Does Obama’s bullying of investors portend real problems for the US?
Johnathan Pearce (London) Globalization/economics • North American affairs
I have not written about the subject of the Chrysler bailout so far since, not being close to the action in the US, I did not feel I had much to say that was not already voiced by the US blogs. But it does occur to me that there is a general problem right now in the way that the US administration – and arguably the UK one as well – has been acting in respect of bailouts of certain industries, such as carmakers as well as banks. What do I mean? Well, this report (H/T: Instapundit) suggests there is real fear about the “Nixonian” tactics employed by Mr Obama’s administration against bond-holders who have been angered by the expropriation of their capital via the Chrysler bailout.
For those who have not been following this story, bond-holders have been pushed to the back of the queue, as far as potential recovery of capital is concerned, with the auto union membership getting preferential treatment. Maybe Mr Obama figures that investors can be rained on right now because it is more important to get the votes and support of traditionally Democrat-leaning car workers. With mid-term Congressional elections a couple of years away, he will have his sly, Chicago machine-politics mind working out how to garner important support in the event that the US economy is still sluggish by that time. But pissing off investors – such as, let it be noted, pension funds – is not smart. The US requires large amounts of capital for any economic recovery that may take place. Ask yourself one of the most basic questions any investor should ask: can I get my money back if I need to? If the answer is no or only maybe, and if there is the threat of governments robbing investors, then less investment occurs. The problems of such behaviour explain why, for example, Africa has been such a bad investment bet for so many years.
It is an ugly business. Part of the trouble with the automakers is that even if they had been put into a Chapter 11 bankruptcy process, with the banks and bondholders put on a more even footing for any recovery of assets, there is still the issue of what to do about the enormous unfunded pension obligations that these heavy industrial companies have. It is the same with airlines and steel. I have heard it said of British Airways – to take a UK example – that is is a pension scheme that happens to have a lot of aircraft. The pension tail can wag the corporate dog. And that is a hideous issue to deal with against the background of an ageing population. So in fairness to US policymakers, running down Chrysler involves dealing with a lot of tricky contractual issues.
Even so, it strikes me that the Obama administration is showing a level of political ruthlessness and “bugger-the-investor” attitude that is hardly going to endear people towards investing in that economy. My fear is that Mr Obama is making the cynical calculation that memories will fade; after all, how many investors in the UK remember how the Blair government, in the form of the charmless Stephen Byers, the-then industry minister, shafted investors in Railtrack?
Like I said, an ugly business.
It certainly helps when you cheat your way into the Presidency (via ACORN and funds coming from overseas [contrary to finance laws])
First lady Michelle Obama called her “current life” in the White House “a very blessed situation, because I have what most families don’t have — tons of support all around, not just my mother, but staff and administration.
I have a chief of staff and a personal assistant, and everyone needs that
“Everyone should have a chief of staff and a set of personal assistants,” Obama said with a laugh as she spoke before a crowd of business executives meeting today during a “Corporate Voices for Working Families” conference at the Mayflower Hotel in Washington.
The honest truth of the government’s approach to the Constitution
What’s interesting is that a good majority of the people involved in the Chrysler dispute, including the lawyers, VOTED for Obama
To hell with the Constitution, the rule of law, the integrity of contracts and any other written limitation on their power – they will do anything they can get away with. Which means that we are all at risk, and the only reason some of us haven’t been targeted is that Obama simply hasn’t turned his attention to that particular sector yet. But he will – it’s only a matter of time.
Two, the moment anybody gets in the way of their grandiose communist plans, the Obama Administration’s first instinctive reaction is to threaten people with personal destruction. This suggests both a childishness – throwing a temper tantrum the moment it seems their object of desire might be put beyond their reach – and an evil large in scope.
When you stoop that low right out of the gate, the extremity of it indicates a total lack of conscience. Just ask Robert Bork, Clarence Thomas and Sarah Palin how it feels to be so instantly targeted by the left for annihilation. And the haste of it portends an intention to go much farther than that one area – hence the need to get it over with quickly, so as to proceed to the next victim.
Third, the fact that the Obama Administration would so confidently wield the press as a weapon indicates that they aren’t merely vomit-inducing in shoving their tongues up his teleprompter-dependent bunghole in blind worship. The media, by the White House’s own de facto admission in having issued this threat, will not only refuse to report and thus cover up the malicious misdeeds of their “messiah,” it will happily and obediently destroy his enemies upon his marching orders. They are, in essence, his club-wielding goon squad. (Whereas a Republican president so threatening people would result in screaming for impeachment and ululating echoing through newsrooms as they wrote veritable fatwas of jihad against him.)
