Rich Galen

This is the kind of stuff which used to make headlines, back in the days when it was rare for central governments to take control of private companies. But, these days it passes almost without comment.

Friday, this headline from the BBC:

Chavez seizes oil service firms

The article describes how the president of Venezuela "sent troops to take over companies that provide services for the oil industry."

Chavez didn't try to couch the takeover in terms of TARPs or Stimulus Packages or Stress Tests. Chavez said, "This is a revolutionary offensive."

Chavez nationalized oil companies operating in Venezuela a couple of years ago. The firms which were seized last week "are owed billions of dollars" by the now-nationalized oil company.

The "state firm says lower oil prices mean the contractors are being paid too much" so Chavez went for efficiency and simply seized the services companies and now the state-owned oil company owes them … nothing.

At the end of April the American automobile manufacturer Chrysler declared bankruptcy. This was a pretty big deal because Chrysler is one of the Big Three auto makers, blah, blah, blah.

That Chrysler went into bankruptcy was of some interest. That it was announced by the President of the United States from the White House was extraordinary. And, like Chavez' takeover of Venezuela's oil services companies, went largely unnoticed.

This morning's Wall Street Journal contains a report which makes the Chavez takeover and the Obama takeover eerily similar. According to the piece by reporters Neil King and Jeffrey McCraken, Chrysler's lenders reminded the Obama Administration that they were owed $6.9 billion and they wanted to be repaid. "And not a penny less," said James B. Lee Jr., vice chairman at the bank, in a call to auto task-force boss Steven Rattner on March 29. The next day, Mr. Obama called the banker's bluff. The president stepped before a podium to announce that Chrysler could face a disorderly bankruptcy or even liquidation. His meaning was clear: If that happened, the lenders would get nowhere near $6.9 billion.

Note the parallel. Chavez decides the oil services companies were owed too much, so he took them over. Obama decides Chrysler's creditors were owed too much so he took Chrysler into bankruptcy.

The advantage that Obama had was the lenders were largely Wall Street bankers, brokers, and hedge funds. Hardly the current darlings of the American press or public.


Rich Galen

Rich Galen has been a press secretary to Dan Quayle and Newt Gingrich. Rich Galen currently works as a journalist and writes at Mullings.com.