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According to a Barron's article, the General Motors filing for a stock offering together with other analysis provides a glimpse of how the bailout really worked.
GM owed $27 billion to bondholders and $20 billion to the UAW benefits trust when it filed for bankruptcy. According to long-established law, these claims should have ranked equally. The shortage of about $17 billion should have been spread across the UAW's claims and the bondholders claims on a pro-rata basis.
In reality, the UAW will probably end up with ALL of its $20 billion back, while bondholders will end up with less than $10 billion. Who knew that in Obama's America, investors (including widows and retirees and other little guys) would end up paying $7 billion in tribute to the UAW?
Yeah..the government pulled a quick one on the bondholders and I guess they could because they were the big bully on the block and the bondholders vs the UAW with government backing just wouldn't go very far.
Change the rules to suite them in their dealings.
It was not fair, not fair at all. If they can to that to GM bonds, they can do that to any and all bonds..just remember that.
If the steps hadn't been taken, no one would have received anything except for the 3,000,000 people who would have received pink slips.
The bondholders are the owners of the company and because of their ownership share in the fortunes of the company whether profits or losses. The company owed the money to the UAW trust because they signed the promissory note, therefore the stockholders are liable for the debt.
No different than losing money from your 401k or having stock in any other company that tanks.
Kudos to our President for his profound leadership in securing the jobs of 3,000,000 Americans, and shame on the obstructionist politicians who tried to get in the way. We'll try to get rid of a few more obstacles in November.
If the steps hadn't been taken, no one would have received anything except for the 3,000,000 people who would have received pink slips.
The bondholders are the owners of the company and because of their ownership share in the fortunes of the company whether profits or losses. The company owed the money to the UAW trust because they signed the promissory note, therefore the stockholders are liable for the debt.
No different than losing money from your 401k or having stock in any other company that tanks.
Kudos to our President for his profound leadership in securing the jobs of 3,000,000 Americans, and shame on the obstructionist politicians who tried to get in the way. We'll try to get rid of a few more obstacles in November.
cuebald..the government changed the rules of investment.
Shareholders can lose it all but bondholders have specific rights.
In bankruptcy court the bondholders have a very strong claim.
But the government saw to it that it never got there.
If the steps hadn't been taken, no one would have received anything except for the 3,000,000 people who would have received pink slips.
The bondholders are the owners of the company and because of their ownership share in the fortunes of the company whether profits or losses. The company owed the money to the UAW trust because they signed the promissory note, therefore the stockholders are liable for the debt.
No different than losing money from your 401k or having stock in any other company that tanks.
Kudos to our President for his profound leadership in securing the jobs of 3,000,000 Americans, and shame on the obstructionist politicians who tried to get in the way. We'll try to get rid of a few more obstacles in November.
bravo sierra!! gm and chrysler both filed for chapter 11 reorganization. had the government not stepped in both companies would ahve gone through the bankruptcy process, and in the mean time the assembly lines would have remained up and running, cars would still have been delivered, etc. all that would have happened is that the debts would be set aside to be paid off over time as the company had the money to pay those debts. the bond holders would have gotten their money in the end.
bond holders have NO equity in the company, they have NO ownership, what they do have is ownership of debt in the company, which is why the law allows for debt holders to be paid off first in the event of liquidation.
had gm and chrysler filed for chapter 7 liquidation instead, both companies would have been broken up and the pieces sold off by the courts to satisfy the debts owned by both companies. now what would that mean? it would mean that gm of north america would be no more, but chevrolet would be owned by another company, same with all the automotive divisions. gm of europe would be split off from gm of north america, as would holden, and other gm companies around the world. all the gm of north america trademarks would be sold off as well as all the real estate that gm held.
in the end, the bond holders would still have ended up getting the short end of the stick, but they would have at least got something out of the bankruptcy, unlike the government deal where they got nothing.
but it would NOT have meant the end of the auto industry in north america. chevrolet, jeep, cadillac, dodge, chrysler, buick, gmc, all would have been bought up by other automakers, and those car lines would still be in operation today and without the huge amounts of money laid out by the government.
