Debt in Bankruptcy Rules are Important to Everyone

I am repeating this unfortunate account because America still has not grasped its true meaning.

It isn’t often when you see the White House make one decision that can truly impact the financial direction of the country, without any legislation by Congress or by benefit of full, extensive national debate. That happened when President Obama forced a settlement on senior debt holders of Chrysler.

The result was the gift of major equity positions to the current Administration’s favored United Auto Workers Union, followed by a decision to hand Fiat control of operations, at the expense of investors who previously had been asked by the government to aid in Chrysler’s bailout, all in return for that senior position.

Normal bankruptcy proceedings would have recognized proper legalities but the President simply brushed them aside.

Still, debt in bankruptcy rules are important to everyone. Break them and nothing can be sacred under law, and under Executive Order.

The U.S. Pay Czar

We have a pay Czar in Washington, to go with all the other so-called pleasant changes we will have to get accustomed to. He will see that companies that took bailout money from the government are not paying executives too much salary and bonuses.

After all, it is taxpayer money. Why should those millionaires be making even more millions? Right?

So, this gentleman is actually renegotiating employee contracts already signed in good faith because they have worked out too well for the executives.

I have a suggestion. Every ball club these days with a stadium is directly or indirectly subsidized by taxpayers, many with federal stimulus money. Ball players make millions. Most never produce as intended when signed. Why not have this gentlemen renegotiate their contracts?

I do think ball players are overpaid. I also think that should be a question for those who pay them and those who attend games. Not a Washington politician and his or her appointed lackey.

Capitalism and the Current Recession

Capitalism and the Current Recession

We keep hearing about the role of capitalism in the onslaught of the economic downturn of 2008/2009. The media parrot the voices of the Left which has succeeded as a result, in making political gains.

But the facts show otherwise. Capitalism does not cause recessions or depressions. It never does. Adjustments in the economy are not a failing of capitalism. In fact, when they occur under socialism, capitalistic methods are always undertaken for adjustments under that system.

The economic problems we have had are caused by our regulators, such as the Treasury and Federal Reserve, whose policies in attempting to control the economy often, if not always, do the actual damage. Currently, it can be the easy money policy that created the mortgage bubble and then the ill-planned bailouts that followed what would have been recoveries from normal economic down-cycles.

Long-term Chrysler Takeover Results

Long-term Chrysler Takeover Results

2009 Probably will leave a bad proverbial taste in the mouth of capitalism for a very long time because of the Chrysler bankruptcy.

That’s when the White House and not a bankruptcy judge decided to reverse the seniority position of creditors. Senior debt position was made subservient to a lesser position. And to boot, the president took it upon himself to castigate the senior creditors for being obstinate for trying to protect their contractual position.

It was the first time the Chief Executive established a precedent that may well become the standard for America’s business future.

Health Insurance for All Americans?

Health insurance for all Americans?

Is it true that 45 million Americans have no health insurance? There is lots of doubt about this figure. Many claim, with reasonable authority, that this includes illegals, those in between jobs that offer insurance, and folks who are not interested and wish to self-insure.

If that number is considered, that is only about 15% of the population. In truth, we are looking at true need in only about 5% of the population.

Questions:

One: Are they getting medical help now? Yes, they do, when they go to ERs.

Two: In dealing with this small group , should we tinker with the entire health insurance system?

That could have everything collapse: What we like today, with what we would like corrected. Including independent use of doctors and medical treatment, when we want it and when we need it.

How about giving the poor uninsured a free membership card for private insurance of their choice?

Stimulus Folly

Stimulus Folly

Stimulus attempts by bureaucrats most often are a folly. The antics that failed in the past always seem to be forgotten by academics despite the previous results. So they rehash them, as we see these days.

It is about time we make sure academics are not relied on so much, in the control of our destiny. How do we do this? Stop listening to the “geniuses” in the Treasury and the Federal Reserve trying to micromanage our government bailouts.

Notice that these folks all go to the same Ivy League schools? Schools which never give students bad marks? Schools which turn out famous students we hear about and see on TV? Which, as a result, hire fellow alumni at the drop of a hat because they are pretty much like-minded.

I can go on about their financial and business flubs but space is short. More in future comments.

Government Pump-Priming Never Works

Government pump-priming never works.

Liberals always refer to the opinion of John Maynard Keynes but he was not decisive as to methods of producing prosperity, as are those who claim to be his followers.

Some examples of the left's misuse of his admonitions:

..Prosperity depends on investment in industry. That produces jobs and income.
..Lower interest rates do not help as the Great Depression showed in the 1930s.
..Lots of bank reserves and deposits don’t help if the banks are afraid to make loans so industry can invest.
..Large public works do not create meaningful jobs.

To elaborate on a portion of our recent emphasis on billions in certain areas as a depression stimulus: A pick and shovel job is meaningless to women and skilled workers who make up such a large part of the work force. This did not help in the 1930’s. It certainly is of no use today.

And government jobs are a crutch which create poor psychology. It does just the opposite if we must overcome fear and gloom to get over a recession or a depression.