Shape of Things to Come

The headline today is "Chrysler Files for Chapter 11".  It should have been "US President Sweeps Bankruptcy Law Aside".

A view of the extent of interference by the President can be seen here and here. Normally, a bankruptcy judge will balance the interests of the stakeholders in a failed company, and there is quite a body of law that governs who gets what when a company files for chapter 11.

That's what Rule of Law is about.  We have a body of laws that govern our behavior, and everyone - the government included - follows the law.

In this case, the US Government is one of the investors, and is clearly not "just another stakeholder".  It is not politically acceptable to allow the natural events of a Chrysler failure to occur.

The administration is therefore dictating some of the terms, much to the chagrin of some of the bondholders.  Some who thought they had legally binding contracts with Chrysler, and some protection in bankruptcy law, have been swept aside.  The article notes that the President "left no doubt about his anger with some Chrysler creditors who refused to accept a reduced payout".  Think of this as a Presidentially imposed tax on particular bondholders to help pay for his investment in Chrysler.

I challenge anyone to find authority for the administration to do this.

The financial strength of the U.S.A. is in the millions of workers, businessmen, bankers, investors, and risk takers who put their futures on the line with an expectation that they know the rules of the game, and that the game is fair.  They sweat and gamble and strive with the hope that they can win, and their limits are what they can achieve with hard work and inspiration.

When the politicians put their thumbs on the economic scale, the game is no longer fair.  Only a fool plays in a rigged game.  Sweat and hard work no longer count, only political connections do.  Opportunity has lost out to influence.

I wish I could say this was a one-time event, or that we are in unusual times, but history says this is yet another chapter of a repeating story.

Expect a surge in lobbyists' activity.

This is a sad day for the USA.