I keep thinking I’m cynical enough already, and can’t be surprised by politics and/or the MSM’s coverage of it any more. But I guess I still retain too much idealism, because the general lack of concern about the administration’s throwing out the usual rules regarding senior lenders in the Chrysler negotiations still has the power to surprise me.
There is no way this course of action can end up benefiting our economy, or even Chrysler. The only beneficiaries are the unions (at least, temporarily; if the company ends up failing, they will go down too), Obama’s standing with his supporters on the Left who are angry at “greedy capitalists” and want to stick it to them, and perhaps Fiat.
Obama has served notice: play ball with me or I’ll play hardball with you. The rules? Made for suckers, not for Obama.
While maintaining a facade of affability, Obama reigns by naked power and threats. His is an unusual combination, even for politicians; I can’t recall another president in my lifetime with a facade so at variance with his actual methodology.
But Obama’s effectiveness depends on that dichotomy, and on the public focusing on his smooth surface while ignoring his acts—or at least not understanding what they signify, which amounts pretty much to the same thing. Here’s a comment at National Review that puts it quite succinctly:
[Obama] has the knack of appearing moderate while acting radical, which is a lethal skill.
Lethal, that is, to what has made America so unique, so successful, and so protective of human liberty.
Not everyone is ignoring Obama and Chrysler, or singing his praises as the deity’s annointed (I kid you not; the linked article is only slightly tongue-in-cheek in its fulsome fawning). Some are as agitated as I am about the unprecendented Chrysler arrangement, and Obama’s dissing of the creditors.
First there’s Irwin M. Stelzer on the chilling effect Obama’s actions will have in the practical sense:
…[T]he president is counting on some of these “speculators” to partner with the Treasury and take a big stake in the toxic assets that are preventing the big banks from resuming normal lending. Unprotected by a rule of law, these investors will sit on their assets, rather than partner with a government that might some day decide, after the fact, that they made too much money, or should bear a larger portion of any losses than they had signed on to do.
Next we have Kevin Hasset:
All the government stops were being pulled out to present the United Auto Workers with a sweetheart deal that, incredibly, gives its retiree health-care fund majority ownership of Chrysler.
Yes, those are the same workers who pushed the firm toward bankruptcy in the first place with their extraordinarily generous compensation packages. DaimlerChrysler AG’s average cost to employ a UAW worker in 2006, including benefits, was 1.7 times that of Japanese automakers, according to company estimates.
Next comes Bill Frezza with some excellent questions:
Why would anyone lend money to heavily unionized companies knowing that if things went wrong, the president and his men could trash their security interests by executive decree, hold them up to public vilification, and subject them to future retribution by regulators?…
How is the Federal Government supposed to unwind its ownership in the growing number of companies it has nationalized if prospective buyers know that should things ever take a turn for the worse, Uncle Sam will be back demanding extralegal “sacrifice” in the name of “saving” jobs?
How is private credit supposed to “start flowing again” if the United States of America morphs into a caudillo-run kleptocracy whose explicit policy is to “empower the workers,” chasing ever higher poll numbers by demonizing the very people whose job it is to provide credit?
Why, and how, indeed. It seems to me that the importance of such questions should be obvious to anyone on either side, excepting of course the most rabid Leftists who are against private enterprise and favor a government takeover of the auto industry. But instead, we see very few in the MSM asking them.
Frezza makes a prediction:
The fate of Chrysler and its workers pale in comparison to the wrecking ball that would be taken to economic order if bankruptcy judge Arthur Gonzalez approves the administration’s plan to give Chrysler’s secured creditors the shaft. And what prize will we-the-people get in return? A doomed third-rate car company majority owned by its militant union run by Italian management building congressionally designed “green” cars no one wants to buy financed by taxpayers into perpetuity because no private investor in their right mind will touch the company with a ten foot pole. Is this supposed to be economic policy or comic opera?
I actually think that whatever Gonzalez may decide, Frezza’s description of the characteristics of a new Chrysler-Fiat is likely to be correct.
Meanwhile, it doesn’t look like Chrysler will ever be repaying its billions in government loans. But that’s okay, because:
…Robert Manzo, an executive director with the restructuring group Capstone Advisory Group LLC, said he doesn’t view the government financing as “free money.” “They’re offering financing with a low likelihood of being repaid,” he said.
And if you can explain what Manzo is saying—other than offering us all a huge load of doubletalk—I’d be much obliged.