Since When did Obama Care About the Rule of Law?

Posted: Feb 24, 2012 12:01 AM

So, the ECB decides to exchange one type of Greek bond for another.  The exchange, in essence, puts the ECB on a different playing field from other bondholders. 

For instance, profits may be gleaned that others may not obtain. 

The ramifications of changing the rules are slowly starting to hit home as bondholders such as Bill Gross exhibit displeasure.  Haven’t we seen this happen before? 

When the rule of law got in the way for Barack Obama, he took to the airwaves.  Speaking directly to all those moms-and-pops who desperately depended upon GM bond interest in order to survive, the President reminded them that going to the back of the line was the patriotic thing to do. 

Anyone who thought that owning a senior subordinated AAA rated General Motors bond for safety and income was wildly disappointed. 

For years, the term senior subordination meant that other than taxes, all other claims against the assets of the corporation were secondary to the senior bonds. 

One could take comfort in the fact that on the remote and almost impossible bankruptcy of General Motors, mom-and-pop were protected by all of the corporate assets. 

It was General Motors for goodness sake, and the rule of law. 

Unfortunately, today, neither the Obama administration nor the ECB consider anything other than what is expedient for themselves.  In light of both government and central bank willful disregard for the rule of law, how should any bondholder feel? 

Afraid, very afraid. 

Since the ECB has been orchestrating the flow of funds into sovereign debt markets, the so-called professionals have maintained a wary eye knowing full well that at any instance the rules of the game could change. 

The worst thing of all is that the public, including institutions, have accepted what is being thrust upon them. 

Where was the outrage regarding Obama’s GM caper?  Has there been dramatic protests because of the ECB’s questionable actions? 

The answer is no. 

The world seems to be mesmerized by meetings, deadlines, flourishing announcements, and by the ever upward push of the Dow Jones Industrial Average. 

Principles such as the rule of law don’t really matter until we’ve lost them, and then it’s too late. 

Only then, maybe people will start paying attention. 

Or not.