Saturday, June 06, 2009
Chris Matthews accuses Limbaugh and Palin of "paranoia" because they are worried that the rising power of the federal government over the economy and the Obama administration's control impulses will reduce our freedom. It seems to me, though, that Limbaugh and Palin are making perfectly reasonable arguments. Palin, in particular, is making a virtually irrefutable argument, and there is at least a little evidence that Limbaugh is on to something, too. The harsh reality is that the parade of horribles that Limbaugh and Palin are worried about is a lot less crazy than any number of the conspiracy theories that ended up in the pages of the New Yorker or the Nation in the last eight years, or, dare I say, treated respectably on Hardball.
CWCID: Glenn Reynolds.
Chris Matthews is a windbag and an utter fool. Anyone who dismisses the comments of Rush and Sarah Palin here hasn't been paying attention since Jan 20. I can't decide which I find more frightening: the Obama administration's flat-out ignorance of all things having to do with the economy, or its total lack of either a hint of humility or any sense of limits in pursuing its economic "policies".
Sorry, my mistake, those were local elections. While not Parliamentary, the elections are still a devastating loss for Labor.
"Gordon Brown was dealt another huge blow last night when Labour lost all its remaining county councils in its worst ever local election results.
Most of those counties had been held by Labour for nearly 30 years. Labour parliamentary seats in the North and North West look suddenly more vulnerable."
Tigerhawk, this is my first visit and I'm weirded out. Given your education, expanded circle of acquaintances, colleagues and even as well as exposures and life experiences, would exault these two pieces of shit...what on earth is wrong with you? Limbaugh and Palin, your heroes? Rush probably does come up with his own ideas, such as they are. As for the Bard of Wasillia, no.
Join the ranks of the wingnut roid rage
Chris "the neocons are coming! the neocons are coming!" Matthews has little credibility when it comes to serious commentary on national affairs. Or whether or not there is a danger in the great expansion of power we've seen in the past year (from Bush to today).
There, of course, is.
And sorry, Trip, where did Tigerhawk call Limbaugh and/or Palin his heroes? All he did was agree on their general argument about the dangers of this increased power by Washington over the economy.
As Madison argued, "Men are not angels."
That includes President Obama and those that will follow him.
Yeah, Tocqueville said all of this much better.
I'm a long-term optimist about the USA, but a near-term pessimist.
It doesn't matter that Rush is sometimes right about things, he's too polarizing a figure to be the de facto leader of the Republican party ... in the end, Rush is only about the ratings. Palin has issues too.
Matthews needs his ratings too. Hence his need to attack Rush-Palin, rather than be a reporter. I suspect Matthews will get even more desperate -- and sillier -- over time.
Meanwhile, the two-headed beast in DC grows.
Here's an interesting exposition of the role of federal involvement in the unprecedented "shotgun marriage" of Chrysler to Fiat, a company Chrysler evidently believed is financially suspect, even "shady". Despite the total and complete absence of due diligence, the Treasury Department forced a deal through by using a little known provision of the bankruptcy code (I've never heard of it, and while I'm not involved in bankruptcy matters anymore I once worked to finance businesses in bankruptcy). The provision allowed the Treasury to force a "stealth reorganization plan", which is expressly disallowed by the code. The Treasury Department sought to steamroll all opposition, since Fiat was claiming time is of the essence in completing the deal. Maybe others have seen rushed reorganizations like this one approved on similar grounds before, but I have not. Can someone educate us as to precedent, or is it indeed as unprecedented as it seems to be? Self-evidently, the government seems to be claiming sweeping power in the economy right now.
This post has been linked for the HOT5 Daily 6/7/2009, at The Unreligious Right
Here's what I think is going on with Chrysler, and soon with GM. I'm not an expert on this, so please correct any errors.
Chapter 11 is the big advance in our modern bankruptcy code -- why liquidate a company when all it needs is surgery on the ownership priorities in its balance sheet? Chapter 11 reorganizations require a plan subject to a debtholder vote. One can argue that even this abrogates contract rights because minority debtholders are forced to go along with the majority -- security interest, what security interest? -- but the idea is that all debtholders can benefit if the business survives rather than being broken up for scrap.
Section 363 of the Bankruptcy Code authorizes sales of assets, etc outside of the reorganization plan -- debtholders don't vote but the sale is subject to be being topped by better offers. Originally Section 363 was only used to cover incidental sales of assets, but over time it has come to be used for the sales of divisions. I believe "Vlasic pickles" got sold this way ...there are many other examples. The idea is to increase value for all by quickly selling off any little crown jewels of the bankrupt company.
What's happening with Chrysler -- and soon with GM -- is that Obama & Co are using Section 363 to cover the whole of Chrysler -- not just a line of business -- which is aggressive from a legal standpoint. "Old Chrysler" is being sold to "New Chrysler" outside the usual process for a debtholder approved reorganization plan. Buried in the legal details is the opportunity for someone else to come in and top the US-Fiat-UAW offer ... but I doubt that there will be any such offer made. This process was just upheld by the Second Circuit. There's noise about the Supreme Court taking this case -- I doubt that that will happen.
