Comments on: Chrysler Bankruptcy Exposes Dirty Politics

Declan McCullagh: Obama Calls Creditors Who Lent Money To Chrysler "Speculators," But What About the Rule Of Law?

[brianbwb-2009]

"With Obama breaching the rule of law as he see's fit, then law no longer governs and we are replaced with absolutism, and if Obama is able to roll over these 'tycoons' then what are we to him?" Posted by herodotus1

An idiot neo who would lie and accuse the President of something he did not do.
If President Obama really felt like rolling over "tycoons", he could have nullified their contract, which is within the powers of a president, but is something which he did not do.

If you are going to assume that those who don't share your delusions have not attended business school, and inferring indirectly that you have, then perhaps you should request a refund from whatever business school you attended.

[brianbwb-2009]

"...In the Federalist Papers in 1788, James Madison wrote that "laws impairing the obligation of contracts are contrary to the first principles of the social compact, and to every principle of sound legislation." Unfortunately, Washington politicians seem to pay little attention to history, morality, or the rule of law."

Mr. McCullagh is sorely mis-educated if he thinks that "the federalist papers" are law, they are not. The Constitution however, is the law, and in it there are provisions for "force majeure" which says that in the event of alterations to contracts as result of government fiat, the contract is no longer necessarily binding to any party involved.

He also dismisses the fact that it was indeed the greedy hedge-fund speculators that blew the deal by refusing to make the same sacrifices everyone else was being asked to make.

Those buzzards are only lucky that the WH didn't invoke "force majeure" to nullify any obligations to those funds, and let the gamblers eat their losses.

McCullagh is one to whine about the rule of law, many of his articles indicate that he has no problem with ignoring the rule of law if the act that breaches it agrees with his agenda.

To CBS, you can save your stockholders money, by not paying for such idiotic claptrap as is so often submitted by Mr. McCullagh.

[elz523]

You attempted to sound a bit more eloquent in your defense of Mr.Obama but again failed misserably to cover up that you have never taken a business law class IN YOUR LIFE!

There is something called contract law that is the fundamental fabric of business. As Madison put it (you know who that is right?): it is the first principal of a social compact. With Obama breaching the rule of law as he see's fit, then law no longer governs and we are replaced with absolutism, and if Obama is able to roll over these 'tycoons' then what are we to him?

I am glad someone with clout (Cliff Asness) is able to put in the lime-light the very real threat this poses to capitalism and liberty at large.
Posted by herodotus1 at 2:43 PM : May 8, 2009

Obama has not breached contract law. The contract still stands. The bankruptcy judge will decide this and that is how the rule of law works. The administration has put it's negotiating leverage behind this, that's all.

[elz523]

Nothing here alters the fact that the investors knew they were buying junk bonds when they bought them. Junk bonds carry a high interest rate because of the very real risk of non payment, etc. The savy junk bond investor knows full well that his investment is subject to extremely high risk and is prepared to lose it all. So no sympthaty for these investors is justified.
Posted by ramos1129 at 2:55 AM : May 9, 2009

Agreed and we might add that the alternative would be to see Chrysler liquidated. That is, after all, how the secured creditors would get the most return. They knew and understood that it was unlikely the government would let the company fail and that they would be dealing with the US government at some point in any event. The bondholders are really asking that Chrysler be allowed to fail and put hundreds of thousands out of work, so that they can receive that additional $.21 on the dollar. The government is working to find a solution where everyone gives so that everyone can gain. No one will be happy with the result, but it was necessary to have the biggest positive impact. It should be remembered that the unions gave up substantial concessions as well.

I will give MR McCullah credit this tiem for at least making a logical argument and keeping the right wing hacks best friend -the straw man- out of this one.

[ramos1129]

Nothing here alters the fact that the investors knew they were buying junk bonds when they bought them. Junk bonds carry a high interest rate because of the very real risk of non payment, etc. The savy junk bond investor knows full well that his investment is subject to extremely high risk and is prepared to lose it all. So no sympthaty for these investors is justified.

