The ‘Obully’ Pulpit

posted at 2:26 pm on May 1, 2009 by Slublog

I’m not actually in the ‘Obama is a socialist’ camp, but, yikes.

The assault on hedge funds, derided by the Bully in Chief as a small band of “speculators” seeking a “bailout”, was more than President Obama’s usual opportunistic populism – it’s a signal of the pernicious effect of the increasingly intrusive federal role in the private sector.

To set the record straight, some investors in Chrysler debt are asserting their legal rights – in fact, their legal obligation to shareholders – by electing to make their case in bankruptcy court. These creditors believe the government’s deal unfairly compensates their senior positions, and that less senior stakeholders are getting a better deal. Bankruptcy courts exist to properly align the rights of stakeholders in an orderly and predictable way, and that’s where this matter appropriately belongs.

So President Obama maligned a group asserting their legal rights, while praising those firms – especially large banks – who buckled to White House pressure to accept the deal.

Resist the will of The One, suffer demonization at his mighty hand. Hope and change, the Chicago way. Given recent history, I’m starting to wonder whether our intrepid media will do their best to make those investors regret their decision.

The Wall St. Journal also has a good take on the president’s move and rhetoric.

“I don’t stand with those who held out when everyone else is making sacrifices,” Mr. Obama nonetheless declared, blaming what he called “a small group of speculators” for the car maker’s Chapter 11 filing. To hear the President tell it, you’d never know that Chrysler had borrowed, and since frittered away, the $6.9 billion that it owes to those “speculators.” The Administration had only offered $2 billion to those secured creditors as part of its proposed restructuring for the car maker. So it’s hardly a surprise that many lenders would rather take their chances in bankruptcy court.

Greg Mankiw wonders whether we’re seeing politics trump the rule of law. I think what we’re seeing is a man who gets peevish and resorts to cheap demagoguery when he comes across people who disagree with his policies. It’s strange behavior from a guy praised for his coolness and lack of drama.

If you haven’t yet read “The Forgotten Man” by Amity Shlaes, now would be a good time to pick up a copy. The parallels between then and now are certainly interesting.

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