Yesterday, President Obama announced he was prepared to break the law. After blaming the senior debt bondholders of Chrysler for pushing the company into Chapter 11, he sanctioned a plan to abrogate their covenants and force them to take pennies on their loaned dollar. No matter that their bonds were secured by the company’s assets. The rights of “speculators” are easily swept aside in populist frenzies. Notice how the President didn’t blink a teleprompter-eye when he stood with the union workers, the families and the communities - while transferring to them 55% control of the company assets. American lenders filled with American workers who loaned American savings to Chrysler for decades were expected to simply take massive losses. Apparently it’s no longer American to repay one’s debts. The Bully Pulpit declared “needs” more important than “rights.” And since mere mortals barely understand all this financial jargon, especially REALTORS, the rule of law was quietly killed. Contracts, it seems, aren’t worth the paper they’re written on in America.
REALTORS had better beware.
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This isn’t the first President to simply throw contracts out the window. Franklin D. Roosevelt passed an executive order voiding contracts repayable in gold during the Great Depression. He further eroded the contract-relationship between Greenbacks and gold (essentially, treasury contracts) by setting the daily price of gold by fiat, from his bathtub each morning. Back then, millions of contracts held by bankers, speculators, lenders, retailers and other American citizens were instantly eviscerated. Today, the New New Deal improves this rewriting policy to not only abrogate contracts but quickly steal any available assets and transfer them to preferred political gangs. The United Auto Workers will receive five times the assets un-paid-for. Bondholders receive an ample serving of populist scorn.
What will be the effects of such government capriciousness? How will an open policy of disdain for contracts chill the economy further - especially the housing industry?
To read the rest of this article, please visit is at http://www.matthewferrara.com/rss/contractjeopardy
