BarroMetrics Views:
In her magnum opus, Atlas Shrugged, Ayn Rand coined the phrase, the ‘aristocracy of pull’. By that she meant a structure where economic success depended not on how well I exchanged the best of my efforts for the best of yours but on how well connected I was to rulers of the day.
In modern times, the US has always had a modicum of this in the form of lobby groups. But the Obama statement to the Chrysler bondholders sent shivers down my spine. Here are his reported words”
“While many stakeholders made sacrifices and worked constructively, I have to tell you some did not. In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting.
I don’t stand with them. I stand with Chrysler’s employees and their families and communities. I stand with Chrysler’s management, its dealers, and its suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars. I don’t stand with those who held out when everybody else is making sacrifices. And that’s why I’m supporting Chrysler’s plans to use our bankruptcy laws to clear away its remaining obligations so the company can get back on its feet and onto a path of success.”
Interesting oratory. In a swipe, the President of the USA used his office to change the legal status of secured creditors. And with the use of his office, bullied the bondholders into submission (see report in various papers e.g. http://www.thetruthaboutcars.com/chrysler-non-tarpies-surrender-clear-way-for-fiatsler/) . There will be those that will argue, that ‘this time it’s different; that this time, circumstances justify overthrowing the rule of law.
For an example see: http://www.slate.com/id/2217653/. An opposing view can be found at http://www.safehaven.com/archive-304.htm.
My opposition to Obama’s tactics is simply this: A free economy is dependent on freedom of the press and the rule of law. The moment we set aside, either or both, for any reason, we are exposing ourselves to a greater or lesser form of dictatorship.
In this case, the rule of law was set aside by none other than the President of the United States. This sets a dangerous precedent - that the US will fall into the very form of government portrayed by Ayn Rand in Atlas Shrugged. The problem with this form of government is there is no certainty of legal structure. Without that certainty, the freedom so necessary for human growth (and so obviously present in most ‘golden ages of man’), cannot flourish. In this environment, our rights are those determined by the Government and these rights can be overturned by fiat.
In Blood in Streets, Lord Rees-Mogg and Davidson made the historical case for a decline of US power and authority. The fiscal discipline exercised by Clinton postponed the events described in the book. It took George Bush to reset the slippery slide and it looks as though Obama will drive the final nails.
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