NYT's Sanger and Vlasic, with what must be willed credulousness, describe how President Obama's "hard line" on Chrysler gives him and his "team" the "leverage" they will need going into the GM negotiations.Some commentators like to talk about no one being above the law (i.e., when the Bush Administration is being examined), but I have not read much about no one being above the law when Obama decided to rearrange contracts for Chyrsler bond holders. If respect for the law is good in the first case, why not the second?
That appears to be the part left out of the Obama administration's self-aggrandizing deal spin: Who is going to buy the New Chrysler's cars? Consumers "in new markets around the world," say Sanger and Vlasic, with a straight face.
P.S.: It's one thing to politicize the reorganization of a prominent failed firm, leaning on private investors and making up new rules--if it works, are voters going to complain? It's another to engineer a slow-motion calamity.
Update: More on Chrysler on bondholders from Megan McArdle here and here.
I think most of the people enthusing about this actually recognize that in other countries, when the government uses the banking system as a slush fund to reward its constituencies, this generally turns out badly--and makes the banking system a lot more frail.Also, there was an comment at National Reviews Corner blog about the agility of hedge funds:
This administration has made it quite clear that they can't be relied upon to honor contracts or legal precedents and if I can't know what the rules are before the game starts then I'm not going to play.