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News

Barack Obama outlaws capitalism: threatens Chrysler’s non-TARP creditors

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UPDATE: More details about this story and related stories of government intervention and wealth redistribution are here.

UPDATE: Welcome visitors from 4Simpsons! Thanks for the link!

This bombshell comes to me from my favorite commenter ECM.

Newsbusters is reporting that the White House is making threats to Chrysler’s creditors. Obama is living that these creditors allowed Chrysler to go bankrupt, because he would prefer to throw your money at his auto union worker constituents. What does it mean when the President of the United States threatens and coerces private investors?

  • Private property is abolished
  • The free market is abolished
  • The rule of law is abolished
  • The Constitution has been abolished
  • Private contracts are abolished
  • Capitalism is abolished

It means that socialism has come to the United States, just as the rest of the world is abandoning a failed system.We are now the equivalent of Zimbabwe and North Korea! Our run of liberty and prosperity is now OVER.

The source of the story is a radio interview conducted between 760 WJR’s radio host Frank Beckmann and Tom Lauria, the attorney representing Chrysler’s non-TARP creditors. I am reproducing the full transcript, because you need to read the whole thing, especially what I’ve bolded.

Beckmann: So what’s the matter with your vulture clients who are so greedy and selfish. Why won’t they go along with this?

Lauria: Well, they bought a contract that says that they get paid before anyone else does by Chrysler. And they have been told by the government who is in complete control of Chrysler, oddly enough, that despite their contractual right, they do not get paid before everyone else.

So they are standing on their rights, standing on the law, trying to defend in effect what is the Constitution of the United States, to make sure that they get what they’re entitled to for their investors.

Beckmann: Tom, let me make the argument against you in another way. We’ve heard the President say this, “I wouldn’t want to stand on their side.” Ron Gettelfinger says “Everyone else has made concessions. These people won’t; they’re greedy.” Why not take a concession that is being asked of everybody else and is being accepted by everybody else, including other hedge funds that had bought some of these bonds in Chrysler?

Lauria: Well that’s a great question, because let me tell you it’s no fun standing on this side of the fence opposing the President of the United States. In fact, let me just say, people have asked me who I represent, and that’s a moving target.

I can tell you for sure that I represent one less investor today than I represented yesterday. One of my clients was directly threatened by the White House, and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight. That’s how hard it is to stand on this side of the fence.

Beckmann: Was that Perella Weinberg?

Lauria: That was Perella Weinberg.

Beckmann: All right.

Lauria: Now let me just tell you, to be clear, that we do not oppose the rehabilitation of Chrysler. We think it is vitally important that a company like Chrysler be protected to the extent that it can be within the framework of the law. I want to also say that we do not oppose the government backstopping or supporting the pensioneers and retirees and workers of Chrysler.

I actually think that in a troubled economic time like we’re in, that is an appropriate role for the government to perform. What we do oppose, however, is the abuse of the bankruptcy law to coerce first-lien lenders subsidize the rehabilitation of Chrysler or the backstop of the obligations to the pensioneers and retirees beyond what they will do voluntarily.

And just to be clear, these clients of mine have agreed to compromise 50% of their first-lien position to help support the rehabilitation of Chrysler — Contrary to what the President said yesterday in his new conference that “these people will not give to support the effort,” they have agreed to compromise 50% of what they’re owed to support the rehabilitation of Chrysler, despite the fact that they’re under no obligation whatsoever to do so.

That is what we stand for, and that is what we’re going to go to court to fight for.

Beckmann: OK, so they have offered to take 50 cents on the dollar. What are they being offered in return, and how does that compare to what other stakeholders, say the UAW, are going to be receiving?

Lauria: Here’s the troubling circumstance here. My clients bought a position in the Chrysler capital structure that entitles them to be paid “first dollars out.” That is, they’re to be paid 100 cents of what they’re owed before any junior creditors get a penny.

The government has offerend them 29 cents on the dollar, in the context of a restructuring of Chrysler that will send over $10 billion of value to junior claims. And when I say $10 (billion), that’s a floor. As we’re continuing to review the papers that Chrysler has filed in the bankruptcy court, that number may actually be more like $20 billion. So in other words, my clients, who are contractually entitled to 100 cents on the dollar, are being asked to take 29 cents on the dollar, while junior creditors are being offered somewhere between $10-$20 billion of value in the Chrysler rehabilitation.

Now I ask your listeners, what would they do if they were in our position?

Beckmann: Now Tom Lauria, let me cite a New York Times piece, I believe this was yesterday’s New York Times. No, it’s today’s as a matter of fact. And it says about the creditors who are standing firm: “Many of them bought Chrysler debt for about 30 cents on the dollar.” So what they’re saying is, “Look, they got a discount to begin with. They’re getting a good deal here. If they bought it for 30 and they’re being offered 29, that’s a great deal, better percentagewise than anybody else got.”

