Rule of law

I started trying to sleep half an hour ago, but couldn't because I was thinking of this post, so here it is.

Recently, something I was reading argued that high marginal tax rates were justified because one of the things that allowed generation of extreme wealth was a stable governmental system, rule of law, and other benefits of stability provided by the government. (No, it wasn't in an other LJ thread. At least I don't think so. I think it was an editorial in the WSJ.)

This is part of why the Chrysler bankruptcy settlement bothers Jon & me so much. It upsets rule of law with governmental intervention for political reasons.

For those unfamiliar with the terms, here's a metaphor -- Imagine you buy a house. But you can't afford the purchase price of the house all at once, so you take out a loan from the bank to buy the house, using the house as collateral. The house itself "secures" your loan. If you don't make your payments, the bank gets your house. But that's all they get. If you don't pay your electricity bill while you live in your house, the meter reader doesn't get to take your house away. The electric company may cut off your power, but the electric company generally never gets to own your house.

You, the homeowner, are like Chrysler in this bankruptcy. You stop making payments on your house. The bank should get your house, sell your house at market value (you don't get to be an owner anymore) and then pay off any extra money beyond your original home loan to other lien holders. If there's anything leftover after that, you get it to pay off other debts you owe and start over. Your credit rating is horrible, but the people/institutions to whom you are indebted know what to expect.

The Chrysler bankruptcy didn't go like this however. The government stepped in and said, wait a second, the meter reader is important. They *work* at your house. The meter reader should get to own and live in your house if you can't make your payments to the bank. The meter reader is more important to the country than the bank. The meter reader should become a 55% owner in the house, and share the other value of the house with the mail carrier, garbage collector, and last of all the bank. The meter reader should get all of the money due the electric company. The bank get only one third of the money you borrowed to buy the house with. Now, you, who don't get the house and don't have any ownership of it whatsoever after you vacate, you should have to chip in an extra $60 to bring the front porch light up to code because the meter reader is going to live there.

Rule of law. Turned on it's ear. Who is the bank going to be willing to loan to next time? The "bank" in this case, is the senior secured bondholders. This is why former communist countries have so much trouble attracting foreign investment. When things go badly, they typically change who gets what to favor a particular class, which is not the foreign investors.

This worries us greatly.

--Beth

Bakeries in NH, letter writing campaign

If you have relatives in NH you might be interested in this letter-writing campaign. From ricevermicelli:

Basically, the story is that a woman who was in the country legally, working legally, and operating a business that was an important part of her local economy, is now stranded in France because her application for a renewed visa was denied. As a result, the bakery she co-owns in New Hampshire will probably close, to the detriment of the community. In a big city, some culinary excrescence like Panera would fill the spot. In Colebrook, NH the storefront will probably sit empty indefinitely.

It was an E2 visa. For those, you apparently either have to make "a substantial profit" or be "vital to the local economy" which it apparently is, for me to have heard about it through friends-of-friends even though it's a small town. The full story is here if you'd like all the links to go write a letter to her senator.

I don't know how much a Californian writing an e-mail would help, but I think there are some people on my friends list with relatives in the area.
--Beth

Edit 1: Why was she in France if she was worried about her visa being renewed? Apparently it's required, "He explained that until a few years ago, those in this country on an E2 Visa were not required to return to their home countries to get their Visas renewed. He explained that when the passport system was updated a few years ago, the embassies in the United Stated did not have the funds to upgrade their systems, and that is why so many E2 Visas are handled through the American Embassy in Paris.
However, as the volume of those looking for an E2 Visa increased, that embassy has not been able to keep up with demand and, once an application has been denied—such as Verlaine Daeron’s—it is highly unlikely that she will be returning to the U.S."


Edit 2: Ok, I clicked through the various links and sent an e-mail:

Legal Immigration

Hi,

I'm writing to ask you to help with the case of Verlaine Daöron, a french bakery owner in Colebrook, NH, who is currently stranded in France because her E2 Visa renewal application was denied. I am from California, but my east coast friends let me know about this bakery because they believe it is vital to the local economy.

Thank you,
--Beth Leonard
[contact information]