holding any gm debt, goverment is robbing you...

[tony357 386]

Holding GM Debt? Gubbermint Is Robbing You!

 

Do you hold GM bonds? Perhaps some so-called "unsubordinated" debt?

 

A lot of people - individuals - do.

 

These bonds were quite popular for college savings and other long-term plans - including retirement.

 

Why?

 

Because the coupon was pretty good, they were unsubordinated (meaning senior, or first) preference in the event of bankruptcy, and GM has been around for a very, very long time.

 

If you hold this debt you are about to be wiped out by our government, who has decreed by fiat, without even a vote in Congress, that:

 

1. You don't matter.

2. You don't have a right to rely on anything in the prospectus printed when these bonds issued, or even common and statutory law.

3. Your rights do not exist. Your government has literally declared economic war on you.

 

Let me be clear: The government, specifically President Obama's Treasury, is acting exactly as did George Bush's Treasury - they are behaving as gangsters who are about to rob you blind, returning only 10 cents - if that - on the dollar for your investment and they are going to force you to take it at gunpoint.

 

This despite the fact that the UAW is going to get somewhere between 80 cents and the full buck for every dollar they are owed for their VEBA.

 

VEBA obligations are unsecured and subordinate to yours under the law.

 

That means that under the law the UAW is entitled to exactly nothing until you get every dollar you are owed.

 

President Obama and Geithner have declared that it does not matter what the law says - they are going to do whatever the hell they want - and what they want to do is SCREW YOU.

 

They just got done ramrodding Chrysler bondholders with the exact same "deal", shoved down their throats, and allegedly enforced with threats of tax audits and other jackbooted actions if the bondholders resisted in court.

 

To be clear: You have every right, under the law, to receive full value for your bonds before anyone else gets paid for so much as one penny of the subordinated or unsecured debt owed to them, INCLUDING THE UAW.

 

You accepted a lower coupon in exchange for what was represented to be less risk as a consequence of this protection.

 

Now, after the fact, you are being robbed just as clearly as you would be if President Obama and Tim Geithner came into your house at 3:00 AM with automatic weapons and shoved them up your nose, stealing every penny you had.

 

I ask you this essential question:

 

If President Obama and Tim Geithner will steal from you in this fashion, literally at gunpoint, do you believe that your 401k or IRA will not similarly be confiscated whenever our government decides it wants to steal from you on similar "terms" - or when it suddenly "needs" some money (like when the bond market has had enough of this crap and stops being willing to finance a nearly $2 trillion annual deficit!)

http://market-ticker.denninger.net/archives/P2.html

 

_____________________________________________________________________________________

 

Another article supporting this. The numbers are different, but the results are the same

 

 

Chrysler and the Rule of Law

 

The Founders put the contracts clause in the Constitution for a reason.

By TODD J. ZYWICKI

 

The rule of law, not of men -- an ideal tracing back to the ancient Greeks and well-known to our Founding Fathers -- is the animating principle of the American experiment. While the rest of the world in 1787 was governed by the whims of kings and dukes, the U.S. Constitution was established to circumscribe arbitrary government power. It would do so by establishing clear rules, equally applied to the powerful and the weak.

 

Fleecing lenders to pay off politically powerful interests, or governmental threats to reputation and business from a failure to toe a political line? We might expect this behavior from a Hugo Ch

[DirtyDigz 1,812]

That first bit is from Karl Denninger. He's a bit mercurial, but a real sharp guy when it comes to the financial markets. He called FNMA (Fannie Mae) going insolvent at least 6 months before the government bailed them out. He also saved me from taking a 50% hit last year when the markets crashed, because I got the eff out (and actually made money by going short).

 

I highly recommend reading his stuff if you're involved in investing at *all*. It's worth your while to go back through the archives on his site. He also mostly leaves politics out of it, which is refreshing. (he bashed both Bush and Obama).

 

http://market-ticker.org/

[UHF 0]

The Gov should have let them all go under and been done with it.

[Lublin 3]

The Gov should have let them all go under and been done with it.

 

They'll go under anyway. Give it time.

[tbtrout 141]

The Gov should have let them all go under and been done with it.

 

They'll go under anyway. Give it time.

