Credit Default Swaps May Be Playing a Supporting Role in Chrysler Bankruptcy Filings 53 comments
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In an odd twist, enough of Chrysler’s creditors voted against the administration’s reorganization and recapitalization plan to force the automaker into bankruptcy. Credit default swaps may be playing a supporting role in this drama, as I’ll get to at the bottom…
Yesterday, the reorganization plan seemed close to completion. Four big banks controlling 70% of Chrysler’s debt had signed off on the deal. This isn’t surprising. The four banks in question are Chase (JPM), Citi (C), Morgan Stanley (MS) and Goldman Sachs (GS). All are current (and likely future) recipients of bailout money and favorable Fed/FDIC lending facilities so they are willing to do the administration’s bidding on the $5 billion or so worth of principal exposure they have to Chrysler paper.
But other investors in Chrysler debt, including smaller banks and hedge funds, didn’t want to go along. There may be a few reasons for this. The first, is that the government is running roughshod over creditor interests. A Chrysler creditor profiled in a WSJ article points out that secured creditors have a senior claim over others in a bankruptcy process. They are supposed to recover value for their assets before unsecured creditors, including employees and their pension funds:
We did not contemplate having our first liens invalidated by a sitting president…
The way this deal (and GM’s (GM)) is structured, the UAW and its health care trusts walk away with far more in cash and equity than if they were forced to enter a non-gov’t-sponsored bankruptcy reorganization. Debt investors are rightly unhappy about this, as their claims rank senior.
But pious arguments with respect to the rule of law may be masking other incentives the creditors have to force Chrylser into bankruptcy… (WSJ)
Bank-debt holders, many of them hedge funds or distressed debt funds, voted against the latest deal for various reasons, ranging from financial interests to philosophical ones. Some said their funds had bigger positions in Ford Motor Co. or General Motors Corp. and could benefit by a Chrysler bankruptcy and the production capacity that may eliminate. Some funds may also have credit-default swaps on Chrysler bank debt that pay out in the event of a bankruptcy.
Credit default swaps may be playing a particularly sinister role in bankruptcy filings. As reported earlier in FT, this WSJ op-ed, and a year ago on OA, CDS give their holders a perverse incentive to root for bankruptcy. Where this gets tricky is if the holders of CDS are themselves bondholders in a distressed company. Since there’s not much limit to the amount of exposure one can take in CDS contracts referencing a particular credit, it can be profitable to load up on CDS and then buy just enough of the actual bonds so that you can force a bankruptcy. You lose on the bonds you own, but gain far more on the CDS that pay out as a result…
At the same time, comments like this from the administration and from Obama are not helpful. First, this from the Prez:
“We don’t know yet whether the deal is going to get done,” he said. “I will tell you that the workers at Chrysler have made enormous sacrifices - enormous sacrifices - to try to keep the company going. One of the key questions now is, are the bond holders, the lenders, the money people, are they willing to make sacrifices, as well?”
First off, the employees have NOT made “enormous sacrifices,” not relative to the millions of other workers who’ve lost jobs recently and not benefited from government aid. And the unions played a starring role bankrupting American automakers with pay and benefit schemes that made their employers totally uncompetitive. An enormous sacrifice would be to repudiate benefits and take a pay cut in order to make Chrysler viable. But unions are a chief Democrat constituency and have to be placated. What bothers OA is Barry O’s totally loaded way of describing Chrysler investors….”The bond holders, the lenders, the money people”……Why not go all-in and call them “Shylocks?”
Maligning investors is not smart. Those with capital to put at risk are the ones that are going to rescue the American economy, not the government.
Then there was this comment from an unnamed administration official:
"[Bondholders] failure to act in either their own economic interest or the national interest does not diminish the accomplishments” by Chrysler, its planned alliance partner Fiat SpA and other stakeholders in the company, the official said, “nor will it impede the new opportunity Chrysler now has to restructure and emerge stronger going forward.