[rsmik]

I am so glad Obama is taking care of union workers and civil service employees. People who don't have to do anything but punch a clock just to get salaries, benefits, pensions, and lifetime jobs aren't capable of working in the private sector, so they need all the help they can get.

[June_Fremont]

"The 'rule of law' is a Roman drollery. There is no such thing as the rule of law. There is only the rule of the law-abiding. Either you have it or you don't." --G. Tremper

Marcus Tullius Cicero would have instinctively understood our current political situation.

[biggoofer]

When you screw the greedy speculators (aka People with 401K, Retirement, IRA, Disciplined people's savings, College endowments, employee pensions) you are screwing the responsible citizens.

When you favor the irresponsible, arrogant and sloppy workers (aka UAW), you are condoning and rewarding the very behavior that brought the automaker to its knees.

When these companies need money again, who is going to invest in them?

Detroit automakers have already lost the trust of car buyers. Now they will be losing people who financed their manufacturing.

When the Baffoon in the White House behaves like he is still running ACORN, he is not only screwing GM and Chryslar, he is screwing the entire credit markets.

[kig1208]

regardless if they were "greedy investors" or not isn't the issue. Law was created in this land and considering that this new changing government is big against FREE speech it is now against working class with 401 and retirement plans and business law. HOWEVER, if you are a Union/union member you have carte blanche. Look at what this admin did against CA in trying to balance their budget and cutting pay on union workers. Apparently if you want anything you will have to be part of a UNION - and when I think of UNION the words "Soviet Union" comes to mind. One more step to socialism. Anyone with half a brain can see this. WAKE-UP AMERICA you are entering Obamanation.

[herodotus1]

adsin15 I agree with an earlier comment: you are a bunghole and would also like to add a caveat 'an indiot too'.

You attempted to sound a bit more eloquent in your defense of Mr.Obama but again failed misserably to cover up that you have never taken a business law class IN YOUR LIFE!

There is something called contract law that is the fundamental fabric of business. As Madison put it (you know who that is right?): it is the first principal of a social compact. With Obama breaching the rule of law as he see's fit, then law no longer governs and we are replaced with absolutism, and if Obama is able to roll over these 'tycoons' then what are we to him?

I am glad someone with clout (Cliff Asness) is able to put in the lime-light the very real threat this poses to capitalism and liberty at large.

[adsin15]

In conclusion: Don't invest in things you don't understand.

We're all sorry for your parents. They made what initially appeared to be a good investment a long time ago that then went south. Maybe they should have kept an eye on their investment and when it looked like the Big Three were about to crap the collective bed they should have taken their money out? Just a suggestion. If they thought UAW workers were criminally compensated why were they investing in a company that would do that? They obviously felt that they were somehow going to make money no matter what happened.

[adsin15]

You guys aren't getting it. The "greedy investors" I'm talking about aren't the teachers and retirees, ect. Those people contribue money to 401ks, and other investment portfolios with thousands of other people because they think, for some ungodly reason, that its a "safe" investment. There are NO SAFE INVESTMENTS. Then some greedy investor retard who RUNS the hedge fund or whatever it is that your parents mistakenly placed their trust in then made a monumentally idiotic investment in a company that a 6 year old girl could tell was doomed.

That person is the one who screwed the senior creditors. Not Obama. That person should be working at mcdonalds right now. He won't though. In fact he made millions off idiots like your parents who give away thier money for other people (who don't give a crap about anyone but themselves) to invest. When all the money goes "poof" then your parents lose their retirement while Mr. Hedge Fund Manager walks away with his 1 million dollar quarterly bonus.

The other greedy people responsible for this are the people at Chrystler who lied through their teeth to your parent's 401k fund manager by telling him that if anything happened they'd get 100% of their money back. LMAO. Show me anywhere in the real world where any investor gets 100% of their money back if the scam fails? Come back from fantasy island.

Financial Investments are a sophisticated form of gambling. That's it. Your parents gambled on GM/Chrystler and they lost. End of story. Don't bet what you can't afford to lose and leave your ATM card at home when you hit the casino.

