Recently we were uplifted when the president informed Chrysler’s secured creditors that they had agreed to donate their ownership stake in the company to the United Auto Workers.Did this in fact happen? Well, no, not exactly. Setting aside the elision of secured credit and any putative ownership stake (the guys who got short shrift owned Chrysler debt, not equity -- bonds, not shares), there's the issue of what the UAW gave up: 50% of its retirees' health care fund in exchange for their equity stake in the company. Nobody gave them dick. They bought what they own. With their money.
Meanwhile, guys at hedge funds like Schultze Asset Management and Stairway Capital Management, who wouldn't agree to terms reducing their take in the Chrysler meltdown, put their interests ahead of what is best for the company and for the country. One line of reasoning was that the company was worth more as scrap than they'd get from the settlement they were offered. So let tens of thousands of Americans lose their jobs and hold a Chrysler garage sale. After it's all about maximizing investor returns, right?
Bloomberg reported on May 6:
The Chrysler Non-TARP Lenders are as follows, according to the filing: Schultze Master Fund Ltd. of Purchase, New York; Arrow Distressed Securities Fund at the same Purchase address; Schultze Apex Master Fund, at the same address; Uniondale, New York-based Stairway Capital Management II L.P; Group G Partners LP, based in New York; GGCP Sequoia L.P., at the same New York address; Oppenheimer Senior Floating Rate Fund, in New York; Oppenheimer Master Loan Fund LLC, at the same New York address; and Foxhill Opportunity Master Fund LP, based in Princeton, New Jersey.Note that one of their number identifies itself as a "distressed securities fund." They specialize in risky debt. If they bought Chrysler bonds at face value, they plain aren't doing their job. Folks like that buy stuff at a discount. If any other members of that august group paid more than 50 cents on the dollar for the debt they held, I'd be mighty surprised. And yet they refused to settle for less. (The Feds offered 28 cents on the dollar for securities trading between 27 and 28 cents on the buck at the time of the offer, according to Bloomberg, that hotbed of Socialist, Stalinist, Batshit-Maoist ideology)
But I digress. The topic is how abysmally dumb David Brooks is. Consider this from his -- erm -- column today:
These events have heralded a new era of partnership between the White House and private companies, one that calls to mind the wonderful partnership Germany formed with France and the Low Countries at the start of World War II.And this:
During the press conference with health care executives, I don’t even think Obama meant to give away $2 trillion of their money. He was going to give away just $750 billion, but he got carried away by the Era of Responsibility. “The stakeholders behind me have promised to cut costs by nearly 2 percent a year,” the president riffed. (The executives’ lips were like dead worms stretched across mirthless smiles. Their cheeks were like hardened clumps of concrete.) “They have agreed to support the administration’s reform package.” (Coronaries, epileptic seizures all around.) “They have agreed to donate their kidneys in my office right after this ceremony.” (The executives were now flopping about the stage, like a 3-D version of the Heimlich poster.)Har har! German aggression! Donate their kidneys! What a wag!
You know what else is like hardened lumps of concrete? Both hemispheres of David Brooks' brain. In 2004, US spending on health care totaled over 15% of GDP. Think it's gone down since then? Big Pharma is doing just fine, even without two percent of its take. This is from Paul Krugman's blog last year:
Everybody knows that the US spends much more on health care than anyone else, without getting better results. Everyone also knows that health spending has outpaced GDP growth everywhere, thanks to medical progress. What I didn’t realize was just how clearly the evidence shows that the rising trend is steepest in the US. We have the biggest increase as well as the highest level.He was responding to data that showed health care spending's share of GDP jumping from 7% in 1970 to 15.3% in 2004. During the same period, costs in Canada rose from 7% to almost 10%. Last year, the GDP of the US was about $14 trillion; 15.3% of that comes in at $1.989 trillion. Now Big Pharma isn't the whole pie, but when it comes to health care bucks, they certainly get their share. And that share is growing like a tumor.
And yet (back to my David Brooks is stupid theme) the Times's minister of dumbassery speaks of "enhanced negotiating techniques," disembowelment, shackles, Nazism, North Korea's totalitarian state, and Cossacks. The metaphors of violence multiply and surround his (as it were) argument. Eventually they become his entire case.
Brooks can use metaphors of violent coercion. That is what he has to say on the subject of economic policy.
Hey Ho Let's go! Shoot 'em in the back now.