Auto Bailout Blues: Spin, Lies and Layoffs

The madness of the approach adopted by the Johnson and Nixon administrations to war in Vietnam was summed up by the American major who said after the destruction of the Vietnamese village of Ben Tre: "It became necessary to destroy the village in order to save it."

The madness of the approach adopted by the Bush and Obama administrations to the renewal of the American auto industry has been summed up by the Treasury Department's latest statement on the "restructurings" of the Chrysler and General Motors automotive companies -- which are shaping up as plans for factory closings, mass layoffs and the shuttering of hundreds of car dealerships in communities across the country: "The Administration's commitment to this industry has given both companies a new lease on life."

It may be true that the tens of billions in federal tax dollars that are being pumped into Chrysler and General Motors will save the names of these companies. But the auto-industry "restructuring" is not saving auto plants that have been targeted for closing, tens of thousands of auto workers who face layoffs, auto dealers who are being "consolidated" out of business and perhaps 100,000 service and repair employees who are soon to be jobless.

This "new lease on life" looks like the most wrongheaded expenditure of federal dollars since, well, the bank bailout of last fall -- which was supposed to loosen up credit but instead allowed wealthy executives to paper over their personal losses with taxpayer dollars.

There is no doubt that the Obama administration should aid this essential industry. A federal government that can bail out Wall Street should be helping auto dealerships on Main Street make it through a dramatic downturn in he economy that is devasting the global auto industry -- as well as just about every other industry.

But "help" that pays Chrysler to shutter factories in Ohio, Wisconsin, Missouri, and Michigan and move work to Mexico, that pays General Motors to shutter factories in locations across the country in order to move the work to China, that pays Chrysler and GM to drop roughly 1,900 dealerships, is not going to get the American middle class through this downturn.

The dealership closings, which were announced this week, will be especially tough on minority owners and, according to the dealer's association, could cost as many as 100,000 jobs nationwide.

The factory closings will displace tens of thousands of workers and rip primary employers out of communities across the Great Lakes states.

What is especially unsettling is the mounting evidence that the Obama administration and the car companies are peddling spin -- and, critics argue, outright deception -- in order to promote the fantasy that what's playing out will, as the Treasury Department suggests, be "a restructuring that results in stronger car companies -– supported by efficient and effective dealer networks – (that) will not only provide more stability and certainty for current employees but the prospect for future employment growth."

In fact, the plant closings and dealership closings -- coupled with the ramping up of Chrysler and GM production outside the U.S. and the radical consolidation of car sales and service -- eliminates stability and certainty for tens of thousands of current employees and reduces the prospect for future employment growth in this country.

How is this process advancing? The Cleveland Plain Dealer's Stephen Koff has produced a detailed examination that suggests an unsettling answer.

Reviewing the communications with members of Congress that took place just before the announcement by Chrysler that it would close some of its most productive U.S. plants as part of the "restructuring," Koff writes:

Were Congress members duped? If so, by whom and why?

The short answers appear to be yes, by both Chrysler and the White House.

Koff's report and related accounts led the Plain Dealer to editorialize:

No one in Northeast Ohio -- or anyplace else that once thrived along with the American auto industry -- is naive enough to think that the changes needed to save that industry won't hurt workers or communities. The truth is especially grim when it comes to Chrysler, always the weakest of Detroit's once-Big Three.

And yet the deception surrounding the fate of Chrysler's Twinsburg stamping plant and factories in four other cities is unconscionable -- a slap at Chrysler's employees, their hometowns and the taxpayers, who have ponied up billions to keep the company alive.

Ohio Congressman Steve LaTourette says he and other members of Congress were briefed by top administration officials prior to the president's national address about the future of Chrysler. "Members of Congress on the call were assured that there would be no permanent plant closings... We were also assured that no jobs would be lost," says LaTourette, a Republican.

Democrat Dennis Kucinich, another Ohio congressman who was briefed, told the Plain Dealer he "is struggling even to understand why the administration would tell him and others something that wasn't true." Says Kucinich: "To me, it really becomes a question of credibility."

