How Obama Conducted a Mafia-Style Shakedown and Stole Chrysler From Secured Lenders and Handed the Stolen Goods to the Auto Unions.
By Wayne Allyn Root, 2008 Libertarian Vice Presidential nominee
I've been arguing for 2 years now that Barack Obama and his anti-capitalism, pro-union friends want to change the way America does business. I've stated out loud on numerous occasions that their goal is to destroy (or certainly badly damage) capitalism and tilt the playing field in favor of socialism. I've argued that Obama is trying to turn the U.S. economy into FRANCE- a country dominated by big government and big unions. Well I wish I were wrong, but my worst fears were realized last week when Obama literally stole the ownership of Chrysler from capitalist investors and risk-takers, and handed the stolen property to the auto worker unions that supported him in the recent Presidential election. It was a shakedown that would make John Gotti or the leaders of the Crips and Bloods proud.
Obama is my Columbia University Class of '83 classmate. As such, I can tell you that the vast majority of my classmates at Columbia University disdained capitalism and capitalists. Worse, Obama went on to become a law student, law professor and lawyer (as well as a “community activist” ie professional protestor). Lawyers are the natural enemies of business- they don't create jobs. To the contrary, they sue the courageous capitalist job creators and risk-takers, thereby destroying jobs. With a natural disdain of business, Obama has spent the past 25 years since our college graduation attacking and suing business, as well as teaching others how to do the same. He has never in his life started a business, funded a business, risked his money on a business, or created a single job. Now we've elected him to run the entire American economy. As a man with zero business experience, a natural disdain of capitalism, and now drunk with power, Obama has decided to abandon the rule of law and conduct a hostile takeover of American business. Frightening.
Here is what happened at the Chrysler negotiations last week. Plain and simple, Obama conducted a Mafia-style shakedown. He went to SECURED creditors who risked $6.9 Billion of their risk capital on saving Chrysler, and who rightly owned a large majority of the company, and told them their secured interest was no longer secured. Obama put a gun to their heads and told these capitalist risk-takers to accept a 86% markdown of their secured holdings in Chrysler. Next he proceeded to hand a vastly larger 55% ownership to the Auto Workers Union, which was unsecured, last on the totem pole of creditors, and therefore likely to receive little or nothing in the event of a business failure. Obama, the mafia don, decided to throw the rule of law out and shakedown the wealthy capitalists he so disdains. He told secured creditors (capitalists who happen to usually support Republicans and fiscally conservative candidates), owed $6.9 billion, that their ownership was worth pennies on the dollar, while he handed (out of the blue) majority ownership to unsecured auto workers (who happened to support Obama's Presidential campaign with millions of dollars in contributions and man-hours). He capped off the shakedown by allegedly threatening to use the White House Press Corp. to destroy the reputation of the creditors. John Gotti would be proud.
I've been in business my entire adult life. I've raised money, risked money and borrowed money on countless occasions. The rule of law is simple: whoever risks their cold, hard cash always has priority over all other creditors. Those with skin in the game are always in the drivers seat. My creativity, tenacity, organization skills, motivation skills, and thousands of hours of work always stand in line behind those who put their money at risk. Risk talks, all the rest walks. That's how capitalism works. PERIOD.
That's the rule of business…and the rule of law. Now, along comes Obama to change the rules. When a man disdains capitalism and capitalist risk-takers, suddenly the rules are out the window. Suddenly those who put up the capital, those who shoulder the majority of the risk, are no longer first in line if the business fails. Obama made it abundantly clear last week in the Chrysler negotiations that the rule of law has been replaced by the rule of street thugs and shakedown artists. Obama's plan simply ignored the secured first-in-line creditors and risk-takers, gave them pennies on the dollar, and rewarded (paid-off) the auto unions with a majority interest for risking nothing. Then he turned around and blamed the capitalists for being selfish, and unwilling to sacrifice.
Where is the sacrifice of the auto unions? Sacrifice? Obama just pulled off the biggest taxpayer and capitalist rip-off in history. Taxpayer money, and investor's money just got “crammed down” to almost nothing, to make room for majority ownership for Obama's friends at the auto unions. Of course he and his political allies will receive HUGE kickbacks in campaign contributions in the future for his thuggery.
This is a political payoff- pure and simple. It is a shakedown of epic proportions. The bankruptcy judge and courts should, of course, absolutely reject Obama's shakedown tactics and follow the rule of law. Unfortunately, with an administration that has clearly shown itself willing to operate on an intimidation, thug, and mafia level, I have no confidence that will happen. But the fair outcome to uphold the rule of law, is that the people involved in this political shakedown and theft should all be sent to prison for extortion, fraud and grand theft (just as the mafia would be for taking the same actions).
One of the biggest problems with politicians like Obama who have a total lack of understanding about business, economics and the world economy is that they do not see the unexpected consequences of their short-term political payoffs. In this case, it is none other than the destruction of capitalism and the American economy.
Since Obama took office the mantra we have heard is the need to get credit and capital flowing again. Our children's and grandchildren's futures have been mortgaged with the trillions of dollars that Obama has spent to accomplish that goal. Now, in one fell swoop of audacious ignorance for the sake of political payoffs, Obama has slammed shut the spigot of capital flow to American business. As has been made clear over the past months, foreigners control much of our capital. But, because we are a land of laws, including the law that those who provide the capital stand first in line to get it back if the business venture should fail, they have readily invested this capital in American businesses. NO MORE! Obama has just thrown that out the window and the ripple effects will be rapid and devastating.
In a global economy it is as easy to invest in a business in Europe, China, or Brazil as it is in the United States. Given the fact that President Obama now says your secured capital can be stolen from you, why would anyone (foreigners or Americans) any longer invest in American business? Obama has just made it far harder, if not impossible, to get any capitalist investor or risk-taker anywhere in the world to invest in any American business. Perhaps President Obama really hates capitalism and capitalists. Or perhaps he just doesn't understand it all. Either way, his actions have caused great damage to the American economy.
Is there a way to undo the damage? Yes. Voters can elect candidates who understand business; understand the long-term consequences of their actions; support and reward capitalism; encourage free markets without government interference, manipulation or extortion; value the rule of law; and don't support government making payoffs to political supporters.
As I close, I have a few important question for you President Obama- Without capitalism or capitalists willing to take risks, who is going to pay the bills for all your out-of-control spending plans and welfare programs disguised as “tax cuts” (for people who don't pay taxes)? Who is going to pay for your dramatically increased handouts and entitlements? Who is going to pay for your next round of bailouts? Who is going to pay for your next round of economic stimulus? I'm afraid you've got a huge problem President Obama. I'm afraid you have budget and revenue projections that you can throw out the window. I'm afraid you have tax revenue projections that are now closer to fairy tales than reality. I'm afraid you now have deficits the size of which no one has ever dared imagine in world history. Here's the moral to the story for my socialist college classmate: Be careful what you wish for, it may come true.
Wayne Allyn Root was the 2008 Libertarian Vice Presidential candidate. His new book will be released by John Wiley & Sons this July entitled, “The Conscience of a Libertarian: Empowering the Citizen Revolution with God, Guns, Gambling & Tax Cuts.” The book is available for pre-sale at Amazon.com. For more of Wayne's views, commentaries, or to watch his many media interviews, please visit his web site at: www.ROOTforAmerica.com