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Melonie
06-03-2009, 01:31 PM
oops ... it appears that Obama may run up against some minor problems re his 'bending' of the US constitution to facilitate the Chrysler bankruptcy / bailout after all ...

(snip)"June 3 (Bloomberg) -- Chrysler LLC’s plan to sell its best assets to a new entity on June 5 was put on hold by a federal appeals court that will hear arguments that day by creditors challenging terms of the deal.

U.S. Bankruptcy Judge Arthur Gonzalez in New York had said the sale to a group led by Fiat SpA could be completed at noon June 5. He moved the date up from June 15, noting in an order that Chrysler is losing $100 million a day as it awaits a sale designed to make it a viable company in world markets.

The Manhattan-based appeals court is to hear the challenge to terms of the sale by a group of Indiana pension funds at 2 p.m. and written arguments are due by noon tomorrow, the appeals court said in an order late yesterday.

“I expect they’ll lift the stay and let the sale close,” said Stephen Lubben, a bankruptcy-law professor at Seton Hall University in Newark, New Jersey. “I think the courts all understand that the consequences for Chrysler are dire if the deal with Fiat falls through.”

Indiana Treasurer Richard Mourdock said he was pleased the Court of Appeals agreed to hear state funds’ arguments that they and other secured creditors have been made secondary to government-preferred unsecured creditors “in contravention of longstanding bankruptcy law.”

“Indiana retirees and Indiana taxpayers have suffered losses because of unprecedented and illegal acts of the federal government,” Mourdock said today in a statement.

TARP Funds

Illegal acts include using Troubled Asset Relief Program funds, designated for aid to “financial institutions,” in the Chrysler sale, the treasurer said.

Gonzalez, in approving the sale May 30, rejected objections, including those of the Indiana funds, that hadn’t been withdrawn.

“Not one penny of value of the debtors’ assets is going to anyone other than” lenders who deserve it, the judge wrote. "(snip)



At issue of course are two constitutional provisions. The first involves Constitutional 'takings clause' violations whereby the gov't is effectively 'seizing' the assets of private investors (i.e. the owners of Chrysler corporate bonds ) without fairly compensating the owners of those assets. The argument essentially boils down to Chrysler corporate bondholders being paid something like 18 cents on the dollar for their bonds, while Chrysler sub-suppliers will be paid in full, while Chrysler UAW employees will be paid at something like 80 cents on the dollar for promised Chrysler benefits etc. This point was originally raised by some big hedge fund investors, who were quickly shouted down in mainstream financial media as being 'greedy bastards'. However, other Chrysler bond holders i.e. state employees and pensioners of all sorts of state and municipal retirement funds, have successfully escaped the 'greedy bastards' label and have managed to successfully appeal the bankruptcy auctioning of Chrysler's assets in hopes of receiving a 'fairer' percentage.

The second involves constitutional authority of the US gov't to provide financial support at all to non-financial business entities ... or to selectively provide financial support to one non-financial business entity, while not providing 'equal treatment' to similar non-financial business entities. If this point gains any traction, it opens Pandora's box for the foreign owners of US vehicle assembly plants (i.e. Honda, Kia, Toyota, BMW) to apply for their 'fair share' of US gov't financial support. The main grievance is of course the US gov't subsides being provided to GM and Chrysler auto loan arm GMAC ... which in turn allows GMAC to write new loans to 'subprime' buyers of new Chevy's and Chryslers at interest rates which are lower than those available when purchasing a Honda, Kia, Toyota, BMW etc. Thus Honda, Kia, Totota, BMW etc. must now subsidize interest rates on new US loans to purchase their autos out of their own corporate pockets to remain competitive (i.e. the US gov't is now providing an unequal / unfair subsidy to the two auto manufacturers which it now 'owns').

Obviously, the eventual results of this successful appeal will also directly apply to GM's bankruptcy proceeding as well.

~

Eric Stoner
06-22-2009, 09:38 AM
"Item- The $7500 tax credit for purchase of a GM Volt is greater than the income taxes paid by over 80% of American families.

Item- The same government that vowed to make Amtrak efficient and free of further subsidies in 1990 has vowed to do the same with GM. We're supposed to forget that Amtrak has LOST $23 BILLION in that time. And the main reason Amtrak is unprofitable is because Congress prevents it from cutting unprofitable routes. Just as Congress will do with plant closings; future plant sitings; content requirements and of course CAFE standards. Look what they do with the Defense budget. Procurement and base sitings are done based on politics and not what is best for the national defense. "


I TOLD YOU SO. I TOLD YOU SO.

GM announced it was closing a parts distribution center in Norton, Mass. It is located in area represented by Barney Fwank. He talked to GM's CEO Fritz Henderson and now it will stay open for at least 14 months. In a tragi-comic twist, Fwank claims that his motive was ENVIRONMENTAL. If the Norton facility were closed, parts for new England would have to be trucked from Philadelphia. And Fwank claims that there is no worry about any disturbing pattern as he did NOT talk to the Obama Administration but went to GM directly to help sve the planet.

