Friday, May 1, 2009

Payback Time: A Labor Union Owns Chrysler

Yesterday President Obama declared: "I don't stand with those who held out when everyone else is making sacrifices." He's referring to those evil Americans who lent Chrysler $6.9 billion and, horrors, expected to actually be paid back! These are mostly individual investors, banks, and hedge fund investors. The hedge fund investors lent about $1B of the total. Hedge funds, in Obama's worldview, are evil so naturally he targeted them. Because hedge funds are not generally well understood they make a great villian in Obama's narrative.

Hedge funds tend to have a smaller number of investors who invest a higher amount. The minimum requirement is usually $1M, $500K, or $5M or whatever else depending on the hedge fund. Hedge fund investors include the super-wealthy but also many normal folks who are older and just saved a lot of money over the years. They could be your dentist, insurance agent, local small business owner, etc.

The normal course in a bankruptcy proceeding is that the creditors get paid back first. But in this case, President Obama has to ensure his Union supporters get first dibs. They've given a lot of time and contributed millions of dollars to the Democrat party. Not only, that but the main union essentially owns the thing. Obama's giving the UAW a 55% majority ownership stake in Chrysler. Investors will be lucky if they get back even $2B of what they're owed.

The UAW owns Chrysler now. The government gave it to them. Regardless of what political party you belong to if you are not concerned about this you ought to be.

1 comment:

Anonymous said...

I think this comic says it all.