The question of credibility remains unsettled.

An auto industry "bailout" that shutters productive factories and dealerships, lays off tens of thousands of auto workers and perhaps 100,000 dealer employees, is not change that we can believe in. The Obama administration is headed in the wrong direction on this one.

The president needs to change course.

Instead of spending billions to steer America toward fewer jobs, fewer factories and fewer dealerships, the Obama administration should stop spinning and start investing in the workers, the small businesses and the communities that have always been the heart and soul of America's auto industry.

Comments (65)

1. It's funny that you didn't see this coming. Of course they were going to close down plants and dealerships, how else do you expect the company to save itself? It can't keep making cars that aren't being sold. This post is shortsighted for one because once these companies are solvent again they will reinvest, on top of that if the companies went bankrupt, which they were sure to be if they didn't start shutting down unneeded services, it would be more than 100,000 employees getting tossed. So you should count your blessing that it isn't ALL of these places being shut down.

   Posted by Cccomfo1 at 05/16/2009 @ 6:20pm

2. Posted by Cccomfo1 at 05/16/2009 @ 6:20pm

   Exactly. Few people now can afford to buy a car, and those that can likely already have a new one. If they really wanted to save all these plants and jobs, the government should have had them retooled to produce equipment for clean and renewable energy, purchased it, and had it installed to start replacing coal/nuclear plants.

   Posted by zmann at 05/16/2009 @ 6:32pm

3. Exactly. Few people now can afford to buy a car, and those that can likely already have a new one. If they really wanted to save all these plants and jobs, the government should have had them retooled to produce equipment for clean and renewable energy, purchased it, and had it installed to start replacing coal/nuclear plants.

   Posted by zmann at 05/16/2009 @ 6:32pm

   Coulda done that, I think it might have cost more thought to retrain all the employees on new equipment, retool the plants and in the end all dealerships would still be shuttered. GM could make money selling the factories for that purpose though.

   Posted by Cccomfo1 at 05/16/2009 @ 7:25pm

4. Posted by Cccomfo1 at 05/16/2009 @ 7:25pm

   Ultimately, what's the greater cost to the economy? Spending more on new training and equipment, or having tens of thousands (or more) out of work for at least several months? I suppose this wouldn't help the people at dealerships or auto suppliers at all...but better than the current plan, for sure.

   Posted by zmann at 05/16/2009 @ 7:29pm

5. Posted by Cccomfo1 at 05/16/2009 @ 7:25pm

   Ultimately, what's the greater cost to the economy? Spending more on new training and equipment, or having tens of thousands (or more) out of work for at least several months? I suppose this wouldn't help the people at dealerships or auto suppliers at all...but better than the current plan, for sure.

   Posted by zmann at 05/16/2009 @ 7:29pm

   Maybe, but we don't know what the ultimate cost would be. That's the problem. We can guess but I don't think we would come close.

   Posted by Cccomfo1 at 05/16/2009 @ 8:42pm

6. The one thing that we can be certain about with Obama at this point in the context of domestic economic issues is that he will always either directly serve the interests of the richest Americans, or will capitulate to them if push comes to shove.

   President Obama couldn't even force his own party to pass his credit card rate bill, which would have somewhat alleviates the excruciating rates that the banks are getting away with gouging out of people right now. I thought of that today as I paid off the monthly balance on a card with 32% APR. That bank (Chase) is essentially getting away with unequivocal loan sharking and intolerable levels of usury. President Obama could have forced his own party to pass the bill, but did not.

   Just as he will not fight to protect the interests or well-being of people who make cars for a living, as opposed to the people who drive entire car companies into the ground for a living, whom he happily protects.

   Posted by syfriendly at 05/16/2009 @ 9:32pm

7. NICHOLS: An auto industry "bailout".....is not change that we can believe in. The Obama administration is headed in the wrong direction on this one.

   On some pretty high-profile `stuff', it looks like Magic is doing the `safe' thing, by following in the lead of Bush, refreshing, no?

   HOPE AND CHANGE forever!