That sound you hear is Thomas Jefferson rolling over in his grave, as the two entities he presumed to be natural antagonists – the press and government – join forces to trash the founding documents and the nation he helped create.
Just what country and time are we living in? The United States of 2009, or Stalin’s Soviet Union of the 1930s?
So Obama is going to let the Spanish prosecute US government administrators….good job upholding the Constitution, buddy.
Obama has taken ambiguous, and flatly contradictory, positions on whether to prosecute Bush administration advisers and decision makers involved in “harsh interrogation techniques.” Although he immunized intelligence operatives who conducted the interrogations, morale at the CIA is at record lows. The president has played to the crowd politically, but the principles underlying his policies are opaque and continually subject to change. This hardly constitutes leadership.
This is the government that you can trust
THE GOVT DECLARES ENEMIES of the STATE
Homeland agency pulled back extremism dictionary
WASHINGTON — The same Homeland Security Department office that categorized veterans as potential terrorists issued an earlier report that defined dozens of “extremists” ranging from black power activists to abortion foes. The report was nixed within hours and recalled from state and local law enforcement officials.
Whites and blacks, Christians and Jews, Cubans and Mexicans, along with tax-hating Americans were among several political leanings listed in the “Domestic Extremism Lexicon” that came out of the Office of Intelligence and Analysis (I&A) in late March.
The lexicon lists definitions for key terms and phrases used by Homeland Security analysts “that addresses the nature and scope of the threat that domestic, non-Islamic extremism poses to the United States,” the report said.
If only Obama would employ Jack Bauer without restraints…
Jim Geraghty’s axiom continues to apply as another Barack Obama Position Expiration Date arrives. After a series of rebuffs towards those who want war-crimes trials against Bush administration officials for allegedly approving torture, Obama reversed himself today and suggested that such trials might take place. Jake Tapper gives the details:
Earlier today, an employee of CB Richard Ellis forwarded me an internal memo distributed to all employees after the Washington Times exclusive on alleged abuse of power and conflict of interest by Senator Dianne Feinstein. The senior Senator from California allegedly pushed $25 billion to the FDIC in unusual federal funding at the same time the agency was granting a bid by CBRE to manage its residential-foreclosure properties and sell them at higher-than market commissions. CBRE’s board chairman is Richard Blum, Feinstein’s husband.
Needless to say, CBRE isn’t exactly impressed with the Washington Times, but their logic seems a little short of the mark here. I’m posting the memo in its entirety to ensure readers see the entire context. I’m removing the names on the memo, as they’re not really material to the story. An e-mail to CBRE’s media office has so far not been answered:
MORE INFORMATION FOUND HERE:
Obama’s Hope and Change = Doubling Your Taxes
Op-ed on CNN: Why Your Taxes May Double, by David M. Walker (President & CEO, Peter G. Peterson Foundation; Former Comptroller General of the United States and Head of the Government Accountability Office):
Even under the best of economic circumstances, tax season is a tense time for American households. The number of hours we collectively spend working on our returns is probably a lot more than government agencies claim.
The burden in financial terms is even greater: A recent independent survey found that the average American’s total federal, state and local tax bill roughly equals his or her entire earnings from January 1 up until right before tax day.
Now imagine that tax bill doubling over time. …
Regardless of what politicians tell you, any additional accumulations of debt are, absent dramatic reductions in the size and role of government, basically deferred tax increases. Remember the old saw? “You can pay me now or you can pay me later, with interest.”
To help put things in perspective, the Peterson Foundation calculated the federal government accumulated $56.4 trillion in total liabilities and unfunded promises for Medicare and Social Security as of September 30, 2008. … If $56.4 trillion in financial commitments is too big a number to digest, think of it as $483,000 per American household, or $184,000 for every man, woman and child in the country. …
Meet Owen & Payne, partners in a fictional accounting firm that specializes in helping Americans fill out the “new” Form 483000, which spells out how our elected officials are putting our nation into more and more debt and how that bill eventually will have to be paid: By doubling your taxes. The campaign is all in fun, but the intent is very serious.
Unless we begin to get our fiscal house in order, there’s simply no other way to handle our ever-mounting debt burdens except by doubling taxes over time. Otherwise, our growing commitments for Medicare and Social Security benefits will gradually squeeze out spending on other vital programs such as education, research and development, and infrastructure.
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