Livin' in the north

FASB Statement 159: A Big, Fat Legal Scam

Some companies can buy back their debt at $.10 on the dollar, instead are negotiating and taking tax money to run their businesses while in bankruptcy. The American capitalist system is under fire, we need to wake up and update current securities laws to reflect the global ecomony and the products being sold in it. The problem is, "the fox (congress) is watching the hen house". If you know what I mean.

Annihilate the Perverse Effect of CDS on Bondholders

I couldn't agree more. However, there is so much that has to be reformed in the CDS market., In good conscience, we should not help those who sold these derivatives to honor their commitments until the playing field is level. For example, no more CDSs should be issued to a market place than debt outstanding. In the case of Bowater, it has been estimated 6 times the CDSs were issued than the debt it was covering. Since there is no rules to protect investor interests against the effects of CDSs, we should force the banks and insurance companies that offered them to negotiate how they honor payment on the CDSs, instead of hurting one class (retail investors) in favor of another larger class (institutions), and ultimately the US taxpayer. Instead maybe CDSs should have only been allowed to be built into the issue at the beginning of an offer, so all investors could participate in the protection in an equitable manner. Like municipals, the insurance would be reflected in lower yields, but bump the quality rating. Some believe that the current lack of regulation has a criminal element to it. All investors should be treated equally and given full disclosure. If many of us knew that these instruments were being used, we would have reconsidered investing in corporate debt in the first place.

GM Bondholders: No Good Answer

Seems to me this is a $.40 on the dollar deal in stock, "who cares". The 225 shares is before the reverse split and to build on "user386" it gets rounded down immediately to 2 post split shares and no cash for partials. Brokers who process exchanging get 5% on the $1,000 face, as a fee. The Fees looks like "50 pieces of silver" and no broker will recommend taking this deal, just based on the client risk. The big boys want this in the courts to activate their "CDSs" and get full face value on their investments from the banks. This might also be the right place for the retail bond holder to make a case to a judge for being left alone. The big loser is the US taxpayer who has to support the TARP money used to pay the Institutions for their worthless bonds. This could look like the great American ripoff. "Credit Default Swaps" should be illegal and could be the demise of the whole system if not reformed. If GM goes to the courts wait til we see banks 3rd qtr earnings. "NOT". And so right back down we go! What choice do we have? HELLO JUDGE?

GM Bondholders to Receive Even Worse Terms

A GM bankruptcy is about the worst thing we could do to ourselves as taxpayers. THe institutions have themselves covered with these Credit Default Swaps. So sending GM into bankruptcy would allow them to collect the full amount of their bonds. The banks who underwrote these contracts will use taxpayer money to pay off the institutions. The retail bond ( US retirees inmany cases) investors will get nothing. The taxpayers will have to support GM during bankruptcy, that means more money from taxpayers. GM will be able to transfer their pension obligations to the Department of Labor's PBGC which will only pay about $.30 on the dollar owed, if that. Oh, and the stock will be worthless ( which doesn't mean much these days. So who is the Fed kidding. If Obama is so smart and his team of advisors have such concern for the middle class, then they know a bankrupt GM will devastate millions of families. At this point, force GM to use the tax free profits from their global sales in China and Europe to pay the bondholders and keep GM out of the courts to save us all money.

Time for GM to Declare Bankruptcy?

Here's a couple of facts from the auto industry. In 2007, GM sales in China grew 18.5%. In 2008, first half, sales in China grew 12.7% and for the full year almost 10%. Chinese GDP grew at 9%. Here's my point, we're hunting alligators and their draining the swamp. In another way, the heavy debt load we are supporting in America is financing the retooling of a profitable GM overseas. Why such a crazy thought? Well, we should ask how is Delphi Global doing? How much of that growth comes back to the US? None. Why? taxes. GM doesn't want to pay. Just because we are being thrown a few jobs by foreign auto makers, doesn't justify this insanely self serving practice. It's great to talk about quality and price of vehicles, but that is not the big picture. The big picture is the purposeful erosion of the American worker and net worth of the American household. Here is the solution, and unfortunately it is not very "republican". Tax the foreign vehicles. Force GM to use foreign profits to reduce debt, instead of grow overseas. Competition is great, but it doesn't look like everyone is playing by the same rules. So strengthen the dollar and see if they can keep their advantage. This is about our way of life, not cars. They have come to us for help, now let's use this power to make GM stronger and solidify our country as the great nation we all know it to be. We are not trying to name call or point fingers at each other. Despite our differing points of view, we all feel "taken". We are just not sure by who. Like any good parent, we need to set stricter rules until GM learns to behave.

Time for GM to Declare Bankruptcy?

No one seems to realize that every negative comment on the US auto workers comes from some one in the south. There is a definite movement in southern states to undermine the US auto industry recovery, to their gain of course. To support this theory, I looked up Mr. Cook's background. And where does he hail from you you ask? That's right, Tulane University in New orleans Louisiana. Last I remember, GM wasn't the big employer there. I think his bias should be put into a chart and waived next to that southern flag.