Government Capitalism

by JASON | 11:43 AM in |

Further industry consolidation i.e. ownership...

NEW YORK (AP) -- A bankruptcy judge says GMAC can become Chrysler's preferred lender.
http://finance.yahoo.com/news/Judge-OKs-deal-to-make-GMAC-apf-15218297.html?sec=topStories&pos=2&asset=&ccode=

Fannie reported 1Q 2009 results and, bluntly, they blew big bananas.

They lost $4.09 a share (!) and will be "asking" for $19 billion from Treasury. That's the bad news.

The worse news is:

* They see home price declines of 7-12% nationally for 2009. But but but but I thought home prices had stopped going down?
* They see "losses continuing" and see "09 credit losses exceeding 2008." (!)
* They don't see the firm operating profitably in "the foreseeable future." (!!!)
http://market-ticker.denninger.net/archives/1027-Green-Shoots-Not-According-to-Fannie.html

General Motors Corp on Tuesday detailed plans to all but wipe out the holdings of remaining shareholders by issuing up to 60 billion new shares in a bid to pay off debt to the U.S. government, bondholders and the United Auto Workers union.

The unusual plan, which was detailed in a filing with U.S. securities regulators, would only need the approval of the U.S. Treasury to proceed since the U.S. government would be the majority shareholder of a new GM, the company said.

The flood of new stock issuance that could be unleashed has been widely expected by analysts who have long warned that GM's shares could be worthless whether the company restructures out of court or in bankruptcy.
http://moneynews.newsmax.com/headlines/gm_shareholders_wiped/2009/05/06/211270.html

For more insight...

http://market-ticker.denninger.net/archives/1011-The-Day-The-Capital-Structure-Died.html

http://market-ticker.denninger.net/archives/1013-BAC-More-Obfuscation-by-The-Media.html

Trouble accessing "your" money...

Some investors in 401(k) retirement funds who are moving to grab their money are finding they can't.

Even with recent gains in stocks such as Monday's, the months of market turmoil have delivered a blow to some 401(k) participants: freezing their investments in certain plans. In some cases, individual investors can't withdraw money from certain retirement-plan options. In other cases, employers are having trouble getting rid of risky investments in 401(k) plans.
http://online.wsj.com/article/SB124148012581385199.html

More analysis and lead to the article...
http://www.marketskeptics.com/2009/05/401ks-hit-by-withdrawal-freezes.html

Conflicting outlooks...
http://www.financialarmageddon.com/2009/05/all-too-familiar.html

Since I'm on the government soapbox...

PITTSBURGH – The government will begin taking land from seven property owners so that the Flight 93 memorial can be built in time for the 10th anniversary of the 2001 terrorist attacks, the National Park Service said.

In a statement obtained by The Associated Press, the park service said it had teamed up with a group representing the victims' families to work with landowners since before 2005 to acquire the land.

"But with few exceptions, these negotiations have been unsuccessful," said the statement, which was to be released later Thursday.

The seven property owners own about 500 acres still needed for what will ultimately be a $58 million, 2,200-acre permanent memorial and national park at the crash site near Shanksville, about 60 miles southeast of Pittsburgh.

"We always prefer to get that land from a willing seller. And sometimes you can just not come to an agreement on certain things," park service spokesman Phil Sheridan said.

Two owners account for about 420 acres the park service plans to condemn, including Svonavec Inc. — which owns 275 acres, including the impact site where 40 passengers and crew died. About 150 acres are owned by a family that operates a scrap yard.

Most of rest of the land to be condemned are small parcels, two of which include cabins.

"It's absolutely a surprise. I'm shocked by it. I'm disappointed by it," said Tim Lambert, who owns nearly 164 acres that his grandfather bought in the 1930s. The park service plans to condemn two parcels totaling about five acres — land, he said, he had always intended to donate for the memorial.

"To the best of my knowledge and my lawyer, absolutely no negotiations have taken place with the park service where we've sat down and discussed this," Lambert said.
http://news.yahoo.com/s/ap/20090507/ap_on_re_us/us_flight93_memorial

Ironic isn't it...we take property from someone else (loss of freedom) to memorialize a patriotic event....

Do you hold GM bonds? Perhaps some so-called "unsubordinated" debt?

A lot of people - individuals - do.

These bonds were quite popular for college savings and other long-term plans - including retirement.

Why?

Because the coupon was pretty good, they were unsubordinated (meaning senior, or first) preference in the event of bankruptcy, and GM has been around for a very, very long time.

If you hold this debt you are about to be wiped out by our government, who has decreed by fiat, without even a vote in Congress, that:

1. You don't matter.
2. You don't have a right to rely on anything in the prospectus printed when these bonds issued, or even common and statutory law.
3. Your rights do not exist. Your government has literally declared economic war on you.

Let me be clear: The government, specifically President Obama's Treasury, is acting exactly as did George Bush's Treasury - they are behaving as gangsters who are about to rob you blind, returning only 10 cents - if that - on the dollar for your investment and they are going to force you to take it at gunpoint.
http://market-ticker.denninger.net/archives/1033-Holding-GM-Debt-Gubbermint-Is-Robbing-You!.html

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