Chrysler Deal Highlights The Democrats' Culture Of Corrpution

You may get tired of hearing this, but it needs to be repeated over and over and over. Back in 2006, the Democrats campaigned on a Republican culture of corruption. Their claim was that they would bring back transparancy and fairness to Washington D.C.

Well, the Dems lied to us. They are more immersed in a culture of corrpution than the Republicans ever were, even more than they claimed the Republicans were. Now, we can see that this culture of corruption extends all the way to Barack Obama and the White House.

The Chrysler bankruptcy deal was supposed to sail through with no problems and Fiat would be the new majority owner at the end. But, the Obama administration didn't count on a group of Indiana pension funds looking critically at the deal and finding out what was really going on.

This whole deal with Chrysler was about paying off union supporters at the expense of Joe and Jane Average American.

From the Dow Jones Newswires:

Fiat would initially own 20% of the new company, though it would have the option of increasing its stake to as much as 51%. A United Auto Workers health-care trust would initially get a 55% stake, while the U.S. and Canada, which are lending Chrysler $4.9 billion during the bankruptcy, would own 8% and 2%, respectively. Senior lenders owed $6.9 billion would receive $2 billion, giving them a recovery of about 29 cents on the dollar. The Indiana funds own about $42 million of the senior debt. The UAW's health-care trust has an unsecured claim against Chrysler for about $10.5 billion. In addition to the equity stake in Chrysler that the trust, an unsecured creditor, would receive, it would also get a $4.5 billion note under the plan.

In other words, the UAW, a junior creditor, would be given preference over the Indiana pension funds, part of the senior lenders group. This is why the Supreme Court has temporarily blocked the sale, to look at the legality of this situation.

Giving junior lenders preference over senior lenders is wrong. This is clearly an attempt by the Obama administration to pay off their leftist union supporters through the sale of Chrysler and screw over hard-wroking Americans in the process.

(BTW, didn't Obama promise to get the automakers back on their feet? Why is he now so hot about selling them off?)

The concept of fairness and the due process clause in the Constitution dictate that senior lenders must be tended to first and junior lenders after that. Obama is trying to turn that around. In other words, he is changing the rules in mid-stream so that his supporters get the greater benefit at the expense of everyone else.

The Democrats' culture of corruption now adds to Nancy Pelosi, Tim Geithner, Charlie Rangel, William Jefferson and Todd Blagovich the name of Barack Obama.

You can access the complete article on-line here:

Pension Funds Ask High Court To Delay Chrysler Sale
Mark H. Anderson
Dow Jones Newswire via Wall Street Journal
June 8, 2009

And another good analysis can be found on-line here:

Don't Like the Game? Change the Rules
Glenn Beck
Fox News
June 8, 2009

An Example Of An Obama Crony: Brian Deese, Butcher Of General Motors

How did Brian Deese become such an influential voice in the Obama administration and how did he get put in charge of dismantling General Motors?

Let's look at his resume. According to Glenn Beck at Fox News:

Deese grew up in a Boston suburb, the son of a political science professor at Boston College. He moved to Vermont and attended Middlebury College, where he studied political science and also took time to host a campus radio show called "Bedknobs and Beatniks," described in one write-up as "a format of music, news, discussion and banter." He graduated college in 2000 and then it was onto a pair of non-profit think tanks: the Center for Global Development and the Center for American Progress. Eventually Deese went to Yale for a law degree, but a few credits short of graduating, he went "on leave" to work on Senator Hillary Clinton's presidential campaign, quickly becoming her top economic policy staffer.

Did you see anything in there that would even remotely qualify this guy to work in the auto industry? Neither did I. So, how did he get to where he is?

Read on:

Last summer, Deese moved to the Obama campaign as a deputy economic policy director and, just before this current gig, he served on Obama's transition team as an economic adviser.

There it is. That's it. No other reason. This is an example of pure cronyism on the part of a president who promised that such things would not happen in his administration.

Also, you should note that this same president promised to fix the auto industry in Detroit. But since he took the reigns, the auto industry has been going bankrupt faster and faster. That's why GM is being sold off by pieces and a deal to merge Chrysler with Fiat is being pushed through.

If I were the CEO of Fiat, I would be very concerned at how much influence an inept and bumbling Obama administration wields with Chrysler. So much so that I would call off the deal unless I could get a guarantee in writing that the U.S. government would stay out of my business.

