AIP column: The whim of a madman!

posted at 10:11 am on May 7, 2009 by Ed Morrissey

My first weekly column for American Issues Project appears today, and it looks at how financial markets will act when “madman” rule becomes the norm in Washington DC.  Senior creditors from Chrysler told Business Insider that White House threatened them with the “madman theory of the Presidency,” or in more practical terms, that holdouts from Barack Obama’s bankruptcy plan couldn’t count on him to act sanely and rationally if crossed.  It reminded me of a scene from a passably entertaining movie that may seem more unsettling now:

In one scene from the movie, “Speed,” Dennis Hopper cackles with glee when a news reporter describes his hostages as being held at “the whim of a madman.” Hopper’s character repeats it twice, clearly delighted by the description, and at the sheer power of being allowed to act as irrationally as he desires.

Unfortunately, that scenario played out in real life, only not in a runaway bus with a bomb on it. This past week, it played out behind the scenes during the negotiations to salvage Chrysler from the scrapheap. And the madman whose whims could get unleashed was the one person tasked by the Constitution and mandated by the voters to enforce the laws his representatives were attempting to pervert.

Two separate reports from the negotiations accused the Barack Obama administration of threatening senior creditors with public humiliation if they did not relinquish their contractual rights to Chrysler’s assets in the bankruptcy, by exploiting their connections to the White House press corps. The first report came from an attorney representing these creditors, Thomas Lauria, who first alleged the threats during Frank Beckman’s WJR radio show. The second came from Business Insider, where two other sources confirmed Lauria’s allegations.

Business Insider actually went a little farther. Their two sources, both of whom said they voted for President Obama, said that the White House representatives in the negotiations threatened them with what they called the “madman theory of the presidency.” That meant that Obama could act in irrational ways if thwarted by Chrysler’s senior creditors, a threat that the one creditor took “very seriously.”

I’d take it seriously, and apparently I’m not alone.  Last evening, Thomas Cooley at Forbes explained why capital remains firmly on the bench despite government attempts to partner with them:

Government interference in the normal conduct of business has had a chilling effect on financial markets and threatens the progress of the recovery. The Treasury and the Fed have created many new programs to provide liquidity to the financial system, to help banks restructure their balance sheets and to re-invigorate securitization markets.

So far, the interest in these has been distinctly muted because potential participants fear the longer term consequences of getting involved with any of these programs. …

Investors, other than the banks who desperately needed TARP funds for survival, are leery of any program that uses them. Anyone who took TARP funds has been subject to government interference in managerial decisions. The restrictions on bonuses and executive pay have been widely discussed in the media. Less well known are restrictions on the banks’ ability to hire foreigners, and the constant harassment by Congress over internal management decisions on everything from the use of private aircraft to the locations of conferences. Some of these concerns are well justified, of course, but it wasn’t clear ex-ante what all of the rules were and it isn’t clear ex-post either.

If Cooley isn’t describing the “madman theory of the Presidency,” he’s at least explaining that governance by whim does not instill the kind of confidence investors need to assume risk in the marketplace.  The nation was founded on the rule of law, precisely to keep people from using political clout to pervert contracts and marketplace decisions.  Be sure to read both columns.


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Sums it up better ‘n most.

Bob's Kid on May 7, 2009 at 10:15 AM

Someone is the Al Capone in this Chicagoland morality play.

Who is it?

Greg Toombs on May 7, 2009 at 10:16 AM

Maybe Obama needs to tell his big-money pals to stop running anti-conservative ads and to put that money to work in American manufacturing.

BuckeyeSam on May 7, 2009 at 10:17 AM

Great column ED. To bad you cant get on to the MSM shows and discuss this.

MDWNJ on May 7, 2009 at 10:21 AM

Someone is the Al Capone in this Chicagoland morality play.

Who is it?

Greg Toombs on May 7, 2009 at 10:16 AM

Obama.

Mark Levin says it’s Rhambo.

Daggett on May 7, 2009 at 10:21 AM

That meant that Obama could act in irrational ways if thwarted by Chrysler’s senior creditors

Oh, I’m sorry, I didn’t realize that he’d been acting rationally up to now.

Snowed In on May 7, 2009 at 10:24 AM

Investors going Galt? Good.

petefrt on May 7, 2009 at 10:25 AM

Please Please Please let this story stay alive and get bigger. Please Please Please!

JamesLee on May 7, 2009 at 10:26 AM

Great article, Ed.

ladyingray on May 7, 2009 at 10:28 AM

Madman in the White House. That’s about right.

230 years of the most success any country has ever enjoyed. By far.

