Saturday, May 02, 2009
Chrysler: Orwell's Animal Farm
Image via WikipediaDoesn't Barack Obama write any of his own material?
His statement on Chrysler Thursday could have been taken from the pages of George Orwell's Animal Farm.
Barack Obama apparently believes all animals are created equal, but some are more equal than others.
Obama blamed Chrysler's chapter 11 bankruptcy on some of the company's creditors who he says are unwilling to make the same sacrifices as everyone else.
"Some demanded twice the return that other lenders were getting," Obama said in his statement.
Since the return on investment for all Chrysler's creditors is negative, perhaps he should have taken them up on their very generous offer to get twice as much of it. Note to Obama: If you don't understand the basic concept of return, perhaps you shouldn't be in charge of "investing" our tax dollars.
Obama -- who bears a striking resemblance to Animal Farm's Napoleon -- wasn't asking Chrysler's financial sector creditors to make sacrifices like everyone else. He was demanding that they assume a disproportionate share of the sacrifice.
Obama's plan called for these creditors to forgive 67% of the debt owed them (or about $4.6 billion) in exchange for a 10% stake in Chrysler. The United Auto Workers, on the other hand, would forgive about 48% of the money owed to their retirees health care trust (or $4.2 billion) in exchange for a 55% stake in the company.
Even among the financial institutions owed money, not all animals are equal on Obama's farm.
JP Morgan Chase, Morgan Stanley, Citigroup and Goldman Sachs, which together hold about 70% of Chrysler's debt to such institutions, all backed Obama's plan. All four firms -- perhaps not surprisingly -- have received significant federal Troubled Asset Relief Program funds. The 20 lenders balking at the deal have not received TARP funds.
The parallels with Animal Farm don't end there.
In Animal Farm, Napoleon takes control over the farm after farmer Jones so completely mismanages the farm that it experiences severe financial difficulties and proves incapable of caring for the farm's animals adequately.
Once in power, Napoleon didn't tolerate opposition. When a rival advanced an alternative plan for the farm, Napoleon had him driven out spreading false rumors that his rival was secretly trying to sabotage the farm.
I think that pretty much sums up Obama's press conference yesterday.
Posted by David A. Ridenour at 8:29 AM