You can access the complete column on-line here:

Meet Brian Deese
Glenn Beck
Fox News
June 2, 2009

A Few Items About Barack Obama: Immigration, Budget Reporting And Obamanomics

It's been a few days since I last posted. But, that is to be expected when you are the father of a four-and-a-half month old baby boy. Many times, your obligations to your family simply outweigh any other activity you engage in.

That said, let's catch up on a few things that are brewing out there. (In a later post today, I'll try to tackle Nancy Pelosi's lies about her being briefed on waterboarding and a little something about states declaring sovereignty under the Tenth Amendment.)

First, Obama appears to have reversed his position on immigration. Contrary to his many promises during the campaign last year, he now supports "enforcement first" immigration policies. From the Washington Times:

[Obama] now says he can't move forward with the type of comprehensive bill he wants until voters are convinced that the borders can be enforced. Having already backed off his pledge to have an immigration bill this year, Mr. Obama boosted his commitment to enforcement in the budget released Thursday. The spending blueprint calls for extra money to build an employee-verification system and to pay for more personnel and equipment to patrol the border. This security-first stance is not unlike that of President George W. Bush, Bush Homeland Security Secretary Michael Chertoff and Republican presidential candidate Sen. John McCain, who said their immigration bill failed in 2007 because voters didn't trust the government to be serious about enforcement.

But Obama is still trying to convince illegal immigrant support groups that he wants to legalize illegals. Somewhere along the line, Obama must have realized that if he stays the course on such an explosive issue, the Democrat majority in Congress will be in greater danger in 2010 than it already is.

You can read the complete article on-line here:

Obama Reverses Stance On Immigration
Stephan Dinan
Washington Times
May 8, 2009

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Obama seems to have come to another realization about the economy and is taking steps to hide certain things. Despite what he or any other politician says about the way things are going, people can walk through the downtown shopping districts of their hometowns or cities and see the truth.

They see business owners doing everything possible to stretch a nickel into a dime while the Obama adminstration and the Democrat-controlled Congress run up huge national debts by spending way more money that they have to spend.

So, in an effort to stem the tide of public opinion, Obama is issuing instructions to the press about how to report on economic issues. Obama is betting that Joe and Jane Average American aren't smart enough to see reality and will instead believe whatever Old Media spoon-feeds them.

From the American Thinker:

Well, I guess it's better than the $100 million he asked his department heads to trim a couple of weeks ago. But $17 billion cut from a $3.4 Trillion budget is still a microscopic amount. Congress sneezes and spends $17 billion on Kleenex. But the truly weird part of this story is the president of the United States instructing journalists how to report this story. Brian Montopoli of CBS News quotes the president giving instructions in how to spin the miniscule budget cutting efforts of his administration: As Steve Chaggaris noted in Hotsheet's morning bulletin today, the news that the cuts totaled $17 billion "landed with a bit of a thud" in the media. Reporters stressed that the cuts made up "a tiny fraction" of the total budget and that they would be hard to push through; USA Today noted that the "proposed cuts are about one-fiftieth the size of this year's $787 billion economic stimulus package - all of which was added to the deficit." In his remarks today, the president sought to change that tenor of that coverage. He mocked the notion that smaller savings are considered "trivial" in Washington and stressed that "these savings, large and small, add up." And he told journalists directly that they should stress the fact that the cuts are "significant" - a surprisingly direct appeal to reporters concerning which angle they should take in their coverage. Update - Thomas Lifson adds: Well, now it is out there for all to see. Obama sees the press as his flacks. I applaud the President for his honest and forthright acknowledgement that the White House press corps exists to publish flattering information about him, and has given up any pretense of objectivity. And if any of them from Fox News or the Washington Times or Examiner break the rules, they won't ever get any more press conference questions. The New York Times will be enchanted to do his bidding.

It seems as if Obama would like to re-write economic history. He knows his policies will only lead to more dependency on the government and hence, greater government control over people's lives.

Lifson's remarks are right on the money.

You can access the complete article on-line here:

Obama Schools The Press On How To Report His 'Budget Cuts'
Rick Moran
American Thinker
May 8, 2009

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And finally, we have to ask: Is Obama intentionally hurting our economy, or is he simply naïve?

