Do people know that most 2009 models qualified for vouchers? Democrats define “clunkers” the way Islam defines those in need of subjugation. If it is not a “green” vehicle then it is by definition a “clunker” whose demise is not to be mourned, but is to be paid for and celebrated. (Check here whether Democrats would pay for the destruction of your prized possession.)

You see a one year old crew cab Tundra, capable of hauling your business and your family and think, “what wouldn’t I do to keep that $40,000 workhorse from destruction.” Democrats see the same vehicle and think, “I would gladly pay $4,500 of other people’s money to drop that affront to my eco-religion into the crusher.”

1 acre out of 1500

To document one corner of the car-slaughter that is now underway, I took pictures of every one of the full acre of “clunker” trade-ins at Fremont Toyota. Out of the 450 cars in this lot, hardly a dozen even have a dent (click pic for slideshow):

A Freemont Toyota executive offered an insight why so many of the doomed cars are in immaculate condition. He told me that an unusually small number of Cash for Clunkers participants bought on credit. These were mostly “conservative older people,” he said, the cautious frugal types, bringing in their lovingly cared for 15 or 20 year old cars and paying with a check.

1500 acres of mostly top-quality used cars. This cream of the used car market would have been sold to less wealthy folks who now will face a much tighter and more expensive used car market.

“The $3,000-to-$5,000 car is just gone.”

Good for Oklahoma Senator Tom Coburn for speaking up. From USA Today:

Sen. Tom Coburn, R-Okla., called that provision [to destroy the trade-ins] “nuts” during debate in the Senate last week. He said that in his state, one trade-in had less than 10,000 miles on the odometer. “We’re going to destroy the opportunity for somebody less fortunate to have that automobile,” he said.

Used car dealers agree. They say fewer older cars are at auction.

Too few older cars at reasonable prices could put some dealers out of business, says Tim Swift, general manager of the Corry Auto Dealers Exchange, an auction operation for dealers in Corry, Pa.

“It’s was tough finding them before, and now, it’s even worse,” says Mike Williams, owner of Auto Wise in Shelbyville, Ky. “The $3,000-to-$5,000 car is just gone.”

Manheim Consulting tracks the used car market. They don’t yet have figures for August (Cash for Clunkers began in late July), but they do have some anecdotal information:

A cursory look at the vehicles already being traded-in under the program, as well as discussions with dealers, indicate that the majority of the vehicles deemed “clunkers” would have, absence the program, eventually been retailed by dealers catering to the deep subprime or Buy-Here, Pay-Here market.

These are NOT the bottom tier of cars. What got turned in were mostly cars that dealers would keep on their second hand lots. Such cars are typically resold with substantial guarantees. In other words, dealers’ impressions were that these cars would check out as reliable, just as I heard from Fremont Toyota.

“He wanted the fun of participating.”

I also visited Capitol Toyota in San Jose, where an employee offered another insight into the high quality of the cars being turned in. He was amazed at the number of $5000 to $7000 vehicles that people were taking $3500 to $4500 for. “Some just didn’t want the hassle of getting their car smogged and selling it on ebay or whatever,” he told me, while others “wanted to support the program.” He mentioned one guy who turned in a low mileage Lexus LS400 in primo condition that would easily have brought more than $10,000. The dealership itself would have given him substantially more than the $4500 Cash for Clunkers voucher, but the guy believed in the program and “wanted the fun of participating.”

Instead of letting his fellow countrymen buy his better-than-perfectly-good used car, he would rather take taxpayer money to destroy it. We are talking here about the absolute epitome of human manufacturing. The $50,000 price of an LS400 reflects the year of unprecedentedly efficient labor, divided among thousands of individuals, that goes into crafting one of these beauties.

Here is one of the more typical LS400 trade ins:

Car slaughter vs. people slaughter

The loss from slaughtering cars is not comparable to the loss from slaughtering people, but the mental process that approves this wanton destruction is the same. The only value that the Communists in Cambodia accounted was value that served Communist ideology. Everything heterodox got valued at zero, or negatively, as an enemy to be dispatched. Hence, kill all the educated people.

The green religionists are the same. They have an ideology of how people should behave, and everything heterodox is valued at zero, or negatively, as an enemy to be dispatched. Hence, destroy all the cars that are big enough to fit the needs of most people. If it is not a Prius or a Scion or some other green sacrament, the world will be a better place without it. Democrats will actually PAY to get rid of it, regardless of the value of the service it provides.

Real morality consists in husbanding and following all evidence of value, then accounting the resulting discoveries of value wherever they are enough at stake to be worth accounting. It is this accounting of value that tells one how to act for most value. The communist/Democrat mental process is the opposite. They don’t start with value (the value of a person’s life, or the services provided by a car). They start with their presumptions about what is to be done, and simply refuse to account the value of anything that stands in their way, or they account it negatively BECAUSE it stands in their way.

Cash for Clunkers is the same KIND of evil as Communist mass murder, just applied to something that is important to people, instead of to people themselves. The refusal to account the value of what they destroy is the same. And of course it WILL hurt people. It does not by itself kill anyone, but it will take a couple thousand dollar bite out of the welfare of a half million less-prosperous Americans (or a lesser bite out of several million less-prosperous Americans, adding up either way to the value of the cars destroyed).

That is a big hurt for a lot of people and some will indeed lose their grip on the economic ladder because of it, especially as Obama’s intentionally-created anti-energy recession deepens.

Cash for Clunkers is just the tip of the iceberg. Obama wants to wreak the same wanton destruction on an economy-wide scale, destroying our present “dirty” energy economy so he can replace it with his preferred “clean” energy economy. Think a comparison between destroying things and destroying people is far-fetched? You won’t once you see how many “things” Obama destroys: basically our entire established energy infrastructure, and without energy there is no prosperity, no modernity, just the radical contraction of civilization that green leaders so fervently desire.

Midwest Jim has some pertinent quotes from the former Obama’s “green jobs czar” Van Jones: ‘Green Jobs’ Goal is ‘Complete Revolution’ Away From ‘Gray Capitalism’

As Dick Morris notes, if cap-and-trade becomes law, green czar Jones “would be in charge of basically deciding how American manufacturing could cope with the need to reduce carbon output, which firms lived and died.”

Priusts and Sciontists

The eco-religionists are not real priests and they are not real scientists. Theirs is a dishonest religion, justified by utterly unscientific claims of dangerous CO2-driven global warming. As my noted in my last post, solar activity accounts statistically for 60-80% of global temperature variation on all time scales, and anyone can verify it in a couple of minutes (just follow the links), yet the alarmists build it into their models that solar activity has a much smaller impact on temperature than CO2.

The graph below shows how the IPCC models are parameterized. CO2 is much more powerful than solar activity BY ASSUMPTION, the opposite of what the statistical evidence says, and the opposite of what the scientific method requires. Data is supposed to take precedence over theory, not vice versa.

Actually, there is no statistical evidence that the human contribution to atmospheric CO2 has any effect on global temperature at all. We know theoretically that it should have SOME heat-trapping effect, but it seems to be too small to show up in the data. Parameterizing this unobservable effect at 14 times the strength of the known primary driver of global temperature is pure anti-scientific fraud. As Fred Singer put it recently:

…by focusing only on TSI [the latest IPCC report] disingenuously considers solar influences on climate to be insignificant when compared to the forcing by greenhouse gases.

Can the destruction be stopped?

The ironies are tragic. Here is the Governator, signing used vehicles for the State of California to auction off in a pathetic attempt to toss a single bucket of debt overboard while 40 ft. waves of debt crash over the gunnels. California’s two or three hundred acres of top quality Cash for Clunkers trade-ins, on the other hand, could be auctioned off for real money, enough to actually help the state’s budget while at the same time leaving the citizenry flush with inexpensive quality cars. People’s productivity would be enhanced, and they would be able to spend their savings elsewhere in California’s beleaguered economy.

Where are the advocates for such common sense? Walled off from most Americans, unfortunately.

Every elite institution in America today is controlled by the Democrats: academia, the mainstream media, the charitable foundations, the professional organizations, the public unions, the private unions, both houses of Congress and the presidency. All of them accept the lie that in order to save the planet from CO2, humanity and modernity must radically contract, a liberty-hating ideology every bit as ambitious as Nazism and Communism.

America pays thousands of professors to teach moral philosophy, yet faced with this latest society-wide eruption of moral perversity masquerading as moral rectitude, our professional moralists are silent at best. The only audible voices are riding the global warming bandwagon. Is there a single moral philosopher alive today who is not morally oblivious?

If you have a free hour, think about taking your camera to any nearby auto dealer to photograph the cars that are about to be destroyed. The decimation of America’s used-car market won’t be felt until after the hundreds of acres of non-clunker turn-ins have been destroyed, but if we can’t stop this crime we can at least document a little bit of it, to remind our impoverished future what a glory we once had: the best used car market ever seen.

