GM- Government Motors

Most are aware of this already but there are some unintended consequences that you might find troubling...

Source

General Motors became Government Motors with the news today about the ‘proposed’ pre-packaged bankruptcy. The GM news tonight of how the government will take controlling interest in the “new” or good parts of GM out of bankruptcy leaving the crappola for the bondholders we can pretty much assume the 5th Amendment is now officially toast. I guess the 1st, 4th and what is left of the 10th is next. The bondholders of GM are about to take a major reaming and that is going to cause a tidal wave, not a ripple, throughout our nation. Let me try to explain how and why this is worse than the Obamanation is making it out to be

Please read the article if you have the time and the inclination....almost time for the pitchforks.....almost

It is a fundamental principle of US economics that bond holders are first in line to collect when a corporation fails. What the Obama administration is doing is re-writing the law as they go along.

Generally speaking, the way people get paid out from a failed corporation is that the bond holders get paid first, then preferred shares get paid out, and if anything is left over, the common share holders get paid.

With respect with creditors, secured creditors get paid first. Simple example: You go bankrupt. You own a parcel of real estate other than your home. In bankruptcy, the purchase money lender (the bank who gave you a loan to buy the real estate) gets paid first from the sale of that parcel of land. Then if any money is left over, secondary secured creditors (e.g. the bank that gave you a second mortgage on the parcel) get paid. Finally, if there is anything left over, unsecured creditors (credit cards, etc...) get paid.

What Obama did with Chrysler, and is doing with GM, he is putting the unsecured creditor (UAW) ahead of the purchase money lender (bond holder) in order of priority. It even more overreaching than anything Bush did in eight years.

Disclaimer: nothing in this post should be construed as legal advise in any way whatsoever. If you are thinking about bankruptcy, consult with an attorney.

....and the silence is deafening...
.............................................

Originally posted by RolandBrichter
....and the silence is deafening...
.............................................

People are into their own little niches. Some people only care about swine flu, some people only care about NWO or Bilderberg.

No one notices when they are being raped out in the open by the government. Everyone is so busy trying to look behind the curtain that they are not seeing what is happening in plain sight.

Originally posted by finemanm

Originally posted by RolandBrichter
....and the silence is deafening...
.............................................

People are into their own little niches. Some people only care about swine flu, some people only care about NWO or Bilderberg.

No one notices when they are being raped out in the open by the government. Everyone is so busy trying to look behind the curtain that they are not seeing what is happening in plain sight.

Well, most of the posters are not tied to GM in any way.

The OP sounds as if we were in some Constitutional crises due to changes in priorities concerning a bankruptcy procedures.

If there is something that may concern wider audience, then it's this:

The source, who was not cleared to speak with the media and would not be identified, said the U.S. government would pay for the assets by assuming the automaker's $6 billion of secured debt and forgiving the bulk of the $15.4 billion of emergency loans that the U.S. Treasury has provided to GM.

What really sucks and is never mentioned anywhere is this:

In addition, the government would extend a credit line to the new company, the source said.

www.reuters.com...

That means, the taxpayers will support GM and offset all losses due to bad desicion making or poor engineering. GM is secured forever and ever, as the the Dow vouches for:
data.cnbc.com...

Great not only are the people getting screwd out of tax money and the bond holders aren't getting their fair share... we're going to have even crappier cars engineered by the government's finest!

reply to post by stander



Yes, this IS a constitutional crisis....most folks just don't have the desire or inclination to put the pieces together..I'm most certainly not concerned with what may appeal to a wider audience...I'll leave that to politicians

[edit on 20-5-2009 by RolandBrichter]

Originally posted by RolandBrichter
reply to post by stander

 

Yes, this IS a constitutional crisis....most folks just don't have the desire or inclination to put the pieces together..I'm most certainly not concerned with what may appeal to a wider audience...I'll leave that to politicians

[edit on 20-5-2009 by RolandBrichter]

Well, you are free to put the pieces together and link the Fifth Amendment to Chapter 11 bankruptcy proceedings.

No person shall be held to answer for a capital, or otherwise infamous crime, unless on presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

reply to post by stander


Okie Dokie, I'll give it a whirl....

