Article 43


Friday, May 01, 2009

Finally, Chrysler Bankruptcy

By Anthony Randazzo
Reason Foundation
May 1, 2009

There is no question that free market actors royally messed up over the past few years, leading to the decline of many major companies in America. But no one ever said the free market meant everyone succeeds. And when a firm fails the free market has self corrective measures--with bankruptcy proceedings a part of that. After months of getting the process dragged on by Washington, Chrysler can finally go the way it should have from the first place… into a court room to sort out its future after to failing to run a good business.

The Wall Street Journal SUMS IT UP today:

“Chrysler’s finances can now be restructured in a less political atmosphere in the New York courtroom of federal Judge Arthur Gonzalez. This is how the Chrysler collapse should have been worked out last December, when the auto maker first went looking for taxpayer cash. Treasury could have saved the $4 billion it lent the car maker at that time, to which we can now add another $8 billion that Mr. Obama promised yesterday to keep the company going.”

Some of the lessons that should be learned here are: 1) that a chief problem with Washington getting involved in free enterprise is that it interjects political games where they are most destructive; 2) firms fail for a reason, and in the case of Chrysler it was the standard reason of bad business practices, which ultimately can not be corrected by a big loan; and 3) when we say, let the free market run its course, we don’t mean let anarchy reign in the streets, we just mean let the system do its thing. After all, if bankruptcy were a nuclear blast on the car industry--like many claimed several months ago--then why is it okay now? It would have had the same effects in December as April, well, actually maybe better affects, without wasted taxpayer money.

Bankruptcy proceedings can be very orderly, and effective when done right. Now the key is will it be done right?

The White House has proposed a deal, worked out between Fiat, the Treasury Department, and the UAW, which would restructure the firm’s ownership arrangement. But the deal offers a settlement to investors that they essentially rejected as too low earlier in April. The President WANTS CREDITORS to work with him in a “spirit of shared sacrifice"--but they ask why? Sure they will take some sort of loss for investing in a poor company, but why take a greater cut than necessary in order to preserve Union power or failed leaders?


“...let’s hope Judge Gonzalez (in charge of the bankruptcy) ignores Michigan Representative John Dingell, who yesterday called the investors “vultures” and warned darkly that they “will now be dealt with accordingly in court.” Someone should tell Mr. Dingell that the debt-holders aren’t on trial in a bankruptcy proceeding.”

The creditors who support the government’s plan are the large banks already bailed out by the government. They are under the thumb (and trying to get away from) President Obama. They have to support it. The lenders who want the most they can get from a Chrysler asset sale in bankruptcy, instead of just 30 cents on the dollar, are teacher pension funds, retirees, and the like. Instead of supporting them, the government is (admittedly) playing political games, offering 55% ownership to the United Auto Workers union.


Posted by Elvis on 05/01/09 •
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Foreclosed Home Sales

5 tips on buying a foreclosed home
Sure, there are great real estate deals to be had, if you know what you’re doing.

By Amanda Gengler
CNN Money
May 1, 2009

1. Finding one has become easier

You don’t need to show up at courthouse auctions or comb through legal filings. These days many banks sell foreclosed homes through real estate agents.

To find listings, look on sites that specialize in foreclosed properties, such as REALITY TRAC and FORECLOSURE POINT. The local multiple-listing service often has selections as well. (The fact that the home is in foreclosure is not always highlighted in the MLS, but it’s often mentioned in the description.)

Finally, some agents specialize in foreclosures, so call your local realtor’s office and ask for a referral.

2. It’s best to buy from a bank

If you buy a foreclosed home at an auction before the bank repossesses it, you’ll have to pay in cash, and you usually cannot inspect the property. You may also later discover that there are liens against it.

When a bank takes back a home, however, it will clear any outstanding liens. Plus, when you buy a bank-owned property, you can inspect it beforehand, and you can finance the purchase with a mortgage. Leave your suitcase full of cash at home.

3. Bring in a contractor before you buy

Many foreclosed homes have been abandoned, some even vandalized, and they often require major repairs. “One mistake a lot of people make is underestimating how much work it needs and the cost,” says Rick Sharga of RealtyTrac.

To avoid getting stuck with a surprise bill, ask a contractor to give you an estimate of how much the restoration will cost and how long it will take. Many will do so for free in hopes of winning your business.

4. Bid low

Banks aren’t necessarily selling foreclosures at fire-sale prices; some are listed at market value, says Gene Hacker, a broker in Orange County, Calif. So be prepared to haggle. The bigger the inventory of foreclosed homes the bank has and the longer the property has sat, the greater your chances of nabbing a great deal, says Chris Matty of

Set your initial offer about 20% below market price - or more if your area has a lot of foreclosures.

5. Be prepared to wait

While some lenders are getting back to bidders within 36 hours, others are dealing with an enormous backlog that can hold up their response for as long as three months. While you wait, someone can trump you with a higher offer.

To boost your chances at scoring a home you love, have multiple properties in mind, and get your financing pre-approved before you bid. Even if the lender says it has another offer, follow up every week - these deals can often fall through.


Posted by Elvis on 05/01/09 •
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