Wednesday, June 10, 2009

Supremes to Indiana Public Pensioners/Chrsyler “Secured” Bondholders: Take a Hike

The SCOTUS decided not to hear the claim of misapplication of bankruptcy law from the Indiana Fund bondholders in the Chrysler restructuring...At least four of the nine judges had to have seen cause to hear the case for it to move to the full Court, and four could not be found...So the Chrysler-Fiat deal will proceed and the secured bondholders will get their 29 cents on the dollar, while the UAW gets more....The Supremes Speak, Hear, and See No Evil in Chrysler Deal

Lesson to one and all investors in American corporate bonds: If you want to take a chance on becoming a “secured” bondholder in an American corporation, first assure that there are no politically favored unions involved, and then take note of today's Supreme Court Decision that the law doesn't obtain in what are described by the current administration as an economic emergency.

Lesson to the current administration: Looking at this resolution of what were supposed to be contractually bound, legal rights of investors, buyers of U.S. T-bills and other U.S.=”secured” bonds, such as the Russians, the Chinese, the Japanese, the French, the Germans, the Brazilians and – oh-oh – oil producing countries like, say, Canada, might decide that a yuan-backed bond makes a lot more fiduciary sense. Maybe policy shouldn't be based on that book Hugo Chavez gave you.


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