Last Sunday, Jane wrote a critical piece on hedge fund managers opposition to the UAW’s preferred postition in restructuring GM.
It seems that a number of bondholders are upset that because the government owns preferred debt of about 300% in terms of GM’s market value. If the bankruptcy priority system were strictly followed, the bondholders would get about $0. But since the tax-payers bailout money is helping GM, those bondholders want to get paid out before the government (and the government’s assignees). Those assignees of the government are the GM union and pensioners, the latter of which would become wards of the state under the Pension Guaranty fund which is also out of money. But the silliness starts because the bondholder were offered something (stock in the new GM), which means that the taxpayers were getting the short end of our investment stick once again for the benefit of hedge funds.
Today, Felix Salmon at Reuters comes to the same critical conclusion as Jane. Maybe he is reading FDL.
Good going Jane!