Since when are investors charged with acting in the “national interest?” As to their economic interest, that is for them to decide. If CDS are perverting their interests, well that’s one thing. But guess who helped lead the charge to keep them from being properly regulated? Obama’s top economic adviser Larry Summers.
Who’s going to want to go near distressed companies if the administration continues to add insult to economic injury?
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This article has 53 comments:
This was a good analysis until the snarky, egregious reference to "Barry O". And the big banks you enumerated aren't supporting the work-out because they "are doing the bidding of the administration". They're the ones who SOLD those CDS that you've rightly pointed out give the hedgies a perverse incentive to force a bankruptcy.
Given the completely unregulated nature of CDS, there may be twice or even ten times the exposure to CDS issued against Chrysler debt a couple of years ago when the automakers were riding high. Sure, the banks probably BOUGHT CDS to hedge against the ones they sold, but the circle can only go around so many times; somebody will be left without a chair.
The banks have a big incentive to get a work-out; the hedgies have the opposite incentive. This is one time that the banks are the "good guys".
The Barry O comment might well be political but the Toyota factories in the south states are not kicking the proverbial butts of the Detroit 3 because of their quality, exclusively, -- they actually have a cost structure that works!
Wait until the Obama Justice Department judges completely ignore existing law to do the President's bidding anyway. Why would anyone think that bankruptcy would protect you against this sitting President.
That seems to be the attitude of too many investors. They forget all too easily that this nation is the source of their wealth. They may not be charged with acting in the national interest, but they should have a moral obligation to do so. That assumes that they have any morals. So0me investors do, others leave me in serious doubt.
I do not blame the creditors for standing up to the Barry O gang who think they have an answer for EVERYTHING!
The US auto industry - overpaid producers of low quality vehicles - remember when things were different, they held a gun to the auto companies - now we are supposed to show support for these guys!
Is there an industry that the unions have ACTUALLY helped - not!
They have helped themselves - it's a world economy - cars (and much better cars) are produced in other countries!
Last one to leave, cut the lights out in Detroit - it's OVER!
Sad, but true!
www.cmavision.com/Prod.../
I noticed in all this that FIAT now stands to only get a 20% stake, well down from their previous mention of 35% stake in Chrysler. Probably the disturbing part (to me) is that Chrysler might emerge as a worker run company. If UAW runs the company like they have run the union, the new Chrysler might not survive many more years.
On Apr 30 02:00 PM HerrHansa wrote:
> Probably
> the disturbing part (to me) is that Chrysler might emerge as a worker
> run company. If UAW runs the company like they have run the union,
> the new Chrysler might not survive many more years.
trying to protect AMERICAN WORKERS, and an AMERICAN COMPANY is now somehow trouncing the constitution. where were you morons the last 8 years ? with cheney in your underground caves .
stating goofy claims about the president not being an american citizen, or somehow this is socialism , or a greedy hedge fund manager talking about a revenge vote against delta is really a joke.
i would not be shocked to see gwynn and the other hedge fund pigs come out and state this was a deliberate sabotage to set the president back . another vote againt PRESIDENT OBAMA ....keep it up boys ....you are soon to be seen as the waco crowd that you are .
poetic justice is if they get less from the courts.
i still cant believe there are people on this board supporting hedge fund billionares......these guys are the problem not the solution.
they use favorable tax codes to skirt taxes which we pick up , so when gwynn cries about a sitting president ....please lets not shed a tear for this idealogical phony.
The bankruptcy process should protect the secured lenders and modify the union contracts to make them competitive with the contracts of domestic based non union auto manufacturers.
Why would anyone want to lend to Companies on a secured basis for the low interest rates that secured loans pay?
Is there anyone out there that can get numbers on this? A number of us would like to know.
On Apr 30 03:28 PM wolverine27 wrote:
> lol....now i know where 21 % of the nut jobs still remain.
> trying to protect AMERICAN WORKERS, and an AMERICAN COMPANY is now
> somehow trouncing the constitution. where were you morons the last
> 8 years ? with cheney in your underground caves .