The Supreme Court, in Louisville Joint Stock Land Bank v. Radford, found that creditors have a 5th Amendment right to property that cannot be set aside by a change to the law (such as TARP):

1. The bankruptcy power, like the other great substantive powers of Congress, is subject to the Fifth Amendment.

2. Under the bankruptcy power, Congress may discharge the debtor’s personal obligation because, unlike the States, it is not prohibited from impairing the obligation of contracts; but it cannot take for the benefit of the debtor rights in specific property acquired by the creditor prior to the Act.

3. The Fifth Amendment commands that, however great the Nation’s need, private property shall not be taken even for a wholly public use without just compensation.

4. If the public interest requires, and permits the taking of property of individual mortgagees in order to relieve the necessities of individual mortgagors, resort must be had to proceedings by eminent domain, so that, through taxation, the burden of the relief afforded in the public interest may be borne by the public.

5. The provisions added to § 75 of the Bankruptcy Act by the Act of June 28, 1934, known as the Frazier-Lemke Act, operate, as applied in this case, to take valuable rights in specific property from one person and give them to another, in violation of the Constitution.

There it is, clear as a bell...with precedence....what Obama is doing with Chrysler and GM bondholders violates their 5th Amendment rights...and if this is not challenged we might as well throw the rest of the Constitution away...

edit for SP


[edit on 20-5-2009 by RolandBrichter]

I figured this would happen when Obama fired the head of GM. I still can't figure out why he is closing the dealerships as they are franchised, so they really don't cost the company alot of money, it's not as if GM or Chrysler is directly paying the employees and overhead expenses...those are paid by whomever owns the franchise. Of course they do pay out to the dealers for warranty repairs and incentives, but they are going to have to pay them regardless of how many dealerships there are, and when there are fewer dealerships, people will just have to drive further, but it still comes out the same. In my opinion, all it has done is put alot of people out of work. Over the past few years, Ford closed some of the dealers, and they also refused the tarp money, so it seems to me, they had some foresight into this.

This is not good, no matter how you look at it and if they can do this to the auto manufacturers, what will they go after next? And the fact that they change the rules as they go...quite scary indeed. I'm sure eventually it will reach further than auto manufacturers and then what.

Just a another step in losing our constitutional rights, people should be very worried.

Glad I work for an import dealer and all we have is Fords.

[edit on 5/20/09 by opal13]

Originally posted by RolandBrichter
reply to post by stander

 

Okie Dokie, I'll give it a whirl....

The Supreme Court, in Louisville Joint Stock Land Bank v. Radford, found that creditors have a 5th Amendment right to property that cannot be set aside by a change to the law (such as TARP):

1. The bankruptcy power, like the other great substantive powers of Congress, is subject to the Fifth Amendment.

2. Under the bankruptcy power, Congress may discharge the debtor’s personal obligation because, unlike the States, it is not prohibited from impairing the obligation of contracts; but it cannot take for the benefit of the debtor rights in specific property acquired by the creditor prior to the Act.

3. The Fifth Amendment commands that, however great the Nation’s need, private property shall not be taken even for a wholly public use without just compensation.

4. If the public interest requires, and permits the taking of property of individual mortgagees in order to relieve the necessities of individual mortgagors, resort must be had to proceedings by eminent domain, so that, through taxation, the burden of the relief afforded in the public interest may be borne by the public.

5. The provisions added to § 75 of the Bankruptcy Act by the Act of June 28, 1934, known as the Frazier-Lemke Act, operate, as applied in this case, to take valuable rights in specific property from one person and give them to another, in violation of the Constitution.

There it is, clear as a bell...with precedence....what Obama is doing with Chrysler and GM bondholders violates their 5th Amendment rights...and if this is not challenged we might as well throw the rest of the Constitution away...

edit for SP


[edit on 20-5-2009 by RolandBrichter]

I didn't ask for an opinion of a state court, nor I'm inrerested it in any ruling outside the Supreme Court of the United States in the matters of the US Constitution. I asked you to put the pieces together.

Bondholders or any other investors make their descision especially those who have found credit-default swaps too attractive to resists. They will surely not share their profit with me, and so I would be the last one to advocate for them. The US Constitution wasn't written to protect greed -- I can read.

