There’s some interesting stuff out there to read about the Chrysler bankruptcy, like people asking “why wasn’t this done in the beginning”?
Simple answer – in the beginning there was no way to secure the UAW a majority stake in the company. Now, as Felix Salmon points out, that’s been accomplished:
The broad outlines of a deal are already clear: Fiat will take a 35% stake in the company and manage it; the UAW will have a 55% stake; and all the government’s TARP funds will be converted into a 10% stake. Present-day creditors do not get equity but rather get cash; the sticking point is exactly how much cash they will get. And of course present-day shareholders — Cerberus and Daimler — are wiped out, and top management will be replaced.
Of course the reason Chrysler is headed into bankruptcy is because all of its bondholders weren’t satisfied with the deal offered through taxpayers money. As you might imagine, Think Progress has the “progressive” spin on the situation:
As Bloomberg reported, “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.” Steven Pearlstein put these numbers into perspective:
What you need to know about these vultures is that their idea of fairness is throwing 100,000 people out of work and denying retirees their pensions and their health benefits just so they can liquidate the company and maybe squeeze an extra 15 cents on the dollar from their Chrysler debt. Of course, to get that extra 15 cents, the hedge funds would probably have to fork over a penny or two to pay the army of $700-an-hour lawyers needed to spend two years working it through the bankruptcy process.
The greed factor here is really appalling, but bad intentions can sometimes produce a good result.
The greed factor here certainly is appalling, but not on the part of the group Think Progress would like us to believe is the problem. I mean, how dare secured lenders ask for more money than a paltry 30% of what they lent Chrysler? In the new world of what’s fair, apparently asking for 30% is unfair and greedy. And frankly with an administration which has tossed trillions around like they were beads at Mardi Gras, it seems that somehow $250 million more was just a “bridge too far” when it came to keeping the deal together.
More importantly, what in the hell is the President of the United States doing involved in this sort of process to begin with? Oh, wait, the UAW gets 55% ownership?
All of this is necessary but not sufficient for Chrysler to have any hope of a long-term future. One of the more interesting things going forward will be how Chrysler manages to turn itself into a smaller, nimbler, change-oriented company while being majority owned by the UAW — which is nobody’s idea of a change agent. In general, if you need a dose of creative destruction, big unions are not the place to look.
You think? Another wonderful deal put together by the folks who want to run your health care. And yes, I know this isn’t perfectly analogous to the British Leyland situation, but it certainly has some striking similarities. A labor union will most likely have to decide between it’s previous decades of focus and producing cars that people want and can afford. And government involved in the deal up to its armpits. In case you missed it, the government will appoint four of the nine member board and the Canadian government will appoint one. Fiat is essentially a management entity with only 3 on the board and a 35% stake. And while the UAW will only have one seat, it will be a seat representing 55% ownership.
Yeah, nothing can go wrong with that.
An moment of sanity prevailed in the Senate today:
For the second time in two years, a provision to allow bankruptcy judges to modify mortgages died in the Senate today, handing the Obama administration a significant defeat in its plans for arresting the foreclosure crisis.
Supporters argued the measure would keep 1.7 million borrowers in their homes, but it ultimately foundered in the face of fierce financial industry and Republican opposition. The bankruptcy modification provision, which was offered an amendment to a broader housing bill, failed by a vote of 45 to 51.
I love how this is reported by the WaPo. The measure failed because of ‘fierce financial industry and Republican opposition?”
Apparently it failed because 14 Democratic Senators said “no”.
Of course, passage of such a measure would make legal contracts in this country subject to review by the courts and arbitrarily changed based on political concerns. Certainly, in this case, such power is only being given for changing mortgage amounts – but as we all know, precedent is what courts operate under, and such a precedent would just as certainly be used to attempt to give the court similar power with other types of contracts.
It’s a phenomenally bad idea, but one you can expect to see attempted again and again, as promised by Dick Durbin:
“I’ll be back. I’m not going to quit on this,” said Senate Majority Whip Richard J. Durbin (D-Ill.), who sponsored the measure.
“At some point the Senators in this chamber will decide the bankers shouldn’t write the agenda for the United States Senate. At some point the people in this chamber will decide the people we represent are not the folks working in the big banks, but the folks struggling to make a living and struggling to keep a decent home.”
You’ve got to love the populist rhetoric and the absolute misrepresentation of what he and those that were trying to get this monstrosity passed were attempting. A fundamental change in how this country has operated since its inception. If courts can arbitrarily change the terms of a contract for social/political reasons, we’re doomed. And that’s precisely what Durbin and his ilk are proposing.