According to a Barron's article, the General Motors filing for a stock offering together with other analysis provides a glimpse of how the bailout really worked.
GM owed $27 billion to bondholders and $20 billion to the UAW benefits trust when it filed for bankruptcy. According to long-established law, these claims should have ranked equally. The shortage of about $17 billion should have been spread across the UAW's claims and the bondholders claims on a pro-rata basis.
In reality, the UAW will probably end up with ALL of its $20 billion back, while bondholders will end up with less than $10 billion. Who knew that in Obama's America, investors (including widows and retirees and other little guys) would end up paying $7 billion in tribute to the UAW?
Would you like a hanky or some cheese with your whine?
Would you like a hanky or some cheese with your whine?
JTG, thank you for your concern. What I really want is my share of the $7 billion that was stolen from bondholders and donated to the UAW. On my $20,000 bond, that comes to $5,530.
Ironic that the diminshed value I will recover comes in stock in a company that is still burdened by continuing pension obligations that, in every prior case in the history of the country, were discharged in bankruptcy. In addition, the unprecedented survival of the union work contracts is another drag.
If I had my $5,530, I wouldn't need a hanky or cheese from you.
The larger point is that investors build every factory, store, and office that more than 100 million Americans work in every day. If, in Obama's America, the value of the investment can be arbitrarily stripped away, you will see a lot less investment in the future. In fact, this is one of the reasons why companies are not hiring and investing and have instead piled up $1.8 trillion in cash. They are waiting for regime change in Washington, which will effectively happen on The People's Revenge Day (Election Day) in November.
If the steps hadn't been taken, no one would have received anything except for the 3,000,000 people who would have received pink slips.
The bondholders are the owners of the company and because of their ownership share in the fortunes of the company whether profits or losses. The company owed the money to the UAW trust because they signed the promissory note, therefore the stockholders are liable for the debt.
No different than losing money from your 401k or having stock in any other company that tanks.
Kudos to our President for his profound leadership in securing the jobs of 3,000,000 Americans, and shame on the obstructionist politicians who tried to get in the way. We'll try to get rid of a few more obstacles in November.
There are any number of web sites that will explain for you the difference between a share of stock and a corporate bond. A bond is a debt of the company and the interest and principal is an obligation to be paid when due, period. Whether the company thrives or merely survives has no effect on results for bondholders. In a bankruptcy, bondholders are SUPPOSED to get a pro-rata share of value unless of course the President siphons off a bunch of money for his friends.
According to a Barron's article, the General Motors filing for a stock offering together with other analysis provides a glimpse of how the bailout really worked.
GM owed $27 billion to bondholders and $20 billion to the UAW benefits trust when it filed for bankruptcy. According to long-established law, these claims should have ranked equally. The shortage of about $17 billion should have been spread across the UAW's claims and the bondholders claims on a pro-rata basis.
In reality, the UAW will probably end up with ALL of its $20 billion back, while bondholders will end up with less than $10 billion. Who knew that in Obama's America, investors (including widows and retirees and other little guys) would end up paying $7 billion in tribute to the UAW?
They did the same thing at Chrysler. The press never reported it.
If the steps hadn't been taken, no one would have received anything except for the 3,000,000 people who would have received pink slips.
The bondholders are the owners of the company and because of their ownership share in the fortunes of the company whether profits or losses. The company owed the money to the UAW trust because they signed the promissory note, therefore the stockholders are liable for the debt.
No different than losing money from your 401k or having stock in any other company that tanks.
Kudos to our President for his profound leadership in securing the jobs of 3,000,000 Americans, and shame on the obstructionist politicians who tried to get in the way. We'll try to get rid of a few more obstacles in November.
WRONG- Bondholders are not owners of the company.
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