[edit on 5/21/2009 by stander]

reply to post by stander


Ummm....not sure why they should share their profit with you...it's not yours, is it?

You don't seem to mind them sharing their losses with you, which is what Obama is forcing down our throats...

I don't really care if the bond holders lose ALL of their money, a bad investment is a bad investment, but the way this administration is forcing illegal cramdowns is simply unconstitutional...they are ignoring the law and simply ruling by executive fiat...do you like having a king telling you what to do without possibility of redress?

If you can read, then you understand the the Constitution is written as "BLACK LETTER LAW"....which means that the words therein are not merely a suggestion.....this whole issue is just a UAW payoff scheme and it will fail when it reaches the Supreme Court via challenge...my concern is, if the SC refuses to turn this over, then where does it end?




[edit on 21-5-2009 by RolandBrichter]

I'm in agreement that the .gov is acting in an unconstitutional in regards to how the GM bondholders are being treated. That the UAW will be rewarded more for their UNSECURED investment in GM than the bondholders who should get rights of first recovery, is pure evidence that our nation has crossed the threshold into banana republic.

I currently have a Dodge and a Chevy parked in my front yard, both bought new several years ago. I've only bought US branded cars new in my adult life. I will not even consider purchasing a GM or Chrysler branded vehicle new ever again. To hell with them. I will consider buying a Ford if they are able to remain off of the taxpayer teat, but I fear that they are in a tough spot since their domestic competition is now a taxpayer sponsored enterprise, and they will be effectively competing against the government. Good luck to Ford but I fear they will not be able to hold out forever unless things turn quickly on the job front.

I'm most interested in unintended consequences of the GM/Chrysler bailouts. One that I am already hearing rumblings about is a new premium on bonds for any heavily unionized business. I've already heard that a hedge fund or two are considering not buying the bonds of heavily unionized companies due to the risk of future GM/Chrysler like treatments. I could easily see investors starting to require higher interest from companies that are heavily unionized, and one could hardly blame them given what happened to GM/Chrysler bond holders.

reply to post by jefwane


We must run in the same circles of opinion....I've been reading and hearing those rumblings as well.....hats off to Ford, but it seems that they are swimming against the tide here.....If unions receive preferential treatment no matter what the law states...then you can say good-bye to cheap capital investment and without that, the whole party is over...

But I think that is the Obama administration plan....

Originally posted by RolandBrichter
reply to post by stander

 

Ummm....not sure why they should share their profit with you...it's not yours, is it?

But you seem to be sure that if they made a bad investment move, I should open my ear to their whining. I don't see the committee of GM bondholders to address this issue:

In addition, the government would extend a credit line to the new company and forgive the bulk of the $15.4 billion in emergency loans that the U.S. has already provided to GM, the source said.

The government takes the money from me through taxes and then it forgives the loan. Is this "constitutional?"

GM has said it is negotiating to give the UAW about 39 percent of its stock in exchange for roughly half the $20 billion it owes to the trust. Half the stock would go to the government, with 10 percent going to bondholders in exchange for wiping out $27 billion in GM debt. The remaining 1 percent would go to current shareholders.

Bondholders have resisted the 10 percent offer, saying they're getting too little for the amount of money they are owed. The offer expires Tuesday but could be extended.

Let them negotiate.

As I said. The Fifth doesn't protect those who were given the benefit to negotiate (defend themselves); it was written to protect those who were denied the right to negotiate, like the taxpayers whom the government never asked if it was okay to "forgive" the GM loans.

I would have to be insane to advocate for dumb investors who never saw what was coming.



[edit on 5/21/2009 by stander]

Originally posted by stander

As I said. The Fifth doesn't protect those who were given the benefit to negotiate (defend themselves); it was written to protect those who were denied the right to negotiate, like the taxpayers whom the government never asked if it was okay to "forgive" the GM loans.

I would have to be insane to advocate for dumb investors who never saw what was coming.

[edit on 5/21/2009 by stander]

I completely agree with you.....however.....were the bondholders of Chrysler allowed to negotiate? Perhaps, while looking down the barrel of a gun.....

Will GM bondholders be allowed to negotiate? We'll soon see, but we already know how the Obama administration "negotiates".

