Friday, May 01, 2009

Why Bankruptcy is needed (from the WSJ)

Obama did a good impersonation of Mr. Thompson or Wesley Mouch as he harped against bond investors and hedge fund managers (the industrialists from Atlas Shrugged), but such political name calling is not what is needed and indeed quite scary. (why scary? He is essentially asking the funds to forgo returns they deserve to pick an alternative that makes them worse off. This is not a recipe for success.)

Chrysler Goes to Court -
"'I don't stand with those who held out when everyone else is making sacrifices,' Mr. Obama nonetheless declared, blaming what he called 'a small group of speculators' for the car maker's Chapter 11 filing."
The WSJ points out that this political/populist view is exactly why bankruptcy is needed:
"President Obama's broadside against bankers yesterday illustrates better than any argument ever could that bankruptcy court, and not the political arena, is where Chrysler belongs. Yesterday's filing isn't the end of the U.S. auto industry, or even necessarily of Chrysler, and it offers the best chance to protect all parties under the rule of law"

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