How Safe is Your Bank?

You can determine the financial condition of your financial institution by going to Bankrate.com. Once at the site, move your cursor to the lower left-hand side of the site and look for "Safe and Sound Ratings." Click-on the appropriate button and follow the instructions.

Kuwait Trip: Observations on Oil and Enhanced Interrogations

The following observations on the future direction of oil prices and enhanced interrogations are from my recent trip to Kuwait:

1. Oil Prices: Kuwaitis, along with OPEC, believe that oil sometime during 2009 will be within the $75-$80 range. The rationale for the range is based on the following assumptions: (1) World economic growth, especially in U.S., is expected to occur during the second half of 2009, (2) Since gas prices have fallen below $2.50 a gallon from around $4 a gallon, demand for very small cars and hybrids has plummeted. At $2.50 per gallon, this price structure is anathema to Obama’s plan for the U.S. auto industry. (Obama's plan for auto makers to boost the average fuel efficiency of their fleets to 35.5 miles per gallon by 2016, which essentially means the auto industry will produce smaller cars and hybrids in lieu of SUVs.) Therefore, the price at the pumps must rise either through higher federal excise taxes, tacitly allowing OPEC to restrict production, or some combination of the two, and (3) With oil in the $50 range, alternative-energy sources become less attractive because they are usually more expensive to produce than traditional fossil sources. For example, ethanol, including U.S. subsidies, becomes profitable when oil is approaches $60 per barrel. Therefore, the Kuwaitis fully anticipate that the Obama administration will implement domestic and foreign polices that are conducive to higher, not lower oil prices.

2. Enhanced Interrogations: Much has been expressed and written in the media recently about the negative consequences of enhanced interrogation techniques, especially water boarding, on U.S. relations with the Arab Muslim world. According to many Kuwaitis, the reason the U.S. is disdained to the point of being called the “Great Satan” is not enhanced interrogations but the complete lack of any moral compass as depicted by movies and television shows coming out of Hollywood. Many in the Arab world, especially the Mullahs who are Islamic clergy educated in Islamic theology and sacred law, perceive the reality of the U.S. by what they watch on satellite internet and television, which is a constant streaming of sex and more sex and violence. That is their perception of Americans, which is a complete anathema to the Koran. Here in American we have been mostly desensitized to such programming but not the Arab world.

Memorial Day: Let's Not Forget Its True Meaning

S&P 500 Weekly Update: Bearish Trend Continues

Note: To enlarge chart, double-click inside.

Dollar-debased Fund

I have designed and implemented an index fund (portfolio) to track the irresponsible polices being set forth by our government through the Treasury Department and the Federal Reserve System. It is called the "Dollar-debased Fund". This fund is an equally weighted index whose investment objective is tied to the debasement of the U.S. dollar through the quantitative easing (QE) policy of the Federal Reserve System. This policy along with the Treasury bailouts is highly destructive to the fabric of the U.S. economy and its currency (dollar). Therefore, the fund is designed to protect investors from the insanity of the current fiscal and monetary polices of our government and Federal Reserve System, respectively. A descriptor of each investment vehicle is as follows:

1. Gold Shares (GLD): A trust (Exchange Traded Fund) that holds gold bullion.
2. Ultra-Short 20+ Treasury Bonds (TBT): The investment (Exchange Traded Fund) seeks daily investment results, which correspond to twice the inverse of the daily performance of the Lehman Brothers 20+ Year U.S. Treasury index.
3. Crude Oil (DXO): The index (Exchange Traded Note) is a rules-based index composed of futures contracts on light sweet crude oil (WTI) and is intended to reflect the performance of crude oil.
4. Ultra-Short S&P 500 Index (SDS): The investment (Exchange Traded Fund) seeks daily investment results, which correspond to twice the inverse of the daily performance of the S&P 500 index.
5. Agriculture (DBA): The index (Exchange Traded Fund) is intended to reflect the performance of the agricultural sector (Corn, Red Wheat, Soybeans, and Wheat).

For the week ended May 22, 2009, the Dollar-debased Fund stood at 1.0115 (+1.15%) from its inception of May 21, 2009.

Back in U.S.A

Just arrived back in the U.S. from a fourteen hour flight from Kuwait. Long flight indeed but it makes it tolerable when you are sitting up front.

Had an opportunity to meet the U.S. Ambassador to Kuwait, Deborah Jones, during my meetings at the American University of Kuwait. Country still has not fully recovered from the 1990 Iraq-Kuwait War. There are still many tangible and intangible scars within country and especially among the Kuwaiti people. More on Kuwait later, especially as it pertains to "oil."

