We were dismayed to see that the small group of Chrysler secured debt holders have given up their battle to gain a better deal from the bankruptcy court in the Chrysler restructuring due to pressure from Pres. Obama and his administration. This news came at the same time President Hugo Chavez of Venezuela acted under a newlyenacted law giving him the ability to seize the assets of oilfield service companies working in Venezuela for PdVSA, the stateowned oil company, who were determined to have taken unfair advantage of the state-owned company during the industry boom of 2007 and 2008. These are many of the same companies that PdVSA has not been paying because it doesn't have the money for the invoices.
Upon reading these two stories in the Saturday morning edition of the Calgary Herald, we immediately thought about the picture of the two presidents shaking hands and smiling at the summit meeting of the leaders of the hemisphere's democratic leaders last month. There was substantial outrage voiced in many quarters about the significance of the handshake and the willingness of Pres. Obama to engage Pres. Chavez. Maybe there was a greater kinship between the leader of the Free World and the socialist leader of Venezuela than any of us thought at that time.
We were extremely disappointed that Pres. Obama used his "bully pulpit" to attack the secured debt holders in Chrysler who were exercising their fiduciary duty to seek the maximum return for their investment through the well-established legal workings of the bankruptcy court structure. We now must consider that the United States has started down the slippery-slope in which the "ends justify the means," which violates the rule of law foundation of our country. As a result of this development, we anticipate that next year in the various business and credit risk assessments of countries, the United States will rank much lower than at any time in the past.
Energy industry executives seriously must consider the proposition unveiled in the Obama budget that the energy industry is to be a "piggy bank" to help fund the President's grand social vision. Higher taxes, greater restrictions on access to federal lands for oil and gas exploration and political attacks on the morality of "dirty fuel" executives will color the next three and half years. I guess a religious person might describe the new environment as the "lean years" that are supposed to follow the "fat years." It is one thing to lose some fat, but when an industry loses muscle and bone, the risks are magnified immensely.
G. Allen Brooks works as the Managing Director at PPHB LP. Reprinted with permission of PPHB.
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