At least we can take some consolation that we are only destroying 700,000 cars, unlike Germany, which destroyed 2,000,000, starting from a much smaller base. That’s okay. They’ll just make a new car their next welfare entitlement, then they won’t need a used car market. Show us the way Germany. We’ll corkscrew in behind you.

1. Toyota Corolla
2. Honda Civic
3. Toyota Camry
4. Ford Focus FWD
5. Hyundai Elantra
6. Nissan Versa
7. Toyota Prius
8. Honda Accord
9. Honda Fit
10. Ford Escape FWD

Note: Government Motors (GM) did not make the cut. We spent billions to bail out the company and we can’t pay people to buy the car? This is the same government asking Americans to trust them with their health care.

AOL Auto notes that in the same period charities that provide a tax rebate for used cars saw a dramatic decrease in donated cars. This downturn made it more difficult for families that could have benefited from an inexpensive car.

When Obama stole Chrysler from its stockholders and gave it to his union cronies, we knew he would take every opportunity to waste taxpayer dollars trying to keep this lead balloon afloat. The Cash for Clunkers subsidy is just particularly egregious, since it works by subsidizing the last people in the world who need a subsidy: those who are well off enough to buy new cars in the midst of a deep recession. Talk about a middle class welfare program!

Crime 2: Eliminating Government Motors’ competition by gratuitously slagging an expected 750,000 perfectly good used cars in the sub-$4500 price range.

The Obamacrats aren’t just subsidizing cars for the well-to-do. They are destroying the cars that the less well-off are in the market for, driving up used car prices as part of their effort to make new cars more attractive:

Some parts may be kept but the engine and drive-train must be destroyed. Specifically the engine will be injected with a liquid glass solution to permanently disable the engine and it will be the responsibility of the dealer to make sure this is done to the engine.

Injected with liquid glass? Sounds like a Quentin Tarentino murder fantasy, and the reality isn’t any prettier. Witness Obama’s procedure for destroying the would-be cars of the non-wealthy:

Here is another one, a spiffy-looking Volvo that holds out for 4-plus minutes. Some clunker, and check out the row of semi-new cars lined up to go next:

Take THAT all you graduate students, newlyweds, store clerks, aspiring actors, single moms, non-deadbeat dads, warehouse workers, journalists, hippies, and other assorted poor relations. You want a car, you can scrape together your savings for a down payment on the privilege of paying hundreds of dollars a month to Government Motors for FIVE YEARS, just like everybody else.

How big is this crime?

A very substantial portion of the population NEVER buys a new car. I, for instance, have never bought a new car, and I never expect to. Why would I, when California has the best used car market in the world? In the last 10 years I have bought two 1984 Toyota Vans, one with 45,000 miles, one with 115,000 miles, each for $1500. Both still run great. One is set up as a work vehicle. One converts from passenger van to camper. No new vehicles would serve as well, or look as sharp.

My two uber-vans, one extra-dirty from its recent 2000 mile trek to Seattle and back. (Shasta, Crater Lake, Boeing Museum of Flight, Blue Angels, Olympic Peninsula, Fort Stevens, Oregon Dunes, North Coast, and back across the Golden Gate. Ain’t that America?)

The vehicles that are being gratuitously destroyed are newer than my two vans (which are just outside the 25 year age limit) and they are up to three times the price. For instance, the immensely popular Toyota Previa vans (1990-96) all qualify.

A good California Previa with a hundred thousand miles left on it sells for two to three thousand dollars. The government’s offer of 35-45 hundred is outbidding the market even on these top quality used vehicles. Cash for Clunkers is a misnomer. Some bottom-of-the-barrel cars will be turned in, but the rules insure that most will not be these “clunkers.”

To qualify, a car must have been registered in the name of the new car buyer for the last 12 months and it must have been insured for the last 12 months. These actively-used cars of people who buy new cars are the quality core of the used car market. Most “clunkers” will be perfectly good cars that would be prize possessions for a half million less well-off Americans, wantonly destroyed only because the Obamacrats prefer that they be destroyed. Dollar for dollar, this is the equivalent of trying to solve the glut of housing foreclosures by purchasing the houses with taxpayer money then burning them down.

Any Obama supporter who claims to be motivated by distributional justice, go soak your head. You want to subsidize the better off? Be as stupid as you want. But don’t go destroying en masse what the less well-off need to survive.

All justified by a lie

Obama’s excuse for decimating the last two generations of used vans, SUV’s, pick-up trucks and full size cars is the global warming hoax. The ascendancy of Obama was, in his own narcissistic words:

…the moment when the rise of the oceans began to slow and our planet began to heal.

Energy consumption must be curtailed in the extreme:

…under my plan of a cap and trade system, electricity rates would necessarily skyrocket.

It is all about CO2 and the phony global warming industry that Vice President Al Gore created with $10b of seed money when he pioneered and administered the executive branch’s global warming portfolio (now called “climate change,” since the earth stopped warming 10 years ago). Gore’s appointees have directed almost all of the full $79b that the U.S. has spent on climate science since 1989, and they don’t care at all whether CO2 is actually warming the planet. Their real motivation is an eco-religious belief that economic activity is gobbling up the natural world, so that for the natural world to survive, economic activity must contract.

To these high priests of green religion, CO2 is the perfect fall guy, no matter how insignificant its actual impact on climate. If the CO2 released by fossil fuel burning can be framed as a threat to the planet, that provides a rationale for drastically curtailing human economic activity, thereby stopping economic activity from gobbling up the natural world, whether or not CO2 itself actually has any harmful effects.

CO2 alarmists reject the scientific method

We can say with nearly complete certainty that the bulk of 20th century warming was NOT caused by CO2. This is because we know what DID cause the warming: the “grand maximum” levels of solar-magnetic activity that obtained for most solar cycles between 1930 and 2003.

Numerous studies have found a high degree of correlation (.6 to .8) between solar-magnetic activity and global temperature. That is, solar-magnetic activity “explains” statistically 60-80% of global temperature change on all time scales. That degree of correlation, observed over thousands and millions of years, HAS to be causal, and the causation can only go one way. It is not the temperature of the earth that is causing sunspots.

What is not well understood is HOW solar-magnetic activity drives global temperature. We just know that it does, just as before Einstein we did not know what mechanism causes massive objects to fall towards each other, we just knew that they do.

We actually have some pretty good theories of how solar-magnetic activity drives global temperature but set that aside. The eco-religionists, who thanks to Al Gore control ALL of the research funds for the “climate change” industry, use uncertainty about HOW solar-magnetic activity drives global temperature as an excuse for completely omitting the solar-magnetic variable from their models. They explicitly put theory over data, exactly the opposite of the scientific method, which says that data is always supposed to trump theory.

This anti-scientific method misattributes to CO2 the warming caused by high 20th century levels of solar-magnetic activity. Put solar-magnetic activity back into the equation, attributing to it what warming has historically been correlated with high levels of solar-magnetic activity, and the levels of warming that could possibly be attributable to CO2 become small. In particular, they become benign.

Warming in general is good. When Greenland was green, civilization prospered, as did plants and other living things. Nothing gobbles up the natural world like ice. It is only by claiming that CO2 could cause some unprecedented “runaway warming” that the alarmists have been able to present CO2 as dangerous. Stop misattributing solar-magnetic warming to CO2 and that possibility is off the table.

The dominant driver of global climate is solar-magnetic activity and any modicum of warming we can get out CO2 is all to the good. If our fossil fuel burning has the side effect of making our warm times a little warmer and our cold times a little less cold, that is a happy bit of luck for a world that ALWAYS seems to be colder than the optimum, with the next glacial period due any millennium.

Proof that the IPCC completely omits the solar-magnetic variable

Just look at any of the IPCC assessment reports. They all include the following graphic (slightly updated over the years):

From the 4th Assessment Report (figure 2.4 on page 39 of the Synthesis Report).

The only “natural” climate influence accounted by the IPCC is “solar irradiance,” which means visible light and other electro-magnetic radiation. It does not in any way include the solar-magnetic flux, which is completely omitted from all IPCC models, even though every climate scientists knows full well that, according to the raw data, magnetic effects are the primary driver of global temperature.

EVERY educated person who accepts CO2 alarmism on the authority of the global warming anti-scientists is failing the most basic due diligence.

Technically, the alarmists’ anti-scientific inversion of theory and evidence takes the form of what is called “omitted variable fraud,” where the omission of any important explanatory variable causes its explanatory effect to be misattributed to whatever correlated variables are included (in this case CO2 which, like solar activity, also went up in the 20th century). This is the most basic, the most common, the most familiar form of statistical fraud. Everyone who has ever studied not just any physical science but any social science at any moderately high level is fully competent recognize for themselves the statistical fraud that is being committed by the CO2 alarmists.

