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Unions are the Winners, Investors the Losers

May 7, 2009

Michael Barone penned an excellent column today that raises questions not being asked of Obama by the mainstream media, so sycophantic to the current administration that it challenges Pravda in its unwillingness (or inability) to be the government’s watchdog.  We’ve now seen Obama unilaterally decide that GM and Chrysler will hand over a majority share of their respective organizations to the US government and to the United Auto Workers.  In doing so, Obama will circumvent all accepted bankruptcy law and will subordinate the secured debt of bondholders to the unsecured debts owed to the union — the same union who’s uncompetitive contracts drove the companies into bankruptcy to begin with!  Wrote Barone:

…the Obama deal would give the bondholders about 33 cents on the dollar for their secured debts while giving the United Auto Workers retirees about 50 cents on the dollar for their unsecured debts.

This, of course, is a violation of one of the basic principles of bankruptcy law, which is that secured creditors — those who loaned money only on the contractual promise that if the debt was unpaid they’d get specific property back — get paid off in full before unsecured creditors get anything.


Think carefully about what’s happening here. The White House, presumably car czar Steven Rattner and deputy Ron Bloom, is seeking to transfer the property of one group of people to another group that is politically favored. In the process it is setting aside basic property rights in favor of rewarding the United Auto Workers for the support the union has given the Democratic Party.

You can read the entire article here.

Some bondholders rejected the proposal, a move that earned Obama’s condemnation and derision.  “Speculators,” he called them, as if having invested their savings with the expectation of earning a return was somehow an illegitimate exercise.  Tell me, will you soon help recapitalize companies by re-entering the stock and bond markets when you know our President believes doing so is shameful and worthy of excoriation?

This hardly seems to be a move intended to grow the economy.  Between punishing companies that attempt to retain profits for their shareholders, forcefully taking money from corporate investors to hand to unions, attempting to give unions the upper hand in organizing and negotiating, and further taxing anyone with the effrontery to earn money on their investments, the Obama Administration seems hellbent on doing everything it can to force venture capitalists, our manufacturing base, and corporate headquarters to other countries.

And we’re hearing none of this in the media.  But, we do know the Obamas have a new dog…oh, and what “enchants” Barry the Beneficent.  Nothing like reporters having their priorities straight.

2 Comments leave one →
  1. moose permalink
    May 8, 2009 8:13 am

    We also know that Obama and Biden went out to lunch the day before yesterday and treated some of the media to burgers and tater-tots (the media reported that this particular burger joint didn’t serve fries). Obama also paid, and this is important, IN CASH! It was reported by CNN that this is proof the economy is turning around. Just more really important news in this slobbering love-fest between Obama and the media.

  2. wfallis permalink
    May 11, 2009 6:52 pm

    An open letter to Tony Clement on his most disparaging comments about autoworkers!

    Once again you are shooting off your overpaid big mouth in the media!
    Why can’t you observe normal protocol and contact and have a face to face meeting with CAW leaders?
    Why haven’t you publicly debates your views with Ken Lewenza?
    Why haven’t you showed your face in Oshawa, Windsor, Brampton?????
    In your wrecent interview ith “The Hour” you were asked several good questions regarding the Canadian auto industry,
    auto exports etc and you failed to give an answer to them.
    Is this because you didn’t understand the questions?
    Is this because you didn’t have an answer?
    Is this because you don’t have a clue as to what is happening in Canada?
    What are your qualifications to be industry minister?
    On the subject of being over paid, lets take a look at you, who as a cabinet minister has presided over this economic crisis,
    I haven’t heard you offering to take a pay cut to help finance the HUGE DEFICIT from the last budget.
    You seem to like the pensions you are and will be receiving from the Canadian Tax payers,
    lets see: province of Ontario, Government of Canada. Both are fully indexed.
    You as a cabinet minister in the Harris Government never attempted to correct Bob Rae’s mistake
    of not allowing GM to fully fund its pension obligations.
    So it sure seems you are a big part of this problem and yet you take no credit for your role?
    I really don’t expect an answer because you know I’m RIGHT!
    And by not answering like Bev ODA does to my letters reinforces my knowledge I am right and you are wrong!
    Do the Honourable thing and renounce your pensionS and quit politics!
    I have BCC this letter to my many friends and co-workers and I will forward your response if you have one to them.

    Please feel free to contact me!

    Michael Gimblett
    Newtonville, Ont

    Contact Tony

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