[credibility2]

This administration is turning out to be worse than the KGB, but then Obama and his slackers are products of corrupt Chicago politics.

[nummer1rhino]

Everyone needs to go to the Whitehouse website & tell him what you think of him & his way of doing things, he needs to hear from us, he just heard from me again, this is just crazy.

[noloyalisti]

We have one of the most corrupt countries in the world. That's what happens when you have big corporations with big money owning and running the media, the government and the military. Mussolini would be proud.

[paulthiel]

adsin15 (and all of you who agree with this clown),

Not everyone who owns automaker's bonds is a greedy investor. My senior citizen parents, for example, own GM bonds and are now going to get hosed on them.

Let's change your words from "greedy investors" to "Paul's Parents" and see where your logic train leads us...

- Paul's parents loaned GM money to get back interest to fund their retirement
- GM took this money and shoveled it out to criminally-overcompensated UAW workers
- GM is now out of money
- GM will take whatever money they have left and shovel it to the UAW workers

I think that sums it up.

You, sir, are a bunghole.

[crazymook]

Many on this site do not seem to understand what makes a"secured" creditor secured. Simple-collateral. Chrylser offered collateral in order to get a lower interest rate on the loans. The secured debt holders now want that collateral. The Executve branch has decided to give that collateral to an unsecured (no collateral) third party. This is insane. If loans cannot be made "secure" through the use of collateral, no loans will be made.

[sjc_1]

Worker are stakeholders that produce product every day. Bond holders are rent seekers that buy discounted bonds and try to flip money for nothing. Workers are productive, bond holders are parasites.

[BKAtty]

I hope the bankruptcy judge issues a restraining order against the press from maligning any creditor who justly attempts to access the system to enforce their rights under the Bankruptcy Code. The bankruptcy laws are in place as they because they were deemed to be fair. Why should the President of the United States get to jump in and say this case should be different? If he wants the Bankruptcy Code changed, those changes should go through the same channels as the last reform went through. Not by sending thugs out to threaten entities who are acting under the law as it stands.

I'm trying to wipe the slime off from just reading about it!

[sequen756]

The author doth protest too much. In reality, the financial services community has handed politicians over $1 billion in the same period that the UAW gave $25 million.

What?s more, let?s really consider who these bondholders are before we try and paint them as the glue of our financial system. They are distressed investors. They do not lend anybody any money. They wait until debt is dirt cheap and they scoop it up. Most of these investors probably bought the Chrysler pare at 15 or 20 cents on the dollar and were looking for a payout of 25%-40%. They saw the government come in and thought they could get 100%-200%. Dream on.

No liquidation would result in 50% let 100% recovery for senior creditors, and they know this. The played chicken with a freight truck and got steamrolled.

I assume I will be called a communist or whatever for my comments. That said, I worked in distressed for well over a decade and investors always factor that the govt will not allow a firm like Chrysler to liquidate. Just as it saved Bofa, AIG, and Citi. Without the govt support of these players Parella, Oppenheimer and their ilk would be billions poorer today.

[fbanta]

The president, just as all federal officers, must take a solemn oath prior to being granted any federal authority to "preserve, protect, and defend the COTUS". Additionally, under Article II of the COTUS, the president is specifically tasked to "take care that the laws of the US are faithfully executed".

His personal actions in the Chrysler bankruptcy clearly suborn the laws of the United States. This is a violation of his oath of office for which he should be impeached. This president either has no understanding of his legal responsibilities according to the COTUS, or willfully exceeds the strictly limited authorities he has been delegated. In either case his behavior is illegal and cannot be tolerated.

It is the responsibility of the Congress to bring his behavior into compliance with the COTUS. As Sovereign Citizens it is our responsibility to direct our elected representatives to meet their obligations. I encourage every Citizen to contact their elected representatives to demand that they meet their Constitutional responsibilities, and assure that they and every other federal officer under their responsibility not exceed their Constitutional authorities.