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May 6, 2009

Planned obedience…or else

Kevin E. Dayhoff

As of last week it appears that a marriage between Chrysler and Fiat SpA may eventually happen; this in spite of the few reports that surfaced recently that the marriage was off once Fiat realized the extent that Chrysler’s labor contracts were, how shall we say politely, less than helpful. Gee…


News reports that the labor unions were an impediment to the survival of Chrysler were quickly replaced with populist class warfare rhetoric that the bondholders were the real villains in the negotiations.


For those who are keen observers of populist political rhetoric, it was not lost as to how miraculously the conversation shifted. How does such a phenomena happen anyway?


Enter, ever so enigmatically, Jake Tapper, ABC News senior White House correspondent, who was one of the first to break the story that the anti-Wall Street screed was alleged to have been orchestrated from the White House.


That the White House had enlisted the state-controlled media, otherwise known as the White House press corps, to be its shock troops leading the charge at the beck and call of the “enchanted” messianic President Barack Obama.


On May 2, the heretical Mr. Tapper reported:


“A leading bankruptcy attorney representing hedge funds and money managers told ABC News Saturday that Steve Rattner, the leader of the Obama Administration's Auto Industry Task Force, threatened one of the firms, an investment bank, that if it continued to oppose the administration's Chrysler bankruptcy plan, the White House would use the White House press corps to destroy its reputation.”


An indignant White House immediately denied that such an audacious charge was true. Hey, case closed. I mean, I’m convinced.


Well, maybe not.


“The charge is completely untrue,” said White House deputy press secretary Bill Burton, “and there's obviously no evidence to suggest that this happened in any way,” reports Mr. Tapper.


Thomas Lauria, Global Practice Head of the Financial Restructuring and Insolvency Group at White & Case, told ABC News that Rattner suggested to an official of the boutique investment bank Perella Weinberg Partners that officials of the Obama White House would embarrass the firm for opposing the Obama Administration plan…  (W)hich requires creditors to accept roughly 29 cents on the dollar for an estimated $6.8 billion owed by Chrysler…”


Perella Weinberg Partners, Lauria said, “was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under the threat that the full force of the White House press corps would destroy its reputation if it continued to fight…”


Of course, it was a mere coincidence that when President Obama announced the Chrysler plan last Thursday, the president singled out Mr. Lauria's clients for criticism in his remarks. Read the remarks here


Above and beyond the fact that Americans have so quickly come to accept the president announcing business deals as if our country’s economy and means of production are now state-run and centralized, the populist rhetorical demagoguery over the plight of the workers at the hands of the capitalists, is striking.


Mr. Tapper reveals some of the more interesting lines for us to ponder:


“While many stakeholders made sacrifices and worked constructively, I have to tell you some did not,” the president said. “In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none.”


President Obama then said: “I don't stand with them. I stand with Chrysler's employees and their families and communities. I stand with Chrysler's management, its dealers, and its suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars. I don't stand with those who held out when everybody else is making sacrifices.”


All of this scathing rebuke because Mr. Lauria, (whom Mr. Tapper reports “donated $10,000 to the Democratic Senatorial Campaign Committee in 2008 and $1,000 to then-Sen. Hillary Clinton (D., NY) in 2006,” held out for “50 cents on the dollar from Chrysler for their debt.”


Of the Chrysler deal itself, my scribbled notes indicate that the bondholders, who were secured creditors, will receive 28 percent of their $6.9 billion in bonds in cash.


Compare that to the United Auto Workers, which was an unsecured creditor, which will get $4.2 billion in stock and a “note” for another $4.58 billion.


Do the math. Secured note holders – 28 percent. The unsecured union gets 82 percent of its claim.


However, according to the president, the greedy capitalists are the bad guys. Go figure.


Now I ask you; where is the risk capital going to come in the future in this environment created by this president and a Congress overwhelming controlled by Democrats and unabashed supported by an enchanted state-controlled media?


In the near future, the government is destined to be the only entity left standing that will have the capital, by way of confiscatory taxes, to create jobs, make house loans, control what car you will drive, and what doctor you will see.


Of course, in the near future, the metal used for currency will come from your confiscated guns; in a country where private capital is confiscated by the government to benefit the workers and the unions; and where saddling “the rich” with confiscatory taxes, is the mantra of the land.


Who in the world is going to invest in getting the nation’s (now state run centralized) economy back on track?


Nevermind raising your voices in protest, the state controlled media will marginalize and trivialize you. It makes one wish for the good ole days when all we worried about was a centralized state planned economy and health care.


Now we also have to tend with planned obedience – or else…


Kevin Dayhoff writes from Westminster. E-mail him at


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