> stating goofy claims about the president not being an american citizen,
> or somehow this is socialism , or a greedy hedge fund manager talking
> about a revenge vote against delta is really a joke.
> i would not be shocked to see gwynn and the other hedge fund pigs
> come out and state this was a deliberate sabotage to set the president
> back . another vote againt PRESIDENT OBAMA ....keep it up boys ....you
> are soon to be seen as the waco crowd that you are .
I've heard a lot of conflicting information about how senior the bonds are in relation to the pension funds. Some news commentators say the bonds are senior, others say the pension funds. I don't know enough to say who is right, but I'm just glad it's not going to be a politician making that distinction.
On Apr 30 01:27 PM infp wrote:
> The Barry O comment was tacky. However, I do agree that with Summers
> as his chief financial adviser all the moves of the Obama administration
> will be to protect Wall Street at the expense of the nation.
seekingalpha.com/artic...
The Detroit News is reporting that the following three entities did not come to Chrysler's party:
Oppenheimer Funds
Perella Weinburg Partners Xerion Capital Fund
Stairway Cap Management
Whatever you think of their actions, they will face some 'image' issues in the days to come.
www.detnews.com/articl...
On Apr 30 03:34 PM wolverine27 wrote:
> i would love to see the list of hedge funds who voted against this
> deal . some stated they were getting 33 cents and that they could
> get more in courts ......i want those results published.
> poetic justice is if they get less from the courts.
> i still cant believe there are people on this board supporting hedge
> fund billionares......these guys are the problem not the solution.
>
> they use favorable tax codes to skirt taxes which we pick up , so
> when gwynn cries about a sitting president ....please lets not shed
> a tear for this idealogical phony.
The Barry O worshipping is really getting to be annoying now. Just stop it, or keep it to yourselves (religion should be a private matter), please
"Bankruptcy Court judges are not Art. III judges. They are creatures of the legislature and do not enjoy lifetime tenure. They are therefore subject to political pressure. Trusting in the integrity of the bankruptcy judge in the face of Presidential pressure is asking too much. This is a test of BHO's progressive agenda versus the rule of law. On a positive note, any appeal will be heard by an Article III court. I would welcome an article from a bankruptcy lawyer as to likely scenarios. "
I have disagreed with this author on other articles, but I feel he did a nice job analyzing this situation and the article was well written.
The unfortunate thing is that the consequences of whatever Ob does now wont show up for 5 or 7 years. So OB will take credit for the recovery that would come along naturally and will be out of office when the consequences of what he does now manifest themselves in the future.
My own take is that the article is spot on. The unions are the favored constiuency of the government. It would be better for the economy if chrysler were liquidated rather than have the company run for the benefit of the UAW and the administration. Such a liquidation might inject some reality into the greater economy.
When the means of production are nominally in private hands, but the enterprise is run to benefit the interests of the state - we have a classic description of National Socialism in Germany 1933 - 45
On Apr 30 09:18 PM danf wrote:
> Lots on sensitive feelings on display about calling our president
> names. He is however just a man and not particualarly crucial to
> the survival of our society. I recall much worse names being hurled
> at Bush 1 and 2. And I clearly remember the glee of the media in
> showing the shoe being thrown at the president. I personally refer
> to the president as Princess Obama.
>
> The unfortunate thing is that the consequences of whatever Ob does
> now wont show up for 5 or 7 years. So OB will take credit for the
> recovery that would come along naturally and will be out of office
> when the consequences of what he does now manifest themselves in
> the future.
>
> My own take is that the article is spot on. The unions are the favored
> constiuency of the government. It would be better for the economy
> if chrysler were liquidated rather than have the company run for
> the benefit of the UAW and the administration. Such a liquidation
> might inject some reality into the greater economy.
