When secured lenders chose Chrysler bonds, they accepted a lower rate of return in exchange for the assurance that in the event of trouble, they would be paid everything they were owed before any money went to the junior or unsecured lenders. (The unsecured lenders in this case would be the United Autoworkers Union, a.k.a., the UAW.)

In short, the bondholders were assured that they would be paid first because the United States is supposed to be governed by the rule of law.  (As many Lakota and others are aware, this country doesn’t always measure up to that standard.)

More specifically, legal precedents in the areas of contract and bankruptcy law provided the bondholders a “guarantee” of being paid first.

That concept went out the window with the Obama plan.  The secured lenders were paid 29 cents on the dollar while the unsecured lenders were paid 50 cents.

Yes, some of these secured lenders were hedge funds but according to economist Dr. Mark W. Hendrickson, they were also “retired blue-collar workers, investment firms managing the retirement accounts of state and municipal employees,” and “school endowments…”

Obama unfairly lumped these folks in with the hedge funds and referred to all of the ripped-off bondholders as “speculators.”

The uncomfortable conclusion I’ve come to is that Obama violated the rule of law so he could reward his UAW supporters.  This behavior smacks of Soviet style cronyism, in my opinion.  This is theft at the highest branches of the government and at this point, no one is safe with the rule of law thrown out the window.

There are also constitutional problems with the Chrysler bankruptcy and government semi-nationalization.

Dr. Hendrickson claimed that :  “The Constitution allows Uncle Sam to ‘regulate commerce’ not to own and manage it.”

According to the attorney for the Chrysler bondholders, Tom Lauria, an argument could also be made that the Constitution was violated in the area of right to contract and right to property.

The executive office, which is charged with enforcing the law is breaking the law, he claims.

With this plan, the executive office is intruding into the judicial branch and upsetting the checks and balances that are supposed to prevent this sort of abuse.

So it’s with some disgust that I share the following clip of Obama proclaiming that the secured lenders to Chrysler wanted an “unjustified tax payer funded bailout.” “Unjustified?” What’s unjustified about expecting contract and bankruptcy laws to be respected?  What about the U.S. Constitution?

In addition, Obama says that the bondholders “were hoping that everybody else would make sacrifices and they would have to make none,” when in fact, the bondholders’ attorney offered to take 50 cents on the dollar when they had no legal obligation to take less than 100%!  No joke!

If what attorney Tom Lauria said is accurate, this is one of the most disgusting cases of spin that I’ve ever seen come out of the White House; prepare yourself.

What is differentiating us from a Banana Republic on this issue?

Where is the collective outrage?

Maybe it’s  in hiding until people in this country really start to hurt.

Watch your pensions and your 401Ks.  They may very well be stolen to bail-out the bankrupt social security system.

Quote of the Week: “God seems to have left the receiver off the hook.”

~Arthur Koestler as quoted in the May 11, 2009 issue of Forbes.

Buried News of the Week

Attorney for Bondholders Accuses the White House of Threats

Please check out this clip of attorney Tom Lauria being interviewed by WJR talk radio host  Frank Beckmann.

Mr. Lauria is representing the secured Chrysler bondholders.  He makes some shocking allegations about the Obama administration.

And here’s a later Fox Business News clip where Mr. Lauria seems to back off somewhat from his earlier allegations.

Readers, if you have any theories about why Lauria moved into “no comment” mode regarding his earlier allegations, please let me know.

Lauria seems to be saying that his client wanted him to be quiet about it.

My best guess is that the White House was unappreciative of Lauria speaking publicly about the threats and so they issued further threats to his client and/or Lauria, if he didn’t shut his mouth.

See you next time.

Was that a long winter or what?

I realize that Thomas and Matthews aren’t talking about our current economic crisis in this MSNBC clip.

But maybe my fears of runaway inflation due to the overspending of the Bush-Obama years are unfounded.

After all, if Obama can deliver “…the world, once again, from evil” (Chris Matthews of MSNBC) and “he’s sort of God” (Evan Thomas of Newsweek), then perhaps I’m over-reacting.

Maybe we don’t need no stinking capital…we’ll just print more fiat currency and sell Treasuries!

“If increased government spending with borrowed or newly created money is a ’stimulus,’ then the Weimar Republic should have been stimulated to unprecedented prosperity, instead of runaway inflation and widespread economic desperation that ultimately brought Adolf Hitler to power.”

~Thomas Sowell (as quoted in the May 27, 2009 issue of the Rapid City Journal, and available online here).

Buried News of the Week

Ron Paul Sponsors Bill to Audit the Federal Reserve

Fed Would be Shut Down if it Were Audited, Expert Says