   Posted by Happy at 05/16/2009 @ 9:33pm

8. Who cares if the domestic auto producers go under. We've still got the FIRE industries. You might say they're the "driving force" of our economy.

   Those white-collar people buy a lot of foreign & import cars . Maybe blue-collar theme parks can be started, huh? This gives upward mobility a whole new meaning.

   Posted by Sorelish at 05/16/2009 @ 10:34pm

9. Posted by syfriendly at 05/16/2009 @ 9:32pm

   I fricking hate Chase to hell. They treated my mother horribly with our mortgage when she became disabled. And after acquiring WaMu, they ignored a deal I made with them to lower my credit card interest and jacked it up even further. Bastards.

   Posted by zmann at 05/16/2009 @ 10:42pm

10. Nichols has his heart in the right place. And he's like a echo, losing energy as his pleas bounce about in the same inevitable, endless fake dialectic. The Nation Blog house whine, the tinny tannins, cartoonist versions of capitalism and socialism skulking about - it's left the station, it's wrinkled and not fun to play with, it's like the Spanish dictator Francisco Franco's endless coma... still so very much not vital.

    Anyway, we all keep pretending we're not half way sucking the great collective teet. That there's any other way to run a massive enterprise of ball scratching hominids which prefers to the self-reference of 'a sovereign country'. Every last sovereign country with anything approximating free speech, a middle class and good coffee ends up with a huge swath of the citizenry in some form or another dependent on well, itself. Like ours, the poor they say don't pay Federal tax, but they pay loads of their so called lives in "work" in the service industry propping up massive international trans-sovereign country power supersystems, operations like McDonalds/Walmart, or driving semi's 16 hour days and never being home, or being unemployed, underemployed, uninsured, paying tax on their smokes and gas... whether this is squeezed from an ostensibly 'real' income or extracted back from some government hand out, it's the same corporatocracy, where 90% hover between propping up the elites or sponging or smashing their heads in perpetuity on yee olde glass ceiling.

    Posted by winyahn at 05/17/2009 @ 12:14am

11. I voted for Obama as an experiment, I wanted to see if my worse fears were valid, yes, he confirms that we are living in a corporate state. We have two political parties, we go through the charade of elections, but in fact corporate money buys and sells politicians.

    "Hope we can believe in," no, hope for dopes.

    nhojjohn

    Posted by Nhoj_John at 05/17/2009 @ 06:05am

12. Mr Nichols has created the false choice.

    The real choice was "smaller GM with fewer workers" or...

    "no GM".

    Posted by Mask at 05/17/2009 @ 07:03am

13. I'm glad that Chrysler was allowed to go bankrupt and that GM is forced by reality to break up.

    Both the companies and the unions were monopolistic in their orientation.

    I personally urge individuals to drive LESS and buy LESS vehicles, which conflicts with the desire of GM, Chrysler, Ford, Toyota, Honda, Volkswagen, all of them.

    One consequence of more people driving incrementally older cars rather than new is that MORE repair people are employed, and dispersed throughout the country (and world), rather than concentrated in Ohio, Indiana, Michigan.

    I think that 1/4 of the current volume of cars made in the world, would be the appopriate level of car manufacture in the world, and if anything that number is on the high side.

    Posted by Richard Witty at 05/17/2009 @ 07:23am

14. Exactly. Few people now can afford to buy a car, and those that can likely already have a new one. If they really wanted to save all these plants and jobs, the government should have had them retooled to produce equipment for clean and renewable energy, purchased it, and had it installed to start replacing coal/nuclear plants.

    Posted by zmann at 05/16/2009 @ 6:32pm

    Unemployment is still below 10%, but in you imagination 95% of the country is getting hit with a cane whenever they ask the head of the orphanage for another bowl of gruel.

    The probelm isn't retooling. Do you guys remember what happend to the price of gas? It was $2 then it was $4 and then in was $2 agian. The exact same thing has happend to the price of auto labor. In the '80s, when the average car lasted 75,000 miles, the price/value of labor was $4. Now that the average car lasts 150,000 miles the price/value of labor is back to $2, but they are still being paid $4.