Unfortunately I have no confidence that he won’t manage, at some future time, to push this piece of legislation through. But at the moment, it’s where it needs to be – in the virtual garbage heap of bad legislation.
Gen. David Petraeus says it is put up or shut up time for Pakistan. They’ve let the Taliban establish itself within Pakistan’s Swat valley and they are now threatening other areas. We covered that in a post about the price of appeasement.
“The Pakistanis have run out of excuses” and are “finally getting serious” about combating the threat from Taliban and Al Qaeda extremists operating out of Northwest Pakistan, the general added.
But Petraeus also said wearily that “we’ve heard it all before” from the Pakistanis and he is looking to see concrete action by the government to destroy the Taliban in the next two weeks before determining the United States’ next course of action, which is presently set on propping up the Pakistani government and military with counterinsurgency training and foreign aid.
Earlier in the month the Talibs had advanced within 70 miles of the capital, Islamabad. So what about the nuclear weapons?
The officials who spoke with Petraeus, however, said he and they believe that even were Zardari’s government to fall, it was still conceivable that Kayani’s army could maintain control over the nuclear arsenal.
That is because the Pakistani arsenal is set up in such a way — with the weapons stockpile and activation mechanisms separated — so as to prevent easy access by invaders. Moreover, the Taliban is not believed at present to possess the sophisticated technical expertise necessary to exercise full “command and control” over a nuclear arsenal, and would probably require weeks if not months to develop it.
Oh wonderful – they don’t possess the knowledge now, but a few months, and the Taliban could be nuclear. And, of course, we know what organization would be a beneficiary of such a capability, don’t we?
Pakistan is suddenly a much more critical story than either Iraq or Afghanistan. So what is our plan?
As for the security of the Pakistani nuclear arsenal, Secretary of State Hillary Clinton said last Saturday, in an interview with FOX News in Baghdad, that the U.S. believes the arsenal to be “safe” but only “given the current configuration of power in Pakistan.”
She described as “the unthinkable” a situation in which the the Zardari government were to be toppled by the Taliban, adding “then they would have the keys to the nuclear arsenal of Pakistan, and we can’t even contemplate that. We cannot let this go on any further…”
You know, say what you will about the last administration, but if they had said what Clinton said, I’d pretty well understand what they meant. But with this administration I have no idea what “we cannot let this go any further …” means.
Let the real scary part of the “all Democrats all the time” begin:
Factors in his decision no doubt include the election of President Obama, who would be more likely to appoint a successor attuned to the principles Souter has followed as a moderate-to-liberal member of the court’s more liberal bloc over the past two decades.
The problem, of course, is that Souter could be one of three appointments Obama might have the opportunity to make within his 4 years in the White House. Apparently neither Stevens or Ginsburg plan on retiring after this term, but Stevens is 89 for heaven sake and Ginsburg just got over a bout with cancer.
Rumor has it that Obama wants to appoint a woman (I guess “best qualified for the job” is just too much to ask):
Possible nominees who have been mentioned as being on a theoretical short list include Elena Kagan, the current solicitor general who represents the government before the Supreme Court; Sonia Sotomayor, a Hispanic judge on the U.S. Court of Appeals for the Second Circuit; and Diane Wood, a federal judge in Chicago who taught at the University of Chicago at the same time future President Barack Obama was teaching constitutional law there.
Just looking at the list, Sotomayor would be the diversity daily double winner and don’t anyone think that won’t enter into the conversation when nominees are being discussed.
UPDATE: George Stephanopoulos thinks Sotomayor is a ‘heavy favorite’.
UPDATE II: MichaelW hopes if he chooses from that list that his choice is Kagan. Here’s why.
Remember: billions in earmarks are insignificant but, millions in bonuses are outrageous; “bi-partisan” actually means “one-party rule”; and now “bankruptcy” means “strong.” From Jake Tapper’s Twitter feed:
POTUS says bankruptcy “not a sign of weakness”…
Can’t you just see the White House Press Corps (excepting Tapper, of course) looking like the bunch of lapdogs that they are in response to that statement?
MORE: Tom Maguire is less than impressed with the President’s reasoning about shared sacrifice with respect to the Chrysler bankruptcy:
Uh, hello, how about the US taxpayer? Any props, exhortations, or acknowledgment of their role here? Sorry, MY role?
The Congress – yeah, they have to sacrifice an endless stream of donations from the UAW.
Or so the saying goes – but in this case it may have a ring of truth to it.
