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Old 05-27-2009, 05:58 PM
 
Location: Georgia, on the Florida line, right above Tallahassee
10,473 posts, read 13,413,505 times
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Chrysler Dissidents’ Lawyer Seeks GM Bondholders for New Fight - Bloomberg.com

Somewhere, a long time ago, I read something somewhere that said investing was like gambling. Don't invest what you can't afford to lose. Seems these days, eveyone wants to be a winner.

Imagine this scenario. (Paraphrased from the article.)

Former Safe-T Mart employee, John Puntkiss, 18, said he represents his 38 year-old mother, Linda Puntkiss. Mr. Puntkiss, of Clearwater, Florida, said he plans to fight the store's offer to "toss his mother's lottery ticket in the trash for her" after her initial $10 investment in the "Super Payday Scratch Off BONANZA!!!" didn't pay off anything - much less a bonanza - once she had scratched it off.

“What it boils down to is that the ticket she bought turned out to be worthless,” he said.

“It’s stunningly unfair.”

************************************************** *
This just in: Lawyers expect to drag litigation out for years, costing someone (Read: you, Joe Taxpayer) a hundred zillion dollars.

Commented Mr. Marrajo Dientuso, her attorney;

"Look, I don't have all the answers. But, what I do know is that this woman - this beautiful, caring, sophisticated woman - all she wanted to do was to play the "Super Payday Scratch Off BONANZA!!!" and win. And what did she get? Misery. She got misery. You see this face on the card? You see that lady holding a big fat wad of cash? My client is not holding a big fat wad of cash. Don't you see the inherent injustice in that? It's false advertising for one. EVERY TICKET SHOULD BE A WINNER."
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Old 05-27-2009, 07:48 PM
 
168 posts, read 806,010 times
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Default False Analogy

Your lottery ticket analogy is a false one. Buying bonds is not gambling. The bond is a contract between the seller and the buyer. We give the seller money to help run their business or municipality and they in turn promise to return our initial investment with interest.

This current administration is breaking contracts without blinking an eye. Their only goals are more control over business and more power. It disgusts me.
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Old 05-27-2009, 08:00 PM
 
1,738 posts, read 3,883,570 times
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Well, bankruptcy judges red dash labor contracts all the time. I'd say the analogy is right on. It's a gamble, the market is a ponzi scheme. Bond holders, there's the back of the line....
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Old 05-27-2009, 08:12 PM
 
Location: Georgia, on the Florida line, right above Tallahassee
10,473 posts, read 13,413,505 times
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So, you're saying the folks with bonds are definitely going to get their money back? Tell me more of this "sure thing." I've got a sure thing, too.

Lucky #7 in race #3.

I get what your saying though - with a bond, You invested money in a piece of paper which you should get interest from. With a lottery ticket, it's a "might get something from." Bonds are absolute, lottery tickets, not so much. Except in this case, where bond payoffs were not absolute. Gee. Sounds like a lottery ticket to me.

And speaking of the administration,, I'm in total agreement with you on that. I think they shouldn't help out at all. They should just let 'em flame out, like a big fat marshmallow. You need assistance? Sell some more bonds.
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Old 05-27-2009, 08:24 PM
 
168 posts, read 806,010 times
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You would call buying GM bonds in 2006 a bad financial decision? I wouldn't agree. They were the largest employer in the US. I realize any investment isn't a "sure thing," and fortunately these bonds are a small part of our portfolio.

The bigger issue is the government meddling in business to the extent it is. It's a naked power grab.
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Old 05-27-2009, 08:50 PM
 
Location: Portland, Oregon
7,091 posts, read 10,488,886 times
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Bonds are not equity, they are debt supposedly rated on credit by a third party impartial organization...which obviously (from all the failures) didn't work and GM wants to push them into equity shares. Bond holders get first crack at the assets of GM, and they must be repaid...they don't have to accept being pushed into equity because GM can't pay. People see GM as a loosing sinkhole anymore, if they accept equity they get boned (since GM has been a dragging pony at least since I remember)...but at least bond holders get some protection.
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Old 05-27-2009, 09:35 PM
 
975 posts, read 1,543,198 times
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If all of you would just google "corporate bonds" I suspect you would find a straight forward definition of what bonds are, how they are secured and where they fall in line with respect to the corporate structure. Then the only debate would be will/can/should the gov't be able to change those rules?

The answer, btw, appears at this point to be yes they can and yes they will.

However, bonds are not lotto tickets, bondholder's are not first in line for GM asset's, the rating is of no consquence and labor agreements and bondholder rights are two seperate and distinct issue's and bonds are certainly not a ponzi scheme. But like all investments bonds are risky(gamble) and buying bonds in a poorly run company is almost always a bad investment.
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Old 05-28-2009, 03:51 AM
 
48,519 posts, read 81,030,761 times
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Quote:
Originally Posted by hindsight2020 View Post
Well, bankruptcy judges red dash labor contracts all the time. I'd say the analogy is right on. It's a gamble, the market is a ponzi scheme. Bond holders, there's the back of the line....

Its is a gamble but the chrysler deal pretty much was a fixed game played by the administrtion against thge standards of risk. That is why we are liklely to see less investors put any money in gm and chrysler or any government partnership. Alot have pulled back fron the administrtions housing assets because of the chrysler deal. In the end it may just mean that private investment stays clear of the Big three under governamnt control.It wasn't the bankrupsy court that created this ;it was the administration.
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Old 05-28-2009, 05:25 AM
 
9,068 posts, read 5,659,334 times
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Awwww... it is just so unfair... Hmmm what about the 100's of thousands of people that have lost their jobs ?!?!? Maybe they should sue too !!
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Old 05-28-2009, 06:56 AM
 
1,738 posts, read 3,883,570 times
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Quote:
Originally Posted by scarabchuck View Post
Awwww... it is just so unfair... Hmmm what about the 100's of thousands of people that have lost their jobs ?!?!? Maybe they should sue too !!

Exactly. Putting blind faith in the notion of "bondholder's rights" while dismissively sidestepping the notion of labor contract lottery in this country is beyond disingenuous. Total case of moral relativism. Like I said, you might as well put your FIAT in a lotto ticket, cause that's as good as it gets in this country.
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