News today that GM is about to be taken by its new management (the US Government) into bankruptcy. Weeks ago in this blog, I predicted that this (bankruptcy) would happen after a particularly strong speech by the President on the issue. Some thought I was being suckered (especially Goldwater's Ghost), and while it appears that I got the legal call right, I clearly blew every other part of the call. As things turn out, "structured bankruptcy" is another term for "government bailout" and the senior debt-holders are going to get screwed in favor of the unions.
This bankruptcy is not what I envisioned. The heavy hand of the government in this issue brings into question the validity of the entire bankruptcy process. This was not "creative destruction". This is taxpayer-funded redistribution of wealth.
Friday, May 22, 2009
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2 comments:
"This was not "creative destruction". This is taxpayer-funded redistribution of wealth."
Yep; but you can't say he didn't warn us...
This serves as a lesson to firms not to miss the inflection point.
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