>
> When the means of production are nominally in private hands, but
> the enterprise is run to benefit the interests of the state - we
> have a classic description of National Socialism in Germany 1933
> - 45
Plus, a 'credit event' which is what triggers payout on a Credit Default Swap doesn't have to be a bankrupty. A debt reorganization is likely to be treated as a 'credit event'.
Look at what happenned at Fannie & Freddie when they were taken over - but not bankrupted - that triggered payouts on the credit default swaps.
By the way, I also did not like President Bush, but would think the same of him or any other President of the, as yet, greatest civilization in the history of the planet...
On Apr 30 11:35 PM Al-USA wrote:
> I agree, the use of Barry O to refer to President Obama is disgraceful.
> I don't like President Obama, and of course I didn't vote for him,
> and I am very much against his support of the $trillions in Wall
> Street bailouts but, at the end of the day, he is President Obama
> of the United States of America, and, as such, deserves to be respectfully
> addressed; in print or otherwise.
>
> By the way, I also did not like President Bush, but would think the
> same of him or any other President of the, as yet, greatest civilization
> in the history of the planet...
Or we can degenerate into those stupid spammers on Yahoo! Stock Message Boards like GE and XOM - making SeekingAlpha useless as it all becomes a flame war that drives away people looking for REAL investment discussion and insight.
You want to see what I mean? Go visit:
messages.finance.yahoo...
Latest topics in the message board on GE:
"President Ma, Taiwanese people want you to keep al..."
"I tuned in Olberwoman tonight"
"pro-life scammer: "Name that Baby!"
"Democrats more likely to back murdering babies"
"Rice Admits to Passing Torture Instructions to CIA"
Makes you really want to frequent that message board to read investing news, doesn't it?
To those of you who think it's perfectly okay to play dirty politics in here, please remember to be respectful and please stop trying to spread those stupid Internet rumours.
The next five idiots who decide to use the phrase "Barry O" hereby admit to wearing stinky Huggies diapers on their heads and dining on swine urine.
You will notice that for your efforts, you have thus far received 4 thumbs down ( I will give you thumbs up in a moment, just to help balance out the clowns here)
The lesson that many have learned at SA (I have learned it, but could care less what the kool-aid drinkers think) is that if you make a comment that is critical of Obama , you will receive the wrath of the trolls. They do not like that. However, if you make idiotic comments about Bush/Cheney/war for oil....you will get thumbs up.
Of course, this is not a political forum, but since the author used Barry O, that set off the loonies. Much worse has been said of Bush, but I doubt any of them posted about how wrong that was. In fact, I am pretty sure of that.
On Apr 30 09:18 PM danf wrote:
> Lots on sensitive feelings on display about calling our president
> names. He is however just a man and not particualarly crucial to
> the survival of our society. I recall much worse names being hurled
> at Bush 1 and 2. And I clearly remember the glee of the media in
> showing the shoe being thrown at the president. I personally refer
> to the president as Princess Obama.
>
> The unfortunate thing is that the consequences of whatever Ob does
> now wont show up for 5 or 7 years. So OB will take credit for the
> recovery that would come along naturally and will be out of office
> when the consequences of what he does now manifest themselves in
> the future.
>
> My own take is that the article is spot on. The unions are the favored
> constiuency of the government. It would be better for the economy
> if chrysler were liquidated rather than have the company run for
> the benefit of the UAW and the administration. Such a liquidation
> might inject some reality into the greater economy.
>
> When the means of production are nominally in private hands, but
> the enterprise is run to benefit the interests of the state - we
> have a classic description of National Socialism in Germany 1933
> - 45
Woo-hoo! Tin foil hat time! So glad you stopped in; all your friends here at Seeking Alpha wish you the best as you drive your brain into the ditch.
