This blog started out as a companion piece to my book, Musings from the Christian Left (excerpts of which can be found in the July 2004 link) and to support a planned radio show. Now, its simply a long term writing project from a Christian Left Libertarian perspective (meaning I often argue for liberty within the (Catholic) Church, rather than liberty because the church takes care of a conservative view of morality.

Thursday, April 30, 2009

What about the Car Dealers? Or Hedge Funds?

Mack McClarty writes about the risk of bankruptcy by GM and Chrylser to the car dealerships in today's Washington Post.

Sorry Mack, but perhaps the time for dealerships has passed. The franchise system was, in part, a way to shift product risk from the manufacturers to small business and part to prevent their sales and maintenance forces from unionizing. Neither strategy seems to be good at this juncture.

Perhaps it would be better for the dealers to sell out to the manufacturers, trading inventory and assets for stock and allowing the employees to join the UAW. In Chrysler, this would make them owners as well. It is telling that these workers were not mentioned in your piece at all.

The AP is reporting the the President will announce at noon that Chrysler is going into a short period of bankruptcy, which will allow them to deal with much of the outstanding debt held by Hedge Fund operators who refused to accept the deal proferred by Chrysler and the Administration.

Do they think that they are going to get a better deal from the bankruptcy judge? It does not seem likely. Do they seriously think that the Obama Administration is going to bail them out when they have to write these assets off when they did not play ball on Chrylser? I think not. Luckily, none of my assets have any holdings in these funds, because they are about to go south. They fought off any type of regulation in the 1990s and that decision is about to bite them hard. My advice to hedge fund managers is to leave the Lamborghini at home when going to court, because the judge may seize it as an asset for your investors. Given that the Administration is working to go after tax, and presumably asset, havens in the Caymens, et al, it doesn't take a fortune teller to see that the end is near.


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