US stole Chrysler: Are we in Russia?

Obama’s actions will have a twofold impact:

First -- and this is certain -- they impaired auto companies’ ability to borrow from the fixed-income market for at least a generation, and that's regardless of whether they have secured collateral.
A fixed-income investor, when pricing a security, makes certain assumptions of recovery based on the collateral and its place in the capital structure in the event of bankruptcy. The better the collateral and the closer it is to the front of the capital structure, the less money they stand to lose, and thus the lower the interest rate they expect to receive. In the case of Chrysler, loan holders expected to recover around 70-80 cents on the dollar if the letter of law was followed. After the company was given away to UAW, however, that number dropped to 29 cents.
Would you buy an auto company’s bonds in your retirement account if you knew that this industry often flirts with death, the rule of law is suspended and empathetic workers take your money if/when things go wrong?

The second impact is more significant to the U.S. economy, but will depend on future government actions. If the empathetic distribution of wealth stops with the auto industry, investors may look at it as a one-off deal, specific to the dysfunctional industry. But if Obama repeats this even once outside of the auto industry -- and he’ll have plenty of chances as we are in a prolonged recession -- the political risk of the U.S. will increase. Lenders, be it bond or loan holders, will lower recovery assumptions for even very secured assets, and the risk premium and thus borrowing costs will rise for all companies.