Libertyblog

Foot in Mouth Disease

Windbag again.

Glimmer of Hope

Fatigued for now by efforts to seize America’s private corporations, our government resisted today the urge to rewrite America’s mortgages.

Kumbayah

Obambi recalls the Holocaust, not as something to be avoided by the use of overwhelming force, but merely something to be resisted and reconciled.

So Much for Private Property and the Rule of Law

Unable to give the unions “card check,” Obambi is giving them an auto company instead:

President Obama insisted at his press conference last night that he doesn’t want to nationalize the auto industry (or the banks, or the mortgage market, or . . .). But if that’s true, why has he proposed a restructuring plan for General Motors that leaves the government with a majority stake in the car maker?

The feds have decided they should own a neat 50% of GM, yet that is not the natural outcome of the $16.2 billion that the Treasury has so far lent to the company. Nor is the 40% ownership of GM that the plan awards to the United Auto Workers a natural result of the company’s obligations to the union.

Yet Secretary Timothy Geithner and his auto task force, led by Steven Rattner, have somehow decided that Treasury and UAW chief Ron Gettelfinger will get to own a combined 90% of GM. If there’s a reason other than the political symbiosis among the Obama Administration, Michigan Democrats and the auto union, it’s hard to discern. From now on let’s call it Gettelfinger Motors, or perhaps simply the Obama Motor Company, though in the latter they’d have to change the nameplates.

The biggest losers here are GM’s bondholders. According the Treasury-GM debt-for-equity swap announced Monday, GM has $27.2 billion in unsecured bonds owned by the public. These are owned by mutual funds, pension funds, hedge funds and retail investors who bought them directly through their brokers. Under Monday’s offer, they would exchange their $27.2 billion in bonds for 10% of the stock of the restructured GM. This could amount to less than five cents on the dollar.

The Treasury, which is owed $16.2 billion, would receive 50% of the stock and $8.1 billion in debt -- as much as 87 cents on the dollar. The union’s retiree health-care benefit trust would receive half of the $20 billion it is owed in stock, giving it 40% ownership of GM, plus another $10 billion in cash over time. That’s worth about 76 cents on the dollar, according to some estimates.

In a genuine Chapter 11 bankruptcy, these three groups of creditors would all be similarly situated -- because all three are, for the most part, unsecured creditors of GM. And yet according to the formula presented Monday, those with the largest claim -- the bondholders -- get the smallest piece of the restructured company by a huge margin.

This seems to be by political design. GM CEO Fritz Henderson says Treasury insisted that bondholders receive, at most, 10% of the company. “We went to the maximum and offered 10%,” Mr. Henderson said. Mr. Rattner’s office did not return our calls, so we can’t say why Mr. Rattner wanted private risk capital cut out of the ownership of the new GM, but no one has contradicted Mr. Henderson.

Some Treasury officials have told the media that 50% government ownership is important to ensure that taxpayers get repaid for the $16.2 billion in Treasury loans. But this is false logic. Taxpayer-shareholders are likely to be far better off with a smaller stake in a truly private company that is better insulated from political meddling. Private owners are more likely than the Treasury or the unions to try to run the company for profit, and so increase its equity value over time. Treasury says it would be a hands-off owner, but that hardly seems plausible and in any case that would merely leave the UAW in control. At the next labor contract bargaining session, the union would sit on both sides of the table.

Hell Hath No Fury

John Edwards’s cancer-riddled wife speaks:

When Elizabeth Edwards learned of her husband’s affair, she went into a bathroom and “threw up,” she writes in her new memoir to be published in May.

“I cried and screamed, I went to the bathroom and threw up,” Edwards writes in her book “Resilience.”

Edwards said her husband, former North Carolina Senator John Edwards, admitted to the betrayal just days after declaring his run for president in 2006 -- and a year before the National Enquirer first reported it.

Which would make it how long before the MSM reported it?

Edwards never mentions her husband’s mistress, Rielle Hunter, by name. But she writes that while her life may be tragic, Hunter’s is “pathetic.”

She also writes that Hunter’s pick-up line was, “you are so hot.”

Hey, it worked, which is the accepted standard for pick-up lines.

Edwards writes that when her husband first confessed, he lied and said he had only had relations with Hunter once.

Bubba said the same about Gennifer Flowers, as I recall.

The original confession “left most of the truth out,” she writes.

Speaking of “leaving most of the truth out” ...

The two-time [and two timing!] presidential candidate went public with the affair last August after the National Enquirer reported he was the father of Rielle Hunter’s daughter, Francis Quinn.

Edwards admitted to having an affair with Hunter -- who worked on his presidential campaign as a videographer -- but he denied that he is the father of her child.

Bad Timing Award

In the midst of a pandemic panic, a quarantine scofflaw files suit:

The Atlanta attorney who caused an international health scare when he flew to Europe for his wedding even though he was infected with a drug-resistant form of tuberculosis is suing federal health officials, claiming they invaded his privacy.

Andrew Speaker got worldwide attention in 2007 after he flew knowing he had tuberculosis. Doctors first thought he had a more severe form, but later tests revealed a less dangerous strain.

The lawsuit filed in federal court in Atlanta on Tuesday claims the Centers for Disease Control and Prevention damaged Speaker’s reputation and made him the target of death threats. The lawsuit, which says he and his new bride split up because of the stress, seeks unspecified damages and court fees.

Hmmm, could it be the bride discovered she’d married someone a bit more selfish than she’d imagined? (Via Drudge.)

Another Damned Socialist

Wherein the Dalai Lama is bitchslapped. (Via InstaPundit.)

A Rising Tide Lifts All Boats ...

... and we’ll have none of that! The New York Times on No Child Left Behind:

Between 2004 and last year, scores for young minority students increased, but so did those of white students, leaving the achievement gap stubbornly wide, despite President George W. Bush’s frequent assertions that the No Child law was having a dramatic effect.

James Taranto:

So minority kids are doing better than before. But because white kids are also doing better, and therefore the “gap” remains, the Times suggests the law is a failure. By this measure, it would have been better to pass a law that only benefits minorities than one that benefits everyone.

To be fair, closing the racial gap was one of the stated goals of No Child Left Behind. But what a strange, uncritical attitude the Times has toward the federal government when it reports with a straight face that the law is a failure because it seems to have helped children of all races, rather than observing that this calls into question whether the goal made any sense in the first place.

Zombies!

That’s the likely InstaPundit tag for this post from Mitt Romney:

GM’s new proposal, clearly produced under government duress, is worse than virtually any of the alternatives. It would give GM to the UAW and the U.S. government and make taxpayers pick up the bills. Of course, billions more from government would be drawn down right away. But the UAW could also depend on the Obama administration to keep up the subsidy for years and years to come. Government and Union co-ownership: It would be as ineffective as it is un-American.

The right course for GM is an out-of-court restructuring or bankruptcy. Either would keep the company in business and rid it of burdensome costs, work rules and obligations. The government could backstop the post-restructuring debt, helping the company get on its feet. GM must not fail: If its costs are brought in line with its competition, it can ultimately thrive and grow jobs. What is proposed is even worse than bankruptcy—it would make GM the living dead.

Misplaced Compassion

Ed Morrissey is working overtime keeping track of the deadbeat bailout excesses. First the McMansions, then the second mortgages. These people are not victims, they are perps.