    The answer isn't a perpetual subsidy of $2. The answer is to allow wages to readjust to the economic realities of today.

    Posted by Darin_the_Big_Fat_Troll at 05/17/2009 @ 08:00am

15. There is a great deal wrong with the auto bailout especially since the people who caused it still get away with the hundreds of millions in bonuses they got will slowly killing the companies.

    As pointed out on the blog post So Where Are The Jobs Going? on www.ProuldlyMadeInAmerica.com, GM is planning to move more jobs overseas. At first the U.S. jobs will be replaced by jobs moved here from Canada. Once the Canadian jobs run out will GM stop exporting jobs.

    Posted by ReedUSA at 05/17/2009 @ 08:51am

16. Mr. Nichols, how can you POSSIBLY blame the Bush administration for ANYTHING to do with the downfall of the auto companies?

    While it (and esp. Henry Paulson) was clearly involved with the bank bailouts, Bush went out of his way to delay acting on the auto debacle, since action there was not as urgent as was the case with the banks. Further, the only thing that Bush DID do (grant a temporary loan to GM and Chrysler) was CLEARLY just a band-aid, as he knew the incoming administration would have to approach any assistance to these companies on many angles, and he knew that the little time left he had in office would not allow his administration enough time to work out the intricacies of the many problems confronting these companies.

    What is going on with these car companies is simply unbelievable, starting with the way the bondholders were thrown under the bus at the expense of the unions. And the fact that taxpayers are involved at all is just beyond belief.

    It will be interesting to see where these companies are a year from now.

    Posted by Missy37 at 05/17/2009 @ 09:47am

17. The U.S. government pursues a uniquely backward strategy in its approach to globalization that is unlike every other advanced industrial economy. Other nations impose national obligations on their producers and multinational corporations, demanding that companies retain their highest value-added production and best-paying jobs in the home country. The United States gives its multinational a free ride - even assisting them in dispersing production and caital to low-wage economies whilt keeping open the U.S. market for their imports. Our own companies game this system endlessly -.- producing cheaply abroad, then selling the "US brands" back into the home market. (William Grieder - metrony) . ..Globalization is a failure that is never going to work - it will drive wages and benefits down, destroying the moral of the work force - committing suicide. IT WILL NEVER WORK BECAUSE ALL YOU HAVE TO DO IS LOOK AT WASHINGTON -.- one small body of one government can't get together -.- and you expect the whole world to get together for Globalization ?.?.? ... If you save your pennies and your dimes you will be able to laugh at their crimes.....

    Posted by bbednarz at 05/17/2009 @ 10:25am

18. Posted by Darin_the_Big_Fat_Troll at 05/17/2009 @ 08:00am

    So you are arguing for wages to be lowered? Uh, just about everything except for housing is more expensive than ever. Electricity, food, healthcare, insurance, college, etc. The economic realities of today are that most people who don't work with money (financial sector) or make the decisions for large companies can't afford jack, and in real terms make less money than they used to. What needs to happen is a reversal of the wealth concentration over the last few decades. Unless you like living in a 'banana republic'.

    Posted by zmann at 05/17/2009 @ 10:30am

19. Posted by Darin_the_Big_Fat_Troll at 05/17/2009 @ 08:00am

    Darrin, stipulating to your claims of the facts, sprinkling in a little consumer protection on the mortgage and credit card fronts, and a dollop of more modernized health care delivery, and ditto for public education (say class size limits and firing of shitty teachers) we could reach a deal here - and I'll toss in only modest teacher salary hikes.

    If workers could make long lasting, high tech, cool rides - and afford a piece of the middle class pie, a culture of ownership house / good schools for the kids / solid health care... we could get on with dismantling of the toxic legacy of union's hyperinflated demands.

    THIS should at least be the frame for this sort of discussion.

    Posted by winyahn at 05/17/2009 @ 11:07am

20. Typical liberal hogwash. It has been apparent from day one that General Motors is nothing more than another Marxist excuse to destroy the American family.

    Posted by antisocialist at 05/17/2009 @ 4:20pm

    i couldn't agree more.

