Thanks to an outstanding series of podcasts from the von Mises Institute on the economics of fascism, I have a greater appreciation for what this administration is doing. Economic fascism is where you get to keep your private property so long as you do what is in the best interests of the State. In the case of Obama, those best interests include wealth redistribution and stopping what they see as global warming. That Obama is not interested in lebensraum is immaterial. His aims are just as State-centric as those of previous fascists.
First off, it is placing itself above the law. Legally, Chrysler's bondholders should be the first to be paid in any bankruptcy proceedings. By US law, the bondholders should be paid out of Chrysler's assets until they've received 100% of their investment back or the money runs out. The Obama Administration's bankruptcy plans for Chrysler do not accept this law and the bondholders, those not being directly intimidated by the Obama Administration, are suing the government over their illegal takeover and bankruptcy proceedings. Here is an excerpt of an interview with their lawyer, linked above.
Lauria: Let me tell you it’s no fun standing on this side of the fence opposing the President of the United States. In fact, let me just say, people have asked me who I represent. That’s a moving target. I can tell you for sure that I represent one less investor today than I represented yesterday. One of my clients was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under the 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.Instead, Chrysler is being handed over to the president's political supporters, the UAW as well as the government itself who is taking about 10% interest. That 10% interest may not seem like much, but as Wells Fargo has found out and the Italian companies living under Mussolini found out decades earlier, it's all that's needed for the State to control you. Chrysler's bondholders are being offered pennies on the dollar. By US law, they are entitled to 100% of their money back.
Beckman: Was that Perella Weinberg?
Lauria: That was Perella Weinberg.
When Obama tells you that he doesn't want to be running an auto company, he may or may not be telling the truth. After all, he's also said he will cut the deficit in half, which is nonsense, and that the days of borrow and spend are over, which is also nonsense. It doesn't really matter what Obama says, anyway. His actions are as clear as those of any fascist. While he doesn't want to control your private property, if you refuse to do what he wants, he will control your property until you do.
That is the very definition of economic fascism.
Update: Eva Rodriguez lays out the facts, but doesn't get to the conclusion.
This is a tempest in a small, cracked Republican teapot. I notice that the blog that started this "thuggery" accusation has now stopped allowing comments. It based its accusation on the words of an interested party -- Perella Whineberg's lawyer -- without ever noting the party's interest, and without ever even bothering to examine how bankruptcy law is structured and applied.
ReplyDeleteThe issue here is Perella Whineberg's desire to be paid 50 cents on the dollar for its bonds, rather than 29 cents on the dollar offered by the Treasury. The reason Treasury is involved is because Chrysler can't obtain private "debtor in possession" financing for its bankruptcy. Treasury is playing that role, and he who provides DIP financing always has a big role in bankruptcy proceedings.
Virtually every bankruptcy features some fighting among creditors over pieces of a pie that, by definition, isn't big enough to give everyone a full slice. The biggest fights are often between different classes of creditors, and in those fights you will often see "senior" creditors howling over not being paid as much as they think they deserve relative to "junior" creditors.
That was the case here. In addition to Perella Whineberg, two other senior creditors (Oppenheimer and Stairstep) were so-called "holdouts" from a settlement agreed to be scores of other creditors. In bankruptcies, holdouts usually don't do very well. The judge sometimes tosses them an extra crust of bread, but not always.
As the DIP financing provider, the Treasury wants Chrysler to remain an ongoing entity. Its interest is to produce agreement among the creditors so there won't be a prolonged court fight that might endanger the entity's ability to repay the DIP financing. So, it wants to corral the holdouts.
Perella Whineberg was corralled last Friday; it issued a press release to that effect. But it also trotted out its lawyer to claim that the White House had forced it into agreement by threatening to ruin the firm's reputation. The White House categorically denied that version, something that the blog you quoted never mentioned before abruptly closing its comment section on Sunday morning.
We don't know what was said by the White House to Perella Whineberg. It's unlikely that anyone threatened Whineberg with the White House press corps, but it's not beyond imagining that the White House pointed to President Obama's statements and told Whineberg that they were only the beginning of what they'd face if the holdouts continued to hold out and jeopardized the ongoing operations of Chrysler. After all, the taxpayers are now on the hook for $4 billion in DIP financing, and it's the government's job to protect that investment against greedy graspers like Whineberg.
In any case, the idea that "the rule of law" was ignored is outrageous. The Chrysler bankruptcy, and the recent machinations, is par for the course. Perella Whineberg was trying to get a better deal, and failed. What really sticks out here is Perella Whineberg's utter lack of class and professionalism. They are the personification of the kind of sore losers and manipulative squirrels that the Republican Party has become.
Great post- and you know what? Like these Fascist dictators you compare Obama too... The One is also a pathological narcissist- sure explains a lot.
ReplyDeleteThe White House says there’s “no evidence”- note that Hitler was careful to only give verbal orders, too... and Obama's not new to this sort of thing.
It’s plenty clear what really happened- Obama KNOWS he owns the press corps… and even treats them with arrogant contempt, ie- hectoring reporters to “not waste their question”, telling them when they’ve “got enough pictures”, and even to “get back on the bus” in Chicago- ouch.
This out-of-control narcissist wouldn’t call on Fox News after the TEA parties, and skipped the NYT at his presser a couple days after their reporter asked Obama if he was a “socialist”. Since when is a refusal to answer legitimate questions and explain your actions to the American people acceptable in a US president?
Obama has no use for The Contstitution, law, religion, ethics, or anything else that gets in his way- The idea that he’d sick his MSM sycophants on some bank that isn’t willing to do as he says doesn’t surprise me one iota.
This guy thinks he's Tony Soprano now- he's completely out-of-control.
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