Torture Is Being A GM Bondholder


We had protesters in D.C. getting arrested for protesting the White House's latest stance on torture and the culpability of the Bush administration - the same protesters whose children are most likely to end up in rehab for drug abuse because their parents wouldn't lay down the law at home when their children needed to be disciplined.

We've got TV pundits and op-ed columnists splitting hairs over the legal definition of torture versus the moral implications its use could have on America's oh so white bread image that the more naive amongst us think is accepted as the gospel by those in foreign countries.

None of these people know what torture is.

If you want to know what torture is, call up a GM bondholder. If you live where I live, you'll probably get one of your neighbors on the other end of the line, or maybe even someone in your own household. If you think that living in modest circumstances means you don't know anyone like that, you are wrong - GM and GMAC bonds are a part of the holdings of a significant swath of the mutual funds that manage your 401(k) and retirement funds.

We all rolled our eyes at Bernie Madoff's clients, because deep down inside, we thought that they were greedy people who got what they deserved after enjoying unusually strong investment returns year after year, seemingly without risk. But this is worse. Offering GM's bondholders a paltry handful of common stock without any cash sweetener in exchange for surrendering their bonds may be one of the worst things the president's underlings have dreamed up yet. What's even worse is that President Obama has ostensibly OK'ed this proposal.

Remember Tom, Dick and Harry back on Wall Street, Mr. President, those same Tom, Dick and Harry bankers that you threw money at like it was confetti at a ticker tape parade? Why not extend GM a measly 75 billion Line Of Credit so they can have enough time to actually accomplish what you want? Why is it so hard, Mr. President, to treat one industry like another?

Chinese water torture has nothing on American bailout torture.

Moral righteousness is at the root of the debates filling the airwaves over torture. It is the same sense of morality that should have been employed in the decision making regarding Detroit's automakers, whose sins are no more venal than those of their Wall Street brethren. The plan you and your staffers have come up with, Mr. President, should be footnoted with explanations as to the kind of logic and the type of methodology you used to come up with the numbers in your workout plans for Chrysler and GM. I am especially curious to see who the genius was who had the audacity to equate the government's ten billion dollar stake in GM with a 50% interest in a reorganized company. Maybe his calculator was malfunctioning that day. Or maybe he just figured nobody was going to pay attention.

Why not offer the bondholders the right to the fifty percent stake if they come up with an additional ten billion to take the government out of the equation? If you had a few real deal guys on your squad instead of policy makers, they would have insisted that you include enough possible permutations to actually give your proposal a chance to work. The bondholders themselves want you to know that your stock swap idea is the worst kind of pandering - if bond holders had wanted stock, most of them will tell you, they would have originally bought stock instead of bonds.

Mr. President, the proposals you laid on the table for GM and Chrysler are like the choices Charles Graner and Lynndie England made at Abu Ghraib with the Iraqi detainees - the unconscionable and unnecessary financial torture of your own American citizens. You are treating your constituents as if they are crash test dummies, who are able to withstand fatal impacts and be put back together again as if nothing has happened. If this is the best you think you can do, you have earned this black mark on your presidency.




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4 comments:

Anonymous said...

WTF.

Anonymous said...

Perhaps I misunderstood your article, but you equate the collusion to torture people with Chrysler being bailed out by the government? I agree with the previous poster, "WTF?!"

Michael said...

How can Obama suggest legitimate investors in a business to reliquish their equity positions in GM and Chrysler, because the governement is the new SENIOR creditor? That should frighten major investors in other firms to fear governemnt intervention and possibly encourage firms to go out of business. Why would any executive agree to government mandated paycuts, limited bonuses and other loss of benefits without fore knowledge? I've read some of the details of government intervention and they all suck. Millions of investors picked bonds as a guaranteed source of income and value. The government has the right to suggest, no demand bondholders give up their secured interests and lose value in a company that was strong at the time of purchase. Like the article stated, GM and Chyrsler are better of finding alternative financing, than the likes of Big Brother. He wants to destroy the economic backbone of the county by taking away an investors opportunity to become a secured creditor of a firm. Not a simple flake whom is buying and selling stocks on the hopes gaining a profit after an set period of time. Don't torture investors with the thought that secured bond/debt obligations major firms offer can be subject to transfer into common stock by the US Government. That is true torture to the US Economy. More economc policies like this and we will stay in the toliet.

Michael W.

Brown Man said...

Misters Anonymous,

I'll admit that this wasn't my best effort of juxtaposing two issues that you normally wouldn't see anyone compare and contrast, but if you want predictable commentary you need to stick to the newspaper op-eds.

The main thrust of this post was to take the bailout from a financial dilemma to the human one it really is - a lot of times when we start throwing around the words "billion" and "bankruptcy", we forget that every dollar in this country began as a storage unit of energy that someone somewhere toiled to earn as they traded their time for money. So if you believe that torture is an unconscionable abuse of another person's body, then hopefully, you can see that these ridiculous bailout terms, designed to bring about only one outcome while appearing as if at least two viable options were on the table, are about to bring the same kind of psychological pain to small investors around the country who cannot figure out how they could go so wrong with an investment whose instructions were so straightforward.

To those whose retirement depends on the interest payments from those bonds - and they are many - they feel that Barack Obama is Benedict Arnold. I can't blame them. Because in less than 60 days, there will be no more checks in the mail. If they had accumulated a couple hundred thousand in bonds, then that is not only thousands a year in lost income, but almost a total depletion of the principal that was generating it. Where are they going to go to get any of it back? If watching your life's savings and careful planning evaporate in a few weeks isn't torture to a 65 or 70 year old, I don't know what is.

Its as if you stopped a football game at the two minute warning in the fourth quarter, designated field goals as seven points and touchdowns as three points, recalculated the score, and then restarted the game.

I know a lot of people are pretty squeamish about the idea of torture, but we have killed hundreds of thousands of innocent people in the name of freedom. The people in Nagasaki and Hiroshima whose parents walked around without arms or fingers or ears could tell you a thing or two about torture.

The thing about all this debate is, when the stakes are high enough down the road, we will do it again. And if we could see the real records at the CIA, we would realize that we are doing it RIGHT NOW.

When more of us lived on farms, where we actually had to kill what we ate, or kill those thing that threatened our lives, I would posit that our outlook on torture was different. The migration of our population from rural to urban living over the past 80 years has had some profound effects on the way we look at things in this country.

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