Friday, May 22, 2009

GM to Join Chyrsler in Bankruptcy

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.

2 comments:

Goldwater's Ghost said...

"This was not "creative destruction". This is taxpayer-funded redistribution of wealth."

Yep; but you can't say he didn't warn us...

bbauer said...

This serves as a lesson to firms not to miss the inflection point.

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