Lauria: Well, what people need to understand, first of all, that that is only speculation. There are people who bought this debt at par in my group, there are people who bought this at 70 cents, there are people who bought it at other prices. But what people really need to understand is that the people who bought this debt are pensioneers, teachers’ credit unions, personal retiree accounts, retirement plans, college endowments. That’s who my clients act as fiduciaries for. And they make all kinds of investments. And as you can imagine in this economy, there are numerous of those investments that have gone bad.

This was an investment that people made based on their assessment of the assets of Chrysler, and the view that this was a very secure, very safe investment. And they bought a contract that said they would get a very low rate of return in exchange for that high level of security. So the argument about what they paid for their investment really is irrelevant.

The fact of the matter is they bought a contract that said “you’re first in line, and in exchange for that you’re going to get a very low rate of return.” And I think everybody in this country should be concerned about the fact that the President of the United States, the executive office, is using its power to try to abrogate that contractual right. If the President will attack that contractual right, what right will it not attack?

Beckmann: You made a comment to me before we went on the air about the significance of this case as it relates to the Constitution. I’d like you to explain that to my audience.

Lauria: Well, look, there are kind of two aspects to that. The first is the right to property and the right to contract are kind of sacronsanct in this country. I think everybody understands that when you make a deal it’s supposed to be honored, and if it’s not honored you’re supposed to be able to get protection in court. And what is happening here, through the force of the United States government, and that’s what’s disturbing about this — I mean, private parties have contract disputes all the time — but for the United States Government to step in, the Executive Office of the United States Government, who under the Constitution is charged with enforcing the laws to step in and try to in effect break the laws, I think we should all be concerned about that. That is a constitutional issue.

OK, number one. Number two, realize that our Constitution is premised on the notion that there is a balance between the three branches of government: the executive, the legislature, and the judiciary.

And what’s going to be happening, in fact I’m going to have to go here, because I’m heading down to the bankruptcy court to start taking on this battle, which is of epic proportions. But what is going on here is you’ve got the executive branch coming into the judicial branch. And I think it is really important for the Constitution of the United States that people understand that the judicial branch can stand independent and interpret and apply the laws as it’s required to do under the Constitution in the face of intense pressure from the Executive branch to do otherwise.

Beckmann: Tom Lauria, really appreciate it. Final question, will Oppenheimer Funds and Stairway Capital, your other two clients in this, are they committed to standing firm? I’ve got to believe they’re facing the same pressure Perella Weinberg did before it changed its mind and said “Okay, we’ll go along now.”

Lauria: Well they are today, but the Executive Office hasn’t called them yet and made threats to them. So, maybe by tomorrow I won’t have any clients, and maybe this fight will be over.

Click the link below to see more commentary from National Review, Wall Street Journal and Hot Air.

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News

What is Obama working on instead of making Americans safer?

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Below is the video of the new Republican ad that highlights all the recent bungling by Obama on national security and foreign policy. (H/T Gateway Pundit)

The Patriot Room has more on this effective ad.

Check out this post on Obama’s opposition to waterboarding. And this one of Obama’s military spending cuts. A general article listing the administration’s failures on national security and foreign policy. And an essay I wrote on the conservative doctrine of peace through strength. And don’t forget last week’s Friday night funny on Obama’s plan to undo the effects of Bush’s successful national security policies.

Robert Spencer over at Jihad Watch has this post up about how Obama overruled the CIA and FBI in order to release Gitmo detainees into the United States.

Excerpt:They told him these guys were dangerous jihadists, and Obama doesn’t seem to care. They’re coming to your neighborhood whether you or the FBI or DHS like it or not. Relax. What could go wrong?

Spencer asks: “How about putting them up in the White House?”

So, what are Democrats focused on instead of national security?

First, Democrats are busy restricting free speech to protect the hurt feelings of their special interest groups. Here is a speech by Representative Trent Franks about the recent thought crime hate crime bill that the Democrats just passed in the House.

Excerpt:

In fact, Madam Speaker, the essence of America is that all people should be treated with the same respect and should be protected completely equally under the law. To break up people into different categories and say that one group is more worthy of protection than another and then to grant special protection to some groups and not to others, fundamentally diminishes the protection of all of the other remaining groups.

…The First Amendment of our Constitution was crafted because our Founding Fathers recognized that the freedom of thought and belief is the cornerstone of every other freedom. It is the foundation of liberty itself, because, without it, every other freedom, including the freedom of speech, becomes meaningless.

…Not only does this legislation require law enforcement to investigate an individual’s motivations–those are the thoughts and beliefs that seemingly motivate him or her to commit a crime–but it would expand the scope of the prosecution to include individuals or members of organizations or religious groups whose ideas or words may have influenced a person’s thoughts or motivations when he committed a crime.

…Madam Speaker, this would have a devastating and chilling effect on free speech in America. Who could blame pastors, educators or any other cultural leaders if they chose to cease expressing their beliefs for fear of being thrown in prison and charged with a Federal crime? This is not rhetorical speculation. It has already happened in the case of the Philadelphia 11 and in other cases. In the Philadelphia 11 case, 11 individuals were jailed, and they faced $90,000 in fines and 47 years in prison for simply speaking the gospel openly and publicly.