On Apr 30 02:11 PM bigbadbeethoven wrote:
> SOBama is trampling the constitution RIGHT AND LEFT, and has from
> the start---and you're upset that they called him "Barry O"? Why
> shouldn't they call him Barry----Barry Soetoro is his legal name,
> not Barack Obama. He's not even a citizen of this country, and has
> steadfastly refused to provide any proof that he actually is. No
> Secretary of State and no ethics committee has EVER verified that
> he's actually a citizen.....it came out in court in the CA/Keyes
> suit that no SOS has ever qualified him and the CA SOS said it's
> not her job and they don't verify candidates (which is a complete
> LIE because they at least twice have removed candidates from the
> ballot after verification failed- they just wouldn't touch the MESSIAH)---the
> system is actually an honor system where Barry Soetoro signs a sworn
> affadavit that he is Barack Obama and is a citizen of this country---and
> they take his word which is only the word of a lying criminal traitor.....So
> the spoiled brat potus has gotten anything he wants even though he
> deserves NOTHING----Nothing will surprise me with this IDIOT who
> refused to stoop to prove to REAL US CITIZENS that he is even a citizen----
> And now the SOBama wants to be a hedge fund manager---and since anything
> Barry S wants, SOBama thinks he should get----so now he's playing
> hedge fund manager by nationalizing the banks, mtg houses, car companies,
> ins companies--he's firing CEO's right and left and deciding what
> companies will survive and which will fail----when he's never run
> ANYTHING and is a completely CLUELESS IDIOT without the least bit
> of sense about economics (remember his big attempt at being a market
> guru when he kept talking about P/E ratios and calling them "Profit
> and Earnings ratios" lol the guy is CLUELESS)----but in spite of
> it all, anything he wants is given to him because he has the most
> redeeming qualifications of being a lying criminal non-citizen traitor
> up to his big ears in Chicago Combine kickbacks and corruption---which
> is why he had to pass the almost $2 trillion joke-of-a-stimulus bill
> FAST---he had KICKBACKS to make and so he ditched "hope and change"
> and became Chicken Little---which actually fits the lying criminal
> non-citizen traitor much better than "Hedge fund guru" lol
I can't count the number of counter arguments that are racing through my head right now about how the nation is not the government and the government is not a producer of goods but a consumer of goods.
If 100,000's lose their investment funds and retirement funds not only do you lose millions in available investment capital, but you send a chilling message to everyone else not to invest here (any quasi-nationalized or distressed company).
The effect this will have is any company which is the least bit distressed, becomes a leper on the market. Rather than taking a "reasonable" risk of purchasing bonds the capital investment will walk away. More companies will fail with more unemployment. Not so good for the national interest.
There's probably a counter argument that all the capital investment money (anything you have left after paying your bills) should go to the government so that they can ensure these distressed companies get the investments they need to remains solvent. Is that in the best interest of the nation?
On Apr 30 01:44 PM watchdogg wrote:
> "Since when are investors charged with acting in the “national interest"?"
>
> That seems to be the attitude of too many investors. They forget
> all too easily that this nation is the source of their wealth. They
> may not be charged with acting in the national interest, but they
> should have a moral obligation to do so.
On Apr 30 09:15 PM DonFurio wrote:
> This is horrific, the lenders who are secured, should be ahead of
> everyone. I hope they do well in court. To me it is ridiculous
> that the UAW gets anything considering they were a major factor in
> the collapse and when other heavily unionized companies went through
> CH 11 including.....
On Apr 30 08:34 PM The Geoffster wrote:
> I posted this elsewhere but I am soliciting articles from bankruptcy
> lawyers.
> "Bankruptcy Court judges are not Art. III judges. They are creatures
> of the legislature and do not enjoy lifetime tenure. They are therefore
> subject to political pressure. Trusting in the integrity of the bankruptcy
> judge in the face of Presidential pressure is asking too much. This
> is a test of BHO's progressive agenda versus the rule of law. On
> a positive note, any appeal will be heard by an Article III court.
> I would welcome an article from a bankruptcy lawyer as to likely
> scenarios. "
since
> these are insurance policies, and most insurance requires the insured
> to work to keep from having a claim (ex. you need to keep from intentionally
> driving your car into the lake) to get payment. so the next possible
> out come is they deny your claim.