The educated Democrat-voting elites who are pushing to unplug industrial capitalism on the authority of alarmist anti-scientists have an obligation of due diligence to check for themselves whether the facts of the matter are beyond their own competence, and they are ALL failing this basic obligation. They are just assuming that they have to accept on authority that the survival of the planet requires the radical curtailment of CO2, when even a quick look at the facts reveals that the statistically most important variable is omitted from the alarmist models.

Why this willingness uncritically enlist as foot-soldiers for the destruction of modernity? Because like the CO2 anti-scientists themselves, these Democrat elites also don’t care whether CO2 is actually a threat. They too are eco-religionists who are glad for any excuse to curtail the economic growth that according to their presumptions is gobbling up the natural world.

Wrong about economics too

Of course the eco-religionists are also wrong about economic growth being bad for the environment. Economic growth creates and is created by technological advance, and it is technological advance that is allowing mankind and the natural world to both thrive at once. Economic activity is not the enemy of the natural world. It is the salvation of the natural world.

Having dedicated their intellectual resources to maintaining their religious presumptions instead of following reason and evidence, our Democrat elites have become pure political animals in the lowest sense, driven entirely by their lust for power. Every excuse, be it phony concern for distributive justice or phony concern for the environment, is wielded with complete dishonesty, utterly heedless of how distributive justice or the environment are actually affected, until all that is left is their ultimate presumption: that the one thing most necessary is that THEY have power.

This pathology finds its epitome in President Obama. Cash for Clunkers is just one paltry multi-billion dollar program, but the same coming-and-going perversity is manifest in Obama’s larger jihad against CO2—his push for cap and trade legislation. If we would uncork energy, the economy would rebound tomorrow, but Obama is determined to close the energy spigot down, not open it up.

Anybody who thinks this recession is ending is out of their minds. Obama is draining the oil and pouring in the silica slurry. If you want to hear where the economy is headed, listen to the “squirk” from the end of the Obama-car-death video, when the engine jerks at the end of the hangman’s rope.

This is the sound of a valuable helper being sacrificed by government to the false idols of green religion. It isn’t just barbarous. It is a clear violation of the establishment clause. Execute the worst human criminals, yes, but Mission Solano has it right: “No Death Penalty for Cars!”

Amazing that the DNC believes their ad to be a winning strategy: Let’s characterize and flippantly dismiss concerned Americans on both sides of the political aisle as nothing more than torches-and-pitchforks-style rabble-rousers. Brilliant.

Thanks to skye for use of her photos and apologizes to Dana Loesch for pillaging her photos like the uncouth, ill-mannered mobster, that I am.

The ones who are “scripted” and “astroturfed” are the Democratic leaders out there following their “playbook”. Any “community organizing” on the part of the vast rightwing conspiracy of an honest-to-goodness- grassroots movement should be described more like Miracle-Gro than the manure-fractured outrage which the term “astroturfing” suggests.

How dare they condescend and dismiss the concerns of real ordinary Americans! The reason why some of these “mob” citizens resort to anger and “shouting down” is because they already tried listening and reasoning with their congressional leader, and all they are getting back in return are DNC-talking points and pre-scripted answers. The Dem leaders aren’t engaged in debate and conversation but following their own Pelosified marching orders; they aren’t talking to their constituents, but at them.

Meet the mob.

Someone should make one of those “I’m with stupid ->” style t-shirts, but saying “I’m with the mob” with arrows pointing every which direction. Oh, and bring along some (cardboard/fake) torches and pitchforks.

From the pending takeover of 17% of  economy under the auspices of health care reform, to the government takeover and subsequent ownership of automobile companies, to the unconstitutional interference in the formerly private market under the rubric of stimulating the economy. Not to mention the proposed cap and trade legislation which would give the federal government unlimited powers of taxation and regulation under the guise of saving the planet.

Totally ignored by elected officials of both parties is the tenth amendment of the Constitution, which states very clearly, “The power not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the States respectively, or to the people.”

Many Americans don’t agree with the left’s idea of a ‘living constitution’, arguing that the intent of the founders should govern the interpretation and application of the Constitution, not the whimsical and politically motivated present day politicians. And, largely unreported by the media, they are starting to stand up to the federal government.

To date, 37 states have introduced sovereignty resolutions, asserting their state’s sovereign rights under the tenth amendment.

Earlier this month, Louisiana became the seventh state, joining Alaska, North Dakota, South Dakota, Oklahoma, Idaho and Tennessee to officially adopt a resolution affirming their sovereignty. These states are putting the federal government on notice that politicians in Washington do not have the right, under the Constitution, to continue to impose their increasingly onerous federal mandates on sovereign states.

Some states, with Arizona leading the way, are going a step further.

Under Arizona’s Health Care Freedom Act, which was passed by the Arizona state legislature this month, a voting initiative will be placed on the 2010 ballot that, if passed, will allow Arizona to opt out of any federal health care plan.

Following Arizona’s lead, five other states — Indiana, Minnesota, New Mexico, North Dakota and Wyoming — are considering similar initiatives to opt out of federal health care for their 2010 ballots This, even before Congress has created the program.

Arizona is also preparing for the misnamed ‘climate’ bill, that passed the House this month. (With eight Republican votes.) The Arizona state Senate voted 19-10 to approve a bill banning the Department of Environmental Quality from enacting or enforcing measures with language pertaining to climate change.

to climate change.
Other states are stepping up to the plate and asserting their state’s sovereign right under the second amendment – a right that guarantees the right of the people to keep and bear arms.

On July 6, Florida introduced the Firearms Freedom Act which seeks to provide “that specified firearms, firearm accessories, and ammunition for personal use manufactured in state are not subject to federal law or regulation” in the State of Florida.

Increasingly, the representatives ‘we the people’ have elected to preserve and protect our rights, are ignoring the clear, unequivocal language of the Constitution. Our politicians seem unaware of the fact that the Constitution does not include  congressional power to override state laws.

In fact, the power our representatives are now accruing to the federal government was expressly voted down, not once, but several times.

During the Constitutional ratification process, James Madison drafted the ‘Virginia Plan’ which advocated a strong federal government. It proposed, among other things, giving Congress legislative authority, and a veto over state laws. Each of Madison’s proposals was soundly defeated. Our founders clear intent was vesting all powers in the states, with but a few, listed exceptions.

Ever since 1938, when FDR used the occasion of the great depression to drastically expand the scope of federal government (Wickard vs Filburn) using an absurd reading of the Commerce Clause, this unconstitutional taking of power by the central government has gone virtually unchallenged. Until now.

Though the media has ignored these efforts, ‘we the people’ are starting to fight back, via our state and local representatives.

Politicians need to be reminded that our Constitution is still in effect. And Americans need to be reminded that just because some believe the trendy notion that our Constitution is a ‘living, breathing’ document, doesn’t make it so.

Crossposted from Right Bias

Now, with the unrealistic financial demands on industries, combined with risking the taxpayers’ cash on the future of GM, the Dems find themselves between a “palladium” and a hard place with their economic policies.

They can opt to protect the US taxpayers investment in GM (aka Government Motors) by continuing to refuse to honor a GM contract with Stillwater to purchase their metals for catalytic converters at (oft times) higher than market prices.

Or they can shop on the free market, purchasing their metals cheaper from Russia or South Africa, and let the US PGM’s mining business cascade into the financial hole, and leave thousands of American workers jobless.

Democrat Governor Brian Schweitzer has picked which liberal economic approach he’s on… the side of his Montana miners. It is a vote for subsidies…. none of which would have to exist if the government didn’t create an environment for the lopsided playing field with their legislation.

The Montana citizens themselves get screwed either way. If they lose their mining jobs, the repercussions echo not only thru the Big Sky State, but potentially rumble all the way to NJ and CA where the metals are refined. But even if their jobs are saved, they… along with the nation’s taxpayers… lose because the new government owned GM cannot purchase the metals from foreign nations… not burdened with the US regulations, taxes and union contracts… at a better price.

What was that about chickens and roosting again?

As I pointed out, Gov. Schweitzer was demanding intervention from the O’admin. Schweitzer is looking for a bud in the WH for his miners, and today he’s just been handed a huge gift….Steve Rattner has resigned as the Obama top dog of auto czars, and passed the blow torch to Ron Bloom. And Bloom is fresh off his last gig of 13 years as the assistant to the President of the United Steelworkers union…. coincidently the same union who represents the Stillwater Mining Company’s workers.

