The Fearsome Barrel Monster

This is definitely the most creative use of construction barrels I have seen. Hopefully the charges against the North Carolina State University student get dropped.

Arm Twisting for Chrysler

The government wants to change the outcome of well established bankruptcy procedures. This is not about giving away Chrysler to another entity, foreign or otherwise. This is about property rights and may well impact everyone in the country.

Bondholders that are senior (vs. senior subordinated, unsecured, etc.) are entitled to being made whole before any junior creditor. This is screwing investors who accepted lower interest because they would be the first reimbursed even in bankruptcy. This was not necessarily a poor investment based on existing rules. By changing the rules the government is telling all bondholder that senior is the same as unsecured. Imagine the implications for future bond sales by other companies and the effect this will have on borrowing costs. Investors may tend to stay away from any corporate bonds or bond funds, particularly those holding industrial, unionized companies - at least until this is resolved.

The retort to the suit by the government is “this is better for the economy” must not stand otherwise any effective property right you may believe you have is moot. Tthe same argument about your how much you make, where you work, how much free time you have, where you live, etc.

This is not about protecting the common man, this is about protecting every man. It does not matter that the small investors are fighting back, that is their right. Be happy someone is fighting back. J.P. Morgan and other TARP (bailout) recipients hold a lot of automotive bonds, but don’t look for them to join the fight as a bond holder.

More Regulation?

My concern is we have not enforced our existing regulations and we allowed lobbyists for banks to convince Congress to pass favorable laws.  A Federal regulator have even allowed blatantly illegal activities regarding backdating capital on the balance sheet, from a bank regulator that did the same thing in the S&L crisis.  See the Wall Street Journal for details.

Congress and the President want even more regulation.  That means more regulators.  That means more duds like the video below ensuring(???) we don't get burned as taxpayers.  The Federal Reserve has committed over $9.7 TRILLION dollars that the taxpayers ultimately backstop.  That is over $30,000 liability on every single person in this country.  More regulators is very unlikely to help.  How about better regulators?  Lots of Wall Street people are without jobs and they know how business is done.

Watch the video and you decide if more regulators will help.  By the way - stuff like this is quite common for our regulators for those who don't regularly see "how the sausage is made."

 

Sources:

Mises.org, The Fox Watching the Henhouse,  http://blog.mises.org/archives/010086.asp

Wall Street Journal, Regulators Let IndyMac Backdate Infusion, http://online.wsj.com/article/SB122998621544328009.html