GMAC to Get a Fresh Bailout

The Wall Street Journal reports today that the Treasury Department is poised to inject more than $7 billion into GMAC, the first installment of a new government aid package that could reach $14 billion, according to people familiar with the matter.

"As a result of the move, the government within months could end up owning both GMAC and General Motors (Government (Obama) Motors. The GM plan being devised by President Obama's auto task force calls for the government to emerge with a majority stake."

"The GMAC funding is an illustration of how rapidly the government effort to rescue the U.S. auto industry is escalating in cost and scope. What began as an emergency batch of loans to GM, Chrysler and GMAC in December -- totaling just over $20 billion -- now looks likely to balloon well beyond $50 billion and could approach $100 billion by the end of the year." Unbelievable. The auto industry is fast absorbing financial resources that the Treasury had previously directed to the banking sector.

These measures will NOT work. Period! They will bankrupt this nation. No, these measures of bailout after bailout have already bankrupted this nation. Our total national debt (federal, state, municipal, and consumer) has made us a servitude nation to the rest of the world, especially China. Proverbs 22:7 states, "The rich rule over the poor, and the borrower is servant to the lender." In other words, the nation who has the gold makes the rules. Folks, America does not have any gold. We have sold off our birthright, and we don't even realize it.

Why Government Can't (And Shouldn't) Run a Business

On today's (May 20, 2009) Opinion Page of the Wall Street Journal, John Gordon, who is the author of "An Empire of Wealth: The Epic History of American Economic Power," writes an excellent treatise that simply states politicians need headlines and markets need profits to survive. The entire article is a must read, which is provided in its entirety as follows:

"The Obama administration is bent on becoming a major player in -- if not taking over entirely -- America's health-care, automobile and banking industries. Before that happens, it might be a good idea to look at the government's track record in running economic enterprises. It is terrible.

In 1913, for instance, thinking it was being overcharged by the steel companies for armor plate for warships, the federal government decided to build its own plant. It estimated that a plant with a 10,000-ton annual capacity could produce armor plate for only 70% of what the steel companies charged.

When the plant was finally finished, however -- three years after World War I had ended -- it was millions over budget and able to produce armor plate only at twice what the steel companies charged. It produced one batch and then shut down, never to reopen.

Or take Medicare. Other than the source of its premiums, Medicare is no different, economically, than a regular health-insurance company. But unlike, say, UnitedHealthcare, it is a bureaucracy-beclotted nightmare, riven with waste and fraud. Last year the Government Accountability Office estimated that no less than one-third of all Medicare disbursements for durable medical equipment, such as wheelchairs and hospital beds, were improper or fraudulent. Medicare was so lax in its oversight that it was approving orthopedic shoes for amputees.

These examples are not aberrations; they are typical of how governments run enterprises. There are a number of reasons why this is inherently so. Among them are:

1) Governments are run by politicians, not businessmen. Politicians can only make political decisions, not economic ones. They are, after all, first and foremost in the re-election business. Because of the need to be re-elected, politicians are always likely to have a short-term bias. What looks good right now is more important to politicians than long-term consequences even when those consequences can be easily foreseen. The gathering disaster of Social Security has been obvious for years, but politics has prevented needed reforms.

And politicians tend to favor parochial interests over sound economic sense. Consider a thought experiment. There is a national widget crisis and Sen. Wiley Snoot is chairman of the Senate Widget Committee. There are two technologies that are possible solutions to the problem, with Technology A widely thought to be the more promising of the two. But the company that has been developing Technology B is headquartered in Sen. Snoot's state and employs 40,000 workers there. Which technology is Sen. Snoot going to use his vast legislative influence to push?

2) Politicians need headlines. And this means they have a deep need to do something ("Sen. Snoot Moves on Widget Crisis!"), even when doing nothing would be the better option. Markets will always deal efficiently with gluts and shortages, but letting the market work doesn't produce favorable headlines and, indeed, often produces the opposite ("Sen. Snoot Fails to Move on Widget Crisis!").

3) Governments use other people's money. Corporations play with their own money. They are wealth-creating machines in which various people (investors, managers and labor) come together under a defined set of rules in hopes of creating more wealth collectively than they can create separately.

So a labor negotiation in a corporation is a negotiation over how to divide the wealth that is created between stockholders and workers. Each side knows that if they drive too hard a bargain they risk killing the goose that lays golden eggs for both sides. Just ask General Motors and the United Auto Workers.

