On Our General Motors And The Bond Market
Coupla quibbles here.
The shabby treatment of bond holders makes it unlikely GM will be able to borrow money going forward. (Why loan money to someone who gets government permission not to pay you back?) Which makes it unlikely GM will ever get off the government teat.
but as a matter of economic policy, it's kind of stupid to put all your eggs in one basket. Ten years from now there will be some really good new smaller cars out there. You really think Buick and GMC will be making them?
Personally, I'd bet on Saturn before I'd bet on Buick or GMC. If you've got $50 billion for GM, how is it you've got nothing for Saturn?
They oughta spread the subsidies around and give some to new car companies that have a fighting chance. GM will never get off the dole. They make crappy cars nobody wants to buy. Take away incentives, fleet sales, the odd hot pickup truck of the moment, and they've got jack.
The government isn't fostering or encouraging innovation or competition. It's just making transfer payments to auto workers. It's too bad: they could have done a little of both and had a better chance of success.
The best Obama can hope for is that GM will not yet be an utter failure in 2012.
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On Our General Motors And The Bond Market
yeah, meeg, you kinda missed the lead here: secured bondholders are always at the front of the line. that is the definition of what it is to be a secured bondholder. that's why there is a market for crap like GM debt: you buy it because it comes with a guarantee that, if anything goes wrong, you're first in line to get your money back.
unless, of course, the white house says, screw you, you're not first any more.
anyway, that's why the bondholers are bitching and that's why the blogger here, chris, is telling them to shut their pieholes.
and that's why i'm taking issue: if you want people to buy bonds, so that credit markets function, honor their rights as bondholders. if you don't, you probably have to nationalize lending -- which appears to be fine with the obama folks, they have nationalized the mortgage market.