24 May 2009

To Disagree IV

This is more on Obama's criticism of those Chrysler debtholders that did not want to accept the government's proposed restructuring of the carmaker.

The implications of the governments abrogation of long-respected bankruptcy law will be felt in coming months and years.

More on the issue, from The Economist-

The collapse of Detroit’s giants is a tragedy, affecting tens of thousands of
current and former workers. But the best way to offer them support is directly,
not by gerrymandering the rules. The investors in these firms are easily
portrayed as vultures, but many are entrusted with the savings of ordinary
people, and in any case all have a legal claim that entitles them to due
process. In a crisis it is easy to put politics first, but if lenders fear their
rights will be abused, other firms will find it more expensive to borrow,
especially if they have unionised workforces that are seen to be friendly with
the government.


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