Wednesday, May 27, 2009

Investing And The Bailout

Investors invest for a reason, to make money. The Left often portrays investors as greedy fat cats who “play” the system to enrich themselves at the expense of ‘the common man’. Newsflash, the common man is an investor. Everyone who has a 401 K for their retirement or a 529 plan for their children’s education is an investor. All of these investors should take one big lesson from the government’s bailout of Chrysler and GM-don’t risk your future by sinking your money in to any industry that is union intensive.

This from The Atlantic:

Bond investors literally can't afford to lend to unionized companies because it's clear that current power in Washington will take the unions' side, despite past bankruptcy law precedents that favor senior creditors. That means Washington's actions in pushing for these bankruptcy verdicts to come out in favor of the unions will probably hurt unionized companies in the long run. As a result, it might be wise for Washington to reconsider the precedents it's setting for unionized companies undergoing bankruptcy.

So, going forward, how will GM and Chrysler raise capitol? Why would investors ever trust the automobile industry with their money again? Our government is notoriously short sighted and the treatment of investors is a prime example. In the long run, the Administration may have shot the UAW, and other unions, in the foot.

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