Understand that in bankruptcy court almost anything goes -- a lot happens that tramples on formal legal rights. Big bankruptcies are often a quasi-political process.
The Chrysler situation is stranger still -- together with GM, it's sui generis. I'm not sure what it means as a broader legal precedent.
Firstly, I wouldn't cry too much for the debtholders. Had the US not stepped in, Chrysler would have failed and debtholders would likely have gotten nothing. It's not a business worth re-organizing, and I doubt there are buyers for the pieces -- even for machinery. With a lot of priority claims -- things like payroll taxes -- the debtholder claims would be worth less than zero. If they did have substantial value, the debtholders would be trying to make a higher counter-offer using the value of their nominal claims as part of the offer. That's not happening, is it?
What really happened is that the US put in billions of taxpayer dollars months ago. A true investor crazy enough to have put in those billions would have negotiated for priorities that would have put debtholders firmly in the back seat with no more than 10% of the equity. What really happened is that the UAW got their stake at the expense of taxpayers, not the debtholders -- a gift from Obama.
As a legal precedent, other than for GM, I don't know that we'll see this again. The federal government has other ways to "dip its beak" into banking. If we see the US involved in Section 363 sales of other big companies -- think failing hospitals or failing utilities -- the world will be ending ... buy a gun and move to Idaho.
The bigger issue here is that Chrysler isn't a candidate for Chapter 11 at all -- it shouldn't be re-organized and without government intervention it wouldn't be. All the auto companies have been struggling with collective overcapacity. If one company should have been culled from the herd it was Chrysler.
By owning two major auto companies, Obama & Co will want to dictate policy across the industry. Obama & Co will soon control GMAC -- GMAC and Citibank are the only two casualties of all that stress testing -- and can thus use low-cost financing to try to muscle sales. If I worked at Ford in Detroit or Toyota in Tennessee, I'd be pissed.
One of the easiest ways to protest this is to not buy a GM or Chrysler car. Only Corvette lovers will suffer. Make Obama own this loser. Seriously, this is a way to show up Obama-nomics in 2009 - 2010 ... and don't tell me that buying Ford isn't patriotic.
I said months ago that putting TARP money into banks was very different than for auto companies ... that with the banks, the government would likely get its money back and even make a profit. This is because a US TARP investment in a bank was just a paper transaction that made the bank's capital ratios and balance sheet look better. If the bank failed, the US was going to own the problem anyway because of FDIC insurance. Putting money into an industrial company is very different, especially into companies that keep losing billions with no realistic plan for this to change.
If the US had not stepped in Chysler would have failed?
They failed anyway. If Chrylser and GM had gone into bankruptcy earlier then maybe the companies would have re-emerged in a better position. Better for the "Millions" involved in the auto industry.
And the a grade bond holders would have come ahead of the union in the division of the spoils. As is normally the case.
Now what do we have - a festering sore draining resources from the country. A sore which will eventually have to be excised to save the whole.
This distinction davod makes is important: Chrysler already failed, not "would have failed". And in bankruptcy, Link, creditor rights are absolutely preeminent. There is nothing "political" about that fact.
In order of priority, unpaid taxes and employee claims go first, followed by secured creditor claims. As class claims are satisfied, by majority vote of the class, assets become available for the next most junior class.
You should indeed cry for the creditors in this case. Their security was worth nothing, and that means no lender will ever lend again to a unionized industrial company in trouble, except on a relatively short term basis. This is very bad news for America.
It's all in vain too, as both GM and Chrysler will crash again before the 2012 elections and need ongoing support from the administration.
Your missing my point entirely. Chrysler did fail months ago. It would not have been able to go Ch 11 -- as no one ... least of all Cerberus ... would have supported a reorginazation plan. Instead it would have gone to a Chapter 7 liquidation. I can't say for sure, but I doubt that the creditors would have done well in Ch 7. We'd have had a lot of ripple effects.
The same would be true for GM -- only government was going to save them. No one was going to put up "debtor in possession" financing. They'd just have run out of cash.
Now your "point", whatever that was, is really muddled. Arguing from opinion is fine, we all do that here, but claiming the government is better able to judge economic values the creditors might have received in a liquidation than the creditors themselves can judge is just turning our system on it's head.
Here in America, at least in olden times like last year, the creditors had the right to find out if they were right or wrong in their judgments of collateral values. The opinion of junior creditors just plain shouldn't matter very much, even if the junior creditor in question is the US Treasury who made themselves a very badly structured loan and didn't want to live with the consequences. This is a bald case of using state power to turn established law on it's head, and you can't be serious trying to justify the government's actions on a "what-if" supposition that the creditors don't know what's good for them!
I have a longer response to this on a later post.
Big corporate bankruptcies are not market driven -- its a legal process. I didn't invent this -- I think I'm accurately reporting it.
It's taxpayers who are getting screwed here, not creditors. If we're going to call Obama on things, we should do so with clarity. God knows he's giving us enough.