chernevik's Profile
Comments
Entry: David Kellerman Was Under "Relentless" Pressure
posted by chernevik
Apr 23, 2009 1:49PM
Actually, Bess, my concern was the speculative and hasty suggestion of responsibility for one group. You're going to cover the story. I think you can be more careful.
EP sometimes engages critics in comments. If you did, I might have clarified earlier. Earlier or later, it's just one man's opinion, worth exactly what you paid for it.
The episode certainly _seems_ part of the story of the demonization the financial class. But the man was at the center of Freddie, the housing bubble, the economic crisis. And we still don't know anything. I'd say it is a little early to be emphasizing any of the dozens of possible contributors here.
Entry: The Pressure!
posted by chernevik
Apr 24, 2009 1:35PM
What is populist about revealing that Treasury is bullying banks? Banks are unpopular.
Entry: May You Come To The Attention Of Those In Authority
posted by chernevik
Apr 28, 2009 11:02AM
If Chrysler's secured creditors don't like the deal, can they force liquidation? Or could a judge cram down their debt to 5-10%, even if they could get more in liquidation?
Entry: Chrysler: Endgame
posted by chernevik
Apr 29, 2009 5:07PM
So many reports they've got a deal, so few announcements of a deal.
Entry: Chrysler: Endgame
posted by chernevik
Apr 29, 2009 8:06PM
I don't think the government is looking at market reaction. If the creditors agree, the government hasn't deprived them of their rights, has it? Sure, they're leaning on them to concede, but that's negotiating. And maybe the government is tying the bank concessions to regulatory treatment, which I think is bad policy but isn't really a market-moving surprise from this Administration.
If anything, it's more likely that they're trying to pressure some holdouts. Maybe they're trying to show there is a deal, and that the holdouts are somehow better off agreeing rather than being forced. Or, they're setting up the holdouts as anti-job bad guys if they sink the whole thing.
Or, it's just hard to stitch all the details together.
Entry: Dealbreaker Afterhours: Chrysler Headed To The Suck
posted by chernevik
Apr 30, 2009 9:05AM
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.
Entry: Dealbreaker Afterhours: Chrysler Headed To The Suck
posted by chernevik
Apr 30, 2009 9:32AM
@ 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.
Entry: Obama On Chrysler Recovery Restructuring 30 60 Day Bankruptcy (Live)
posted by chernevik
Apr 30, 2009 12:39PM
I decide who has and hasn't sacrificed enough.
People dependent on me for capital and regulatory forebearance get that.
Independent people of me don't, so we're gonna have to make them dependent on me.
I mean, regulate them to avoid systemic risk and tax them out of fairness.
Also, you're all going to have to buy electric cars once the EPA gets done regulating carbon. Rumors that only Chrysler cars will meet the regulatory standard are just crazy talk. They'll cost $50,000, but I've decided it's a sacrifice you need to make.
Entry: "Will The Employee Who Let Geoffrey Do An Interview With The WSJ Please Report To HR."
posted by chernevik
Apr 30, 2009 12:51PM
Cut the guy a break. He managed to generate a story showing that the UAW is getting a bailout no one else gets, and suggesting that lenders actually have some rights.
I don't see those points getting made anywhere else in the Journal/Post/Times.
He looks like a tool, but he's an amateur rhetorician going up against professionals.
Entry: The Unpopular Kids
posted by chernevik
Apr 30, 2009 2:41PM
I wonder if the stress standards, and the internal documents on their development, could be obtained with a FOIA request?
I got to thinking about it wondering how loans to automakers and auto suppliers were handled, but of course the whole thing would be interesting.
Entry: Dangerous Times
posted by chernevik
May 01, 2009 1:35PM
#24 / guest@10:15AM
As guest@12:32pm notes, your complaint about "speculators" goes back to the government's first days, when it considered compelling holders of Revolutionary War bonds to accept discounted payments.
Hamilton explained why this is a bad idea. Obviously, payment at par would allow the country to borrow on better terms in future emergencies. But he further noted that the debt of countries with good credit "answers most of the purposes of money" by serving as a medium of exchange. This expansion in money would in turn improve the cost and availability of credit. Perhaps one consequence of a shortage of money will sound familiar:
"The present depreciated state of [real estate] is a serious calamity. The value of cultivated lands, in most of the states, has fallen since the revolution from 25 to 50 per cent. In those farthest south, the decrease is still more considerable. Indeed, if the representations, continually received from that quarter, may be credited, lands there will command no price, which may not be deemed an almost total sacrifice.
"This decrease, in the value of lands, ought, in a great measure, to be attributed to the scarcity of money. Consequently whatever produces an augmentation of the monied capital of the country, must have a proportional effect in raising that value. "
This exact argument applies today. No, this isn't government debt, but debts like Chrysler's, and others with less security, were rolled into CDOs and sold to investors who funded their purchases with commercial paper. The growth of that process accelerated the movement of cash from savings to business investment, essentially creating money. The deceleration of that shadow banking system starved businesses and consumers of previously expected credit, dramatically slowing their purchases and thus our economy. CP lenders stopped lending, and so stopped the whole system, because they decided the debt in the CDOs was of poor quality, and so lost confidence in their borrowers' ability to repay.
