For any who might be interested, we had a pretty intense back and forth over at Seeking Alpha regarding my article Defending the UAW, Felix Salmon is Forced to Abandon Logic. Essentially, I was at pains trying to explain why the UAW has done such a major injustice to the US. The link to the back and forth comments on Seeking Alpha is here.
The comments made me think that for those who hold similar economic views as myself, we really have to explain ourselves better in this world...
For example, to put in a very simplistic way, to me its a shame that somehow communism is generally seen as more compassionate than capitalism. Or that people who are pro-business are seen as what prevents other people from rising out of poverty despite the fact that history has shown pro-business environments to lift people out of poverty the fastest, and with far greater effectiveness than even the best charities. Or a few years back when French students opposed a new law making it easier to fire (and thus hire) new workers, thinking that they were helping those with less opportunities (in a country where employers are very very cautious to hire due to the onerous long term liabilities involved once you taken somebody on).
Frequently people with good hearts kill the very policies that can help the people they worry about. Anyways, I thus welcomed the chance to articulate myself over at Seeking Alpha, despite it being 4:40AM for me, and thought it was worth highlighting here as well. Its great to be back to regular blogging.
I notice you don't post comments..
But if you did, you could do worse than to engage this.
Granted, I think he is 100% right and you are 79% wrong. Maybe 89%.
But still, I am open to argument.
But only if you post comments.
Very good post, thanks a
Very good post, thanks a lot.
Apologies, I didn't see the
Apologies, I didn't see the comments for approval until now. I might reply on this further once I have time to read the link. But it seems that The Epicuran Dealmaker is not using reason to argue his point, but rather admitting its wrong but saying "its just politics, accept it and move on." That to me doesn't prove a point. He doesn't present a real argument, only an excuse.
oh, please
The UAW did its job, representing the interests of its members, roughly a zillion times better than big-3 management did its, representing shareholders.
As for the Chrysler bankruptcy, google "cram-down" and exclude recent mortgage-related hits. A distressed debt investor who doesn't know what bankruptcy courts can and will do deserves to wash out of the industry. Capitalism isn't a charity event. Or so I hear.
What you are saying is that
What you are saying is that debt investors should not have confidence in the senior claims granted them in their contracts over other company stakeholders. It is true that now many debt investors will be less confident in their contractual rights. But this is a horrible thing for the US and long term state of the economy. Confidence in the rule of law is extremely important and an achievement that few countries achieve to the degree which the US has. And confidence takes decades to build, but only years to destroy.
I am saying..
..that capitalism is not the freaking Special Olympics. Cramdowns do not flout "[c]onfidence in the rule," cramdowns are the law. If you invest in something, you have to know the law. These senior-claims investors, I posit, knew the law full well, and are playing a purely political card that is contrary to the rule of law.
Love 'em or hate 'em, they are not defending contractual rights. Their rights ended when the company hit the bankruptcy court, and any idiot knows that.
This is incorrect. It is in a
This is incorrect. It is in a bankruptcy when senior creditors' rights come to the forefront. They don't lose their rights in bankruptcy, in fact they have the most senior claim on the company's assets during the bankruptcy process, above pension claims. But what has happened here is that the government has pressured them via veiled threats to forgo the use of their rights. In a standard bankruptcy, without government threats vs. the creditors, the UAW's contracts would likely be gone. Creditors have nothing to gain by politicizing the situation, they are the most senior by law. Its the UAW who is playing their political cards.