… [Ron Bloom was] employed by the Pittsburgh-based United Steelworkers union, which has 1.2 million working and retired members. Bloom has worked as a special assistant to the USW president since 1996 and his duties include helping the union affect corporate business restructuring, investments, bankruptcies and mergers. He is particularly known for working on deals related to recent steel industry bankruptcies. In many of these deals, the USW made considerable concessions in order to help steel companies stay afloat.

Needless to say, the USW will be demanding the ear of one who was formerly their own to step in to the situation, coming to the aid of their mine union workers. This, of course, would reverse what Rattner himself helped construct as he spent his entire five months tenure overseeing both the GM and Chrysler bankruptcy proceedings.

GM emerged from bankruptcy last week after removing tens of billions of dollars in debt. Chrysler emerged earlier from its own bankruptcy proceeding.

Both car companies are undergoing dramatic restructuring plans that will see them drop several brands and lay off tens of thousands of factory workers in states across the country. House and Senate lawmakers will see thousands of constituents lose jobs in the process as the industry tries to regain its footing.

“With GM’s restructuring complete, Steven Rattner, whose leadership and vision were invaluable to the auto task force’s efforts, has decided to transition back to private life and his family in New York City,” Treasury Secretary Timothy Geithner said in a statement on Monday.

Ron Bloom, who has had a leading role on the task force, will take over.

~~~

“With day-to-day management of these companies in the hands of the private sector, the American taxpayers have a better chance of recouping their investment in these companies,” Geithner said.

With any intervention from Bloom on behalf of the USW and Stillwater, we can safely say Geithner’s comment about GM being “…in the hands of the private sector” couldn’t be any further from the truth. Plus, this is an administration who has demonstrated they place union interests above secured investors and pensioners.

At this point, there is no way Bloom can turn that doesn’t shaft one party (the taxpayers, including Montana residents), or the other (Montana, and possibly CA and MJ jobs… as well as damaging the American PGM industry). Small wonder Rattner is beating feet…

Keep your popcorn handy.

Unlike community organizing, there’s nothing like owning a car manufacturer that drives home basic business common sense, eh?

One of the darlings of the Dems, Montana Governor Brian Schweitzer, is calling upon Obama to force his new, majority government owned GM, to honor it’s contract with Stillwater Mining for PGMs- i.e. platinum, palladium and other metals – that are used in catalytic converters to control car pollution.

With platinum and palladium mined in just two other countries, Russia and South Africa, Schweitzer said GM’s cancellation would put the U.S. at a strategic risk and hurt the mining industry.

A White House spokesman declined comment.

All the palladium and 70 percent of the platinum produced by Stillwater’s mines had gone to GM and Ford Motor Co. Stillwater representatives won’t give specifics on how much GM’s contract was worth. It had been set to expire in 2012.

Stillwater Vice President John Stark said the contract cancellation will be challenged at a July 22 hearing in U.S. Bankruptcy Court in New York.

Detroit-based GM defended its decision to cancel the Stillwater contract, saying the deal had been “uncompetitive” and could have hobbled its efforts to repay the government loan.

“We will continue to make difficult decisions that best position the new GM for long-term viability,” said GM spokesman Dan Flores. “There is an obligation to the taxpayers to provide a return on their investment to our company.”

The contract set a floor price requiring GM at times to buy metals at prices above those on the open market. It also set production volumes, meaning GM had to keep buying a set amount from Stillwater even as its vehicle production fell from 9.2 million cars in 2006 to 8.4 million last year.

The Ford contract has similar terms.

At recent palladium market prices, the contracts had been shielding Stillwater from the equivalent of $57 million in lost annual sales, according to the company’s filings with the Securities and Exchange Commission.

No wonder the WH is dodging… and no doubt hoping that the media won’t pick up on the dichotomy of it all… You *do* see what we have here, right? The two other countries that supply the needed PGM market are those that operate sans American OSHA and EPA regulations – and are free of union demands and contracts. The agreement between Ford (who is still profitable) and GM was subsidizing our American PGM market in order to make them competitive.

In other words, these companies were demonstrating some “Buy American” loyalty… all without mandates.

Not any more. Now, in a complete 180 degree attitude, the new “Government Motors”… with Obama and his Treasury and car czar, Steve Rattner, at the helm… recognize the difficulty of competing successfully because of the cost of operations with the subsidy, and have demanded the new government GM entity purchase it’s PGMs elsewhere for a better price.

Is this gonna drive the “outsourcing” crowd nuts, or what?

This would be hilarious, were it not for the potential of debilitating effects. At risk are not only the very existence of the giant of the US precious metal market and their 1300 Stillwater Mining American workers, but potentially it’s domino effect upon the refining facilities in both NJ and CA.

By failing to shield the platinum and palladium mines, the Democrat said Friday that the administration had shown a bias against his state — at a time when other U.S. jobs were protected with a “buy American” clause in the $787 billion stimulus act. GM is shedding its contracts with Stillwater Mining Co.’s platinum and palladium mines as part of the automaker’s emergence from bankruptcy protection.

Details of the case paint a complex picture: GM was effectively subsidizing production by Stillwater, often paying above market price for the metals. And since 2003, the mines have been majority-owned by a Russian company, Norilsk Nickel.

GM’s reorganization is fueled by $50 billion in government loans. The loans are separate from the stimulus bill.

“When it comes to protecting the industries of the Midwest it’s buy American first,” Schweitzer said. “When it comes to Montana, they say buy anywhere but Montana.”

The state’s sole U.S. representative, Republican Denny Rehberg, said it was “beyond outrageous” that GM would use bailout funds to “move American jobs overseas.”

First, we will have to correct the Montana Governor, as Obama did think better of the “Buy American” clause in the stimulus, and officially nixed that idea as sounding too “protectionist”. There was, as Gov. Schweitzer noted, an attempt in the original language to protect the American iron and steel (and presumably metals) industry specifically. However it was revamped to a more ambiguous wording that “…requires only that the government spends funds in ways that do not violate U.S. trade agreements.”

And how very convenient that is now, don’t you think?

But there is no doubt the internal war is about to break loose between the Dems and the different factions, reconciling their ideology of “Buy American” while simultaneously taxing and regulating them out of the country in order to survive.

INRE that Russian ownership… It’s true that in 2003, the purchase of 55% of stock in the US’s largest producer of PGM resources was approved by three federal agencies to Russia’s Norilsk. Within a few years, that majority percentage had fallen to 53%. By 2008, Norilsk was looking to sell.

The Moscow Times identified [Switzerland's] Xstrata and [South Africa's] Impala Platinum as potential buyers of the stake.

Lobanov said, “In a crisis situation, cash is king. And we have to prioritize our projects. He added that Russian projects would take precedence to foreign projects due to differences in production costs.”

“We had been hoping for a synergy with our palladium assets in the Russia and the United States, but it hasn’t worked out, ” Lobanov was quoted as saying by the Moscow Times. “The crisis has aggravated the situation with Stillwater Mining.”

Norilsk bought majority control of Stillwater in 2003 after Stillwater Mining officials said they had to sell stock or go bankrupt. The sale required the approval of three federal agencies because of regulations regarding the sale of companies with national security implications.

However, the Moscow Times calculated Norilsk’s Stillwater stake has fallen from the $270 million it paid four years ago ($4.83/sh) to its current value of $230 million.

During 2008, palladium has fallen from a high of $582/oz to $168/oz, according to Kitco London Fix charts. Over the past 52 weeks, Stillwater Mining stock hit a high of $22.72 as metals prices soared. By Friday, Stillwater stock closed at $3.05/sh.

Original forecasts projected a hoped range between $515K – $525K per PGM ounces. Actually 2008 sales documented $431/oz in the first half of 2008, compared to $382/oz for the same period in 2007.

Speculative investment in 2003 for an anticipated increased demand for PGMs in not only the auto industry, but electronics and dental alloys, fueled Norlisk’s decision to supplement Russia’s already high production sales in the world. (along with sundry criticisms they were attempt to control PGM world pricing, of course.) Add to that, the push for more hydrogen fuel cell technology, also requiring PGMs, and one would have thought purchasing Stillwater was a safe investment.

It is also true that the J-M Reef area is the only known US resource for PGMs, … while the only other resources for the PGMs are largely produced out of Russia and South Africa. Needless to say, Stillwater Mining, and other smaller entities represent the sole US resource of rare metals in the world.

Welcome to Economics 101, Congress and Obama. Both are long overdue in getting some basic common sense business experience and executive management. And perhaps this may make these big spending elitists think twice about the additional regulations on US business they are proposing… now that they are CEOs of government owned enterprises. ah, ahem… can you say “cap and tax”? (Okay… I doubt it….)

Now Stillwater is demanding WH intervention, or they will find themselves filing with many others for relief and appeal against the lawsuits being held by the “old” GM. They’ve already been put on the S&P credit watch list because of this contract cancellation.

