AT first I thought that the news was terrible. But then I analyzed it from another point of view. I refer to the “bond issue” and the Obama administration. A commercial bond is a contract between a corporation and an investor. The bond holder has a legal---and absolute---claim to the assets of the company. Even if the company can not pay others bond holder gets paid off first. He has an unqualified legal claim, so that the company MUST sell off what it owns (things like buildings, chairs, etc) to the bond holders before it tries to pay off its “regular” debts.
The Chrysler arrangement reversed this. Somehow two courts, including the Supreme Court, said that this legal contract, honored and upheld by courts for over 200 years, is now, well, “inoperative.” This IS the end of the world. Legal contracts can no longer be enforced in courts, if they do not please Bam-Bam. It is like Tony Soprano has taken over the country. There is not even the hint of real legality in this matter. And this is why I saw it as so bad… at first.
Now consider this. What can people do with their money, after the government takes its share? Unless they hide it in the back yard, they can only can either invest it or spend it. Now, because of the rulings, investment contracts are not protected by law. People would now be idiots to buy bonds. So, especially as they know that inflation is coming, they are going to spend their money. And this is what the Bam-Bam stimulus is intended to achieve: namely lots and lots of spending.
Of course such a demand based stimulus will not work. However, at least Bam-Bam is being consistent in his policies. But then so is Tony Soprano.
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