    Posted by frosty zoom at 05/17/2009 @ 11:24am

21. GM Global Marxism:

    Rebranding the Impala as the Lemming! Comes in your choice of 32 different shades of red. Each gas hog according to it's socialist sucking sponge's needs?

    Posted by winyahn at 05/17/2009 @ 11:35am

22. What is going on here, big-picture-wise, is the ratcheting down of American living standards. Of course, we had been promised by free-market conservatives and economic "experts" that this would never happen under globalization, because Americans would all be made richer due to our unique "skills". Nevertheless, the fact of the matter is that American workers cannot compete one-on-one with foreign workers in low-wage countries, when the only thing that differentiates us from them is our higher hourly wage. It turns out that in a globalized world where capital and technology can flow freely from country to country, there are no "skills" or "education" advantages for Americans. As such, the natural result is the migration of high value American jobs to low-wage countries. Therefore, the real lesson to learn from the Chrysler bankruptcy and the GM meltdown is that any companies who are unable to play by the new rules (due to legacy contracts negotiated at a time when the game was played by different rules) will not remain in business for long in their current form. Highly-paid union jobs in this country are disappearing rapidly, never to return. There is nothing on the horizon to replace them that will pay comparable wages. Conservatives cheer this result thinking they will be made richer, but, really, this means that American living standards will continue to fall until we are more "competitive" with the rest of world (which, if you haven't noticed, substantially outnumber us and is quite poor on average). This means that most Americans, comparatively, will be much poorer than they are now, after this game fully plays itself out. I say good luck to all of you when you wish to buy a new car in ten years. Chances are, you won't be able to afford one.

    Posted by wmkostak at 05/17/2009 @ 11:51am

23. President Obama could have forced his own party to pass the bill, but did not.

    forced? this is not the politbureau. only when congress moves in lockstep/goosestep with the pres, as congress did under Bush, is such a thing possible.

    Posted by emile duBois at 05/17/2009 @ 11:52am

24. Posted by wmkostak at 05/17/2009 @ 11:51am | ignore this person | warn this person

    Karl Marx pointed this out long ago. for capitalism to survive it needs to find ever cheaper labor and ever cheaper raw materials.

    Posted by emile duBois at 05/17/2009 @ 11:54am

25. Each gas hog according to it's socialist sucking sponge's needs?

    not it's, darling, its

    remember the commercial: not ain't darling, isn't

    Posted by emile duBois at 05/17/2009 @ 11:57am

26. Chances are, you won't be able to afford one. Posted by wmkostak at 05/17/2009 @ 11:51am | ignore this person | warn this person

    as one who lives in a traffic choked city, I can say, good.

    Posted by emile duBois at 05/17/2009 @ 1:19pm

27. If ones interrogatory does not include Summers, then it lacks granularity.

    If ones analysis does not include Summers, it misses the point.

    Posted by V at 05/17/2009 @ 3:29pm

28. 9a<>Q

    Posted by winyahn at 05/17/2009 @ 3:34pm

29. Woops

    Posted by winyahn at 05/17/2009 @ 5:14pm

30. Highly-paid union jobs in this country are disappearing rapidly, never to return. There is nothing on the horizon to replace them that will pay comparable wages.

    Posted by wmkostak at 05/17/2009 @ 11:51am

    This is a critical point. All the government stimulus money is a short term band-aid that will not fix this problem. Card check (EFCA) will not fix this problem. If we want high paying low skill jobs, then we need to build something the world wants and can't be built elsewhere with people making 1/10 the wages. This can only be something with serious intellectual property protection, and companies willing to keep from outsourcing the manufacturing. I don't know what this set of products is. Without them, our standard of living will decline.

