Is Obama paying off his political supporters?
According to reports, President Obama has forced Chrysler into the bankruptcy courts.…
"A sinister cabal of superior writers."
Chrysler Bankruptcy: Political Payoff? - Comments Page 2
Is Obama paying off his political supporters?
According to reports, President Obama has forced Chrysler into the bankruptcy courts.…
Article comments
26 - roger nowosielski
Great point, bliffle. For all my thinking about it, this never really occurred to me. Rather than competing in the market place and earn their way to the top, they each started to view one another as targets - hence mergers and acquisitions and their globalization.
27 - Clavos
Lest anyone still retain illusions as to the depth of the White House's role in the Chrysler debacle, here's a statement, published today in an article from CBS News, from Thomas Lauria, who heads up the bankruptcy practice of the White & Case law firm:
that he was threatened by Steven Rattner, the White House's auto task force chief. (A White House spokesman denies making any threats.)
"...I represent one less investor today than I represented yesterday," Lauria said on a Detroit radio show. "One of my clients was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight. That's how hard it is to stand on this side of the fence." Lauria said that his clients were willing to compromise on 50 cents on the dollar, but the government offered them only 29 cents.
In the same article,Clifford Asness, managing partner at a $20 billion hedge fund named AQR Capital Management, which is one of the creditors accused by last week by Obama of "Endanger[ing] Chrysler's future by refusing to sacrifice like everyone else," had this to say, "the president's attempted diktat takes money from bondholders and gives it to a labor union that delivers money and votes for him."
28 - Bliffle
I read the citation, which is in the POLITICS section, not the business section or the economics section. That's because the article is partisan politics.
They advance the sacristy of contracts, but there is no such thing. Contracts are revoked and nullified and even re-negotiated every day. Only a very naive businessman would think that a contract he holds is sacred. A contract IS a good arguing point, however, and can often be used to engage the other party in expensive litigations,as we see the courts are filled with.
The BoD is the supreme law of a corporation, and when the corp faces an existential threat extraordinary measures are called for and the Board would be remiss not to use them in the fight to survive.
Anyway, the article is wrong. Nobody is placed first in the liquidation line forever. And nobody is guaranteed 100% of their money back: that is impossible to promise.
29 - Clavos
I read the citation, which is in the POLITICS section, not the business section or the economics section.
Which is where it should be; the issue long ago transcended business or economics; it became political when the White House stuck its nose into it.
Nobody is placed first in the liquidation line forever.
And none of them are asking to be. In fact, the holdouts are among the most recent lenders.
And nobody is guaranteed 100% of their money back:
And they aren't asking for 100%. As the article notes, they are willing to settle for 50%, but are only being granted 5 to 9% by the White House proposal.
30 - Bliffle
Here are a couple of direct quotes from Clavos' citation to CBS news:
"During its slide, Chrysler borrowed money from lenders and in return signed a contract promising that as so-called senior creditors, they'd get paid before anyone else if the company went under."
'anyone else' in this context means anyone already in line. They can't promise the future.
"A normal bankruptcy filing would be straightforward. Senior creditors get paid 100 cents on the dollar. Everyone else gets in line."
Impossible if the assets don't amount to enough money to pay 100 cents on the dollar.
The cited article is too flawed to be taken seriously. It's just a political exhortation.
31 - Clavos
'anyone else' in this context means anyone already in line.
Now you're trying to have your cake and eat it too, bliff.
Previously you said the seniority of ther bondholders didn't count because those who came after would supersede them; now, you say it won't count because those who precede them will have priority.
Your arguments are far more flawed than that article's.
Laughably so.
32 - roger nowosielski
Some contracts are necessarily broken when a company goes belly up and can't meet all its obligation, so to be falling in situations such as these on "the sanctity of contract" clause (or credo) is somewhat circular or self-serving - depending on the arguer's intent. Chrysler made a pitch, and the investors bought it (the so-called "cross-section" of America):
"These creditors, by the way, represent something of a cross-section of America: the University of Kentucky, Kraft Foods' retirement fund, the Bill and Melinda Gates Foundation, pension funds, teachers' credit unions, and so on."
And if they've done so on the assumption that there was no risk involved (going by Chrysler's promises), then they were fools.