And I'm certainly not advocating that the moron investors and bondholders should in any way be "made whole".......but I do see a violation of abrogation here...and it seems to be the recurrent M.O. of this administration

reply to post by RolandBrichter

Obama doesn't want any bankruptcy but he cannot force the resolution of the issue. If the bondholders refuse the share percantage offer and also refuse to negotiate other options, there is a pretty good chance of Chapter 11 proceedings. Then the bankruptcy judge will decide. (Bankruptcy judges rarely seek tutoring in the matter of Constitutional Law -- there is no need for it.)

All the parties involved in the negotiations are not bound to make decisions according to the rules that govern over Chapter 11 proceedings regarding the asset distribution -- GM has not filed for Chapter 11 yet. So I don't understand what is that fuss about the pecking order being breached.

Maybe Obama will work out some fancy deal with the Treasury and slips the bondholders enough taxpayers' money to take the 10% stake in the new-improved GM.

I disagree, but I like your style
I always appreciate a nice linear argument,and one who debates for the sake of it.... even though I find it impossible that you really buy the case you're attempting to make

Originally posted by stander
Maybe Obama will work out some fancy deal with the Treasury and slips the bondholders enough taxpayers' money to take the 10% stake in the new-improved GM.

Nothing would surprise me at this juncture....

reply to post by stander


What Obama is doing is re-writing the law. That is unconstitutional. Under our system of government, the legislature (congress) writes the laws, and the executive (president) executes and enforces the laws.

This all started under Bush, when he essentially expanded the executive branches power by engaging in conduct that is meant to be in the hands of the legislature. Obama is doing this ten fold.

The reason that this was a good country to do business was because the laws and regulations concerning business where predictably written, enforced and followed.

If you lent money to a corporation in the US, you knew that under the law, you were entitled to collect in a particular priority under the bankruptcy laws.

What B. Hussain Obama is doing is changing the rules, and making the market unpredictable. Not only is this bad for business, its illegal and unconstitutional.

Read this article for a good analysis of the law that Obama is completely disregarding.

But there’s one word that you can’t call the Chrysler bankruptcy package: legal.

The plan would overturn basic rules of bankruptcy by setting up a sort-of sale to sidestep pesky legal requirements. It would bulldoze well-established rights of secured creditors, property rights the U.S. Constitution guarantees.

Source

On Bloomberg radio this morning, I heard an economist state that what Obama is doing will make it much more expensive, if not impossible for large corporations to get credit now because creditors do not know what to expect under the law these days.

Bad for business means bad for economy, which in turn means bad for you and me.



[edit on 21-5-2009 by finemanm]

Originally posted by finemanm


If you lent money to a corporation in the US, you knew that under the law, you were entitled to collect in a particular priority under the bankruptcy laws.

What B. Hussain Obama is doing is changing the rules, and making the market unpredictable. Not only is this bad for business, its illegal and unconstitutional.

There is nothing much I can do here. You guys will continue to blatantly lie, the Goebels style, about GM filing for bankruptcy and Obama wrestling the case away from the bankruptcy judge to preside over the ways things get settled whereby violating each and every amandement in the Bill of Rights.

GM has not filed for bankruptcy yet and the haggling is being shaped by the way out of court cases are settled -- through negotiations.

There is a substantial difference between "unfair" and "unlawful," so let see how the people involved and aware of what is going on chose the case.

May 21 (Bloomberg) -- The U.S. government’s reorganization plan for General Motors Corp., the nation’s largest automaker, is “blatantly unfair” to bondholders, said one investor, Mark Modica.

“If we just look at the offer, we have the Treasury and the UAW forgiving $20 billion of debt and getting 89 percent of ownership, and the bondholders are forgiving $27 billion and getting 10 percent ownership,” Modica, a bondholder, told Bloomberg Television. “If anyone thinks that’s fair, they’re not a GM bondholder.”

Modica, a business manager at a Saturn dealership in Chalfont, Pennsylvania, is a member of a group of GM debt holders calling themselves the “Main Street Bondholders.” The investors are in Washington to seek meetings with President Barack Obama’s auto task force and members of Congress to discuss the plan for GM’s revival.

The bondholders are free to walk out from any deal and force GM to file for bankruptcy. But I would try to squeeze the best out of the negotiations, because when the judge swings the hammer, that's it.