    Posted by sntauri at 05/17/2009 @ 7:17pm

31. The only purpose of "Free Trade" is to drive down wages and remove any social safety net for every worker in the world. They are succeeding because the western political parties that have traditionally been on the side of ordinary people have sold them out. As a life long Democrat, I have had no illusions about the Republican Party, but I also no longer have any illusions about the Democratic Party. Both parties have sold our country to multinational big business. You have only to look at who is getting the big money in bailouts to know that the mainstream parties have both sold us out. They fear tariffs or protectionism because it allow countries to own and control their on economies, thus preventing multinationals from raping every country in the world. National Self Determination in economics, as well as the political sphere, are important in protecting ordinary peoples' economic and political rights. The people who run the multinationals are very stupid, because when they bring down wages, they destroy the disposable income that support markets. Low wages, no disposable income, no markets, and the destruction of their wealth. They are committing economic suicide!

    Posted by pjcasey at 05/17/2009 @ 7:44pm

32. Posted by sntauri at 05/17/2009 @ 7:17pm

    Well said.

    Posted by pjcasey at 05/17/2009 @ 7:44pm

    Enjoyed yours too. I'd mildly disagree with the conclusion on greedy mega-corps. Corporate history proves, there's always more brown people, bits o' biosphere, and/or pieces of the planet to prey upon.

    Posted by winyahn at 05/17/2009 @ 9:57pm

33. pjcasey,

    there are a whole bunch of humans.

    the days of the nation-state will end.

    trade is good.

    have you read thomas pogge?

    "Could you give concrete examples?

    The existing global trading regime contributes to the perpetuation of poverty through the asymmetrical market opening that took place in the 1990s. Poor countries still do not enjoy unfettered access to our markets and are still hampered by anti-dumping duties, quotas and very high subsidies, for instance on agricultural products and textiles. Not only do these subsidies make poor countries' products uncompetitive on rich countries' markets. They also hamper poor countries' products in other markets because they allow the rich countries to undersell these products everywhere. By upholding a global economic order that grandfathers the rich countries' right to impose such protectionist measures into the global trading system, the rich countries greatly contribute to the persistence of the world poverty problem."

    Posted by frosty zoom at 05/17/2009 @ 10:43pm

34. "What is your stand on globalization? Has globalization in your opinion led to an increase in poverty-related human rights violations?

    Globalization is not one particular homogeneous phenomenon. There are many different ways in which globalization can proceed if we understand globalization as increased economic and political integration of the world. The way globalization has actually been steered for the last 15 years has been much worse than it could have been from a poverty perspective. Open markets could have been created with far fewer grandfathering and other rules favouring the rich countries. Out of the various paths of globalization that were available, the chosen one foreseeably produced much more severe poverty than necessary. To the extent that it did, it was a human rights violating path. "

    http://portal.unesco.org/shs/en/ev.php-

    URL_ID=10813&URL_DO=DO_TOPIC&URL_SEC

    TION=201.html

    Posted by frosty zoom at 05/17/2009 @ 10:44pm

35. Historically, Economic Imperialism has been inflicted on underdeveloped countries by developed Industrial states. Developed industrial nations establish a "Free Trade" relationship with underdeveloped states and flood their market with cheap goods preventing industrial development so that underdeveloped economies can not compete with them and remain undeveloped. Generally, they use the natural resources of these countries for their own industries. However, worldwide "Free Trade" attempts to drive down wages in every country through open borders, along with outsourcing Industries and Jobs overseas for cheap Labor. China has been picked as an industrial state because labor there is cheap, but intelligent. In other words workers, all over the world, compete with each other in a race to the bottom. This is the true meaning of Neoliberal, "Free Trade" competition. However,these idiots have backed themselves into a corner. What made the American and Western economies work as markets was the high wages and disposable income that supported those markets. You take away the high wages and you destroy the market. Since China and the other states workers are competing in the race to the bottom, they can't replace the American and Western Markets. I had this conversation with my financial adviser when I was pulling my money out of the market. She pointed her finger to her head and made like she was committing suicide. She got it. Are you bright enough to get It? Alexander Hamilton came from a great Scots trading family. As a teenager, he ran a trading company when the owner fell ill. He understood how the system worked, and the developed tariff barriers that protected us from being buried under cheap British Industrial product. Read his "Report on Manufactures" for the details

    Posted by pjcasey at 05/17/2009 @ 11:28pm

36. greenspan in china.....

    alas.

