naked capitalism

bobo bobo says:

yves: Debtholders vs. U.S. Over Chrysler Deal New York Times. The bondholders want 65 cents on the dollar PLUS 40% of the company when the debt trade for 15 cents. And guess who is leading the bondholders? JP Morgan and Citi.

Yves is off on a cricial point. The NYTimes is referring to secured lenders, not bondholders. The secured lenders on average have historically gotten about 70 cents on the dollar in bankruptcy. In contrast, bondholders have gotten 30 cents on the dollar historically on average. JP Morgan and co are arguing to get paid like senior secured lenders historically have. Geithner appears to be arguing for the senior lenders to get paid like bondholders.

yoganmahew says:

Um, aren’t white moose genetically determined? So the chances of seeing two together is only slightly higher than seeing one assuming you are seeing a family group…

Luke Lea says:

I have a constructive proposal to prevent future housing crises and increase ownership: Rely on automoatic bank withdrawals. A lot of people are simply too disorganized for a whole variety of reasons to manage their monthly bills in a timely manner, even when they have the money. (I’ve been there myself.) A few late payments and next thing you know their credit score plunges and they are forced to pay usurious interest rates, which likely as not they cannot afford. We end up with a system of debt slavery or else large-scale defaults.

skippy says:

@VMSmith^^^above,

Not to worry Ms. Plain would just sequester a police helicopter with thermal imaging and .50 Cal Barret with thermal scope to off set any genetic advantage gained by generational mutation.

Ahh the ancestral beating of ones chest after a successful kill from a few hundred feet in the air, with hot coffee and the heater on high.

Now alert the national guard to go fetch the noble beasts and clean them, its BBQ time.

Skippy…pass me a Bud k…can’t clean my loaded weapon until I’m really pissed.

Yves Smith says:

bobo bobo,

I did make a an error in description, but I do not think the implication is wrong, as you suggest. My statement of the position of the banks’ position and where the debt is trading appears to be accurate, save the use of the term “bondholders” for senior secured creditors. I would assume it is bank debt, although bonds can be secured too.

And the New York Times does say the debt is trading at 15 cents on the dollar, so the comparison does appear accurate. Pretty much all the commentary I have read on distressed debt says recoveries this cycle will be markedly lower than historic norms. Secured creditors have to liquidate assets. Think they are going to get very good prices? Pretty dubious.

And the guy behind Geithner is probably the real Treasury Secretary. Geithner is just his puppet.

bobo bobo says:

yves: And the New York Times does say the debt is trading at 15 cents on the dollar, so the comparison does appear accurate.

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S&P estimates that chryler 1st lien loans would collect 30-50 cents on the dollar in bankruptcy. That is more than 15 cents on the dollar, although less than the historic average of 70 cents on the dollar for senior bank loans.