Not to be outdone, Senators Diane FrankenFeinstein and RINO Susan Collins wept in the WSJ that their beloved "Cash for Clunkers" program has been hijacked by lobbyists who LOWERED the fue economy standards needed to qualify for the Government bribe, um I mean
subsidy.

Just the latest on the Government Motors front.

Melonie
06-22-2009, 09:46 AM
^^^ I elaborated on the side effects of the new 'cash for clunkers' program in a separate thread ! Clearly it favors GM / Chrysler vehicles.

Melonie
06-22-2009, 10:05 AM
and here's the LATEST in the Government Motors saga ...

(snip)"In an attempt to get all the dealers who did not receive the "thin letter" to get on board with the restructuring process, the bankrupt automaker had sent to the surviving dealers highly secretive amended Participation Agreements (presented below) with extensive "No Protest" clauses, which would require dealers to stock more inventory, stop selling non-GM vehicles and accept new or relocated GM dealerships nearby without protest. Any disagreement with the Agreement, and the dealer would find himself joining the 1,300 dealers already terminated.

However, if GM was hoping this one would simply slide with nobody noticing, it was quite wrong. On Friday, the Ohio Attorney General joined in the objections of several other state representatives, notably the DOTs for Texas and Nebraska, in claiming that the newly enforced requirements [ clearly violate state laws - sic ]. Ohio's AG Richard Cordray, a Democrat, objected to the 363 sale in that the Participation Agreements "unquestionably violate Ohio law and are completely contrary to the purpose of having state franchise laws." The AG objection notes that Ohio laws prohibit manufacturers from forcing dealers to dump other brands or accept inventory that they did not order: a key stipulation of that any continuing dealers have to agree with. According to Cordray, GM is presenting dealers with an ultimatum: "lose the protections of Ohio law, or lose your business."

And while no rational dealers have a desire to sign this agreement, none have elected to voice their displeasure over it publicly over fears of losing their livelihood.

Additionally, as The Plains Dealer points out, other concerns the AG raised in demanding a delay of the sale include:

- whether GM can dump liabilities under the state's lemon law for bad cars. The state asked for GM to say directly whether it will take lemon law claims into the new company.

- GM's obligations for extended warranty contracts and the company's possible plans to sell customer data to outside companies.

- properties GM plans to sell in Ohio. The Ohio Environmental Protection Agency monitors several GM sites for environmental concerns.

- whether the company that emerges from bankruptcy will be self-insured, like GM, instead of paying into the state's program.

- GM's request forbidding creditors from withholding payments to GM to offset money the company owes them. The state Department of Taxation wants to hold back tax refunds to offset liabilities.

As Ohio is a major voice in all events automotive, one can only hope Judge Drain has a little more respect for the bankruptcy process than his much more follicularly challenged compadre Gonzalez, who oversaw the joke that was the Chrysler bankruptcy"(snip)

from

You can read the objection filed by the Ohio A.G. at . IMHO it's a real eye-opener in regard to the federal gov't / GM attempting to ride roughshod over Ohio (and most other) state franchise laws !!!

~

Eric Stoner
06-22-2009, 10:57 AM
^^^ I elaborated on the side effects of the new 'cash for clunkers' program in a separate thread ! Clearly it favors GM / Chrysler vehicles.

It's more than that actually. It favors disposal of existing inventory as ANY vehicle with a higher mpg rating than the existing vehicle qualifies for the subsidy.

It's also more backdoor TARP for the automakers.

Eric Stoner
11-16-2009, 08:25 AM
GM's earnings figures are in for the 3rd Quarter. It lost $1.2 billion. It maintained 19.5% of the domestic market and increased overseas sales slightly. GM SAYS they will start paying back $1 billion of TARP next year.

threlayer
11-17-2009, 02:08 PM
That can only be good. But they still have implicit or explicit guarantees, which will help them, but may eventually turn out to be a bad idea. But in my opinion Americans should be buying American goods whenever practical. This has been one of the problems -- consume more and more for less and less money, no matter where that money goes. We have forgotten that our economy is interactive, and if we spend a lot of money in other countries, our money and eventually our jobs go there too. It is such a problem now that it is often difficult to find American goods, and they tend to cost just a little more. For example I spent about 35 cents extra to buy American made door hardware instead of buying something made in China. I made sure to look first. That 35 cent premium (about 5%) is just a tiny part of some American's salary, but Home Depot and the manufacturer and product transport people only got about the same amount regardless.

Deogol
11-17-2009, 05:55 PM
That can only be good. But they still have implicit or explicit guarantees, which will help them, but may eventually turn out to be a bad idea. But in my opinion Americans should be buying American goods whenever practical. This has been one of the problems -- consume more and more for less and less money, no matter where that money goes. We have forgotten that our economy is interactive, and if we spend a lot of money in other countries, our money and eventually our jobs go there too. It is such a problem now that it is often difficult to find American goods, and they tend to cost just a little more. For example I spent about 35 cents extra to but American made door hardware instead of buying something made in China. I made sure to look first. That 35 cent premium (about 5%) is just a tiny part of some American's salary, but Home Depot and the manufacturer and product transport people only got about the same amount regardless.

In short, living in a first world country costs money.

Same can be said about working in a "first world" strip club? :O