[akamaka]

Lots of pleasant thoughts about fairness in this article, but no mention of the simple fact that the financial sector has rapidly burned through their collective reserves of political capital over the last year, and is hardly in a position to make demands.

[danteembermage]

Careful, you've got an abstraction layer that's maybe not appropriate. Imagine for a moment that I am a person near the end of my working life and very wisely and prudently put most of my retirement funds in a portfolio of church bonds, municipal bonds, and long-term corporate bonds including GM's. "The financial sector...rapidly burn[ing] through their political capital" doesn't imply that I should get five cents on the dollar while people behind me in line get forty. I have been receiving a paltry interest rate for years precisely because I was promised I was first in line in the event of a bankruptcy.

There are real people behind these massive losses, and the fact that Wall Street bilked me with transaction costs on the way in to this portfolio means I'm more deserving of sympathy not disdain.

[akamaka]

A lot of people are hurting right now, and you're quite right that investors both large and small have been hit the hardest. But after a year spent clamouring for government help, whether bail-outs for big banks or compensation for individuals who bought ABCPs, investors have lost their place at the front of the political line.

They still have the judicial branch to turn to, but the days of executive branch fast-tracking are gone, and there's little point in complaining about it.

[danteembermage]

You're right that losing your place in the front of the political line has dire consequences, and certainly investors have lost their place at the front of it, but think really carefully about who was campaigning for government help and even more important, for whose benefit were the auto bailouts in the first place.

I think it would be difficult to claim that the answer to either question is the firms' bondholders. It's true, they may have indirectly benefited if the bailouts had succeeded, but the purpose of the bailout was never to help the holders of GM's debt. I don't really think punishing misbehavior should be pertinent to creditor hierarchy in bankruptcy, but if we intend to punish clamoring then I think this proposed settlement may have things slightly backwards.

[Nwallins]

> investors have lost their place at the front of the political line.

That's the shame. They were at the front of a legal, financial line. That one's place in the political line should trump the former is the cause for concern.

[yummyfajitas]

The fact that the political winds have turned against the financial industry shouldn't be relevant.

We are supposed to have the rule of law in this country.

[gaius]

Have you got a 401k (US) or ISA (UK) or whatever? You are "the financial sector".

[sethg]

I'm pretty sure that my 401(k) is sufficiently diversified that even if its GM and Chrysler bonds turn to kindling, it won't affect my retirement. (The Vanguard Long-Term Bond Index Fund, for example, out of $2.7 billion net assets, appears to have a little over $4 million in Chrysler and nothing in GM.)

GM and Chrysler retirees are not so lucky.