In the case of Chrysler, several of the institutions to which it owes money are banks that accepted government bail-out funds last year and earlier this year. Those banks are now enslaved to whatever President Obama and the U.S. Treasury Department tell them to do. So when Obama tells, say, “bank X” to “accept twenty-eight cents on the dollar as payment of the debt Chrysler owes you,” well, those banks are obliged to obey Obama, whether or not it makes financial sense to do so, and whether or not bankruptcy law allows that bank to demand more.
But the private sector economy got in the way of Obama’s plans to save the world, because some of Chrysler’s secured creditors are hedge funds, that, unlike the “bailed-out banks,“ are NOT under Obama’s control. Several of the hedge fund managers involved in the situation did what they are permitted to do under bankruptcy law, and demanded more than the meager “pennies on the dollar” loan repayment that President Obama was ordering them to accept.
And this is when dear leader Obama moved in to “tirade mode.” Lashing out at the hedge fund “hold outs,” he succumbed to name-calling and insults, claiming that the “greedy” hedge fund managers were standing in the way of saving Chrysler.
Was it his naivety that prevented him from seeing the obvious - - that the hedge funds, and those Americans who had invested their personal money in those funds - - were the very thing that has kept Chrysler afloat in the first place? And is he so naïve to think that he will, to use his terms, “get credit flowing in America again,” while using his office to ruthlessly steamroll over the top of contracts, accounting rules, legal precedents, and law itself? Does he really think that he will “save” the U.S. economy and get banks lending again and get people with money to invest in new businesses and begin producing new employment opportunities, by denying legal rights to investors?
President Obama has now demonstrated to the world’s investors that rules and laws don’t matter - - his personal and political preferences are what matter, and he will get his way, even if investors are denied their rights and damaged in the process.
If Obama’s objectve is to weaken the U.S., so as to make a “more fair world,” he’s well on his way to achieving that goal. Yet if Obama actually wants something other than a weaker U.S., then his naivety is something America cannot afford.
Austin Hill is an Author, Consultant, and Host of "Austin Hill's Big World of Small Business," a syndicated talk show about small business ownership and entrepreneurship. He is Co-Author of the new release "The Virtues Of Capitalism: A Moral Case For Free Markets." , Author of "White House Confidential: The Little Book Of Weird Presidential History," and a frequent guest host for Washington, DC's 105.9 WMAL Talk Radio.
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