Friday, May 1, 2009

He Who Has the Gold Makes the Rules, Or So He Thinks

As I wrote in my most recent post, "Killing Chrysler," bankruptcy might be the best thing for debt holders. While I generally don't care for bankruptcy, it does happen, and the rights of both parties should be respected by law. However, with President Teleprompter and his union goons in office, what should be and are vary greatly.

The Wall Street Journal reports indirectly, in a piece titled, "Chrysler Pushed Into Fiat's Arms" (May 1, 2009), that TARP-backed banks were pressured to encourage other debt holders to accept the government's deal. People who switched to Allstate saved an average of $396 per year. Quote Now!

What becomes clear, as the story reports:

"The administration had repeatedly said it has no plans to run Chrysler or dictate its business plans. ... The pact allows the government and UAW to reorganize the company's top management."

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Interesting, President Teleprompter wants to reward the UAW goons with control over the third largest automaker, and then tell them what cars to make. Sounds crazy? Also from the article:

"Moreover, the government said it would use the agreement with Fiat and Chrysler to encourage fuel-efficient cars."

Didn't it seem strange to anybody that the President of the United States was announcing the bankruptcy of a publicly traded company? Have you wondered why the federal government is getting its nose and your money into these businesses and not just letting them fail naturally, under existing bankruptcy law?

Clearly, this is about political power, and the socializing of the U.S economy. Consider how President Teleprompter speaks about the debt holders seeking enforcement of their contractual rights and relief from the courts:

They "decided to hold out for the prospect of an unjustified, taxpayer-funded bailout," Mr. Obama charged. Were that not enough demonization, Cogressman for Life, Rep. Dingell (D. MI) calls the debt holders, "...'rogue hedge fund' and 'vultures' and said in a statement that they 'will now be dealt with accordingly in court.'

Wow, name calling, threats of court? This is just business, right? Not really, as this is really just a push to control as much industry as possible. Guess what GM, you're next!

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In less than 100 days, the federal government now owns 85% of one of the world's top insurance companies (AIG), and has its claws in the top banks via TARP. GM is next, and after that, health care. If this isn't stirring just a bit of worry in your mind, it better!!

My sincerest hope is that when the debt holders get to court, they plead their case, and the judge pays the secured debt holders their due. Further, I hope the judge pays each aggrieved party all they are entitled to under the law, and leaves President Teleprompter's dreams of industrial domination in the dirt.

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Dan said...

I see you are still at it, my friend.

I am not sure if it is only the president to blame. There are a lot of looters out there.

Stay happy...


Bill said...

When I was in high school and college Fiat sold their cars in the U.S. Care to guess why they left the then largest car market in the world? "FIAT means Fix It Again Tony" was the joke back then. So, combining two corporations that have failed to profitably do business in the U.S. is going to create a profitable enterprise that will repay the
taxpayers tens of billions of dollars? Boy, Obama is smart.

And giving the UAW a 55% equity stake as well as a majority of the
Board members will make Chrysler even more profitable! If the
Unions understand anything it's best practices, efficiency and cost controls.

Plus, what creditor is going to loan Chrysler money going forward after seeing secured creditors demonized, bullied and cheated by the government? That's easy - the taxpayers and the TARP banks!

I'm afraid your hope that the secured creditors will plead their case in court is misplaced. Rights can be waived and this is what the
government bullied the creditors to do.

I read an article which compared the auto industry bailout to Amtrak. If only. The auto bailouts will be to Amtrak as a watermelon is to a pea.

WRGII said...

Bill, thanks for your great comment, as well as to Dan.

Fiat has had some good success under their new CEO, and since its Italian, he certainly has to know how to deal with unions.

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