Austin Hill over at Town Hall looks at that very issue:

Okay. Let’s consider the possibility that President Obama is, simply, “a little naïve.” So was it this presumed “naivety” that led him to defy U.S. bankruptcy law, and insert himself in between a corporation and its secured creditors? According to such law, a company in bankruptcy must pay its debts to its “secured creditors” before it pays its unsecured creditors. Not only that, in most cases, secured creditors can demand to be paid in full. In the case of Chrysler, several of the institutions to which it owes money are banks that accepted government bail-out funds last year and earlier this year. Those banks are now enslaved to whatever President Obama and the U.S. Treasury Department tell them to do. So when Obama tells, say, “bank X” to “accept twenty-eight cents on the dollar as payment of the debt Chrysler owes you,” well, those banks are obliged to obey Obama, whether or not it makes financial sense to do so, and whether or not bankruptcy law allows that bank to demand more.

You would think that a president who was also a lawyer would know these things, right? So why would he intentionally go against the law? Is it deliberate, or is Obama really that uninformed about such things?

More:

President Obama has now demonstrated to the world’s investors that rules and laws don’t matter - - his personal and political preferences are what matter, and he will get his way, even if investors are denied their rights and damaged in the process. If Obama’s objectve is to weaken the U.S., so as to make a “more fair world,” he’s well on his way to achieving that goal. Yet if Obama actually wants something other than a weaker U.S., then his naivety is something America cannot afford.

Amen.

You can access the complete column on-line here:

Obamanomics: Naive, Or Intentionally Destructive?
Austin Hill
TownHall.com
May 10, 2009

No Bailout For The Big Three Automakers

Most of us were pretty adamant that we did not want our tax money going to bailout failing financial institutions on Wall Street, especially since those same institutions were failing due to government regulations that forced them into bad business practices. Here we are several weeks later and it is looking like that bailout is going to go down in history as a huge, $905 billion failure.

Now, Congress is talking about bailing out the Big Three automakers, General Motors, Chrysler and Ford. I am against this bailout for essentially the same reasons as being opposed to the Wall Street bailout: bad business practices being forced upon the automakers, not by government, but by the United Auto Workers Union.

Plain and simple, because of the lunacy of the union negotiated contracts, American automakers cannot compete with foreign automakers and produce a quality car for the same low price. Thus, Detroit is in big trouble with no way out.

Investor's Business Daily, giving credit to former Clinton Administration official Robert Riech, goes through the issues that the union brings to American automakers and why those issues prevent Detroit from competing in the world market.

Reich says that if a bailout is to be given, then the unions must be willing to give back many of their contract perks. I say that these same issues show exactly why no bailout should be given at all and the Big Three should be allowed to go into Chapter 11.

From the IBD editorial page:

[T]he companies' poisonous contracts with the United Auto Workers union have to be torn up. The problem is that the UAW, under President Ron Gettelfinger, remains adamant: No givebacks. This is financial lunacy. Thanks in part to managerial incompetence, but mostly due to pricey union contracts, it costs American carmakers too much to build cars here; they can't compete. When you fold in health care, pensions, hourly pay, vacations and the rest, average total compensation for a Big Three autoworker is $73.21 an hour, according to data cited by University of Michigan economist Mark Perry. Toyota, Honda and Nissan pay a still-generous $44.20 an hour in total compensation — a cost edge of nearly 40%. Is it any wonder that Ford, GM and Chrysler can't compete? Or that, after paying their workers, they never have enough cash left to retool?

That last paragraph shows how union contracts are holding the automakers back. The automakers cannot afford to retool because they are doing things like paying laid-off workers 90% of their salaries for not working.

More:

These aren't temporary problems. They've been brewing for decades, as management agreed over and over to labor deals that now financially strangle the industry. Yet, UAW's Gettelfinger claims the weak economy is to blame for the industry's woes. Nonsense. As blogger (and former corporate CEO) Jim Manzi notes, American carmakers in 1960 owned 90% of the U.S. auto market. This year, for the first time ever, that share slipped below 50%. Japan's Big Three — Honda, Nissan and Toyota — make anywhere from $900 to $1,600 in pretax profit on each car they make in North America (mostly in southeastern states, with non-union contracts). America's Big Three, by comparison, lose anywhere from $400 to $1,500. Truth is, they're being out-hustled and out-priced in their own backyard due mainly to labor agreements that have driven up costs and become a millstone around their neck.

Chapter 11 will allow the Big Three to tear up those union contracts and start fresh. That is what is needed more than anything else.

Jack and Suzy Welch at Business Week make the case for Chapter 11 as well.

