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April 30, 2009

Chrysler Bankruptcy

Chrysler is going to go Chapter 11 but that's not really the big story to me. The really important story is the contempt with which Barack Obama speaks of capitalism.

During his speech announcing the deal they will take to the bankruptcy court, Obama praised various parties, management, Daimler, workers and other stakeholders for their willingness to 'sacrifice'.

Shockingly Obama singled out hedge funds and investors who were holding out for a better deal. He specifically said he did not "stand with" them. It wasn't surprising but it was a shock to hear a President of the United States speak this way. Aparently these investors enemies of the people, who kept the company afloat and workers paid, had the temerity to demand they be compensated for their efforts. It seems the government wouldn't even talk to them.

“We have been forced to communicate through an obviously conflicted intermediary: a group of banks that have received billions of TARP funds,” the lenders who rejected the government offer said.

The holdout lenders -- who said their combined debt holding represents about $1 billion of the $6.9 billion owed to senior secured lenders – struck back at comments from an unnamed administration official this morning that blamed them for causing the imminent bankruptcy. The group said they had offered to accept 60 cents on the dollar, despite “long recognized legal and business principles” that gives senior lenders such as themselves the right to be repaid in full before others recover anything in bankruptcy court.

“Our offer has been flatly rejected or ignored,” the group said. “In its earnest effort to ensure the survival of Chrysler and the well being of the company’s employees, the government has risked overturning the rule of law and practices that have governed our world-leading bankruptcy code for decades.”

During his announcement of the plan Obama also kept talking up Chrysler and GM, two companies the government has major equity stakes in. Notably absent was any chat up for Ford, the automaker who didn't suck at the government tit. Not only does Ford now have to negotiate its labor deals with a competitor but it has to compete with the Car Salesman in Chief.

The so-called 'sacrifices' of the UAW do not include reopening their contracts.

I for one hope Obama and the UAW fail.

And before we get into another 'how can you hope the President fails' crap, let me ask you something. Why do you hope Ford fails? They have played by the rules and Obama wants to take business away from them by propping up the corpses of GM and Chrysler. Why do you want Americans who build, sell and service cars people really want to fail because they lost business to companies which can't compete and are being subsidized by the government?

It's not a matter of wanting GM and Chrysler to fail, they already have.

More: Via Slu...Is this the end of the rule of law?


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posted by DrewM. at 12:01 PM

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