The Treasury now proposes to speed the flow of money by lending to equity investors to purchase these CDOs. They'll be bought at a discount to par, so the investors will be "speculators" by definition. The price they pay will depend in part on their ability to predict what they'll get if a credit goes bad. The ability of the shadow banking system to eventually replace the government as a lender also depends on that same predictability.
I suppose we could let the President, or Congress, tell "speculators" to accept what is "fair" and how much that might be. The President's ideas of fairness seem politically convenient to me, but maybe that's just cynical. In any case, lenders won't be able to predict their recoveries under the Presidential fairness standard, and will be that much more reluctant to lend if they have to. Likewise investors in Treasury's "public private partnerships." All of the President's economic goals, and his chief proposal for realizing them, are set back by confusing the bankruptcy recovery process. If you or he think that's a price worth paying for your notions of fairness, you ought to at least say so out loud.
As a "comment" this is definitely "too long, didn't read". 98% of DB's readers already understand this. It was laid out centuries ago by a guy working with a quill pen and candles. But maybe if you see the details, you'll consider that maybe there is more at stake here than the "unfair" returns to wicked bankers.
Entry: Dangerous Times
posted by chernevik
May 01, 2009 1:39PM
Did I just write all that? Wow. Sorry.
Entry: Judge Denies Request To Keep Chrysler Secured Lenders' Names Under Seal
posted by chernevik
May 05, 2009 6:37PM
I'm not a lawyer, but I don't see how the initial Treasury injection can be a DIP financing as the company wasn't in BK at the time. It could be senior without being DIP.
Hopefully the dissenting creditors will make better arguments than they did for this business about sealing their names.
Entry: Judge Denies Request To Keep Chrysler Secured Lenders' Names Under Seal
posted by chernevik
May 05, 2009 8:35PM
Thanks for the discussion.
What does the law say about side deals among claimants to secure their votes? For example, in a more typical process, can a party pay some of a class' creditors to secure that class' vote? Does the law have any requirements for treatment of a class in addition to the class vote?
I'm wondering if the dissenting secureds can argue that the TARP lenders are voting for a lousy deal here in return for preferential treatment of their TARP positions. And I'm wondering if that's even a viable argument, as they'd also have to argue that the deal is so bad that there must be some interest outside this situation.
Entry: Cleanup In Aisle Six
posted by chernevik
May 29, 2009 3:53PM
Goolsbee sounds scattered because he is expected to fill in the non-existent details of his boss's promises.
He understands the economics well enough. But in politics you can't tell the truth, and decent people can have trouble being truthful and on message.
I don't think he understands the politics of shaping and selling policy, or the motives of the real players. He's misread the Bob Rubin experience, and thinks that being smart will be enough. It won't.
Entry: You Tell Him, Mark Haines!
posted by chernevik
Jun 11, 2009 10:33AM
Barney Frank sounds awfully smart when he gets to write the questions. When he can't -- not so much.
Entry: It's Showtime!
posted by chernevik
Jun 11, 2009 10:53AM
Dennis Kucinich is batting #2? What the . . . ?
Now I get it. The House Committee on Oversight and Government Reform wants everyone to know they are Players, with power to torment bank CEOs and question Treasury Secretaries and Fed Chairmen. Remember that the next time they call.
Maybe they'll try to make Bernanke look bad, to make replacing him with Larry Summers look better, but otherwise nothing is going to happen here.
Entry: Barney Frank Will Walk Out That Door And Not Come Back, Is That What You Want?
posted by chernevik
Jun 11, 2009 1:44PM
If interrupting is rude, so it putting words in someone else's mouth. Frank does that constantly. Why should MH, or anyone, put with it?
CNBC is full of idiots, but they also have journalists who "take the other" side with a lot of guests. They get informative interviews from Democrats Corzine, Dean, Kanjorski, Romer, Goolsbee, Cummings. They are not the problem.
Interviews waste time when guests rewrite questions to reiterate their points. If Frank won't answer questions, CNBC can report his public statements. They lose a prestige guest, but viewers lose little if Frank won't respond to the questions those statements raise.
Entry: Did Bonus Shaming Play A Part In Kellerman's Death?
posted by chernevik
Apr 22, 2009 1:29PM
Poster 1:00pm --
One post does not a website make. And if DB didn't occasionally go over The Line, it wouldn't be DB would it?
But this is way over the line. At this point there is zero factual basis for any speculation about the man's reasons. Suggesting that "bonus shamers" bear responsibility for this is about as responsible as, well, "bonus shamers".
Any energy his family and colleagues have ought to be focused on getting themselves and one another forward and through this. Whipping this up as a meme in the national zeitgeist does them absolutely no good at all.
What's done is done, and posts shouldn't be pulled. But I think DB ought to admit out loud that this wasn't their best moment. And I read DB because I think they have the honesty to do just that, if they should happen to agree.
May God rest the soul of David Kellerman, and comfort those he has left behind.