These CDSs are unregulated instruments, are they not?
What's to stop them from forcing Chrysler into bankruptcy? Anything?
On Apr 30 04:19 PM CloroxCowboy wrote:
when exactly
> did it become status-quo for a working-class job to equate to a middle-class
> lifestyle? It's just not a sustainable business model.
I'd hardly call $100K/year "working class".
> Wolverine: Would you prefer for all financial firms to stop lending
> to American companies because the president could invalidate a contract
> at will?
(1) Get a glass. Fill it with water.
(2) Dip your finger in the water.
(3) Pull your finger out of the water.
Notice any change in the water? That's about how much influence the typical company has with this administration. I wouldn't worry about BO re-writing any of YOUR contracts/loan covenants any time soon.
Face it ... most companies aren't important enough to show up on BO's radar (IOW, they don't pose "systemic risk".)
Furthermore, do you honestly think the Administration would've done this if they knew it wouldn't be able to stand up in court? BO no doubt has a boatload of lawyers advising him -- I'm sure he knew what he was doing.
Then you promise all these people that you will run the company as lean as it needs to be run to be able to service the debt and turn a profit. Period.
Now, companies are being expected to guarantee lifetime benefits for employees, and spend more for energy so it can be "green", and be patriots by paying more in taxes. Profits, and apparently debt repayment, no longer take priority. And as the carcass of dying American capitalism starts to rot, the kind of speculators the President really doesn't like are enabled to come in and buy CDS and stakes and finish off the job.
Anyone who sells CDS in this environment is like selling fire insurance in the middle of an inner-city riot. And anyone who doesn't understand how these new priorities are going to make creating new companies and industries much more difficult doesn't understand finance very well.
How does the CREDIT Mkt perceive this?
Who want to buy senior secured creditor - bonds which means absolutely zilch. Would you buy one?
CDS insurance contracts were developed in the SHADOW BANKING which is opque and unregulated. Those Frankensteins are coming out for their feeding!
One is facing his/her KARMA!
On May 01 08:59 AM Liz wrote:
>
>
> I'd hardly call $100K/year "working class".
"To me it is ridiculous that the UAW gets anything considering they were a major factor in the collapse (of GM)".
Let me rephrase your comment a little:
"To me it is ridiculous that the hedge funds get anything considering they were a major factor in the collapse of the U.S. economy"
What goes around, comes around.
On Apr 30 09:15 PM DonFurio wrote:
> This is horrific, the lenders who are secured, should be ahead of
> everyone. I hope they do well in court. To me it is ridiculous
> that the UAW gets anything considering they were a major factor in
> the collapse and when other heavily unionized companies went through
> CH 11 including just about every major airline besides AMR and CAL
> (they re-worked the bonds out of bankruptcy court), the employees
> who weren't retired, had to have their pension sent to Federal Pension
> Beneficiary where they will get a fraction of their previously unrealistic
> pension. Besides most of Chr’s cars are quite simply not very good,
> and if you were to live in anywhere besides the mid-west, you would
> have realized that people liked and drove around Toyota’s and other
> foreign cars, and steered away from the Big 3. For far too long these
> companies believed that they could do what they want and people would
> “buy American”, but people were smart enough to go for quality and
> also realize that many foreign owned cars are actually made in America.
>
>
> I have disagreed with this author on other articles, but I feel he
> did a nice job analyzing this situation and the article was well
> written.
If you do not believe in the rule of law and claims in bankruptcy, that's fine, but besides being one of the pillars of capitalism, just understand the consequences, higher credit costs for everyone and more restrictive covenants. Lenders will not take equity risks for debt returns, it's that simple. The US is still the largest economy by far, and if you weren't over-exposed in this cycle, you have an opportunity to do just fine the next 5-10 years. Remember if you have debt, it's not your money.
