Is The New American Business Model All For One And One For All? Sounds Like Something Other Than Capitalism!

President Obama Implied That The Hedge Funds Protecting Their Investor's Interests In The Chrysler Deal Are Being Somehow Un-American

I read this on another blog, and it really couldn't be put much better. The idea of being a senior creditor is that you are in the highest position in the pecking order of creditors. It gives you the opportunity to push your case in bankruptcy if you think that the offer being made to you is not fair or sufficient. This is not a commentary on the hedge funds and the way that they do business, but on the way that America has always done business.

It seems under our new socialist way of approaching things, a senior creditor should take whatever is being offered to be one of the guys, not make waves, etc. Sounds a little like our new foreign policy as well.

"The latest news is that some senior creditors of Chrysler, mostly hedge funds, don’t want to voluntarily agree to accept 33 cents on the dollar for their debt. Obama criticizes them for not being willing to “sacrifice” for the best interests of the country.

It seems to me that when someone buys senior debt, they agree to a lower return on the assumption that, if there’s a bankruptcy, they get paid before everyone else. Why would they want to accept 33 cents on the dollar when billions are going to be paid to junior creditors and Chrysler will continue to recognize various long term contracts (such as union contracts) which normally are not recognized as valid interests under bankruptcy law?" (Half Sigma)