President Obama's interference in the Chrysler bankruptcy is disgusting.
1. Disregard for bankruptcy law
When investors invest their money in a company, the agree beforehand who gets what and when if something goes wrong. In the Chrysler capital structure, everyone, including the Unions, agreed that the 1st Lien Lenders would get paid first and so long as they did not get everything back, no one would get anything else.
President Obama has now decided to build an economy based on politics and popularity rather than on property rights and contracts.
The restructuring plan gives the Unions far more recovered value than the 1st Lien Lenders or other creditors in the same position as the Unions would be getting.
Why? There is no question of fairness. The Unions agreed to their subordinate position beforehand. Daimler, the previous German owner of Chrysler, even offered $1 billion to get them to agree and the Unions accepted. Suddenly, the Unions are allowed "backsies" and take that money out of the hands of the 1st Lien Lenders and the US taxpayer.
If President Obama wants to use taxpayer money to subsidize the Unions that's one thing. A waste of taxmoney, but within the bounds of democracy. If President Obama wants use investor money to subsidize the Unions, that's kleptocracy.
2. The use of death threats to enforce his will
President Obama used the bully pulpit without regard to the safety of human life. Investors who disagreed with him became targets of a lynch mob that he stirred. Safety and security were the reasons that these dissenting investors dropped their court case.
The courts of the United States exist to protected us from the tyranny of the majority. When the President himself is at the head of the mob and is directing its anger to prevent the court case from even being heard, then we are losing our individual freedom.
This is mobster behavior, not Presidential behavior.
