Dan Gross, in a defense of the Chrysler deal's treatment of bondholders, writes
The Chrysler deal, midwifed and financed by the government, does upend the traditional order and sets a precedent that, were it to be repeated, would be dangerous . [E.A.]
But Gross argues it's permissible in this case, if I understand him, because thanks to government bailout money the complaining "secured" lenders are doing better than they would have anyway.
Well, OK. My objection isn't so much to the screwing of the secure lenders (let's agree it's a "dangerous" precedent) or to the strong-arming of the banks that received TARP funds (another dangerous precedent!). It's to the screwing of the secure lenders and the strongarming of the banks in order to produce a bailout plan that will not work , that will flop like Chooch . The rationale for the bailout was that a bankruptcy would kill car sales, so the government had to step in and negotiate all the bankruptcy-style concessions without actually having a bankruptcy. But Obama was unwilling to get the U.A.W. to make the bankruptcy-style concessions that would be necessary to have a viable Chrysler .** And Chrysler wound up in bankruptcy anyway. Prediction : It will either fail or suck up continuing annual taxpayer subsidies in the billions. In the process it will keep flooding the market with cars and make it harder to save GM and Ford. It didn't have to be that way. ...
And there is something creepy in the way many analysts simply accept that , of course, banks receiving TARP funds must now do Obama's bidding on unrelated matters like the Chrysler bankruptcy. This is a long way from JFK using his presidential power to face down a steel price hike--a long way toward an unpleasant economic model that creates at least the potential for political thuggery, that preserves capitalism's inequalities without its freedoms and efficiencies. Let's not give it a name. ...
**--I thought Walter Olson was wrong in predicting this . Too cynical and conventional a view, I figured, given Obama's presumed secret centrism and willingness to tame Dem interest groups. But Olson was right. ...
Update: Michael Barone has a name ("Gangster Government"). ... It's not corporatist, really--corporatism implies a vision of an organic, hierarchical society, a vision that's not there, right? ...
Blogger and bankruptcy attorney Steve Smith argues that (as he put it in an email) "secured creditors have never treated as golden idols by the bankruptcy courts, particularly in Chapter 11's, where the law gives enormous power to the debtor in possession to devise their own reorganization plan." Smith concludes: "Contrary to what many on the right may have thought, bankruptcy is not automatically a system designed to screw uppity workers and their pensions; it is a set of rules and procedures geared to allow people and companies a fresh start."
But isn't it also Dan Gross who claims that bankruptcy normally would support the creditors, absent the exceptional circumstances recognized by the Obama administration? Smith suggests the circumstances aren't all that exceptional. ... Then why was strong-arming of creditors necessary? Why not just let the bankruptcy judge stiff them? Answer: Bailout capos Rattner and Bloom obviously wanted to avoid normal bankruptcy proceedings entirely, for other reasons (e.g., the stigma, and its effect on Chrysler sales, or the prospect that the bankruptcy judge might disrupt the UAW's sweet deal). ...
Chooch ism is actually a pretty good name. Definition: a) Mildly thuggish crony capitalism directed by elected officials b) using large amounts of taxpayer money c) in ostensible pursuit of "progressive" ends d) that flops. ...
Even a strong-arming Obama can't make the FIATs run on time. ... 3:02 A.M.
I've been trying to figure out if I buy former John Edwards strategist Joe Trippi's claim that he didn't learn that the Edwards/Rielle Hunter story was true until Edwards was caught at the Beverly Hilton last July, shortly before the 2008 Dem convention. I suppose I think that:
a) with two or three phone calls Trippi could easily have learned the truth. If I knew the truth, it wasn't that hard to find out;
b) If Trippi read some blogs, he would have figured out the truth without the phone calls. All a veteran politico would need to know is that a senior Edwards aide, Jonathan Prince, insisted on personally chaperoning HuffPo blogger Sam Stein if Stein was going to view the then-suppressed Rielle Hunter web videos. If Prince was involved at that level, the story had to be explosive. ... But why would Trippi read blogs? It's not like he's the big internet guru or anything. ... oh wait .
c) That said, Trippi seems honest. Maybe he really was off in his own world. If so, that's probably because at some level he wanted to be off in his own world. He couldn't handle the truth!
I suspect a willful suspension of curiosity due to the presence of a paycheck and a press spotlight (in which Trippi thrives). That's my guess anyway. .... 2:59 A.M.
***SPOILER ALERT*** In case anyone who is going to see the disappointing State of Play hasn't seen it yet . Let the record show that, although the film moralizes unsubtly about the virtues of old-fashioned, time-consuming print reporting over irresponsible blogging, in the end the irresponsible bloggers had gotten it right all along. There is a lesson in that for all of us. ... 2:45 A.M.