Monday, May 04, 2009
Stephen Karlson describes how the Chrysler bankruptcy is going to harm the ability of Ford or any other car company from engaging in this kind of innovation:
...this is bad for employees of other companies that will not grow as rapidly as resources those companies might otherwise have claim on flow instead to the legacy car companies; this is also bad for younger employees of the legacy car companies, who will have to face yet another round of difficulties thirty years from now. We see the people spared termination notices at Chrysler. We do not see the job offers from employers that never start up. We do not see the tax collections from those businesses, in the states that are more conducive to business than Michigan.Obama's quick sale has at least been put on 36 hour hold. (UPDATE: Ed Morrissey posts the motion filed to delay the quick sale.) Irwin Stelzer points out one way in which Atlas might shrug after this latest end-run around the rule of law:
And let me remind, this is not about some principle Obama is upholding. He decided to vilify these senior creditors for $250 million. Bloomberg reports:
Obama is pressuring the some 20 "speculators" who are holding out to accept the crumbs that he's offering. But there is more here at stake than the money immediately involved. As George Schultze, managing member of Schultze Asset Management, a hedge fund, told The Wall Street Journal, "This is about contract and bankruptcy law, and upholding agreements -- which is important in the grand scheme of things."
It certainly is. For one thing, the 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.
More broadly, if lenders know that any deals they strike can be overturned by a president who, like Langella/Nixon, can do things that are otherwise illegal because he decides "they are in the interest of the nation," they'll raise the price they charge for their money -- and not only when lending to the government.
Obama�s team had first offered secured lenders $2 billion for their $6.9 billion in loans, and then raised the offer to $2.25 billion. In a game of chicken, the holdouts asked for $2.5 billion, and Obama�s patience ran out.As "Francisco D'Anconia" once observed, "It's the person who would sell his soul for a nickel, who is loudest in proclaiming his hatred of money..." As to the claim of one lawyer that his people were threatened, the White House denies it, but John Carney doesn't buy the denial.
P.S. On a more local, Minnesota note, see Speed Gibson on another group of NIMPPs (Not In My Pension PlanS)