Bill Ackman on PBS Charlie Rose

A hedge fund manager views governments through the lens of business and says that the US is very solvent despite the huge deficits.

He says that GM should be allowed to go bankrupt and restructured to remove debt from the balance sheet by having creditors relinquish claims to be paid back in exchange for equity in the new company which has a chance to make money after redoing all the labor contracts. They repeated a discussion others are having calling the current GM essentially a health care company. One might summarize this by saying he suggests GM go into bankrupcy to wipe out the creditors/bondholders also. If gov't does a bailout, equity holders always get wiped out, but creditors/bondholders (counter-parties) don't. Ackman says unless this is done, GM will limp along under very onerous loans to be paid back and need to be continuously bailed out by gov't.

On housing prices, he says 50% off and low interest rates begins to look attractive! (would be funny if it weren't true...)

But overall, he says equities seems to be on sale. Time to buy!

## March 8, 2012 # #

Well looky looky here.  Was Ackman wrong?  The gov't bailout of GM turned out well and the gov't, while still in the hole a billion here or there, looks to have done the right thing.  Did the gov't force GM to do something more like what Ackman is advocating or not, I guess is the question.