Democrats have been quick to dismiss the Tea Parties which were held in hundreds of locations throughout the country as nothing more than a few disgruntled right-wingers who are sore losers. But instead, they may be the most visible part of a much larger movement that is saying “enough is enough”. And nothing may demonstrate that more than the upcoming special election in California.
Voters there are apparently tired of the legislature not doing its job, and see the 6 ballot measures as the legislature trying to pass the buck instead of doing their job. Consequently, we find a broad consensus that crosses party lines, in opposition to most of the ballot measures proposed. The one most likely to pass, interestingly, has to do with refusing legislators a raise if the state’s budget is in a deficit. In California that means whatever they’re making now is likely to be their pay from now on. Of course, I’d love to see the same sort of measure passed for the Congress of the United States.
To demonstrate the point of citizen bi-partisanship on this are a Republican and Democrat speaking about the upcoming vote:
Voter Barbara Dale, a Republican from Red Bluff, said she will be happy to vote in the special election because she is convinced that lawmakers can’t do their job themselves.
“I don’t like a lot of the things that they’re doing,” said Dale, who plans to vote “no” on Proposition 1A, which seeks to impose state spending restrictions but would trigger $16 billion in extended tax hikes.
“They’re just pushing things through,” Dale complained of lawmakers. “They’re spending too much money, they’re raising taxes, and they’re chasing businesses out of California.”
But Dale particularly wants to vote “yes” on Proposition 1F – the measure to deny elected officials pay raises when there is a state general fund deficit.
So does Democrat Vincent Anderson, an American River College student in Sacramento County.
“Why would we pay them more money when it seems that they’re never doing their job?” Anderson asked. “Their job is to run the state.”
Anderson, who opposes most of the budget reform measures, said he is offended the initiatives are even on the ballot.
“They’re just passing the buck,” he said. “California has been in debt for a while. Why is this (special election) so important now?”
In fact, a large majority of voters polled are not at all happy with the direction of their state’s government:
The poll found a greater proportion of Republicans opposed to the measures than Democrats. More than three-fifths of Republicans oppose the fund shifts proposed in Propositions 1D and 1E, even though both ideas originated with GOP members of the Legislature.
But healthy majorities of both parties – 72 percent overall – answered “yes” when pollsters asked if voting down the measures “would send a message to the governor and the state Legislature that voters are tired of more government spending and higher taxes.”
Now anyone that doesn’t understand that it isn’t just “state government” which has embarked on a program of “more government spending and higher taxes” isn’t paying attention. Thus the “Tea Parties”. If what is going on in California is typical of the developing mood around the country, and I think it is, then Democrats waive off the Tea Parties at their own electoral peril. Instead of Tea Parties being gatherings of a “few hundred” disgruntled “right-wingers” who are “sore losers”, they may just be the tip of a gigantic ice berg of discontent which will begin manifesting itself at the polls as it appears it will in California.
As an aside – that doesn’t mean the GOP is the winner in all of this. I think most of the Tea Parties demonstrated that the people who attended are just as fed up with Republicans as they are with Democrats.
As you may or may not know, I just sent the last week touring the houses of Thomas Jefferson, James Madison and James Monroe – three of this nation’s founding fathers. So when I glanced through the following interview with Barack Obama I tried to picture any of these three men ever contemplating this question or a role for government in the context of the question and frankly, it’s unimaginable.
The only vision I could even begin to imagine is the three of them looking on sadly and shaking their heads “no” in unison as they tried to grasp the size of government and the depth of its intrusion into the lives of citizens the questions and answers indicated. I’m sure they’d also be trying to figure out where it all went wrong. The questions have to do with “end of life care”:
Q:…where it’s $20,000 for an extra week of life.
THE PRESIDENT: Exactly. And I just recently went through this. I mean, I’ve told this story, maybe not publicly, but when my grandmother got very ill during the campaign, she got cancer; it was determined to be terminal. And about two or three weeks after her diagnosis she fell, broke her hip. It was determined that she might have had a mild stroke, which is what had precipitated the fall.
So now she’s in the hospital, and the doctor says, Look, you’ve got about — maybe you have three months, maybe you have six months, maybe you have nine months to live. Because of the weakness of your heart, if you have an operation on your hip there are certain risks that — you know, your heart can’t take it. On the other hand, if you just sit there with your hip like this, you’re just going to waste away and your quality of life will be terrible.
And she elected to get the hip replacement and was fine for about two weeks after the hip replacement, and then suddenly just — you know, things fell apart.