But when, say, a school board sits down to negotiate with a teachers union or decide how many administrators are needed, the goose is the taxpayer. That's why public-service employees now often have much more generous benefits than their private-sector counterparts. And that's why the New York City public school system had an administrator-to-student ratio 10 times as high as the city's Catholic school system, at least until Mayor Michael Bloomberg (a more than competent businessman before he entered politics) took charge of the system.

4) Government does not tolerate competition. The Obama administration is talking about creating a "public option" that would compete in the health-insurance marketplace with profit-seeking companies. But has a government entity ever competed successfully on a level playing field with private companies? I don't know of one.

5) Government enterprises are almost always monopolies and thus do not face competition at all. But competition is exactly what makes capitalism so successful an economic system. The lack of it has always doomed socialist economies.

When the federal government nationalized the phone system in 1917, justifying it as a wartime measure that would lower costs, it turned it over to the Post Office to run. (The process was called "postalization," a word that should send shivers down the back of any believer in free markets.) But despite the promise of lower prices, practically the first thing the Post Office did when it took over was . . . raise prices.

Cost cutting is alien to the culture of all bureaucracies. Indeed, when cost cutting is inescapable, bureaucracies often make cuts that will produce maximum public inconvenience, generating political pressure to reverse the cuts.

6) Successful corporations are run by benevolent despots. The CEO of a corporation has the power to manage effectively. He decides company policy, organizes the corporate structure, and allocates resources pretty much as he thinks best. The board of directors ordinarily does nothing more than ratify his moves (or, of course, fire him). This allows a company to act quickly when needed.

But American government was designed by the Founding Fathers to be inefficient, and inefficient it most certainly is. The president is the government's CEO, but except for trivial matters he can't do anything without the permission of two separate, very large committees (the House and Senate) whose members have their own political agendas. Government always has many cooks, which is why the government's broth is so often spoiled.

7) Government is regulated by government. When "postalization" of the nation's phone system appeared imminent in 1917, Theodore Vail, the president of AT&T, admitted that his company was, effectively, a monopoly. But he noted that "all monopolies should be regulated. Government ownership would be an unregulated monopoly."

It is government's job to make and enforce the rules that allow a civilized society to flourish. But it has a dismal record of regulating itself. Imagine, for instance, if a corporation, seeking to make its bottom line look better, transferred employee contributions from the company pension fund to its own accounts, replaced the money with general obligation corporate bonds, and called the money it expropriated income. We all know what would happen: The company accountants would refuse to certify the books and management would likely -- and rightly -- end up in jail.

But that is exactly what the federal government (which, unlike corporations, decides how to keep its own books) does with Social Security. In the late 1990s, the government was running what it -- and a largely unquestioning Washington press corps -- called budget "surpluses." But the national debt still increased in every single one of those years because the government was borrowing money to create the "surpluses."

Capitalism isn't perfect. Indeed, to paraphrase Winston Churchill's famous description of democracy, it's the worst economic system except for all the others. But the inescapable fact is that only the profit motive and competition keep enterprises lean, efficient, innovative and customer-oriented."

Please go back and read again the last three paragraphs, which are in bold, to get a full understanding on how perverted Washington's thinking is. This type of insanity must stop now, not tomorrow but now! Copy this article and send it to your Senators and Representative and request them to stop all this insanity. (Insanity is defined as continuing to do the same things over and over and expecting a different outcome.) Tell them to stop interfering and meddling with our market economy. If they will not lesson to your reason of sanity, tell them directly you will vote for someone next time who is does believe in the workings of a market economy.

To find your Representative go to the House of Representatives and to find your Senators go to United States Senate.

Short Hiatus

I will be in Kuwait over the next week. Therefore, my postings will be very limited, if any at all.

S&P 500 Update for the Week Ending May 15, 2009

Government Motors (GM): Chinese-Made Cars to USA!

As thousands of GM workers await word on more U.S. plant closures, reports are circulating that the company plans to import Chinese-made vehicles to the U.S., which, of course, have created a political problem for the automaker and the White House.

On Wednesday, May 13, Shanghai Securities News and other Chinese media reported that GM plans to begin exporting vehicles from China to the U.S. within two years and more than 50,000 by 2014.

This should not come as a surprise to the readers of this blog, because on February 9, 2009 the title of that day's blog was "General Motors to Invest $1 Billion in Brazil Operations -- Money to Come from U.S. Rescue Program."