The article is a political exhortation on behalf of the multi-nationals at the expense of other creditors, as is Clavos's defense of the article - and there's nothing wrong with that as long as we recognize it as such; and so is Bliffle's counter-argument. Political disputes usually are over values, and each sides does its best to marshal the best argument possible.
33 - Jet Gardner
All I want is for the 75,000 mile/7 year warrantee on my '04 Sebring Convertible to be honored.
34 - Jet Gardner
Is the "Digg" icon missing up there so I can digg it, or is that a glitch. My previous comment was posted twice because Technorati Monster escaped again.
35 - Dan(Miller)
This article presents the Chrysler bankruptcy debacle in an interesting context. The first paragraph presents this hypothetical twist:
"Imagine if President George W. Bush used strong-arm tactics to bend the law to favor a politically connected company with $1.2 billion in assets, including a private golf course. What if that company’s political action committee had spent $13 million in the previous election, including more than $4 million to elect him?"
Worth reading and considering.
Dan(Miller)
36 - Dan(Miller)
Bliffle, you say,
It certainly appears that the Obama administration is arbitrarily putting the interests of the UAW ahead of interests of certain 'preferred' investors, but this is simply a case of 'turnabout is fair play' since previously the interests of those certain investors were arbitrarily put ahead of the UAW.
I'm not aware of the "arbitrary" nature of any prior bankruptcy or other proceedings involving the UAW and current holders of preferred stock in Chrysler. Perhaps you will elaborate.
Although "turn about is fair play" may have some visceral appeal here for some, I nevertheless question the wisdom of having that concept whimsically and prospectively replace the rule of law. If it is to replace it, it might be well to add a section to the U.S. Code substantially as follows:
"All laws will hereafter be construed and applied based on the concept of 'turn about is fair play' depending on the past, and the anticipated future, political contributions and other support from the parties."
This would, at least, provide a small element of consistency and therefore of predictability. However, it could easily be found objectionable by those who think that the "turn about is fair play" model should be applied, for example, in favor of members of various historically disadvantaged groups despite any failure on their part to make munificent political contributions. It is also possible that the concept should be applied only in some cases, rather than in all. The proposed statute embodying "turn about is fair play" doubtless needs a bit of work. Well, no matter.
Cf Comments 102, 105 - 106, and 108 - 115 here.
Alternatively, maybe the Technorati Monster should be put in charge and allowed to do whatever it thinks best.
Dan(Miller)
37 - Clavos
Dan(Miller):
Re your #36. There appears to be a link missing?
38 - Dan(Miller)
Clav,
The link in my #36 works for me. Here it is again.
Dan(Miller)
39 - Clavos
Ahem. My bad.
40 - Clavos
Dan(Miller),
That's a cogent article, I saw it earlier. Thanks for linking it here.
I've noticed that over the past few days there have been a number of articles, published in a variety of venues, talking about the issue of Mr. Obama's behavior vis-a-vis the Chrysler bankruptcy.
I'm pleased that my article was one of the earliest on this issue to appear anywhere.
41 - Bliffle
I think it's terrible that Obama would use his state power to manipulate private companies in favor of union contributors. I think it's terrible that corporations would demand (and get) tribute from the State while holding the economy hostage.
What I see happening is a schism in the Corporate Statist establishment between those seeking to socialize corporations and those seeking to privatize the government. We've breached many walls between corps and the state. The sham of private/public partnerships is starting to bite us (as it has in other societies before us).
It may be too late to back off and separate state from business.
42 - Clavos
I think it's terrible that Obama would use his state power to manipulate private companies in favor of union contributors. I think it's terrible that corporations would demand (and get) tribute from the State while holding the economy hostage.
I agree -- on both counts.
What I see happening is a schism in the Corporate Statist establishment between those seeking to socialize corporations and those seeking to privatize the government
That's an interesting (and insightful) point, bliffle. I think you're right, but I wonder whether the schism may not be somewhat one-sided in favor of the socializers, if for no other reason than that the greater power would seem to lie with those holding the reins of government.
Regardless, it's a provocative observation. I need to think more about it.