A government handout, however, isn't the way to make that happen. Washington would impose conditions and promise strict oversight, but it simply can't push through the kind of transformative change the industry needs. There would be too much political opposition, and regardless, the bailout sums being bandied about—$25 billion of taxpayer dollars, for starters—would only keep the Big Three heaving along, basically as they are. It's a life-support solution, not a cure. That's why the boards of the automakers should take the courageous step of putting their companies into bankruptcy. Some creditors might make the case for liquidation, but given the diminished worth of the automakers' assets, that's an unattractive scenario. Instead, creditors would most likely opt for the government stepping in as the debtor-in-possession financier supporting the reorganization. Talk about a fresh start. For more than a decade, U.S. carmakers have chipped away incrementally at massive legacy costs. But reorganization would open the doors to meaningful structural change through the renegotiation of contracts with creditors, dealers, and unions. And it would offer better odds of paying back taxpayers.

A bailout is not going to work and it certainly will not encourage the UAW to do the right thing and allow a massive reorganization of the Big Three's management and production practices.

A majority of Americans were against the Wall Street bailout and it turns out that we were right to be opposed. But the Democrats in Congress are itching to repay the UAW and other unions for their political support during the elections, and they want to repay them with our tax dollars.

We need to send another message to Congress that this bailout is not acceptable. We need to tell Congress that the interests of the American people must take precedence over the interests of a bloated and self-serving labor union.

You can access these articles on-line here:

If No Givebacks, Then No Bailout
Investor's Business Daily Editorials
November 17, 2008

GM: The Case Against A Bailout
Jack and Suzy Welch
Business Week
November 18, 2008

Divest From The Failures And America's New Credo: Qua Mei? (Where's Mine?)

It's going to happen. Wall Street is going to get bailed out at a cost of $700 billion to the taxpayer. It makes me sick to think that Congress, with their ultra-low approval rating, is going to saddle more bills on us and that those bills are going to be passed along to our children and grandchildren.

Well, we voted for change in 2006 when the Democrats took over and now we are really getting that change. It just isn't the change that the Dems promised us.

On the way into work today, I heard a caller on a morning talk show suggest something that we should all look into. He offered that we should all pull whatever money we have out of the banks being bailed out and invest it instead in a bank or institution that operates on more sensible business practices. That sounds like a very good idea. We need a list of all the banks that will be partaking of this bailout so that we'll know which ones to pull our money out of.

You may ask: "Why pull your money out if they are getting bailed out?" Because they will get right back into the same trouble as they will continue to operate under the same bad business principles that got them here in the first place. Remember the Chryler bailout back in the early 80's? I do.

Here are some that I know of:

• American International Group (AIG)


• Goldman Sachs Group Inc.


• Merrill Lynch & Co.


• Deutsche Bank AG


• Morgan Stanley

We, as a people, should not in the least bit tolerate having these institutions around if they are simply going to suck money out of us every ten or fifteen years. Since the government won't get rid of them, we need to do something.

I have already called my investment broker and asked him to look into which of my investments are held by the above institutions. When he finds them, he will pull me out of them and reinvest the money more sensible institutions.

I recommend that you all do the same.

Now that I've gotten that off my chest, let me share with you some more reasons why we should divest from these failing lenders.

D.F. Krause from North Star Writer's Group has penned an open letter to Congress in which he asks "Where's mine?" Along the way, he notes some of the more ludicrous bailouts that are taking place with Congressional support.

From his column:

I also see that Congress wants to loan $25 billion to the Big Three automakers. Gosh, why don’t they just borrow the money from banks? Oh. Right. I forgot. Their credit ratings are garbage and no bank in its right mind would loan them money – especially when they’re so busy doing all these subprime mortgage deals! I guess banks aren’t very smart, but even they know better than to loan money to GM, Ford and Chrysler.

The only time I ever hear the words "bank" and "smart" in the same sentence is when the banks are being criticized, and rightly so.

Remember when you bailed out Chrysler 30 years ago? Now they want money again. What a surprise! And how did they talk you into that one? By promising that at least this time they won’t bring Lee Iacocca with them?

That line may have been written sarcastically, but it is absolutely true. Bailing out businesses that practice bad habits will lead to more bailouts in the future. Those businesses should have been allowed to fail.

Wall Street invested billions in bad mortgages. GM, Ford and Chrysler wasted billions and made crappy cars no one wants.

Where does it all end? Right at the foot of the American taxpayer.

You can access the complete column on-line here:

Qua Mei? America’s New Credo: ‘Where’s Mine?’
D.F. Krause
North Star Writer's Group
September 29, 2008