U.S. Treasury to Borrow 46 Cents for Every Dollar Spent

The government will have to borrow nearly 50 cents for every dollar it spends this year, exploding the record federal deficit past $1.8 trillion under new White House estimates. Budget office figures released Monday would add $89 billion to the 2009 red ink - increasing it to more than four times last year's all-time high as the government hands out billions more than expected for people who have lost jobs and takes in less tax revenue from people and companies making less money.

The deficit for the 2010 budget year beginning in October will worsen by $87 billion to $1.3 trillion, the White House says. The deterioration reflects lower tax revenues and higher costs for bank failures, unemployment benefits and food stamps.

Is Higher Education the Reason for Obama's Blame America Rhetoric?

Dorthy Rabinowitz, who is a member of the Wall Street Journal's editorial board, writes in the "Wall Street Journal" on April 22, 2009 that higher education over the past 50 years has adopted a very liberal orientation within the professorial ranks.

A direct quote from her article is as follows: "None of this display during Mr. Obama's recent travels could have come as a surprise to legions of his supporters, nor would many of them be daunted by their new president's preoccupation with American's moral failures. Five decades of teaching in colleges and universities across the land, portraying the United States as a power mainly responsible for injustice and evil, whose military might was ever a danger to the world -- a nation built on the fruits of greed, rapacity and racism -- have had their effect. The products of this education find nothing strange in a president quick to focus on the theme of American moral failure."

For the complete article, click-on "Obama Blames America."

S&P 500 Weekly Update: Bearish Trend Still in Force

Note: Double-click inside the chart to enlarge.

Is Anyone Minding the Store at the Federal Reserve?

Some very simple questions with perfunctory responses by the Inspector General of the Federal Reserve System.

New York Federal Reserve President RESIGNS!

The "Wall Street Journal" reports in today's edition that the Federal Reserve Bank of New York's Chairman, Stephen Friedman, resigned amid a controversy about his dual roles as a director of the Fed bank and a director and shareholder of Goldman Sachs Group. Why is this important? Because the Federal Reserve Bank of New York is a policy-making body, and the Federal Reserve System is a primary banking system regulator. Once Goldman converted to a bank holding company, it fell under the Fed jurisdiction. Oh, that would be under the purview of Stephen Friedman.

According to Karl Kenninger over at the "Market Ticker," during that time, Mr. Friedman sat on Goldman's board and had a large holding in Goldman stock, which because of Goldman's new status as a bank holding company was a violation of Federal Reserve policy. The New York Fed asked for a waiver, which, after about 2½ months, the Fed granted. (No kidding) While it was weighing the request, Mr. Friedman bought 37,300 more Goldman shares in December of 2008. These shares have since risen $1.7 million in value. I believe what Mr. Friedman did was highly illegal, because it amounts to insider trading. Let's see if the SEC is going to prosecute him for insider trading. Don't hold your breath.

I just wonder how many top Fed and Treasury officials have a direct tie to Goldman Sachs, or, for that matter, to Wall Street?

GM Loses Another $6 billion

GM's financial woes continue as the automaker reported a $6 billion loss during the first three months of the year Thursday. The Wall Street Journal reports that "GM burned through $10.2 billion in the quarter as revenue plunged nearly 50%. As recently as a February 17 filing to the government, GM was projecting that it would burn through only $4.1 billion in cash in the period. This is just another sign GM is running out of options as it races to meet a June 1 restructuring deadline set by the Obama administration. The company is surviving on $15.4 billion in federal loans and has said it needs another $11.6 billion to stay afloat. The losses aren't expected to let up soon. GM will idle most its assembly plants this summer, further slashing revenue. The auto maker's revenue fell by $20 billion, or 47%, as sales fell around the world."

"GM Chief Executive Fritz Henderson, while hoping to avoid a bankruptcy filing, has acknowledged the scenario is increasingly likely. The company needs 90% of bondholders to sign off on a deal to exchange $27 billion in debt for 10% of the company's stock. The union also must agree to accept equity in exchange for at least half of the $20 billion GM owes into a retiree health-care trust."

Please let's just euthanize it. We, the American taxpayers, have already given GM $15.4 billion. I definitely believe that American taxpayers do not want to invest another $11.6 billion into this "black hole." Like Chrysler, billions were provided that just delayed the inevitable, bankruptcy. It looks like we are using this same model for GM. Pump billions of taxpayer dollars into GM, which it does not stand a chance to survive. In other words, just more money down the proverbial rat hole.