43 - roger nowosielski
I second Clavos, especially as regards the second point. Very interesting and insightful. I'm not exactly certain how's one to think about "privatizing the government." The "obvious" meaning would be to run the government "as a corporation"? How? In a similar manner that, say, prisons are being run (on behalf of the government) as private concerns? The "hidden" meaning may simply be a matter of corporate influence within the sphere of what should be political decisions; and we've had that all along. So the "intended" meaning may be a matter of degree - a kind of marriage or merger between government and business, which is to say, the notion of Corporate Statism taken to the limit.
Either way, both polar opposites offer a very bleak future. The makings of (or the blueprint for) the NWO?
What do you think, Clavos?
44 - Clavos
Here's a somewhat oblique "response" to your comment, Roger.
Oblique AND bleak -- in the picture it paints.
45 - roger nowosielski
One of the best pieces I have yet read by George Will. Should be a required reading for everyone.
It's this "blurring" that I find most disconcerting. Political and economic decisions must issue from different quarters. I'm also concerned about his appraisal of the politicians. Don't they see they're doing their country a great disservice. I'd be willing to accept the present state as a temporary measure; I am afraid, however, that it promises to be much more than that - a permanent arrangement to the detriment of all concerned.
If there's one point I would oppose this administration, it's the possibility that that's precisely what they have in mind. And this, if anything, should be the rallying cry of all Americans, regardless of their political persuasion.
Again, I can only hope that what we're seeing right now is but an attempt to remedy the abuses in the past in order to start with a clean slate. But if it viewed, instead, as an opportunity to remake the society after a wholly different image, then we're indeed in a bad shape.
Again, great article, Clavos.
46 - Bliffle
"I'm not exactly certain how's one to think about "privatizing the government.""
That's easy. For one thing we see right at the ends of our noses that when the financial corps found themselves going broke they crooked their fingers and summoned the government (at that time under Bush) to inject trillions into their companies. And the government complied, as if they were servants. That we see the new admin doing exactly the same thing is witness to the pervasiveness of the corps ownership of the government.
Indeed, one must conclude that the government has been privatized by the corps.
Therefore, the government has been reduced to taking wealth from citizens to deliver it to corps. Government has become the tax collector of the corps. It's neo-feudalism.
47 - CommonSensical
Clavos, please do not post my last comment. Thanks.
48 - Dan(Miller)
Justice Ginsburg of the U.S. Supreme Court just put a hold on
the sale of bankrupt automaker Chrysler LLC to a group led by Italian carmaker Fiat SpA . . . pending further order of the undersigned or of the court. . . . Her order made no mention of when briefs in the appeal would have to be filed or whether the Supreme Court would hear the underlying legal challenge to the sale.
Indiana pension funds and consumer groups had asked the Supreme Court on Sunday to stop the sale of Chrysler while they challenged the deal.
The Obama administration had opposed such a stay. Grant of the stay may not mean that the Court intends to decide the merits of the pending bankruptcy litigation. However, had the Court denied the stay, any chance of that would have been extremely remote.
Dan(Miller)
49 - Clavos
Does the granting of the stay have some meaning in terms of where the Court might be headed in regard to the Chrysler sale?
50 - Dan(Miller)
It's like reading tea leaves; the only thing reasonably certain is that Justice Ginsburg (or the Court) will issue a subsequent order. It seems that the Court may intend to do something substantive, and that if it does it will order a briefing schedule. On the other hand, today's order may just have been a way for the Court to get a little more time to decide what it wants to do. Since the Justice Department argued in its pleadings sent to the Court that if a stay were granted the sky would fall, that the U.S. economy would die and that life on earth as we know it would cease, I assume that Justice Ginsburg (a) was aware of that position and (b) decided that the sale should not be allowed to go forward immediately anyway. A betting man might put a (very) few bucks on the sale being delayed for quite some time and not ultimately being allowed to go forward.
The next order may provide some additional hints; however, unless it revokes the stay and allows the sale to go forward immediately, it will probably be months before there is a really useful hint as to what the Court will ultimately do.
Dan(Miller)
51 - Dan(Miller)
The Supreme Court today issued an unsigned order lifting the stay on the sale of Chrysler.
To obtain a delay, or stay, someone must show that at least four of the nine justices find that the issue raised is serious enough to warrant hearing a full appeal and that a majority of the court will conclude the lower court decision was wrong.
"The applicants have not carried that burden," the court said.
Just goes to show that there ain't no use trying to guess what the Supremes are up to until it actually happens.
Dan(Miller)