Democrats have to be divisive, and pit one group against another. That is how they get elected – by promising all of their victims government-run salvation from their “enemies”. They thrive on anger, divisiveness, victimization, blame-fixing and resentment.

Second, the Democrats are working hard to raise the unemployment rate by attacking small businesses.

Today’s Washington Post has a front page story: “Small Businesses Brace for Tax Battle,” that catalogues the burden small businesses will face under the President’s massive $4 trillion budget which raises taxes by more than $1.4 trillion.

Gail Johnson, the subject of the Post’s story, is a former pediatric nurse who’s spent “20 years building a chain of preschools and after-school programs that accommodate sick children so working parents can keep their jobs,” but since, “like most small-business owners, Johnson reports her profit on her personal tax return,” she’ll see her taxes go up under the President’s plan – big time.

The WaPo’s article says this:

In a typical year, Johnson’s federal tax bill would be about $120,000.  But starting in 2011, the higher marginal rates would add about $13,000 a year, Hurst said.  Capping the value of itemized deductions at 28 percent would add another $10,000, for a total increase of $23,000.

And Johnson’s tax bill stands to grow dramatically if Obama were to revive a plan to apply Social Security tax to income over $250,000 instead of capping it at the current $106,800.  Because Johnson is an employee and an employer, she would have to pay both portions of the tax, Hurst said, tacking another $30,000 onto her bill.

Johnson said such an increase would force her to consider scaling back operations.

Why do Democrats complain so much about outsourcing and “the rich”? They are the ones who cause businesses to shut down, downsize, relocate overseas or outsource. They push anti-business policies, like tax hikes, card check, global warming regulations, tariffs, etc. If you want more jobs, then make business ownership profitable. Is that so hard to understand?

News

Ontario Premier Dalton McGuinty faces protests over socialized medicine failures

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How well does socialized medicine work? Just ask Dalton McGuinty, the Premier (governor) of the wealthy province of Ontario. According to Yahoo News, he’s facing protests over his proposed cuts in medical service. It’s government-run health care at its finest, complete with Canada’s own version of tea parties!

(I know some of you Canadians are proud your nationalized health care, but please allow me to critique it and don’t be too upset with me).

Excerpt:

TORONTO – With a massive protest over hospital cuts planned today, Premier Dalton McGuinty says he’s not trying to dismantle local health care services.

Thousands of demonstrators are expected to descend on the front lawn of the Ontario legislature to denounce changes at six Niagara hospitals that they say are also happening in other communities.

Critics say a regional health-care agency in the Niagara-Hamilton area is planning to close ERs in smaller communities and move services elsewhere.

…The Ontario Health Coalition says about 50 busloads from communities across Ontario will take part in the protest, starting at 11:30 a.m.

They are expected to be joined at the legislature by seniors and patients to demand that McGuinty to save hospital services.

Buses were expected to arrive from such communities as Belleville, Trenton, Windsor, Leamington, Wallaceburg, Sarnia, Strathroy, Cambridge, Hamilton, St. Catharines, Welland, Port Colborne and Fort Erie.

Niagara-Hamilton is the region south and southwest of Toronto, which votes overwhelmingly Liberal and NDP (Socialist). It’s a union area where steel and auto manufacturing is the major industry. This is the area just northwest of Buffalo, New York.

The Conservative Party leadership race in Ontario

Right now, Ontario has kicked out their ineffective and moderate provincial leader John Tory, and they are in the process of choosing a new leader. One of our free speech heroes, Randy Hillier is in the running. The other two candidates are too far to the left, i.e. – “red tories”. Joanne from Blue Like You is also leaning towards Hudak.

Conservative MP Jason Kenney has already endorsemed Hudak:

TORONTO – Immigration Minister Jason Kenney is backing Tim Hudak in the Ontario Progressive Conservative leadership race – a move that could make things awkward at the federal cabinet table.

…Having the backing of an influential federal minister is a major coup for Hudak, 41, the perceived front-runner in the race to succeed John Tory.

…”He’s the bright, young, energetic, common-sense conservative that will appeal to Ontarians,” he said.

Here is an excerpt from another article about the candidates:

The Niagara-area member, who is married to Harris’s former chief of staff Deb Hutton, also has about half of the 24-member caucus in his corner.

Norm Miller – son of former premier Frank Miller – Julia Munro, Garfield Dunlop and Lisa MacLeod have all endorsed Hudak.

…Hillier, a self-described libertarian who wants to scrap the Ontario Human Rights Commission, will likely make a splash in the race, but observers say he has virtually no support among caucus members.

…Hillier has cast himself as the leader who will steer the party and the province back to true conservatism, including smaller government, fewer regulations and a more participatory democracy.

MPP Lisa Macleod and MPP Randy Hillier are free-speech champions in Ontario. Free speech is also an issue in British Columbia.