Let's look at some sobering statistics, especially if you are not a GM worker, that assumes GM will receive the additional $11.6 billion dollars. With these additional billions, the American taxpayers will have provided $27 billion to GM. GM currently has a workforce of approximately 50,000. This amounts to a staggering $540,000 for each GM worker! If we look at GM's legacy side, (approximately 432,000 retired persons and their spouses), this amounts to $62,500 for each one. I guess paying all those union dues are worth it after all. However, it should not be at the expense of the American taxpayers.

1934 Chicago Tribune Cartoon Asks–Planned Economy Or Planned Destruction?

Take a look at this cartoon published in the Chicago Tribune on April 21, 1934 titled, “PLANNED ECONOMY OR PLANNED DESTRUCTION?” We're so much wiser these days, aren't we?

Cash-for-Clunkers

Democrats and President Obama have agreed on "Cash-for-Clunkers Plan." Eligible drivers would receive a reimbursement voucher for the purchase of a new or used vehicle with a fuel economy rating that exceeds the CAFE target for that class of vehicle by at least 25 percent. The bill also requires that the voucher be used towards the purchase of a vehicle that has an MSRP of less than $45,000, is model year 2004 or later, and meets or exceeds federal emissions standards. Vouchers could also be redeemed for transit fares for participating local public transportation agencies.

Drivers, who apply for the program, must ensure that their vehicles turned in for scrapping match the following criteria:
• Vehicles must be in drivable condition;
• Be currently registered in the U.S.; and
• Have a when-new fuel economy rating of less than 18 miles per gallon (as reported by the original manufacturer for purposes of CAFE compliance).

The bill specifies that during the first year of the program, vouchers will be issued for the following amounts:
For traded-in vehicles that are model year 2002 and later, drivers would receive a voucher for:
1. The purchase of a new vehicle: $4,500
2. The purchase of a used vehicle: $3,000
3. Transit fare credit: $3,000
For traded-in vehicles that are model year 1999 – 2001, drivers would receive a voucher for:
1. The purchase of a new vehicle: $3,000
2. The purchase of a used vehicle: $2,000
3. Transit fare credit: $2,000
For traded-in vehicles that are model year 1998 and earlier, drivers would receive a voucher for:
1. The purchase of a new vehicle: $2,000
2. The purchase of a used vehicle: $1,500
3. Transit fare credit: $1,500

In each subsequent year (2010, 2011, and 2012), the model years would be advanced by one year. Vouchers would be eligible for redemption for up to two years after the date of issuance, and no individual would be eligible to obtain more than one voucher in any three-year period. Dealers and scrap recycling facilities would also be eligible for a payment of $50 per vehicle, or an alternative amount to be specified by the Department of Energy.

Therefore, if you have a 2003 Escalade that is worth $15,000 on the open market, the government will give you $4,500 for it. But if you have a 1998 Ford Expedition that is worth $3,500, the government will give you $2,000 for it.

Don't we live a great country. You have to love it. By the way, I have to sign-off and get to the junk yard before it closes. However, I will leave you with a "sound-bite" from the announcement about the "Cash for Clunkers" by Obama, Bernanke, and Geithner.

Chrysler Forecast Profit - 2012

The "Wall Street Journal" reports that Chrysler reported it lost nearly $17 billion last year but predicted it can return to profitability by 2012 if it can exit bankruptcy quickly and form an alliance with Fiat. Well now, let's break out the champagne and celebrate! Does anyone really believe this prognostication. Let's get real; but, then again, the current positive perception of "good times are here again" is much better than any real dose of economic reality. However, let's start the celebration with some "Three Dog Night."

S&P 500 Weekly Update

Note: To enlarge the chart, double-click inside of it.

Fairness

Our government (American Taxpayer) is spending $12 billion to save 54,000 Chrysler jobs, which is $22,000/job. With 600,000+ jobs a month being lost in the United States, why are these 54,000 jobs "more special" than those of the rest of the unemployed, who get a "fraction" of that amount in unemployment benefits?

UAW Prevail Over Main Street and Wall Street in Chrysler Deal

The following comments (My comments are in bold.) are excerpts from an excellent article by Andrew Bary in this week's "Barron's:

President Obama blamed Chrysler's bankruptcy on "speculators," but the real problem was that the government's plan gave too much to the UAW and not enough to creditors. That Mr. President is what killed the deal!