But he hates it. Wants to turn us into a Banana Republic so that the deadbeats at the bottom get more freebies. And so he and his puppet masters get more power

If that’s not insane, what is?

notagool on May 7, 2009 at 10:29 AM

As I already told you Ed, this was a wonderful column. Looking forward to a new one each week.

juanito on May 7, 2009 at 10:30 AM

Ogabe has been acting irrationally since he announced his candidacy.

So when exactly does such behavior become dangerous enough to warrant impeachment, not that I expect a ‘rat controlled Congress to ever allow such a thing to happen.

Bishop on May 7, 2009 at 10:31 AM

These clippings go beyond Fair Use. If I were Ed I would file a complaint with Hot Ait.

BadgerHawk on May 7, 2009 at 10:31 AM

it looks at how financial markets will act when “madman” rule becomes the norm in Washington DC.

I think it already has become the norm.

Vashta.Nerada on May 7, 2009 at 10:34 AM

“I, Barack Hussein Obama, do solemnly swear that I will faithfully execute the office of president of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States, So help me God.”

At what threshold do we dare begin to utter the “I” word?

locomotivebreath1901 on May 7, 2009 at 10:35 AM

Chicago style thug politics. But is this an intentional act, to destroy the American capitalist system in order to bring in Obama style fascism?

rbj on May 7, 2009 at 10:36 AM

I watched Glenn Beck and his chalk board explain exactly where the money was going for the Chysler bailout last night. I actually got tears in my eyes when I heard it.

And sadly, the American people just don’t care.

Knucklehead on May 7, 2009 at 10:40 AM

Someone is the Al Capone in this Chicagoland morality play.

Who is it?

Greg Toombs on May 7, 2009 at 10:16 AM

Obama.

Mark Levin says it’s Rhambo.

Daggett on May 7, 2009 at 10:21 AM

Twinkle Toes is only the conduit the REAL controllers use to tell their Opuppet what to do. That he still screws things up is his problem.

SeniorD on May 7, 2009 at 10:41 AM

Of course he doesn’t want mainstream investors in the new American economy. Assets are best used by his capos to squeeze every last red cent out of Joe and Jane public.

Limerick on May 7, 2009 at 10:49 AM

I thought Chicago understood the importance of contracts?

OldEnglish on May 7, 2009 at 10:55 AM

Anyone remember the end of the Elektra: Assassin graphic novel by Frank Miller/Bill Sienkiewicz?

Garret had taken the place of Ken Wind as president, and was sitting with his feet on the desk in the Oval Office, next to a bottle of whisky. He held an M16 in his hands while chortling about how America’s enemies were going to negotiate with him now.

Honestly, I always like that – thinking that our enemies should be a little more afraid of us than they are. Of course, that was when the gun wasn’t pointed at ourselves.

blish on May 7, 2009 at 10:56 AM

Another report has the WH threatening audits from the IRS and SEC for anyone who fails to go along.

As others have pointed out, the tax law is so complex that it is impossible to be completely sure that you are following all of the laws. Regardless of how many tax lawyers you have working for you.

All you need is one auditor with an axe to grind, who decides to interpret some obscure section of the tax code slightly differently than your team did, and you are looking at years of costly litigation.

MarkTheGreat on May 7, 2009 at 11:00 AM

And yet the average American who gets his or her news from the MSM knows nothing of these issues. During the Bush administration, the media refused to allow the White House to control the news cycle. In the current adminstration, they have simply handed Obama the keys to it.

drunyan8315 on May 7, 2009 at 11:02 AM

This isn’t politics, this is war. Nobody wants to say it. Nobody wants to believe it. Last November Ft Sumter was fired on by Uncle Sugar and not Johnny Reb.

Limerick on May 7, 2009 at 11:07 AM

It reminds *me* of a line from the 1990s sitcom “NewsRadio”:

“first day in prison, you should act crazy and beat someone with a chair so nobody will mess with you”

This truly does happen in prisons. One documentary shows a sex offender telling of his first week in prison. He asked who the badest guy there was, and went up to him and punched him, who quickly smashed him in the mouth. The sex offender proudly showed his new dental plate caused by the return punch. And no one messed with him after that.

If this is the “Obama style of governing” … make people think he’s crazy … that shows Obama is out of his depth. This is not a proper way for the most powerful man in the world to govern the world’s greatest democracy. This is someone acting scared, asserting their power in an unhealthy way. Maybe it’s the Chicago way. But it shouldn’t be the US way.

Paul-Cincy on May 7, 2009 at 11:13 AM

To heck with global warming. Frostiness seem to be the climate change I’m sensing.

