President Obama seems intent on reducing the US to the status of a third world nation. For a politician who lauds ‘sustainability,’ Obama’s spending plans are the zenith of unsustainable excess. Not content to simply spend the US to bankruptcy, Obama is also bent on destroying the capitalist system that ultimately feeds Washington’s greed. The Obama currency is power and influence, and if money or the rule of law is in conflict, the Constitution is pushed out of the way. The banks’ stress tests, the California budget, and the Chrysler bankruptcy are the latest examples of Obama’s lack of respect for limited and enumerated powers.

As has been widely reported, many banks like Bank of America wish to repay their TARP loans as soon as possible. This is not because the TARP rates are unfavorable, but because every second Washington is in their pocket, politicians devise new ways to coerce the banks to do their bidding. Washington will micro-manage the bank’s lending policies to favor special interests. Washington will dictate hiring policies and force out top performing officers. Washington will direct how banks invest their capital reserves.

Naturally, Obama is not having any of this loan repayment nonsense. The banks are now his tool to affect his policies, and they will remain so. The stress test is little more than an avenue to prevent banks from repaying the government. Barring that, the Obama administration has also tied more traditional bank funding sources to the TARP funds – if they repay the TARP loans, other funding will be withheld as a punishment. Considering how unpopular the bank bailouts have become, why wouldn’t Obama wish for the immediate repayment of the funds? The cynical political calculus is that those who oppose TARP are a broad swath of the US, while the political power over the banks can be targeted at swing states to win elections. Left wing politics is always about punishing many to benefit few.

Similarly, the Obama administration has blocked California from making even the most modest of spending cuts. Despite California’s basket case public spending, Obama has blocked any cuts in their overly generous union pay scales. Moderate? Pragmatic? Unifying? No. Obama’s actions are a divisive partisan sop to the public unions that fund the Democrat party. Again, Obama punishes all of California to prop up his special interests.

TARP banks and California unions are ugly special interest politics, but they are only new in that their scale is enough to bankrupt a nation or a state. Anyone who thought a Chicago politician would play it clean is probably still resting on an Obama cloud nine. Obama’s most recent betrayal of the people, the Chrysler looting, takes government thievery into uncharted territory.

The US has a well established system to reorganize a company that cannot pay its obligations: Chapter 11 bankruptcy. Chrysler, and also GM, are ideal candidates for such a reorganization. Chapter 11 is nothing more than the orderly transference of ownership from existing shareholders to debt holders. The system provides for the distribution of the company’s new shares to debt holders in a hierarchy defined in advance by law. Such a system of laws allows investors to clearly understand the risks they are taking. Secured lenders – those at the top of the hierarchy – feel safer because even in the event of bankruptcy, they will still be repaid. That is unless the government pokes its nose into the case.

Obama has pressured several of Chrysler’s secured lenders to accept far less compensation than they are due. Several mutual funds and hedge funds bravely refused to accept the Obama deal, knowing they would fare far better in court. After all, the courts are impartial and do not bend to political pressure. How naive, the poor fools. They clearly forgot that Wall Street is public enemy number one. The Obama Administration made it clear that they would not prosper by pursuing their lawful rights in court. In addition to having the President bash them on TV as killing off the auto industry, this group was strong-armed into submission by an administration that clearly knows how to coerce behind the scenes. Of course the beneficiary of this looting is the UAW.

Obama has gone far beyond simply stealing from a few mutual funds with this thugery, he has broken the legal system that enables investment. He has stabbed at the heart of the US system of capitalism. The new proclamation is that a contract is no longer valid whenever a capricious President sees political opportunity in upending it. That is how business is done in Haiti and Zimbabwe, and now the US as well. The bedrock of investments in private enterprises is the surety of property rights. Such a system generates more investment and lending at lower rates. All of that is now in jeopardy thanks to a President that either doesn’t understand or disdains capitalism. Such niceties as centuries of property rights are of no concern to Obama when there is an opportunity to grace the UAW with unpopular people’s money.