Posted by
Andrews on Thursday, May 21, 2009 5:06:16 PM
I am shocked to see the Obama administration
trotting out the same tired old rhetoric again. Of course, this time they have, as middle managers love to say, "repurposed" it. But the same problem remains. Just as I argued before that
blaming oil price increases on "speculators" was absurd, as speculators don't cause prices to rise, but serve to flatten out both excessive highs and lows, this time the blaming of "speculators" for Chrysler's woes is equally absurd, if wrong for different reasons. This time, rather than blaming those who guarantee a constant supply at a relatively constant price, they are blaming those who helped finance the company through bad times for the "crime" of wanting to recover their original investment before the union is paid. Shame on them! They had the nerve to do what the government asked, invested in our failing auto industry, accepted the incredible risk of such investment, and then had the audacity to ask for a portion of their original investment back! Egads! What
WERE they thinking?
And just as if anti-speculator rhetoric had been put into legal practice during the oil spikes it would have caused even more prices spikes, not fewer, the end result of Obama's rhetoric, and his meddling in bankruptcy law, will be the elimination of private investment and the failure of more marginal firms, especially those firms likely to attract government interest. In other words,
no unionized business will be able to find private investors.
I think
someone predicted this before..
POSTSCRIPT
I forgot to mention, not only did these cads finance Chrysler, they accepted lower returns in exchange for being promised first chance at repayment in case of bankruptcy, and then, the villains! They expected Chrysler, the unions, and the US government to enforce this contract! How evil of them! What do those insurers and state pension fund think they are? The UAW? State pension fund managers don't control billion dollar campaign funds or tens of thousands of votes, how dare they expect fair treatment!
Then again, it does pretty much guarantee that accepting bailout money (or having union involvement) will be the kiss of death for companies. No investors looking for stable returns will ever touch such firms for fear of becoming the newest vultures who will see 10 cents on the dollar. As I predicted a while ago (and the WSJ predicted as well) the bond market for many industries will be hit quite hard. For that matter, at least judging from the bond funds I hold, the managers are already starting to shift funds away from such risky investments.