Dr. Charles G. Waugh on May 7, 2009 at 11:21 AM

Money has gone Galt

Dr Evil on May 7, 2009 at 11:41 AM

Anyone who takes govt whore $$ will pay a price, eventually.
Me included.
Govt $$ can be attractive when it’s either that, or lose everything.
But you will lose everything eventually in most cases. Taking the $$ only prolongs the agony I think.

Badger40 on May 7, 2009 at 11:42 AM

Rational people want to avoid punks and thugs. What a shock!

dogsoldier on May 7, 2009 at 11:43 AM

Drudge is saying $11,300 for every American. Since only half pay taxes, that’s $22,600 per taxpayer.

This isn’t governance, it’s identity theft. If someone unelected had charged $22,600 to my credit, I’d be using every recourse to shut it down and claw it back…..but since it’s in Washington, what recourse?

cthulhu on May 7, 2009 at 11:48 AM

Not to go all comic-geek on you, but this keeps coming to mind…

The madman theory of the presidency, as it played out in Elektra: Assassin: http://goodcomics.comicbookresources.com/2007/01/21/comics-you-should-own-elektra-assassin/

blish on May 7, 2009 at 11:53 AM

http://www.marketwatch.com/news/story/treasurys-down-ahead-30-year-auction/story.aspx?guid={2B3F04AA-6A92-4343-B25A-174396FF4DE7}&siteid=yahoomy

Dr Evil on May 7, 2009 at 11:58 AM

Treasury down ahead of 30 year auction

Dr Evil on May 7, 2009 at 11:59 AM

Once you let the govt foot in the door, then they stay for dinner, and pretty soon they’ve moved in. When the federal income tax was debated in the early 20th century, one lawmaker said on the floor of the House, with what was then obvious hyperbole, “If we let this 1% foot in the door, who’s to say it won’t increase one day to 5%?”. Our social security numbers were NEVER to be a personal identification number. Of course, that’s what they are now. It was meant to be a small supplement to retirement. Now for many it’s their whole retirement. Food stamps are given to fully 10% of our population. Medicare is ballooning out of control. And they still haven’t rescinded the federal “death tax” which was “temporarily” instituted in 1916 to help fund WWI.

Paul-Cincy on May 7, 2009 at 12:00 PM

Speaking of this concept, how can we forget Barack’s bizarre attempt at psychological projection here?

President Obama Compares Big Banks, AIG, to Suicide Bombers

“Here’s the problem,” Mr. Obama said, “It’s almost like they’ve got — they’ve got a bomb strapped to them and they’ve got their hand on the trigger. You don’t want them to blow up. But you’ve got to kind of talk them, ease that finger off the trigger.”

econavenger on May 7, 2009 at 12:18 PM

I saw a letter from Cliff Asness linked at Keith Hennessey’s post on Chrysler This same letter was also linked on Greg Mankiw’s Blog yesterday. Asness writes:

I run an approximately twenty billion dollar money management firm that offers hedge funds as well as public mutual funds and unhedged traditional investments. My company is not involved in the Chrysler situation, but I am still aghast at the President’s comments (of course these are my own views not those of my company). Furthermore, for some reason I was not born with the common sense to keep it to myself, though my title should more accurately be called “Not Afraid Enough” as I am indeed fearful writing this… It’s really a bad idea to speak out. Angering the President is a mistake and, my views will annoy half my clients. I hope my clients will understand that I’m entitled to my voice and to speak it loudly, just as they are in this great country. I hope they will also like that I do not think I have the right to intentionally “sacrifice” their money without their permission.

Of course we have seen through Joe the Plumber, Rick Santelli, Jim Cramer and assorted other pitchfork attacks on private citizens, speaking out against this administration is a really bad idea sad and scary as that may be. Ultimately the shakedown tactics work to use taxpayer funds to buy auto companies for the benefit of UAW and as Asness notes:

The President’s attempted diktat takes money from bondholders and gives it to a labor union that delivers money and votes for him. Why is he not calling on his party to “sacrifice” some campaign contributions, and votes, for the greater good? Shaking down lenders for the benefit of political donors is recycled corruption and abuse of power.

msmveritas on May 7, 2009 at 12:52 PM

Someone is the Al Capone in this Chicagoland morality play.

Greg Toombs on May 7, 2009 at 10:16 AM

Al Q’aipon

Christian Conservative on May 7, 2009 at 2:38 PM

The next question seems to be, “What will this do to Obama’s campaign contributions for the 2012 campaign?”

herself on May 8, 2009 at 3:43 AM