Most amusing Mr. Stiglitz

Restructuring gives banks a chance for a new start: new potential investors (whether in equity or debt instruments) will have more confidence, other banks will be more willing to lend to them and they will be more willing to lend to others. The bondholders will gain from an orderly restructuring, and if the value of the assets is truly greater than the market (and outside analysts) believe, they will eventually reap the gains.

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Rewriting the rules of the market economy – in a way that has benefited those that have caused so much pain to the entire global economy – is worse than financially costly.

Sadly, no, he\’s not talking about the way that the bondholders have been screwed in favour of the UAW in the GM and Chrysler bankruptcies.

2 thoughts on “Most amusing Mr. Stiglitz”

  1. Err, the bondholders *agreed* to the settlement. They could have rejected it, the automakers could’ve gone bust, and they could’ve tried to realise their investments by selling their assets – instead, they decided that the returns from the bailout plan were likely to be higher.

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