If the Obama administration does not intervene and Stillwater fails to get relief through bankruptcy court, the company would have to file a claim for its losses and line up alongside the automaker’s many other creditors.

The stark reality of economics will be a bitter pill for the lofty-ideology types to swallow now. On one hand, we have cascading job loss, unions and incestuous relationships with Obama’s auto czars, and the financial jeopardy of the largest entity responsible for extracting a rare US resource that is in high demand. On the other hand is the US taxpayer, on the hook for Government Motors and the demand for profitability.

Now what remains to be seen is just how will Obama, and his union entrenched auto czars, react to this push-pull between making GM profitable; or continuing to subsidize the heavily regulated and non-conpetitive US mining industry and placate the united steelworkers union…. an entity that Rattner’s auto czar sidekick, Ron Bloom understands well as he was – until February – assistant to the United Steelworkers union president.

Can you say “ rock palladium and a hard spot”?

62 million Americans now have absolutely no voice in the way our country is being governed. No say in the quadrupling of our debt or in the onerous taxes being piled on top of record unemployment. They have no say in the pending trillion dollar health care ‘reform’ or the more costly ‘cap and trade’ legislation steadily making its way through Congress.

With Democrats firmly in control of the White House and the House of Representatives, and most likely the Senate, the left has found no need for bipartisanship. After all, ‘Obama won.’ Case closed.

Should any pesky Republican complain, the voice goes unheard – kinda like a tree falling in a forest. Did it really fall if no one heard it? The right is reduced to pondering questions like these as the left continues implementing radical change at breakneck speed. Changes that affect every segment of our society and every single American. Changes that are being implemented without the requisite ‘national conversation’. Why hold a conversation?

The left is in control and there is no need to consult with the people they were elected to govern. The politicians and the experts know best. And should the GOP try to halt this tsunami of ‘change’, a quick change of the filibuster rule to 51 instead of 60 is put in place. That’ll teach em.

Under the guise of fighting the non-crisis of global warming, the EPA has declared the very air we breathe to be dangerous. Not to worry. Uncle Sam will save us. Here comes cap and trade. It will only cost $3,100 extra in energy costs per family.

Under the guise of universal health care, our government is preparing to take over app. 17% of our economy by nationalizing health care. Not to worry, they are consulting with the policymakers in Canada responsible for the sterling healthcare in that country. The very same government health care that forces Canadians to come to the US to get their medical needs taken care of. 

Under the guise of saving the economy, the feds have taken over banks, insurance companies and car companies, prompting even thug dictator Chavez to joke, “Hey, Obama has just nationalized nothing more and nothing less than General Motors. Comrade Obama! Fidel, careful or we are going to end up to his right.”  

Under the guise of saving us from those nasty capitalists, Obama has appointed a new Pay Czar to make sure no-one is paid more than the politicians deem they are worth. At least those who are unfortunate to work for companies that have received bailout funds. And in one case, the formerly sovereign state of South Carolina has actually been forced to take bailout funds, and accept all the strings that come with it.

Consent of the governed is being ignored as the Obama administration hijacks ever more power to the federal government, in direct contravention of the 10th amendment and the Constitution. And 62 million Americans can do nothing except marvel at the audacity.

The left is rejoicing at finally being able to implement utopia here on earth. A utopian vision that has consistently failed whenever it has been foisted upon a populace, either through charisma or brute force. But never mind. Obama’s utopia will work, experts assure us.

The experts who now hold us hostage are first and foremost, political beings, having been appointed ‘czars’ on the basis of political connections as opposed to merit. They are thoroughly steeped in theory and liberal orthodoxy and severely lacking in real world experience.

These unelected czars (15 at last count) now have control of our tax dollars and the regulatory bureaucracy that enables them to enforce their whims. Whims which are based more on political expediency than the rule of law. They will never be held accountable when their theories are tested and fail. And fail they must, as history has taught the 62 million people who didn’t vote for Obama.

As we speak, the left, with the willing compliance of an adoring media, are kowtowing to our enemies while demonizing and penalizing capitalists, the very wealth creators whose money now allows the government to implement an agenda anti ethical to the American way of life.

The Obama administration, under the guise of tolerance, inclusion, multiculturalism, empathy and concern for the disenfranchised, are destroying jobs though regulation and taxation. A total of 2.19 million jobs have been lost since Obama became President. (The news that Wal-Mart will be adding 22,000 jobs this year is ignored, as they did it without unions or government help.)

The Democrats are enacting legislation that makes it impossible for America to become energy independent, while at the same time, partnering with Arab countries to help them develop nuclear energy.

Our ‘leaders’ are burdening America with an unsustainable level of debt while at the same time, continuing to send our tax dollars ($106 Billion) to the IMF to bail out the world. And sending $200 million more to Pakistan to help out with their refugees.

The Left, with Obama as its messiah, believing that all cultures and countries should be equal, are systematically reducing America to third world status. A level playing field at last. Whew.

Meanwhile, the 62 million people who didn’t vote for Obama wait in vain for their own elected representatives to stand up and say STOP. Alas, aside from a handful of Republicans like Sarah Palin, Mark Sanford, Jim DeMint, Rick Perry and Dick Cheney, the silence from the Republicans is deafening.

62 million Americans are watching America squander its greatness on the altar of catchy, unproven, politically correct notions. And this American is wondering if the destructive policies that are being foisted upon us without our consent and without debate, are being enacted through stupidity or design.

On May 2nd, I posted the Chicago style strong arm tactics used on some of the secured investors, represented by Bankruptcy Attorney, Tom Lauria of White & Case. Two days later, I was pondering the possibility of political blackmail… and then, 24 hours later, the client being strong armed silenced Lauria in the press.

All seemed to flow along without major headlines until, late last week, Judge Arthur Gonzalez approved the sale of most of Chrysler’s assets to Italian automaker Fiat SpA, leaving 789 Chrysler dealerships with the “Old Chrysler” in bankruptcy, along with unwanted factories. According to the NY judge, a bankrupt manufacturer didn’t need a dealership network.

“Absent a car manufacturing business, the dealerships would not seem to serve any purpose for the debtor,” Gonzalez said, but added there may be a case for the dealers to pursue damages.

huh? Absent “.. a car manufacturing business..”?? Just what is it Fiat is buying, if not a car manufacturing business?

In response to the judicial blessing, Tom Lauria and three of his state pension and construction funds clients asked SCOTUS to step in, staying execution of the sale to renegotiate the terms that left secured investors at the bottom of the barrel, and elevated the unions and government to the top tier positions. And Lauria and clientele were not alone.

Also filing emergency papers at the high court Sunday were lawyers representing consumer groups and individuals with product-related lawsuits.

An appeals court in New York approved the sale Friday, but gave objectors until Monday afternoon to try to get the Supreme Court to intervene. Chrysler LLC wants to sell the bulk of its assets to a group led by Italy’s Fiat Group SpA as part of its plan to emerge from bankruptcy protection.

The emergency requests went first to Justice Ruth Bader Ginsburg, who handles such matters from New York. She can act on her own or refer it to the entire court.

The Indiana State Police Pension Fund, the Indiana Teacher’s Retirement Fund and the state’s Major Moves Construction Fund claim the deal unfairly favors the interests of Chrysler’s unsecured stakeholders ahead of those of secured debtholders such as the funds.

The funds are also asking SCOTUS to consider the Constitutionality of using the TARP funds, only allowable for financial institutions, to supply Chrysler’s bankruptcy protection financing without Congressional authority.

About bloody time….

Breaking today, the Supreme’s put a stay on the sale’s execution, as the court gathers more data, and schedules a hearing.

In the meantime, all is not smooth in Obama’land Auto Sales. House Majority Leader Steny H. Hoyer and Reps. Chris Van Hollen and Daniel Maffei are circulating a letter to the POTUS amongst the left wing party, gathering signatures. But of course, it is tempered by the token “butter up”… but this is a push-back by the Congressional Obama faithful that is hard to ignore.

Dear President Obama:

We are writing to express our concerns about General Motors’ and Chrysler’s decision to close profitable automobile dealerships across the country, and urge you to ask GM and Chrysler to delay final action on proposed closures pending further review of the decision to consolidate dealerships and the process by which Chrysler and GM selected the dealerships to close.

Closing these dealerships will put over 100,000 jobs at risk at a time when our country is shedding jobs at an alarming rate. We also question the criteria being used to determine which dealerships should be closed and the fundamental fairness involved in this effort. It is our view that the market rather than leaving it up to the manufacturers whose poor leadership contributed to their demise. Furthermore, we believe car dealers will be key players in any effort to revive the American auto industry.