I don’t know how much that hip replacement cost. I would have paid out of pocket for that hip replacement just because she’s my grandmother. Whether, sort of in the aggregate, society making those decisions to give my grandmother, or everybody else’s aging grandparents or parents, a hip replacement when they’re terminally ill is a sustainable model, is a very difficult question. If somebody told me that my grandmother couldn’t have a hip replacement and she had to lie there in misery in the waning days of her life — that would be pretty upsetting.
“…society making those decisions to give my grandmother … a hip replacment?” Above that he points to a doctor giving who that choice?
Below that who is Obama talking about making that decision or having that choice? Well it isn’t his grandmother. And although he uses the term ‘society’, he means government. Note he says that if someone had told him no he’d be upset, but he’s setting up the table to be ‘upset’. This is an old Obama trick – acknowledge the downside in a very personal way while still pushing for that downside.
Q: And it’s going to be hard for people who don’t have the option of paying for it.
THE PRESIDENT: So that’s where I think you just get into some very difficult moral issues. But that’s also a huge driver of cost, right?
I mean, the chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care bill out here.
Anyone who hasn’t quite figured out the rationing model Obama is talking about with his answers to these two questions needs to take a remedial reading course. Anyone – where does he see the opportunity to “cut costs” in the medical field?
And, how will he do it. Unless you’re still hungover from celebrating Guinesses’ 250th birthday, he is talking about denial of service especially to the elderly. Government will determine whether or not you’re worth that $20,000 operation. And the “moral issue” he’s talking about is all wrapped up in egalitarianism. What he’s implying may be “immoral” is allowing those who can pay access to the service while those who can’t pay (and for whom government won’t pay) are denied it.
Again, contemplate the model Obama talks about – reducing the cost of health care – and tell me which way that “moral issue” would be decided? Got the money? Too bad – it would be “immoral” to let you buy the service others are denied.
Q: So how do you — how do we deal with it?
THE PRESIDENT: Well, I think that there is going to have to be a conversation that is guided by doctors, scientists, ethicists. And then there is going to have to be a very difficult democratic conversation that takes place. It is very difficult to imagine the country making those decisions just through the normal political channels. And that’s part of why you have to have some independent group that can give you guidance. It’s not determinative, but I think has to be able to give you some guidance. And that’s part of what I suspect you’ll see emerging out of the various health care conversations that are taking place on the Hill right now.
What a question. The assumption is swallowed whole. Where was the question “what if ‘we’ don’t want others making those decisions?”
And apparently you guys in fly-over country are too emotionally involved to make that sort of a decision through “normal political channels” so government have some unelected outside group develop the “guidance.” Only the elite can answer these questions properly.
Three questions, stunning in their implications. Three answers which should make the skin of all lovers of liberty crawl. I’m again left imagining Jefferson, Madison and Monroe listening in on this with unbelieving looks of horror on their faces. The irony is, their opposition to this incredible power grab by government would again leave them in the category of “radical”.
Down economy? Tax revenues in the toilet? Don’t worry Bunky, government will always find a way to keep it’s revenue stream full:
The days of buying online to avoid paying sales taxes may soon be over.
A bill is expected to be introduced to Congress this week that would force retailers like eBay and Amazon.com to start collecting sales taxes on behalf of states from people who shop online or through mail order.
Of course if you know anything about government you also know this was inevitable. However, it is lines like the following which make my blood boil:
“This would be fiscal relief for the states that wouldn’t require any money from the federal government,” said Neal Osten, a senior policy analyst with the National Conference of State Legislatures, which is drafting the bill.
Osten pointed to a recent study that said state sales tax collections fell to their lowest levels in 50 years at the end of 2008.
My earnings are not there to be “fiscal relief” for profligate states who find themselves with budget shortfalls due to poor budgetary practices. Osten seems to think this is some sort of money tree he’s discovered. More importantly, he seems to view the money as rightfully the government’s, not that of the wage earner. And notice, it is a lobbying group with a vested interest in the outcome writing the legislation. What happened to that promise about “no lobbyists” the new administration made? Special interest democracy is alive and well.
Of course a recession is a great time to pass tax legislation like this – why not cool another segment of the economy by giving priority to government tax collections over spurring economic growth?
The more I observe these lunatics and consider their blinkered and ignorant view of the economic world, the less confidence I have that they’ll figure out that the way out of a recession is to cut taxes, not pass new ones.
My latest Examiner article. Apparently spending $7 million per job is something to brag about if you believe Ray LaHood.