 

Yeah, with all of our money :evil:

[Maksim 1,504]

yay, a post right up my alley.

 

I have plenty of clients with GM bonds they bought 10 years ago or more.

 

GM hasnt missed a bond payment. If I was holding it personally, which I dont, I hold ford, I would keep holding those bonds as long as you can. If bankruptcy happens, you will probly get more from them that way rather than trading it in.

 

Why would anyone in their right mind trade in their rights as a bondholder to step down the ladder and become a shareholder which has almost 0% recovery rate in bankruptcy.

 

If you want info, PM me, the government says I cant provide financial advice to the general public over the message boards. 8-)

[PoorSoulInJersey 1]

Even if the government wasn't involved, bonds have risks just like stocks do. It's entirely possible for a company to go belly up and the bond holders get little or nothing.

 

It looks like there's a choice for bond holders: let GM go out completely and get nothing or have the government prop them up and at least get a little. Both options are pretty bad.

 

Personally, I think the government should stay out of it. Almost any time the government gets involved in business or the open market, they make things worse, not better. If a company is so badly run that it can't stand on its own, tax payer help just prolongs the agony. We're not talking about Iaccoca asking for a loan, here. We're talking about a big old handout with lots of strings attached.

[Maksim 1,504]

Even if the government wasn't involved, bonds have risks just like stocks do. It's entirely possible for a company to go belly up and the bond holders get little or nothing.

 

It looks like there's a choice for bond holders: let GM go out completely and get nothing or have the government prop them up and at least get a little. Both options are pretty bad.

 

Personally, I think the government should stay out of it. Almost any time the government gets involved in business or the open market, they make things worse, not better. If a company is so badly run that it can't stand on its own, tax payer help just prolongs the agony. We're not talking about Iaccoca asking for a loan, here. We're talking about a big old handout with lots of strings attached.

 

 

No no.... let GM go bankrupt and the bond holders will get more through bankrtuptcy than what the government is willing to.

 

Lehman BK is goign to return about 23 to 25cents on the dollar for bond holders.

 

Government wants people to redeem bonds at 15 to 16 cents on teh dollar. Point is. GM has alot more assets that are backing those bonds.

Factories, inventories, patents, real estate. there is way more than 16 cents on the dollar.

[kenw 293]

I thought that unsubordinated debt was required by law to be paid off at 100 cents on the dollar and that anything left over was to be distributed to the remaining creditors.

 

I realize that "required by law" doesn't mean anything any more, but then what incentive is there to invest in such instruments?

 

Ken

[Maksim 1,504]

I thought that unsubordinated debt was required by law to be paid off at 100 cents on the dollar and that anything left over was to be distributed to the remaining creditors.

 

I realize that "required by law" doesn't mean anything any more, but then what incentive is there to invest in such instruments?

 

Ken

 

 

Well, the corp structure is so.

 

Senior Secured (secured debt)

Senior Unsecured (senior debt)

Unsecured Bonds (most corp bonds)

Pref. Equity (Pref stock. Prioritity over regular shareholders, div must be paid here before common shareholders get any divs)

Equity (common shares.)

 

anything secured, ie mortgages, etc will just take those assets, then they go down the line with anything left over. Alot of the times, the assets are worth alot less. In a typical bk, unsecured bondholders get about 60 to 80% recovery rate. Pref 40% or so.

 

commons are typically all wiped out. Up to bankruptcy court to work out the details.

[kenw 293]

Got it. Thanks.

 

I feel bad for the investors. They're going to draw the short straw on this.

 

K

[Maksim 1,504]

investors of common shares? Yeah.... but that is why the stock price is $1 and change. what the government wants to do is to get the bondholders to give up their rights, and to convert their bonds into shares at 16 cents on the dollar.

 

The GM bonds, havent missed a payment and are paying. No one in their right mind should give up their rights as a creditor to GM to take a stake in the company with such a diluted base.

 

so you have plenty of smart money and hedge funds that own GM bonds, and the government is putting pressure on them to conver that into GM shares... the smart money figures that when GM goes bankrupt.... there will be more left over for the bond holders than what the government wants them to convert it into shares, or what the market is pricing them at now.