We believe the dealerships are one of the auto industry’s key sources of strength and the manufacturers should continue to honor their agreements and contracts. The dealerships, and their more than 1 million employees, form personal relationships with customers that often contribute to brand loyalty and will be key to General Motors’ and Chrysler’s recovery following this economic downturn. While we understand the desire to reduce the number of unprofitable dealerships, no one has yet sufficiently explained the need to close profitable dealerships.

We recognize that efforts by your Auto Task Force prevented the total liquidation of General Motors and Chrysler, as well as their dealership networks. We commend your efforts to help these businesses survive these challenging economic times.

However, we are concerned that manufacturers are closing profitable dealerships to circumvent current contracts which could require expensive buy-outs under normal conditions. We are also concerned about allegations that dealers that have previously stood up for their rights against the manufacturers are being targeted by these closures. We believe that the forced closures of profitable dealerships needs to be scrutinized by the Task Force to prevent additional future financial loses to General Motors and Chrysler and job loses across the United States

We may consider legislative proposals to ensure that dealers and their employees are treated fairly, and we look forward to your timely response.

It was just over a week ago that some internet bloggers saw what they consider a suspicious link between dealerships being closed and political leanings, while the Huffpo crowd argues it’s not surprising that car dealers are “overwhelmingly Republican”.

“It shouldn’t be any surprise, by the way, that car dealers tend to vote — and donate — Republican. They are usually male, they are usually older (you don’t own an auto dealership in your 20s), and they have obvious reasons to be pro-business, pro-tax cut, anti-green energy and anti-labor. Car dealerships need quite a bit of space and will tend to be located in suburban or rural areas. I can’t think of too many other occupations that are more natural fits for the Republican Party. Unfortunately, while we are still a nation of drivers, we are not a nation of dealers.”

sigh… more “categories” and “classes” for America, thanks to the “tolerant” party.

For now, it’s another hurry up and wait scene. The funds and pensions seek a legitimate restructuring of the Chrysler break up, as well as some answers as to the ability of WH to ignore bankruptcy law, and dictating the terms favorable to the unsecured investors and unions. Additionally, there’s the pesky question as to misuse of TARP funds by the power grabbing WH and auto czars without Congressional approval… something the Dems tended to ignore in their letter of complaint.

Personally, I’m more interested in the interference in contract law aspect. I have no doubt that an Obama lovin’ Congress would be happy to go back and amend last fall’s TARP rules to grant Obama his additional powers retroactively. But where in the Constitution does the ability of the Executive Branch to usurp Bankruptcy and Contract law reside? I suggest it doesn’t…

This is one SCOTUS decision I’m anxious to hear.

I caught a panel on which Obama economic advisor Austin Goolsbee conceded that the administration had previously predicted unemployment would top out at around 8%, that it was now up to 9.4%, and that double-digit unemployment was a distinct possibility in the near future. Goolsbee didn’t resort to the administrations’s blather about “saving or creating jobs,” but he did repeat its fustian about how last month’s loss of 345,000 jobs (resulting in a half percentage point jump in the jobless rate) is somehow good news because it beat predictions (I don’t recall him saying whose) of even more dire loss numbers. It made me wonder why, if those predictions either existed or were serious, the Obama administration would have previously predicted that unemployment would top out at 8%?

Goolsbee then laughably intimated that the steep jump in the jobless rate could be attributable to hopeful signs that the economy is improving. Huh? See if you can follow this: he says flashes of hope that we are on the verge of a revival have purportedly caused previously uncounted jobless people to seek (but not find) work — that is, they waited out prosperous times, deciding to leap into the job hunt only when hundreds of thousands of heretofore gainfully employed people got pink-slipped and began competing for a declining pool of jobs.

Goolsbee wasn’t done with his idiocy. He does the typical Obama move….blame Bush:

We are only in this situation because somebody else kicked the can down the road, and that’s really an understatement. They shook up the can, they opened the can, and handed to us in our laps. Senator Shelby knows that to be true. When George Bush put money in to General Motors, almost explicitly with the purpose, how many dollars do they need to stay alive until January 20th, 2009? There was no commitment to restructuring, to making these viable enterprises of any kind.

The Senior White House economic advisor to President George W. Bush, Keith Hennessey, lays out the facts and shows that not only was Goolsbee’s accusations wrong but inflammatory. It’s a long and detailed post and I would recommend you go read it but here’s the summary:

1. The Obama team declined to respond to the Bush team’s offer to work together to create a joint process that would have resulted in a resolution by March 1st or April 1st, rather than by June 1st for Chrysler and maybe September 1st for GM.

2. We then worked with the Democratic majority to enact legislation that would have limited funds to be available only to firms that would become viable.

3. After Congress left town for the holidays without having addressed the issue, President Bush was faced with a choice between providing loans and allowing these firms to liquidate in early January, which would have further exacerbated the economic situation for the incoming President. President Bush chose to provide the loans.

4. We provided GM and Chrysler with sufficient funds to get to March 31st, not January 20th, and in those loans we gave the incoming Administration the ability to extend them for 30 more days.

5. The loans were conditioned on restructuring to become viable, with a precise definition of viability, specific restructuring goals, and quantitative targets.

6. The Obama Administration followed the restructuring process laid out in the Bush-era loans. They are now measuring that deal against the targets established in the Bush-era loans. The only changes the Obama team made were that they extended GM for 60 days rather than 30, and the Obama Administration directly inserted themselves into the negotiations as the pre-packager.

Dr. Goolsbee’s comments this morning were both inflammatory and incorrect.

Another nugget came out of this interview, while speaking about the running of operations within the companies he said the following: (h/t Gateway Pundit)

“It’s totally clear that the government will have input on operations.”

State controlled automakers…..I know there is a name for that isn’t there?

Now that Obama owns General Motors and Chrysler a very odd thing is occurring. Of the thousands of auto dealerships being forced to close it turns out that most of them have contributed to Republican candidates. Dealerships which have contributed to Democrats seem immune. Doug Ross and Joey Smith have the story.

More work needs to be done before I would say there is anything but a strong and suspicious coincidence here between closed dealerships and support for the GOP but those of us who are acquainted with the Chicago pay for play way of punishing opponents wouldn’t be at all surprised.

But one thing we do know for sure is that Obama is causing tens of thousands of people who work at the closed dealerships to lose their jobs. To put that in human terms, I present this letter from a Dodge dealer whose franchise has been taken away:

Letter from a Dodge dealer
American Thinker
May 19, 2009

My name is George C. Joseph. I am the sole owner of Sunshine Dodge-Isuzu, a family owned and operated business in Melbourne, Florida. My family bought and paid for this automobile franchise 35 years ago in 1974. I am the second generation to manage this business.

We currently employ 50+ people and before the economic slowdown we employed over 70 local people. We are active in the community and the local chamber of commerce. We deal with several dozen local vendors on a day to day basis and many more during a month. All depend on our business for part of their livelihood. We are financially strong with great respect in the market place and community. We have strong local presence and stability.

I work every day the store is open, nine to ten hours a day. I know most of our customers and all our employees. Sunshine Dodge is my life.

On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as “new,” nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.

Our facility was recently totally renovated at Chrysler’s insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank.

HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN?

THIS IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY

This is beyond imagination! My business is being stolen from me through NO FAULT OF OUR OWN. We did NOTHING wrong.

This atrocity will most likely force my family into bankruptcy. This will also cause our 50+ employees to be unemployed. How will they provide for their families? This is a total economic disaster.

HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?

I beseech your help, and look forward to your reply. Thank you.

Sincerely,

George C. Joseph
President & Owner
Sunshine Dodge-Isuzu

Mr. Joseph asks “HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?” Sorry George, those days are gone!

According to an outline the company has been sharing privately with Washington legislators, the number of cars that GM sells in the United States and builds in Mexico, China and South Korea will roughly double.

The proportion of GM cars sold domestically and manufactured in those low-wage countries will rise from 15 percent to 23 percent over the next five years, according to the figures contained in a 12-page presentation offered to lawmakers in response to their questions about overseas production.

The only idea I had in the above referenced post was that Xerion also received funds from the New York State Common Retirement Fund, and that perhaps Rattner/Obama admin was using a blackmail tactic by threatening to drag them into the pay-to-play investigation involving Rattner’s Quadrangle, placement agent Henry Morris and former deputy comptroller David Loglisci.

