In one move, he has demonstrated his willingness to throw out the rule of law, change the bankruptcy laws, demonize capitalism via the hedge funds and give 55% of a company to a labor union. It is a brilliant move by a socialist. GM you are next!
- Rule of law - Bondholders be damned. These types of subversive moves will dampen future investment in the United States. The only reason America affords investors better opportunities than other places in the world is the enforcement of contract law.
- Bankruptcy laws - "We are going to fast-track the bankruptcy proceedings". Why do you think this needs to be fast-tracked? Could it be that it needs to get done before the American people figure out how royally the Obama Administration screwed this up?
- Demonize the hedge funds - This was classic! Obama will never miss an opportunity to bash capitalism. How many times have you heard the Obama Administration and liberal talking heads use the word "greedy" to describe bondholders who would not "do what was in the best interest of the country". This is Socialism 101. Bondholders are not in the business of doing what is in the best interest of the country. They have a fiduciary duty to do what is in the best interest of their investors. Just like the unions have a duty to represent their members. Unfortunately, the Obama Administration is not an advocate of the free market system.
- 55% of the company given to labor unions - This is pay back for the unions' support of Democrat candidates; pure and simple. Within the next six months, GM will be "given" to the unions as well.
So let's recap: we give majority ownership to the party who is most responsible for the company's demise. So while the Japanese build cars in South Carolina and Alabama for a fraction of the labor costs, Detroit and the entire state of Michigan will continue over the cliff to bankruptcy and depression encouraged by a healthy dose of denial and socialism.
Just watch the billions of dollars that Obama will shovel to the automakers during the course of his administration; $8 billion more just committed on top of $3 or $4 billion already thrown down the hole. Since the goal is to preserve the unions and not to improve the business, tax-payer funds will be limitless. Just another perpetual federal subsidy and constituency that needs to be placated. Can anyone say "farm subsidies"?
Barack's successor will be forced to deal with a repeat bankruptcy of Chrysler in 5-10 years after taxpayers rebel over the billions upon billions used to prop up the unions. Wake up America!
Update May 5, 2009:
May 4, 2009 Op-Ed from IBD - Don't Demonize Chrysler's Debt Holders For Standing Up For Their Shareholders
