Tuesday, April 28, 2009

Bondholders Must Be Respected 
So it seems that the Obama Administration is presiding over the attempted mass rape of GM bondholders in favor of the auto workers.

Pennywise and pound foolish. But then, that's par for the course for a libtard. Minus the pennywise part, anyway.

Bondholders, writ large, will exact a stiff penalty for nonpayment. If bondholders - the owners of our nation's capital - are not respected, things get ugly very fast. Bondholders will simply stop lending money. It ain't hard to figure out.

Look. Bondholders understand that in a global economy, shit happens. They understand business risk. They understand currency risk. They understand the risk of natural disasters, market risk, systematic risk, nonsystematic risk, Milton Bradley Risk, management risk, and all kinds of other risks, and have, in theory, priced accordingly.

What they didn't price in - well, until now - is a President and Congress that was willing - even eager - to poke them in the eye just to buy votes from unprofitable laborers in swing states. Yes, they were always a constituency. But when push came to shove, until now, the bondholder was, if not venerated, at least respected. Not in the streets of Detroit, but in the halls of congress and in our bankruptcy laws.

There is a sea change going on, and it's going to lead to a massive repricing of risk. It already has.
If they don't extract their fair cut from GM, they will extract it from the rest of the economy as a whole.

Here's a vignette to help clarify how things work:

Stewie = bondholders.
Brian the Dog = global economy.

Any questions?

Splash, out


Labels: , , , ,

Comments: Post a Comment

This page is powered by Blogger. Isn't yours?

Site Meter

Prev | List | Random | Next
Powered by RingSurf!

Prev | List | Random | Next
Powered by RingSurf!