Tom Lauria, a man genuinely indignant at the White House intimidation tactics used against his legal clientele, has now been silenced by Perella-Weinberg themselves.

If P-W insists Lauria dodge the subject, could it be whatever dirt Rattner/Obama have is true, and Lauria’s indignation resulted in shining a spotlight where P-W did not want it to be?

As Lauria says to Fox’s Megyn Kelly,

… I really don’t want to comment, but I’m sure… uh… that… uh… if people keep pressing, the truth is going to come out.

Perella-Weinberg has a stake in Chrysler via their Xerion [Capital] Fund. Chrysler, itself, is currently owned by Cerberus Capital Management LP. Try to keep all these names straight… these players are going to continue to reappear, along with some others you may not know about.

Per Law Shucks, and via Andrew Sorkin at the NYTs Dealbook, Lauria added more detail to that threat in a follow up interview with Jake Tapper.

In a follow-up interview with ABC News’s Jake Tapper, [Lauria] identified Mr. Rattner, the head of the auto task force, as having told a Perella Weinberg official that the White House “would embarrass the firm.”

It’s no surprise that the WH denied the event ever took place. And yesterday Perella-Weinberg issued their carefully parsed statement as well.

Suggestions have been made that the Perella Weinberg Partners Xerion Fund changed its stance on the Chrysler restructuring due to pressure from White House officials. This is incorrect. The decision to accept and support the proposed deal was made by the Xerion Fund after reflecting carefully on the statement of the President when announcing Chrysler’s bankruptcy filing. In considering the President’s words and exercising our best investment judgment, we concluded that the risks of potentially severe capital loss that could arise from fighting this in bankruptcy court far outweighed any realistic potential upside.

We have a very specific mandate from our investors, and that is to carefully weigh investment risks and rewards. It is not our investment mandate to pursue political or risky legal campaigns with our investors’ money. This was our assessment of investment risk and reward, nothing else.

While we did and still do believe that the lenders would be justified in pressing their objections under conventional bankruptcy law principles, we believe a settlement would now be in the best interests of all parties in the context of avoiding a drawn out contested bankruptcy litigation proceeding, and we encourage our colleagues in the loan syndicate to pursue this immediately.

Note very carefully, Perella-Weinberg spokespersons have not denied the charges of White House strong arming. Instead, in no uncertain terms, P-W has chosen to use the promise of heavy litigation costs …. with a questionable outcome… as their reason for a change of heart. Surely they would have known this before signing on to the lawsuit. Could they be this under-informed at the onset?

History… plus their choice of legal representation, belies this possibility. Lauria has been in this same spot for his clientele before with a previous decision in Adelphia Communications.

Here the bankruptcy judge refused requests by Lauria, representing first lien holders, to appoint a trustee to oversee disputes, and to disqualify a chief Adelphia bankruptcy counsel. The bench considered this a “nuclear war button” threatening obliteration of a crucial $17.6 billion deal, selling Adelphia’s assets to cable rivals, Time Warner and Comcast.

Key to the judge’s decision was that a failed sale due to delays could incur higher costs in penalties to Adelphi, and that the assets could be sold prior to the creditor challenges to the planned reorganization by using Section 363 of the US Bankruptcy Code under Chapter 11.

In the same vein, Obama’s orchestrating a forced asset sale to what will be a government and union owned company, [55% to UAW, 10% to government/secured lenders] known as Fiat SpA (or whatever new name they give to this new US entity), prior to Lauria’s Chrysler claims being heard.

But there’s way too much crony’ism going on with Rattner as Obama’s auto czar. As the ever astute Missy pointed out at the end of March, Rattner’s conflicts of interest in oversight are tenacled.

Rattner is co-founder and senior executive of the Quadrangle Group, under investigation for it’s alleged roll in a kickback scheme in concert with Henry “Hank” Morris, and former New York deputy comptroller, David Loglisci, and involving the New York State Common Retirement Fund. Both Morris and Loglisci were arrested in March of this year, charged with 123-count state criminal indictment that included money-laundering, enterprise-corruption and bribery charges.

So far, the most indepth round up of the doin’s between Rattner’s Quadrangle, and Rattner himself with documented meetings with Morris, and Loglisci comes from The New Republic’s Marty Peretz.

I’ll let you read thru the whole unsavory story itself, but it appears that Mr. Loglisci co-produced one loser of a flick called “Chooch” which lost about $700K after a brief run in three theatres. Rattner’s Quadrangle Group decided to do a quid pro quo, and avoided crucial reporting requirements by using a subsidiary to buy the DVD rights to this movie for $88K. Shortly thereafter, magically, Loglisci… in charge of managing some of the NY pension funds… slide $100K from the fund to Rattners Quadrangle Group for investment purposes.

AKA… pay to play.

Andrew Ross Sorkin’s article also adds more fodder to the story, saying Rattner turned to Morris for his specific placement services for the NY pension funds after meeting the then managing director of private markets for the New York City comptroller, Josh Wolf-Powers. Mr. Powers informed Rattner that “he could not think of any investment firm that had persuaded the city’s pension fund to invest without using a placement agent.” [Mata note: remember this statement...]

Thus the relationship between Rattner, and the now charged Morris, began.

As if the pay to play investigation weren’t enough on it’s own, there’s the incestuous relationship between Quadrangle Group and Cerberus – Chrysler owner. Again, back to Law Shucks brief summary on the situation, Quadrangle received a loan from Cerberus in which they are now technically in default.

Cerberus Capital Management LP, the current owner of Chrysler LLC, lent Rattner’s Quadrangle $125 million as part of the financing for the buyout of Maxim magazine and music publication Blender. As both titles limp through the drop in advertising revenue, Cerberus wants more capital invested to cover the debt levels, a request that Quadrangle has balked at. The two remain at loggerheads over the issue with Cerberus claiming the loans are technically in default.

As one source told the New York Post (NWS 9.85 ↑6.37%), “Cerberus is about to foreclose on the loan to Quadrangle, and now Steve Rattner is going to be the boss of Cerberus.”

Rattner is, of course, the “boss” of Cerberus via his Obama appointment as auto czar to Chrysler… aka Cerberus.

Simple translation? Rattner’s Quadrangle Group is one of Chrysler/Cerberus creditors in default… and he’s in charge of structuring their asset sell off.

Yeah. No conflict there…

Okay… I told you all the above so I could get to this moment. Just what is it the Obama admin (via his) auto czar have on P-W, aka Xerion Capital as the Chrysler first lien investor, to “embarrass” or “ruin their reputation”?

One’s first thoughts turn to Rahm’bo. And while there are, again, the tenacles of connection, that doesn’t pan out as planned. As Timothy Carney at the Washington Examiner reports today, Obama’s Chief of Staff and ballet-dancing tough guy has his own ties to Perella-Weinberg… taking in over $16 mil in his two-and-a-half years between the Clinton White House and Congress. Other publications, such as ProPublica.org… and CNN actually put that figure at $18 million.

If one thinks that Rahm’bo was pulling strings with a former employer, I consider it unlikely. A quick look at Joseph Perella’s campaign contributions show he is anything but on Rahm’bo’s side of the political aisle. Records show Mr. Perella contributing a total of $29,600 to Obama’s rival, John McCain. But this would also explain why Rahm’bo also wouldn’t necessarily harbor any feelings to protect his former financial benefactor.

But then I ran across one of Tyler Durden’s (Zero Hedge) late February articles, examining just where the New York State Common Retirement System’s pension money was being invested. And among them are some very common names…

What is more curious is an often missed page in the Office Of The State Comptroller’s website (link here) in which the New York State Common Retirement Fund discloses its monthly indirect investment in other asset managers, be they private, public equity or real estate focused. Compiling the publicly available data from February 2007 yields some curious results. Turns out in 2007 the New York Common Fund invested over $5.9 billion directly into a plethora of other hedge and private equity funds, and a total of $7.3 billion net invested over the past 2 years. Some curious names that stand out:

Guggenheim, which received $100 million in May 2007 and a total of $500 million, and which has since shuttered;

Bear Stearns, which received $20 million in June 2007, after the blow up, only to see a the entire investment (including previous installments) of $490 redeemed in August, likely at a great loss;
The investment of $415 million in 24 assorted office properties in October 2007 (peak of the commercial real estate market) through a JV with Liberty Washington;

Apollo’s latest Investment Fund (VII), which received $350 million in August 2007, which somehow closed in late January with $15 billion in total commitments. Looks like New York ignored the stellar performance of the prior fund, in which most leveraged buyouts are currently bankrupt or on the verge;

BlackStone Real Estate Partners VI, in which the fund invested $800 million, and which closed in March 2008 with total commitments of $10.9 billion. Blackstone Real Estate became famous for its bidding war for the Equity Office Properties REIT which it won at the peak of the market with a final purchase price of $39 billion, and in which it invested almost $4 billion in equity, only to flip most of it to pay down the associated debt; they are likely stuck with the balance at a significantly underwater valuation.

Harbinger Capital Partners, which received a $71 million investment from the fund in 2007, and which is likely worth roughly 60 cents on the dollar;

