Thursday, April 30, 2009

Some of Chrysler's Bondholders Say No to Obama's Deal

Chrysler Will File for Bankruptcy, Official Says (Update3) -

The deal offered by the Obama team is said by Bloomberg to have been worth about 33 cents on the dollar, which is, I believe, a lower percentage than that the union was to have received for Chysler's obligations to it.

Frankly, not being a lawyer, I don't see the basis for favoring the union's debt over the supposedly secured, and supposedly senior debt held by the bondholders.

Obviously, the politics of the situation would seem to link the priorities of the union and the Obama administration.

All in all, this may be a favorable outcome for the rule of law
over politics and for all parties. One gets the sense that if the deal at GM or Chrysler winds up being too much of a politically driven ongoing transfer of more and more and more billions in defacto taxpayer subsidies to the UAW, at the expense of everyone else's interest, through the conduit of zombie car companies, that an outraged public very likely would soon decide to go on a buyer's strike against the companies involved just to force an end to the misery once for all.


Friday, April 24, 2009

We need a new birth of shareholder freedom!

As for the Wall Street banks: They aren't run for the benefit of the stockholders anyway. They are run for the staff.

This was the eighth of ten reasons not to own bank stocks now. The original list is from here. Sadly, it is a valid reason to re-examine the whole concept of owning stocks at this point. Corporate governance is dead. Dead. The stockholder is the mark at the poker table. The directors are all too often at heart just management suckups and sycophants. That is, when they are not themselves management. Absurd percentages of earnings are transferred to managers. Stock buybacks and empire-building acquisitions are prioritized over cash dividends, and shareholders are fobbed off with a promise of greater earnings and share prices in the by-and-by. So maybe we should all just own bonds and commodity-linked investments for a decade or so!

Or perhaps we need a great stockholders' strike! Such a strike would be ended only when corporation by corporation, we get much more shareholder-friendly and shareholder-empowering bylaws and directors truly committed to a vision of corporate governance where their duty is first, second, and last to maximize the long term value of the enterprise to those who have bought their shares, be they individuals or institutions. That, by the way, would end any notion of a fiduciary obligation to open the gates and do business with those whose goal is only to slash, pillage, burn and dump the enterprise while exiting with a quick hundred million bucks or so.

Nothing too radical about that, is there? Don't look for the government to do it for you! They are too narcissistic, inept, slow, and um, manipulable by lobbyists to do more than mess things up worse.

Seriously, now. Stockholders' tea party time, anyone?

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