The Chrysler Brinksmen

April 30, 2009
By

Chrysler has gone into bankruptcy – but not quietly. Every party took “shared sacrifices” – the major banks, the unionized employees, the company’s management, dealers and shareholders and …. oops the smallest group of debtholders – a group of hedge funds and other risk-taking  investment firms calling themselves The Committee of Non-TARP Lenders of Chrysler,” said “NO” . This refusal was to to the consternation of all parties involved  including the President of the US. Now if I were the head of an investment firm and hedge fund that will be subject to long promised

Based on their pay levels, these players only make one wrong decision in a million – and they already made one in buying into Chrysler debt

 reviews on their practices,  regulation  and levels of compensation by the Federal government I would not be playing Financial Chicken with the Treasury and the Feds at this time. Now remember these gals and guys, who refuse to be indentified (and have incurred the wrath of the Business Trade Press ), are the so-called Six Sigma Darwinian Masters of the Financial Universe. Based on their compensation levels, these players only make one wrong decision in a million – and they already made one in buying into Chrysler debt. Hmmm …  but that assumes they were recent buyers at 60-70cents on the dollar. But this is precisely what is wrong with finacial markets – we may never know how much the Hedge Funders are ‘sharing in the pain’ or just holding out for outsized returns as senior debt holders. So in the spirit of their reckless risk-taking I will take a fifth of any bet that says these Financial Masters come out croppers in the unfolding of Chrysler from bankruptcy and/or their upcoming financial regulation. By the way taking on Obama and the Feds in thesecircumstances are bad decisions 2 and 3 – these Super Masters of the Financial Universe  are badly underperforming while still, of course, taking home their premium pay …. and betting big they will be able to preserve those outsized personal compensation levels.

Leave a Reply

Your email address will not be published. Required fields are marked *