"He will put the sheep on his right and the goats on his left."
Matthew 25:33

Monday, June 1, 2009

Teacher's Retirement Sacrificed for GM

This article describes the plight of a retired teacher, who is one of the "fat cat" bondholders in the GM bankruptcy.

Today's bankruptcy filing of GM should be met with powerful objection by the American people.  It is not a normal bankruptcy.  Like Chrysler, it is more like a US Government seizure of a private business, followed by a politically directed redistribution of the assets to political friends.

There is only the most tenuous congressional authorization for the money being used to execute this seizure, and no constitutional basis.  Congress considered funding a bailout of the auto industry last fall, but explicitly rejected it.  The Bush administration went ahead anyway, and used the TARP money in a way that arguably spits in the face of the intent of Congress.

Bankruptcy for the automakers was unthinkable last fall, which is why the government was "forced" to provide a bailout.  There was no massive fraud, or criminal activity.  This is a garden variety failure of a major business that made bad choices and failed to turn a profit.  All the stakeholders - management, unions, lenders - share in responsibility for the failure.

There was a time when americans understood government seizure as an illegal act; simple theft of american property.  No longer.  Recently, Venezuela expropriated american assets, without a ripple of protest in the US.  Apparently government seizures are now popular, even necessary, so they are OK.

No economic growth, or even activity, is possible without investment.  No intelligent investor will invest under threat of seizure.  The GM and Chrysler seizures will have a chilling effect on every investment that might be seized.  Because there is no apparent limit on the power to intervene (aka seize) private enterprises, the damage will be widespread.

Politically, it is easy for Mr. Obama to stand at the podium and tout the jobs he has "created", and the businesses he has "saved".  Unseen is the subtle devastation meted out to the taxpayers who pay the bills for his largesse.  Because this is all borrowed money, many of those taxpayers are children, or not yet born.  Their opportunities and their futures have been taken from them so Mr. Obama can stand at that podium, please his supporters and  and maintain power.

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