Meanwhile, over the Pond, the Boy Blunder is busy fucking up the US economy. Fresh from a failure of US Treasurys auction—well, they were forced to up the interest rate on the 40 year Gilts (much as the UK government had to do last month)—Obama is now over-seeing a proposed Chrysler restructuring that seriously endangers the US economy.
Unlike a traditional reorganization, in which the parties negotiate the terms of a restructuring that is then voted on by each class of creditors and shareholders, the administration plans to quickly sell Chrysler’s most important assets to a new entity—“New Chrysler”—whose stock will be owned by Chrysler’s employees and Fiat. The senior lenders who objected to the government’s offer (which amounted to little more than 30 percent of their claims) will not have any vote on the sale. Their only option is the one they have pursued: objecting to the sale, and praying that bankruptcy judge Arthur Gonzalez takes a hard look at its terms even while the government is breathing down his neck and saying in a sense, he better approve or else.
Why is this such a colossally dangerous fuck up? Well, Bishop Hill sums it up very neatly.
If investors think their assets are going to be handed over to insiders by the bankruptcy courts then they are simply not going to invest in the American economy. That's a recipe for full-scale depression.
Yup. Fear not, everyone: the Boy Blunder is here to