The Rule of Law is an Absolute Priority

**Be sure to read the follow up post, "Good Bye GM, Hello People's Car!"**

I thought all was well with the world when the senior creditors told President Teleprompter to see them in court. What I should have remembered was that Chicago bare-knuckle politics now rules the day.

In my two posts, "Killing Chrysler" and "He Who Has the Gold Makes the Rules, Or So He Thinks," I wrote how bankruptcy law would win the day. Boy, was I wrong.



It appears that President Teleprompter's goons strong-armed the TARP-compromised creditors, then demonized the hedge funds and others. When that didn't work, the threats started rolling in about audits, etc. I fear we are becoming a banana republic, and not the store with expensive khakis. Cheap? No. 100% Free. Trade stocks for free on Zecco.com. The Free Trading Community. www.zecco.com

In the Wall Street Journal, Todd Zywicki writes an editorial about this mess and how the Contracts Clause of the U.S. Constitution and the principle of Absolute Priority should have prevailed. Instead, the senior creditors were muscled into taking $0.30 on the dollar, while the junior creditor, the UAW (surprise surprise), ended up getting $0.50 on the dollar, which is 55% of the company.

Constitutionally, what President Teleprompter did was violate the contracts between the senior creditors and Chrysler as well as casting bankruptcy law into confusion (from Professor Zywicki's article),

The Contracts Clause of Article V of the Constitution, which prohibited states from interfering with the obligation to pay debts. Hence also the Bankruptcy Clause of Article I, Section 8, which delegated to the federal government the sole authority to enact "uniform laws on the subject of bankruptcies."

Regarding Absolute Priority,

The absolute priority rule is a linchpin of bankruptcy law. By preserving the substantive property and contract rights of creditors, it ensures that bankruptcy is used primarily as a procedural mechanism for the efficient resolution of financial distress... Violating absolute priority undermines this commitment by introducing questions of redistribution into the process. It enables the rights of senior creditors to be plundered in order to benefit the rights of junior creditors.

In other words, the "orderly bankruptcy plan" was really just a ploy to take from the senior creditors and give to the politically-connected UAW. This risk of government interference and confiscation is going to have a negative effect on ALL business in need of credit, especially those who have politically-favored unions. If you are a senior creditor of GM, you should be afraid, very afraid. Guard against ID Theft with 15 Points of Protection from TrustedID, including our $1,000,000 Warranty. Click Here!

America, consider very carefully if this type of government interference and control is the hope and change you voted for. Consider if you want drastic government control over business. Consider if you want to see the world's largest economy collapse under the weight of uncertainty. If you don't, call your representatives and demand the U.S. Constitution be upheld, and the rule of law maintained. If not, expect the worst!

Congress Declares Contracts Null and Void

Hello nationalization, good bye rule of law! Barney Frank (D-MA) has done it again. Byron York reports in the Washington Examiner that:

"...the House Financial Services Committee, led by chairman Barney Frank, has approved a measure that would go beyond the most draconian features of the original AIG bill... the "Pay for Performance Act of 2009," would impose government controls on the pay of all employees ... of companies that have received a capital investment from the U.S. government. It would be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies."

In case any of you missed my post, "The Unconstitutional Congress," I spelled out how this type of ex-post-facto law is unconstitutional. The Constitution of the United States, Article I, Section 9, paragraph 3 provides that: "No Bill of Attainder or ex post facto Law will be passed." Additionally, here is a lovely quote from James Madison:

Bills of attainder, ex-post-facto laws, and laws impairing the obligation of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. James Madison, Federalist 44.

Whether Congressman Frank is attempting to cover up his and fellow Democrats unbelievably incompetence relative to Freddie Mac and Fannie Mae, or they truly believe that Congress can arbitrarily revoke contracts is yet to be seen. In either case, what they are doing is a violation of the basic principals of the founding of this country! Further, if allowed to pass, it will destroy the financial foundation of the United States. Nitro-Pak.com

The United States is economically successful because of its transparency, its commitment to contracts, as well as its protection of private property and the rule of law. However, what we are seeing of this Congress and President Teleprompter is a wanton attempt to destroy the economy of this country. Special Sign Up Bonus: FREE rollover minutes. Order Today!

Allow me to issue this warning today:

Citizens of the United States, if you wish your country to remain the bastion of liberty and prosperity, act now to reign in the blatant, unconstitutional action of this Congress and President. Contact your elected representatives and regularly demand accountability, constitutional action, and an end to destruction of the rule of law. Failure to act will lead to cataclysmic consequences and the absolute destruction of liberty! Pray for our leaders and our country that this Republic will not become the home of tyranny! Great fares to India on Air France!

In case you don't think this behavior is serious, allow me to refer you to the CEO of GM, who, according to President Teleprompter, was fired by the government. Since when did the government have the authority to fire anybody from a private company?? This gross abuse of government authority must stop!