I don’t doubt that the unions may have helped workers 40-50 years ago, but many companies and employees have long realized that it stifles innovation and why pay 10% of your paycheck to “union dues”. Yea, maybe you get a higher salary this year, but since the companies can’t fire anyone, it becomes much more difficult for anyone to try and get ahead because everything is based off of “seniority” or “for the good of union”. Think about it, it basically forces companies to overpay for people, if the employees were really worth what they think, then they should be able to move to the next firm that can hire them at that price. Of course the unskilled like it because it pays them more than they are worth, however it also causes all prices to rise, including cost of living for everyone.
On May 01 02:22 PM Miken wrote:
> DonFurio
>
> "To me it is ridiculous that the UAW gets anything considering they
> were a major factor in the collapse (of GM)".
>
> Let me rephrase your comment a little:
>
> "To me it is ridiculous that the hedge funds get anything considering
> they were a major factor in the collapse of the U.S. economy"
>
> What goes around, comes around.
On May 01 06:45 AM noob wrote:
> Is the answer to pull money out of unionized companies on the investor
> side and to start boycotting unionized companies on the consumer
> side? If effective, it might get their attentions. Of course you
> might go to jail as an Enemy of the State.
>
> On Apr 30 09:15 PM DonFurio wrote:
It is amazing that ANYONE would try and defend hedge fund traitors, excuse me, traders. The UAW is taking flak for be $15/hour too high compared to Toyota, Honda, etc. Auto CEO's are taking flak for making $10-15 million in decent years, and the fact that 5 hedge fund traitors made over $1 BILLION last year hardly gets any mention. Scandals, too many to mention plague Wall Street from Bernie Madoff to John Thain go on and on. But you're worried about the UAW getting more than their share??
I for one am sick and tired of the financial sector skating by with TRUE bailouts, with out any hope of repayment, while the auto industry constantly gets hammered. I'm sorry we don't live in Manhattan or are some of the beautiful people in CA that can't manage their own state. But you know what, I've been to both places and wouldn't live in either one if you paid me enough to make up for the absurd cost of living.
And by the way, I am not part of the UAW, never have been. In fact, for a career I fought them everyday. The only people I can't stand more than them are you suddenly self righteous financial people who, along with your friends Christopher Dodd and Barney Frank (both from eastern states I might add).
The "Dean" of investment advisors Art Cashin from UBS, predicted that there would be a severe pullback in the markets before Friday...didn't happen. How many people lost money on that charlatan's advice? Nobody in the entire investment community saw this coming with the exception of Peter Schiff. They are all a bunch of frauds. Anybody who listens to these people deserves to lose everything. And don't give me this stuff that Grandma's and Grandpa's have there life savings invested with the hedge funds. There are no rules in that game, so buyer beware.
So go on with your indignant rants about your rights being usurped, I'm not listening.
By the way, if you really are a Don, I would gladly kiss your ring instead of ending up with cement overshoes in the Long Island Sound.
On May 01 04:12 PM DonFurio wrote:
> Miken,
> If you do not believe in the rule of law and claims in bankruptcy,
> that's fine, but besides being one of the pillars of capitalism,
> just understand the consequences, higher credit costs for everyone
> and more restrictive covenants. Lenders will not take equity risks
> for debt returns, it's that simple. The US is still the largest
> economy by far, and if you weren't over-exposed in this cycle, you
> have an opportunity to do just fine the next 5-10 years. Remember
> if you have debt, it's not your money.
>
> I don’t doubt that the unions may have helped workers 40-50 years
> ago, but many companies and employees have long realized that it
> stifles innovation and why pay 10% of your paycheck to “union dues”.
> Yea, maybe you get a higher salary this year, but since the companies
> can’t fire anyone, it becomes much more difficult for anyone to try
> and get ahead because everything is based off of “seniority” or “for
> the good of union”. Think about it, it basically forces companies
> to overpay for people, if the employees were really worth what they
> think, then they should be able to move to the next firm that can
> hire them at that price. Of course the unskilled like it because
> it pays them more than they are worth, however it also causes all
> prices to rise, including cost of living for everyone.
