The Darkness Below
By Isaac MacMillen and Robert Romano
America sits upon a precipice, and below, the dark expanse is beckoning.
As the Obama Administration goes to war with the Chrysler bondholders in bankruptcy court, any hope of closing the floodgates of Marxist wealth redistribution may be fading.
At present, the United Auto Workers (UAW), the labor union extortionate demands helped fell the one-time automotive behemoth, is poised to take home a huge return on its Obama campaign contributions—ultimately ending with a loss of only 18 percent, while the bondholders lose 72 percent of the dollars they invested, as ALG News previously reported.
The UAW bears a large burden of responsibility for the present state of the auto industry. With an eye on preserving its own unbridled power and bureaucratic hegemony, the UAW grew until it held a stranglehold over the auto companies, who willingly allowed themselves to be dominated by the Big Labor bosses.
And that's where the problems began. As recently as last year, UAW members were paid $75 an hour in wages and benefits. That is almost triple the earnings of the average private sector worker, who now is being forced to pay for the union members' exorbitant income. In addition, UAW members were entitled to a JOBS Bank program that paid them nearly a full salary not to work. And they were provided a 30-and-out package that allowed them to retire with lucrative pension benefits after just 30 years of work, irrespective of age.
In a bid to dominate the industry upon which it preyed to bend over, the UAW did what unions do best—it made ceaseless demands on the automakers and negotiated costly concessions from the car manufacturers. The featherbedding, cradle-to-grave health care, lack of automation (job protection), and the compulsory unionism robbing workers and the company alike of any alternative—all this costing the automakers precious cash.
And once the recession began to impact auto sales, the non-unionized, more fiscally efficient factories of Toyota began outperforming the union-subservient American auto industry.
Seeing the history of this shameless fleecing, then, it is no wonder that this band of bondholders refuses to buckle to the agenda of Big Government and Big Labor. The bondholders would only receive 28 percent of the value of their $6.9 billion in bonds—that were used to capitalize the company. The UAW on the other hand, would get stock worth approximately $4.2 billion, and a note for an additional $4.58 billion, which represents 82 percent of the value of their claim.
Barack Obama is trying to get his UAW underwriters the best deal possible out of the Chrysler bankruptcy—ignoring the bondholders who spent their own dollars to provide capital to the company. No doubt he remembers that the UAW poured hundreds of millions of dollars in manpower, donations, and advertising into the 2008 campaigns of him and other Democrats. And that the Iowa UAW endorsed him less than two months prior to the Iowa caucuses, which proved so pivotal in the primary election.
This is Marxist redistributionism, pure and simple. We could revert to a whole host of grandiloquent variations. But, occasionally it's good to simply tell the truth. This is a Marxist takeover. And it is only the beginning.
If the Obama-UAW deal is legitimized by the bankruptcy court, further plans to “reorganize” banks and other private entities—along the lines advocated by Paul Krugman and A New Way Forward, “Nationalize. Reorganize. Decentralize.”—will likely follow as stakeholders, creditors, as Obama and his travelers take over one industry after another. And investors across the nation run for cover.
The bondholders who went along with this theft will be remembered as feeding their friends to the crocodiles in hopes they would be eaten last. And they truly are the worst kind of cowards.
JPMorgan, Citigroup Inc., Morgan Stanley and Goldman Sachs Group Inc. hold $4.83 billion of the debt, or about 70 percent. And they refuse to utter even the faintest bleat of protest.
Several critics of the deal note that these creditors are terrified by the Obama Administration. They feel not to take the deal is to risk similar government intervention into their own assets—since many of them are TARP recipients. And perhaps they feel also they do not need to worry about taking cents on the dollar for the debt since they are on the taxpayer dole.
Either way, they have thrown in with Barack Obama and this blatant theft and have essentially fed themselves to the grinning crocodile.
The only hope for the rebel bondholders is that sanity may yet be restored with the bankruptcy court's involvement. For, if the court follows the rule of law as it ought, then these stubborn few could receive what they deserve—or at least a larger percentage.
Certainly, those secured creditors who were capitalizing the company for years ought to get first dibs on getting their money repaid. Under normal circumstances, that is what would happen under a typical bankruptcy proceeding. The question that remains is if the judge involved—Judge Arthur Gonzalez—will stand for the rule of law, or succumb to the whims of the Obama Administration.
The initial signs are not good.
Many of the bondholders who wished to challenge the Administration's deal with the UAW that granted the union a 55 percent stake in the company—a union takeover, to say the least—did so under the condition of anonymity. Thanks to the President's hostile assaults, their lives have been threatened by Obama's thugs. However, their request to protect their identities has been denied as the Judge Gonzalez has ordered their identities be made public by today. And their lawyers' pleas to protect the innocent bondholders' lives and limbs fell on deaf ears.
The White House went so far as to threaten these creditors. And the lawyer who made that allegation has apparently been silenced.
American taxpayers may well be motivated to lend their support to the bondholders; for if they lose, these critical stakeholders will have been told they are less important than a politically powerful union bosses. Bankruptcy law will have been turned on its head. And taxpayers will have to shell out additional billions to UAW-owned Chrysler. In short, the redistribution of wealth at its most ruthless and rawest will have been legitimized by a court of law.
The only bright side is that the new company may not last very long anyway. Given the way the UAW led Chrysler and GM into bankruptcy while privately owned, why should Americans expect them to do fare any better on the taxpayers' tab? Indeed, only 18 percent of Americans have much faith in a government-UAW run GM-Chrysler. Apparently the remaining 82 percent have ridden on Amtrak, been to the post office, or witnessed the evanescence of Social Security.
Unfortunately for those in the majority, it does not appear American taxpayers will be spared yet another bailout, which upwards of 70 percent oppose—60 percent of whom regret the bailout monies already spent on the automakers.
What's worse is that the entire Chrysler fiasco may have opened the door for the federal government nationalizing, reorganizing, and redistributing the assets held by companies across the country.
And once the nation falls into that dark expanse, there may be no crawling back from the Abyss.
Isaac MacMillen is a Contributing Editor to ALG News Bureau. Robert Romano is the Senior Editor of ALG News Bureau.