May 1, 2009
No-one Will Now Lend to Auto Companies
Obama's villification of auto company lenders, the two hedge funds that held out for better terms, pretty much seals the deal -- the government is going to be the only auto company lender. Why lend to auto companies when the President can fix the terms of repayment and call you out if you disagree? Not anyone with money and common sense.
Souter Announces Retirement
Justice Souter's primary business decisions was Virginia Bankshares, a rambling mess of an opinion on Rule 10b-5 and mergers written early in his tenure. Justice Scalia felt the need to summarize the holding of opinion in the opening three sentences of a concurring opinion because Souter's rendition was so confusing.. Souter will be defended by his clerks, whose major creditential is his selection of them to be clerks, and few others. He will not be missed, Republicans will view his retirement as his final act of disloyalty -- he could have retired last year and given Bush a pick. Democratics will view his retirement as time to finally get another "real liberal" on the court. He was selected after a few months on an appellate court because he had no track record and was known to a few connected New Hampshire conservatives, few of whom now exist and who thought he was one of them -- he was not. He came to be grouped with the "liberal wing" of the Court. [Some say is was a personality clash with Scalia.] He lives an isolated, monk-like life. He was a poor writer and a muddled thinker who was "work[person]like" in his court habits. One of another of many, many non-notables on the Court, which itself is a virture of sorts.
Chrysler In Chapter 11
There are many, many aspects to this story. Let me mention a few. First, Obama has proposed and still seeks, through a bankruptcy trustee now, to buy a car company worth nothing for $12 B in clash, TARP money to GMAC, and TARP money to secured lenders and turned the company over to the UAW and Fiat, sort of. Fiat will bring its "technology" and the UAW will negotiate with itself to built better quality cars for appropriate wages. This deal in inane. Fiat is losing money, has a very poor reputation for quality, produces cars that cannot meet United States safety standards, and is not nearly the partner that Daimler Benz was -- the one that failed. The UAW will, with political backing, make few real concessions. It is amazing that the President of the United States is attempting to structure the operation of one of the world's largest automobile companies. His mistakes are predictable. Second, the board of directors will get four Presidential appointees and an appointee from Canada and Ottawa. Liberals will get what they always wanted, a board of directors of a major American corporation appointed by politicians who are less interested in profits and more interested in "public welfare" than ordinary shareholders. This is not a recipe for a profitable company; it is a recipe for a continually subsidized company. Third, in the future Chrysler will seek to dump its pension and health benefits on the United States and we will oblige, as a form of "legal subsidy" to one of our leading export companies so as to enable it to compete with China and others in automobile production. This will be the beginning of some form of nationalized pensions and health care. Predition: Within two years, Fiat will pull out with a dealership agreement (access to old Chysler dealers) and Chysler will be folded into GM, with another major subsidy. The plan is probably already in the works. I hope I am wrong.