>
You seem to try and attack me personally, which is ok because I must have struck a nerve. I could care less who you are, I take the time to write into seeking alpha to give my point of view, and while I have issues of own with some of the banks, I find that many people on seeking alpha just hate the banks and somehow think we would be better off if Barney Frank was in charge of the banks. People can call it pumping and dumping or a ponzi scheme, but the reality is that you stop trying to put the banks out of business and let their stock prices rise, you can let the banks do equity offerings (like GS did) to pay back TARP. I guarantee that GS will pay back their $ by the end of the year (they already have it set aside), and a few others may be able to follow. Yeah, it may take longer to get some money back from AIG, but if you let their good subsidiaries IPO, then you have a chance to get some money back there. Furthermore, you mention that if people listened to Cashin they would have lost money last week. Who cares, whenever you make an investing decision you make the decision depending on what your target rate of return, risk tolerance and time-frame, not what some guys says on CNBC.
You seem to try and attack me personally, which is ok because I must have struck a nerve. I could care less who you are, I take the time to write into seeking alpha to give my point of view, and while I have issues of own with some of the banks, I find that many people on seeking alpha just hate the banks and somehow think we would be better off if Barney Frank was in charge of the banks. People can call it pumping and dumping or a ponzi scheme, but the reality is that you stop trying to put the banks out of business and let their stock prices rise, you can let the banks do equity offerings (like GS did) to pay back TARP. I guarantee that GS will pay back their $ by the end of the year (they already have it set aside), and a few others may be able to follow. Yeah, it may take longer to get some money back from AIG, but if you let their good subsidiaries IPO, then you have a chance to get some money back there. Furthermore, you mention that if people listened to Cashin they would have lost money last week. Who cares, whenever you make an investing decision you make the decision depending on what your target rate of return, risk tolerance and time-frame, not what some guys says on CNBC.
On May 02 11:09 AM Miken wrote:
> DonFurio
>
> It is amazing that ANYONE would try and defend hedge fund traitors,
> excuse me, traders. The UAW is taking flak for be $15/hour too high
> compared to Toyota, Honda, etc. Auto CEO's are taking flak for making
> $10-15 million in decent years, and the fact that 5 hedge fund traitors
> made over $1 BILLION last year hardly gets any mention. Scandals,
> too many to mention plague Wall Street from Bernie Madoff to John
> Thain go on and on. But you're worried about the UAW getting more
> than their share??
>
> I for one am sick and tired of the financial sector skating by with
> TRUE bailouts, with out any hope of repayment, while the auto industry
> constantly gets hammered. I'm sorry we don't live in Manhattan or
> are some of the beautiful people in CA that can't manage their own
> state. But you know what, I've been to both places and wouldn't live
> in either one if you paid me enough to make up for the absurd cost
> of living.
>
> And by the way, I am not part of the UAW, never have been. In fact,
> for a career I fought them everyday. The only people I can't stand
> more than them are you suddenly self righteous financial people who,
> along with your friends Christopher Dodd and Barney Frank (both from
> eastern states I might add).
>
> The "Dean" of investment advisors Art Cashin from UBS, predicted
> that there would be a severe pullback in the markets before Friday...didn't
> happen. How many people lost money on that charlatan's advice? Nobody
> in the entire investment community saw this coming with the exception
> of Peter Schiff. They are all a bunch of frauds. Anybody who listens
> to these people deserves to lose everything. And don't give me this
> stuff that Grandma's and Grandpa's have there life savings invested
> with the hedge funds. There are no rules in that game, so buyer beware.
>
>
> So go on with your indignant rants about your rights being usurped,
> I'm not listening.
>
> By the way, if you really are a Don, I would gladly kiss your ring
> instead of ending up with cement overshoes in the Long Island Sound.
>
>
> On May 01 04:12 PM DonFurio wrote: