First Things First

Megan McArdle asks inconvenient questions regarding Obama's decision to push Chrysler into bankruptcy on terms more favorable to the UAW than to the shareholders who actually have their money invested in the firm:

[W]hen did it become the government's job to intervene in the bankruptcy process to move junior creditors who belong to favored political constituencies to the front of the line? Leave aside the moral point that these people lent money under a given set of rules, and now the government wants to intervene in our extremely well-functioning (and generous) bankruptcy regime solely in order to save a favored Democratic interest group.

No, leave that aside for the nonce, and let's pretend that the most important thing in the world, far more interesting than stupid concepts like the rule of law, is saving unions. What do you think this is going to do to the supply of credit for industries with powerful unions?

I think we'll find out. It is highly unlikely, as Megan points out, that Chrysler can get by without another massive infusion of capital. And The One has just made it clearer than ever before -- with his snide comments about how "a small group of speculators" is standing in the way of automaker nirvana -- how hostile this administration is to private capital. Note how Obama has now defined investors as morally reprehensive because they "refused to bend to the Obama administration and accept steep losses on their investments while more junior investors, including the United Automobile Workers union, were offered favorable terms."

The evil investors' defense?

OppenheimerFunds, in a statement, said: "Our holdings in secured Chrysler debt are entitled to priority in long-established U.S. bankruptcy law, and we are obligated to our fund shareholders to support agreements that respect these laws."

Law, schmaw. So what if shareholders -- which includes teachers' unions and pension funds which, undoubtedly, include a chunk of the middle class -- take another bath? Obama needs the unions, and this is a naked political move. He doesn't need and private investors and capitalists (or so he's arrogant enough to believe, for now). He'll just continue to plow more government taxpayer money into Chrysler and General Motors. The nationalization has begun, and as we've already seen with the strong-arming of the banks, "government" money justifies giving automakers their marching orders:

"I don't want to run auto companies," President Obama said last week. "I'm not an auto engineer. I don't know how to create an affordable, well-designed plug-in hybrid." To those of us who still quaintly believe in the power of private enterprise and free markets, that was a reassuring answer from the leader of a country heading toward owning 8 percent of Chrysler and 50 percent of General Motors. It suggested the president understands that, even with their lousy track records, business professionals are better equipped than government bureaucrats to decide what cars to make, what prices to set and how many people to employ.

Seconds after that promising, if relatively vague, opening, though, Obama took much of it back. He couldn't help himself. "But I know that, if the Japanese can design an affordable, well-designed hybrid, then, doggone it, the American people should be able to do the same," he said. "So my job is to ask the auto industry: Why is it you guys can't do this?"

So much for hands-off. George W. Bush may have been this country's first MBA president, but Obama is on the brink of becoming its first CEO in chief -- and that would not bode well for Chrysler, GM or taxpayers.

Green cars? You betcha. Whether anyone will want to buy them is another story. Subsidies? And/or higher gas prices to incentivize ya? You betcha! Getting our money back from the "loans" to the automakers? You be-- hey, look over there, it's Elvis!