I don't have to be fooled by the flowery talk out of Washington; contracts are discharged in bankruptcy, not honored.

Secured debt is senior to unsecured debt. Some unsecured senior debt may be senior to other unsecured debt. The fact that the large secured creditors were willing to take a "haircut" is indicative of the real risk that no assets exist to fully secure that debt.

Notwithstanding the senior status of a loan or other debt instrument, another debt instrument (whether senior or otherwise) may benefit from security that effectively renders that other instrument more likely to be repaid in an insolvency or bankruptcy than unsecured senior debt. Lenders of a secured debt instrument (regardless of ranking) receive the benefit of the security for that instrument until they are repaid in full, without having to share the benefit of that security with any other lenders. If the value of the security is insufficient to repay the secured debt, the residual unpaid claim will rank according to its documentation (whether senior or otherwise), and will receive pro rata treatment with other unsecured debts of such rank.

Do you really think Chrysler has the assets to cover even the more senior unsecured debt? I don't... Not only that, but I very much doubt that smaller bondholders have more senior unsecured debt to the larger institutions. It's usually the reverse, because the larger institutions had more bargaining power to gain more favorable terms when the loans/bonds were issued. The secured creditors will be paid out first in bankruptcy, and then there may be nothing left after that...

 

Why is it people are complaining about capitalism going away?

It had its shot and these Corporations and CEO's proved that they can't run company's with a sense of Morality and fairness to their Employees and Consumers,so the Government is saying "Enough is Enough".

I'm not saying the Government is gonna do any better,because a socialistic Democracy has its Cons just as Capitalism does,But maybe its time we try something new.

 

So the brainwizards at Chrysler will now try to cram six liter hemis into small fwd cars I guess. But not before they can figure out how to take any sleek lines of the Fiats and make them into hard edged rectanlges.

 

Vader, I love your disclaimers

 

Hmmmm on another forum they noted that it was against Union rules for them to have a controlling interest in any company with Union members. I'd say 55% would be considered controlling interest. Wonder how that will play out?

 

 

Before you turn control over to the feds you should read about the history of these pension plans and obligations that have hurt the US auto, steel and other Industries. The origin of these issues is not solely the fault of the companies. The companies did not want these plans at all. The same Washington whom some see as salvation were in large part helped plant the seeds of the problem.

I think the new thing we should try is to actually listen when companies say something isn't sustainable. When GM originally agreed to pensions it was hard for them to politically say no. They had just earned a record $1B. They were the wealthiest company in the world and were paying huge dividends to their shareholders. It was politically very difficult for them to say, or get people to believe them, when they would say these plans are a huge long term risk.

I posted this in another thread. This is what Ford said about these pension plans and guaranteed employment when the union was pushing for it in the early 50s.
[QUOTE]The only security - the only guarantee - worth anything to Ford employees it that their company will be healthy, competitive and progressive enough to be able to employ them at a high rate of wages and benefits.

 

Sleek? Like the sleek 500 or the Panda?

 

BBC
"Italy's Fiat will not have to pay anything for its share, which will give it access to the North American marketplace. It will also have the right to appoint three company directors."

Sounds like a good deal to me.

 

Your same thinking was applied in Nazi Germany. Look what that got us. Careful what you wish for.