One of the disadvantages of taking strong positions on economic events before the fact is the credibility sink one is subjected to on the flip side. Ouch. Failing one’s predictive tasks as an asset manager is a potentially career limiting mistake. Missing a call as a gambler is expensive, even dangerous- at least to limb if not also to life. But missing a call while occupying the Executive Branch of government of the United States is a different matter all together. Now add the detail that your office was actively leveraging the rather substantial resources of the Executive Branch in pursuit of the effort and you have a bit of a problem. You either have been making a show of it, or your office is far more impotent than it appears. Neither outcome is desirable.
The solution, of course, is not to publicly intertwine yourself in industrial policy with such visible and unbridled enthusiasm unless you have matters well in hand. With J.P. Morgan Chase leading the creditors, 90 minutes of discussion before voting wasn’t enough time to tip the hands in favor of the latest deal. It wasn’t even close. It should surprise no one that once an outsider (Fiat) was introduced into the mix the subsidized and coddled “avoid Chapter” process was split wide open.
Can we please… please move on?
Chrysler Chapter 11 Is Imminent [The Wall Street Journal]
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- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
nice picture, new prototype of the crossfire…
did the government ever figure out how to get ahead of secured creditors in chap 11? I guess theyll be the DIP financer right?
Economics of the transaction aside, I’m sure the smaller secured debt holders relish the opportunity to extend a big “f**k you” to the Obama administration. Moral of the story: Never rely on the anticipated cooperation of your political/economic enemies.
Add the credibility of White House press corps to the bonfire. They’ve been repeating the “we’ve got a deal!” story for a week now and, oops, no deal.
Administration statements of major union concessions ought to get a lot more scrutiny than the press has provided to date.
@3 you know what this means right? Starting next week “carried interest” will be taxed at 95%
The distressed debt vultures are going to get an expensive lesson in f&^*ing with the federal government once it goes to the courts and the legal fess start snowballing.. They may leave with enough of a stump to fit a prosthesis. Serves them right.
So let me get this straight – the UAW, unsecured creditors, get 55% of the company and secured debt holders get 10% of a company ran by the UAW (which is basically worth zero point nada)? And somehow debtholders are being scolded for not going along with this flagrant violation of contract and bankruptcy law? Why do we even have a judicial system anyway?
Welcome to witchhunt reality. Like Clint said “What’s Deserve got to do with it?”
Fox news is saying it is a fait au compli.
@7
What, that doesn’t make sense to you? Here, have some of the hope&change chronic *passes blunt*
“The UAW Is About To Become One Of The Biggest Automakers”
http://ace.mu.nu/
@ 2
The tax rate at the top will be at 39% rate in 2010, so yeah, they have.
2 – still think gubment plays by the rules – eh? Why bother with DIP financing and cross-collateralization when you can just write an “emergency” bill to kill section 725.
@ 9:16AM –
It seems we’ll now see a test of the courts’ willingness to protect a minority’s rights in law against popular opinion and political pressure.
@5 – and so the class wars begin… Time to stock up on canned goods and ammunition.
EP – Your analogies of an asset manager and gambler are not pertinent to the Executive Branch, which is subject to a far different and more complex set of “credibility” and “accountability” judgments from a far more diverse set of interested stakeholders. You appear, like many people, to take the government’s announcements at face value, which is charmingly naive. Have you not considered that it is (fully aware that it is) playing a multi-level, multiple-round game? Have you not considered that it may have multiple contingency plans and several sets of desired outcomes depending on the actions of the other actors to this little drama? Failing to get the creditors to agree to the tabled plan may not even be a setback, from this perspective.
Government success or failure cannot be reduced to a single number, like ROI or gambling winnings (or limb preservation). In fact, you err if you believe that is the government’s principal or even an important objective here.
Lastly, the government is not simply another counterparty to a multi-sided negotiation. It also carries the critical role of being able to set and reset the rules of the game. You may not like it, but that is a hell of a trump card to hold if you are the Administration.
- Not in the Executive Branch
So 16 are you saying the unions gave more to the dems than the hedgies?
16 Too many muddled allusions. Not enough facts.
16 is Steve Rattner. Focus on your upcoming felony trial big boy, instead of defending Obama’s honor.