Last week Venezuelan de facto dictator Hugo Chavez took another step toward socialism by confiscating more assets of western oil companies at a time when Venezuelan oil production is plummeting due to the incompetence of the state oil monopoly. This will undoubtedly lead to further declines in production as the Venezuelan economy continues to implode.
Meanwhile in the U.S., in an unprecedented action, the Obama administration completed the forcible bankruptcy restructuring of Chrysler by effectively confiscating assets of the senior bondholders in order to turn them over to its political ally, the UAW, which is the organization most responsible for the destruction of Chrysler in the first place.
The actions of the two men are not significantly different. In the past, Americans could look at these sorts of confiscations in third world countries confident that nothing like that could happen here - but now it has. The rule of law, in this case bankruptcy law, has been suspended in the Chrysler case. When bondholders tried to resist, they were threatened with extra-legal action by the White House, which then lied about its threats.
As Michael Barone called it in his recent column, this is an example of "gangster government." Now General Motors will be the next company on the chopping block. It will be interesting to see what the fate of its senior creditors is compared to the benefits offered by Obama to its union.
On another front, the Obama administration bullied the state of California into reversing its decision to reduce the wages of some union workers as part of its desperate effort to reduce its massive budget deficit by threatening to withhold billions in federal dollars from the state.
“(California) officials say they are particularly troubled that the Service Employees International Union, which lobbied the federal government to step in, was included in a conference call in which state and federal officials reviewed the wage cut and the terms of the stimulus package.
California Secretary of Health and Human Services Kim Belshe said she could not recall another instance in which the federal government invited a significant stakeholder group into such government-to-government negotiations.”
It’s looks as if Obama is planning to operate far closer to the style of Hugo Chavez than previously thought. Private property and the rule of law are beginning to look like relics of the past after the socialist “change” Obama has in mind.