First though, congratulations are in order to the writer of the first link, Ed Morrissey who writes for Hot Air has his first weekly column published with American Issues Project, titled "The Whim of a Madman."
In one scene from the movie, "Speed," Dennis Hopper cackles with glee when a news reporter describes his hostages as being held at “the whim of a madman.” Hopper's character repeats it twice, clearly delighted by the description, and at the sheer power of being allowed to act as irrationally as he desires.
Unfortunately, that scenario played out in real life, only not in a runaway bus with a bomb on it. This past week, it played out behind the scenes during the negotiations to salvage Chrysler from the scrapheap. And the madman whose whims could get unleashed was the one person tasked by the Constitution and mandated by the voters to enforce the laws his representatives were attempting to pervert.
Two separate reports from the negotiations accused the Barack Obama administration of threatening senior creditors with public humiliation if they did not relinquish their contractual rights to Chrysler's assets in the bankruptcy, by exploiting their connections to the White House press corps. The first report came from an attorney representing these creditors, Thomas Lauria, who first alleged the threats during Frank Beckman's WJR radio show. The second came from Business Insider, where two other sources confirmed Lauria's allegations.
Read the whole thing, it is quite eerie what the Obama administration is trying to do and a great thing that it has become so public.
That piece leads right into the second article that caught my eye, from Forbes, who explains why investors are leery of Obama's bait and switch schemes and are not falling for them.
But on the other hand, lots of things are not happening. Many investors are sitting on the sidelines, as is much money. Why? Because it is impossible to know what the rules of the game are. And that's because the administration and the Congress keep changing the rules in capricious ways in pursuit of larger political objectives.
Forbes also provide specific examples:
Investors, other than the banks who desperately needed TARP funds for survival, are leery of any program that uses them. Anyone who took TARP funds has been subject to government interference in managerial decisions. The restrictions on bonuses and executive pay have been widely discussed in the media. Less well known are restrictions on the banks' ability to hire foreigners, and the constant harassment by Congress over internal management decisions on everything from the use of private aircraft to the locations of conferences. Some of these concerns are well justified, of course, but it wasn't clear ex-ante what all of the rules were and it isn't clear ex-post either.
Goldman Sachs, JPMorgan Chase and a number of other banks want to repay their government TARP loans in order to get the government off their back. Now there is an argument afloat that they shouldn't be allowed to pay back funds if they took advantage of the Temporary Liquidity Guarantee Program (TLGP).
This was an incredible ill-conceived program that Treasury and the FDIC put in place in a panic. It allowed participants to issue guaranteed debt for a fee of 75 basis points regardless of their financial condition. The banks were offered a free lunch and now may be punished for having eaten it.
The Obama administration has shown repeatedly that it is willing to change the rules and even challenge the sanctity of contracts in the interests of its political agenda. The best, most recent example is the Chrysler restructuring.
The piece was written by Thomas F. Cooley, the Paganelli-Bull professor of economics and Richard R. West dean of the NYU Stern School of Business and the concluding paragraphs explain why investors will not subject themselves to the "whim of the madman."
Why would private capital get involved when the rules of the game are so capricious? No one would take that gamble when it is clear that, in dealing with the government, private capital will always take a back seat to politically powerful entities.
And that is the larger worry that current policy has neglected. Firms and markets can function quite well within a framework of rules. Indeed, rules are good for the orderly conduct of business. But when rules get imposed or dispensed with willy-nilly in the interests of politics, it is very dangerous. We have should have learned this lesson long ago.
Without investors, the confidence gaming schemes cannot work and investors with the kind of money that could help our economy are not going to invest when they know they are handing over control of their hard work, their business savvy and their profits to the whims of politicians and what is best for those politicians at any given time.
That is not how capitalism works folks....that is called socialism, where the government controls everything.
No business owner, or investor that worked for their money to begin with, is going to willingly hand control of their companies, nor their money, to the government... not without a fight.
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