If the secured creditors holding $6.9 billion in claims had been offered anything close to what the administration wants to give the United Auto Workers, there would have been no bankruptcy filing by Chrysler.

In the bizarre pecking order offered by the administration, the unions, which are at the bottom of Chrysler's capital structure, would get nearly full recovery value for their $10.6 billion retiree health-care claims, while the secured creditors at the top of the hierarchy would receive about 30 cents on the dollar.

Credit that to politics and a likely desire by Obama to reward the powerful UAW. After all, who in America really cares about a group of deep-pocketed banks and investment firms holding the $6.9 billion of Chrysler debt? "I don't stand with them," as Obama said of the dissidents who derailed the deal.

Another surprising aspect, which is detrimental to Main Street (American Taxpayer) of the Obama proposal was the willingness of the Treasury to forgive a $4 billion loan to the company made in December in return for an 8% stake in the restructured auto maker. An interest that could be worth only 20 cents on the dollar assuming new Chrysler's equity is valued at $10 billion.

President Obama, meanwhile, asked little sacrifice of Chrysler's unions. The administration proposed giving them a $4.6 billion note yielding 9% due in 2022, and 55% of the equity in a restructured Chrysler. That could mean a nearly full recovery of their $10.6 billion claim.

Let's see if I understand what President Obama tried to do. He gives the UAW, which is a unsecured creditor, 100% on its claim of $10.6 billion. Then, he gives the American taxpayer, which does have a secured position in its claim of $4 billion, $.20 on the dollar. Finally, other secured creditors (401k investors, mutual fund investors, etc.), who have claims of $6.9 billion, were given $.30. In other words, the UAW was offered a "lush deal" even though its claim is junior to the claims of Chrysler's other major creditors, including the American taxpayer.

One more thought. If Chrysler couldn't figure out how to make efficient cars from their partnership with Daimler-Benz, are they now going to become viable through a partnership with the U.S. Federal Government (think U.S. Postal System and Amtrak) and Fiat, which has been on the verge of bankruptcy for the last decade? Really? GM paid $2 billion in penalties to Fiat in 2005 so as to not be forced to buy them. And Fiat gets 20% for no cash? Wow! Where can I buy the stock? I want a piece of this action. (LOL)

Chrysler Bankruptcy

Yesterday, Chrysler filed for Chapter 11 bankruptcy protection. This is how the Chrysler collapse should have been worked out last December, when the auto maker first went looking for taxpayer cash. Treasury could have saved the American taxpayer $4 billion that we lent the car maker at that time, to which we can now add another $8 billion that President Obama promised yesterday to keep the company going. Now, in all fairness, Mr. Bush should never have given the car makers a "dime" in December.

"In announcing Chrysler's bankruptcy, it was especially rich for President Obama to blast the "creditors" for seeking "an unjustified taxpayer-funded bailout" while offering the UAW a 55% majority stake in Chrysler. He also praised the large banks, Citibank, J.P. Morgan Chase, Morgan Stanley and Goldman Sachs, that hold most of the Chrysler debt (70%) and supported the government plan. But of course Citibank and the other big banks are also recipients of billions of dollars in taxpayer cash and have a strong interest in playing nice with their creditor, Uncle Sam Obama."

"The Chrysler "creditors" at least represent teachers, pensioners and retirees, among others. The Administration is advancing its own social and political agenda through its ever-deeper entanglement with Chrysler and General Motors. That explains why the government is giving 55% of the new Chrysler to the UAW's retiree-benefit trust, a junior creditor, while those ahead of the trust in line get a mere 30 cents on the dollar." Priceless, isn't it? Here you have a President that wants to completely ignore contract law.

I remember President Obama saying that bankruptcy was never a "viable option" for any of the domestic car makers. What happen, President Obama? Why then, did we sink billions and billions of tax payers dollars into a firm that every financial analyst knew could not survive outside of a structured bankruptcy? Questions I don't see anyone in the media asking.

The federal bankruptcy judge assigned to the Chrysler case is used to dealing with complicated high-profile cases. The judge, Arthur J. Gonzalez, oversaw the reorganization of Enron in 2001, which set a record by filing for bankruptcy with $63 billion in assets, and WorldCom in 2002, which topped Enron with $107 billion assets when it filed.

Therefore, bankruptcy, not the Treasury, is the fairest venue for all parties. Come the end of May, we will undoubtedly see GM seating along side of Chrysler before Judge Gonzales.

Source: Wall Street Journal (Opinion Section), May 1, 2009