Monthly Archives: June 2009

Life and Death Under Capitalism

One of the most important court cases in U.S. history will be heard  tomorrow, June 5th. It pits Indiana State Treasurer Richard Mourdock against the United States government. While the case is nominally brought against Chrysler in the Chrysler bankruptcy, the reorganization plan was put together by the Obama Administration’s Auto Task Force.

You can read the Bloomberg story here. The crux of the case is this: Can the U.S. government take assets that are pledged as security for debts due to existing creditors and give those assets to someone else?  The Auto Task Force plans to give creditors twenty-nine cents on the dollar from the TARP funds and to give the pledged assets to Italian auto maker Fiat.

If this is permitted, then over 150 years of well established law will have been tossed into the dustbin of history. Not to mention that this is clearly an extra-legal use of TARP funds. You can listen to a good interview of Richard Mourdock that took place on WOWO radio by clicking here. (Note, the interview is in two parts and the link has Mourdock’s name misspelled as Maurdoch.)

This is why this case is so important. Secured creditors accept a pledge of specific assets in return for loaning money to a borrower. The creditor has the ultimate right to take possession of those assets and sell them to satisfy the debt. That is how it is with the mortgage on your house, for example.

In the words of Mourdock, “this is far bigger than Chrysler or the State of Indiana,” it is “important to our capital market system.” If secured creditors are not truly secured, then lenders and investors will demand higher rates of interest and may not lend at all to some industries. The government’s position in this case is penny wise and pound foolish.

Who is benefiting? Primarily the UAW and the U.S. Government. Part of the irony of this case is that the Indiana Treasurer is suing on behalf of two union pension funds (Indiana Police and Indiana Teachers) and one other state fund. He is totally alone in this fight. Every other creditor caved in under threats, and pressure from the White House. The California state retirement fund walked away,for example, because the state is asking for a federal bailout.

This case represents a blatant misuse of federal power to abrogate private property rights. It is totalitarian in its nature and represents a major threat to capitalism itself. If we the people lose this one, then who will lend to auto companies, to other unionized industries, or to the government itself? Those who do so run the risk of being labeled as greedy, unpatriotic, speculators who will be publicly excoriated by the White House press office and may look forward to threats of physical violence and death, all of which occurred in the case of Chrysler’s creditors.

The case, In re Chrysler LLC, will be heard in the Second Circuit Court of Appeals and could move quickly to the U.S. Supreme Court regardless of the outcome because Bankruptcy Judge Arthur Gonzalez as scheduled the transfer of Chryslers assets to Fiat for June 15th.

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Fiction, Freedom, and the Forth Estate

We have all watched a magician perform illusions that leave us spellbound. “How did he do that?” we ask ourselves. We understand there is always something going on that we do not see and that a big part of the illusion is accomplished because our attention is drawn to what the magician wants us to see. The “show” is a fiction that hides what is real.

America is witnessing a kind of magic show right now. Great attention is focused on what President Obama says while what he does is accepted with little scrutiny and no serious questioning because of his personal charisma and popularity.

Elected Republicans and the RNC are almost entirely silent. It is only Newt Gingrich, Dick Cheney, and a few others who seriously question what is happening. In response we see stories from the old media about “moderate” Republicans fearing the party has left them. These stories are designed to silence elected Republicans so they will not say what they are thinking.

The President says he is concerned about the budget deficit. Yet he helped pass the $700 Billion TARP bill. He asked for the $787 Billion stimulus bill to be passed in January so he could sign it quickly once inaugurated. It shot through Congress so fast that no one actually read it before voting on it. The President has said “no more earmarks” and yet the bill he signed contained thousands of earmarks.

The President said no lobbyists would be appointed under his administration. The exceptions came almost immediately and then last Friday the policy was scrapped with little fanfare. Watch what he does, not what he says.

The President says he wants to nationalize healthcare to save money. Really? Do you believe more people can get more care, and better care, for less money? No one past the second grade should buy that illusion.

The President wants to limit carbon emissions to save the planet. Or is it to create an enormous new tax system that will undermine our ability to be globally competitive and justify regulating virtually every human activity?

The President promised “change.” No one seemed to question whether this “change” would add to our freedom or take away our freedom. We should keep in mind the wise words of Gerald Ford who observed, “A government big enough to give you everything you want is a government big enough to take from you everything you have.”

The U.S. Constitution was set up to preserve our freedoms by establishing a limited government that would only have a few definite, enumerated powers. The Forth Estate (the free press) was to be the watchman on the wall that assured our freedoms would never be swept away.

The Forth Estate, in the form of newspapers, NBC, ABC, and CBS, has fallen under the spell of the magician. Thank God for the Internet media, talk radio, and FOX News or there would be no Forth Estate as conceived by the Founders.

Most of what the federal government does today is far beyond the enumerated powers. Because no one seems to question anything government does, even the legislation that passed last week is ignored. Consider the TARP bill that had the express purpose of protecting financial companies from collapse. President Bush used some of that money for the first round of bailouts of the auto companies. Where was the Forth Estate?

Now there are credible allegations that auto dealerships designated for closing by the Administration were selected based on political contributions. This is a serious issue. Where is the Forth Estate?

Never forget that government is a monster that always seeks to feed itself and to grow and to devour anything that stands between it and the satisfaction of its appetites. Freedom is a precious thing, and once taken away is not easily regained.

Freedom depends on discovering truth and opening it to the light of day. Fiction, illusions, and flowery speech will not preserve freedom. Will the Forth Estate fight to preserve freedom, even its own freedom?