Cerberus, which received $50 million in May 2007, and which might very well have been immediately funneled into such sterling investments as Chrysler and Aozora bank;

GoldenTree, which received $35 million in 2007, and is now running dutch auctions to offload all its illiquid holdings;

Xerion, which received $13 million in 2008, months after it was acquired by Perella Weinberg. As we have written, Joe Perella is probably the most important financial advisor in the country currently, advising the FDIC on its assorted activities (with very little information on how the process is compensated). If New York is invested in a fund which is run by a firm compensated by the FDIC, the potential conflict of interest here, absent further disclosure, could have massive proportions.

Is Rattner… who must be intimate to just what “placement agent” was used to gain access to NY pension funds… dragging Perella Weinberg via Xerion into the Henry Morris/David Loglisci investigation as a “threat”?

And then there’s the appearance of Cerberus on that same list…

Naturally, there can be instances where the NY Common Retirement Fund may indeed choose investments for their employees pension funds that are legitimate. But it does raise the question… are they tainted by the same contact? And is Rattner so absolutely sure of a common bond… ala running a possible P-W/Xerion pay to play scheme… that it would be an effective bully tactic to use as government blackmail?

Hopefully the really stellar guys at this… ala Naked Capitalism and Zero Hedge… will get to the bottom of it. But it’s food for thought.

“The charge is completely untrue,” said White House deputy press secretary Bill Burton, “and there’s obviously no evidence to suggest that this happened in any way.”

Mata Musing: yeah… like they’re so stupid as to leave a trail of evidence of threats? But then, Pellera Weinberg, magically, is no longer in opposition, nor a part of the lawsuit. my my

A quiet story making it’s rounds only thru cyberspace it that of Bankruptcy Attorney, Tom Lauria of White & Case. Mr. Lauria represents the Chrysler holdouts – a group of 20…. er, now 19 after WH strong arm tactics… first lien investor groups who represent teachers credit unions, pensioners, retirement plans and college endowments (to name a few) that are rejecting the government proposal for Chrysler’s restructuring.

This, of course, is the group who Obama publicly berated for their opposition, stating he doesn’t “stand with them”. Instead, he portrays them as those seeking deliberately to sink Chrysler for personal gain.

The White House had offered Chrysler’s lenders a deal to take roughly 33 cents on a dollar to write off the company’s debt. Most took the deal, but a few holdouts said it wasn’t good enough — and their refusal to go along pushed the company into bankruptcy.

So Obama is calling them out. “A group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices and they would have to make none,” Obama said.

Some of the hedge funds, Obama said, demanded returns twice as high as other lenders were getting.

“I don’t stand with them,” Obama said. “I stand with Chrysler’s employees and their families and communities. I stand with Chrysler’s management, its dealers and its suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars.”

Mr. Lauria gave a nine minute interview to Frank Beckmann yesterday on News/Talk WJR, where he straightened out some facts that belie a sitting POTUS’ willing and deliberate demonization of privator sector investors – composed actually of those “millions of Americans” who may not own their cars, but invested their future retirement in Chrysler.

In fact, the first lien investors are not being hard nosed. They represent common American workers’ pension funds. They took an investment at a lower yield in exchange for the security of being in first place for payout in the event of a liquidation. Nonetheless, this group of investors did agree to accept 50% of their investments as a concession, instead of the 71% Mr. Lauria says was offered by the Obama admin.

A brief summary of the Obama offer and negotiations via Mr. Lauria?

- First lien holders were willing to accept a 50% discount on their positions, however the 71% demanded by the administration was seen as too much.

- The cash going to Junior claims (creditors below the first liens) will be between $10 and $20 billion, a number which in practice should satisfy a par recovery for the 1st liens if the Absolute Priority Rule was actually withheld.

- Among the creditors are not just vulturous hedge funds but “pensioners, teachers, credit unions, college endowments, retirement plans, and personal retirement accounts.”

But evidently the price to be paid when you oppose what Obama wants is high. Two minutes into the interview with Beckmann, Lauria notes that he has lost one of his clients – Perella Weinberg – after they were directly threatened by the White House for their opposition.

“One of my clients was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight…That was Perella Weinberg.”

According to Bloomberg, the game of “chicken” between Obama and the first and junior lien holders was fast and furious in the attempts to meet government imposed deadlines.

Obama’s team first offered secured lenders $2 billion for $6.9 billion in loans, then raised the offer to $2.25 billion. In a game of chicken, the holdouts asked for $2.5 billion yesterday, and Obama’s patience ran out. Many dissidents paid from 50 cents to 70 cents on the dollar for their Chrysler loans, so they’re sitting on losses, according to people familiar with the matter.

“They were hoping that everybody else would make sacrifices and they would have to make none,” Obama said. “Some demanded twice the return that other lenders were getting.”

Dan Arbess, a partner at New York-based Perella, didn’t return calls for comment. Uniondale, New York-based Stairway principal John Rijo and Group G Capital Chairman Geoffrey Gwin declined to comment.

New York-based OppenheimerFunds said it rejected the offers because the government “unfairly” asked the fund’s shareholders to make greater sacrifices than were being asked of unsecured creditors.

“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,” the company said in an e-mail.

Entitled to priority is exactly right. We are, once again, talking about a sitting POTUS abrogating contractual law – a move that is anti-Constitutional between the separation of powers for Judicial and Executive branches. I brought this up before when it came to contract law and CEOs, however no one wanted to listen since it’s politically vogue to hate those wealthy, heartless executives and their salaries and bonuses.

But now we’re talking teachers, retirees, and educational endowments. People Obama purports to “protect”. Yet here he is, lumping them in with those evil and greedy CEOs by attacking them under their umbrella investment company. He makes no differentiation because his principle remains the same… there is no legal contract he considers sacred when it comes to moving along his agenda.

Mr. Lauria points this out in his Beckmann interview about 7′20″ into the audio.

… the right to contract, and the right to property are sacrosanct in this country. Everybody understands that when you make a deal, it’s supposed to be honored, and if it’s not honored, you’re supposed to be able to get protection in court. And what is happening here, through the force of the United States government – and that’s what’s disturbing about this. I mean private parties have contract disputes all the time. But for the United States government to step in – the Executive office of the United States government who, under the Constitution, is charged with enforcing the laws, to step in and – in effect – try to break the laws…. I think we should all be concerned about that. That is a Constitutional issue.

As Lauria points out, you now have the Executive Branch coming in to the Judicial Branch when the judicial system is meant to stand independent to interpret the law … even in the face of intense pressure to do otherwise.

Were not the intrigue of separation of powers, all in the name of “millions of Americans” not fascinating enough, the plot thickens. Financial blogger, Zero Hedge has added another layer of fuel to the fire on this overt display of Chicago thuggery, as P-W is also the advisory firm for asset disposal of failed FDIC banking institutions.

What is very odd is that Perella Weinberg could possibly have veered away from the administration’s path in the first place: Zero Hedge readers know that P-W is the very firm advising the rapidly sinking FDIC “on transactions and strategies to stabilize the banking system, and also on the proper way to dispose failed institutions and how to handle delinquent securities assumed from banks, as well as the creation of the aggregator bank.”

This leads to the conclusion that this was really the work of one Dan Arbess, who runs the recently acquired by P-W, Xerion Capital, but nonetheless does not explain the lack of strategic integration at this most critical of advisors to Sheila Bair [Mata add: 19th Chairman of the Federal Deposit Insurance Corporation (FDIC)], and by implication the U.S. administration. How it is possible that one’s core advisor would go against its client, even if offset by a Chinese Wall, is likely the big story here, and speaks volumes about the chaos behind the scenes currently occurring with regard to Wall Street’s sentiment for the ruling administration.

Another six degrees of separation is with Dan Arbess, who got his professional start at White & Case – the very firm of which Tom Lauria is a member – as a first year associate before he rose to being one of the firm’s partners in 1992.

Zero Hedge mentioned they had been contemplating filing FOIA inquiries to Ms. Bair and the FDIC, asking for full disclosure for Perella Weinberg compensation for the shuttering of bank after bank. In light of capitulation to Obama INRE their first lien status on Chrysler, it may be even more appropriate now.

A final thought from Mr. Lauria:

“The President is trying to abrogate contractual rights; if he will attack that contractual right, what right will he not attack?”

And a more chilling realization may be, just how far with this administration go to abrogate that, and any future rights? At this point Mr. Lauria doesn’t know if the White House will seek to directly strong arm his remaining clientele. As he said, he may wake up and find he no longer has a case because they all backed down from Chicago thuggery pressure.

And if they can do that to powerful financial institutions, what can they do to you and I?

UPDATE 2: Zero Hedge has posted P-W’s list of secured investors plus Lauria’s filed brief on behalf of his remaining clients.