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Thursday, April 30, 2009

If bankruptcy is a success, what does failure look like?

Barack Obama hailed the bankruptcy of Chrysler today as a success story for his administration. Having declared that the auto maker’s plans were too little, too late, the government ushered Chrysler into bankruptcy in order usher in a new era of clean, green cars that Chrysler would produce – in association with Fiat thanks to another eight billion dollars in taxpayer funds.

Bondholders who did not agree with Team Obama to essentially turn the company over to the auto union – soon to be a 55% owner of the company – were vilified in an eerie echo of the kulaks in 1920 Russia.

Limbaugh labeled the announcement as “Peronism” with some justification. The fact is that this country has not developed any defenses against the takeover of industry by a government caudillo. This only happens in banana republics and most of the people in the country are in denial. We are like passengers on a jetliner that has been taken over by highjackers and we think we’re waiting to hear the highjackers’ demands until the moment we make contact with the World Trade Center.

We have become so accustomed to the orderly resolution of commercial disputes in court that we have little defense except to sputter about fairness when political leaders simply ignore contracts and impose their own solutions. It is said that the court follows the election results and who is willing to go to court to thwart a popular politician who claims the requirements of necessity to seize major corporations and hand them over to his allies?

In other words, who’s to stop him?

Andrew Jackson famously said of a decision of the Supreme Court “John Marshall has made his decision, now let him enforce it!"

How would the courts react if Obama made the same statement? It would be interesting to find out.

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