    "Greenspan Visits Scene of Fed's China Crime, William Pesek Jr., Bloomberg: To show he means business on China opening its economy, U.S. Treasury Secretary John Snow recently had a powerful prop on hand: Alan Greenspan. While the Federal Reserve chairman retains an almost godlike aura in Asia... Greenspan's presence in China last week didn't help the White House... In fact, Snow seemed to retreat from his campaign to force China to let the yuan rise. ... The trip did offer the Fed chairman a chance to visit the scene of what history may show to be one of his biggest blunders: China's asset bubble. ... It may seem a reach to blame Greenspan and the Fed for irrational exuberance in markets like Shanghai real estate. Yet globalization has globalized the Fed. While it has 12 districts in the U.S., its influence has never been greater. Think of Latin America as the 13th district, Southeast Asia the 14th, Russia the 15th, China the 16th, and so on. The Fed's policy of keeping interest rates low in the first half of this decade fueled ... a cheap capital-fueled investment boom in China. ... The trend has manifested itself in a variety of ways, including fueling a surge in the use of derivatives. ... The upshot may be untold amounts of leverage and risk in a global financial system... And for that, Greenspan's easy-money policies bear some blame. ... Greenspan probably isn't preoccupied with China's liquidity excesses. It's doubtful he'd even acknowledge a relationship between Fed polices and China's challenges, given how artfully he's sidestepped responsibility for excesses in U.S. stocks, housing and Treasury yields in recent years..."

    http://economistsview.typepad.com/economistsvie

    w/2005/10/is_greenspan_re.html

    Posted by frosty zoom at 05/18/2009 @ 02:26am

37. eek!

    S&P 500 EARNINGS DECLINE: 90%

    http://www.ritholtz.com/blog/2009/05/sp-500-earnings-decline-90/

    plop, plop,

    fizz.....

    Posted by frosty zoom at 05/18/2009 @ 02:30am

38. now, why does this seem familiar?

    "Yet there is one potential weakness in the Treasury proposal, one that reopens a dangerous loophole. Mr. Geithner suggested that derivatives should be split between standardized instruments, which would be traded on regulated exchanges, and privately negotiated contracts, customized deals (often called "swaps") that are made between two financial organizations and would not be publicly traded or regulated. Rather, such transactions would be reported privately to a "trade repository," which apparently would make only limited aggregate data available to the public."

    http://www.nytimes.com/2009/05/15/opinion/15partnoy.html?th&emc=th

    Posted by frosty zoom at 05/18/2009 @ 02:40am

39. OK this is just way too ignorant to let go unchecked.

    What would you want the administration do?

    Subsidize the production of even more cars that people are not going to buy?

    IT'S THE ECONOMY STUPID!

    The layoffs have nothing to do with the bailout. They have to do with reducing production because people are not buying cars and probably will never buy cars at the rate we once did in this country. This is not about busting the unions or rewarding the rich. Much of the government money will end up going to loses to pay of their creditors, employee severance, health benefits and early retirement.

    The government is doing what every company does when it goes bankrupt and needs to be restructured. In fact this is the reason government should take over companies as a last resort because idiots like you want to do what "socially" good instead of making it economically viable.

    Some on the left have become so lost in ideology that they are just losing any sense of reality.

    Posted by KQuark at 05/18/2009 @ 03:04am

40. All politics are local and all economies are becoming global. Does anyone else see a problem with this dynamic? In the expanding global economy, you will be either locally expendable labor or highly educated "assets" with a global reach. The middle class will be split between them. If I am poor, my concerns are local. If I am wealthy and talented, my concerns are national and super-national. The trend is now splitting the American public. The poor and middle class will have less and less ability to get higher educations due to rising costs and social distancing. I don't see anything that will stop the process. The dissolution of Chrysler and GM will drive down the wages of the remaining U.S. auto workers as labor unions grow ever weaker. When the "solution" is more training, the questions remain: "Training for what, how often and who pays for it?"

    Posted by jwalling at 05/18/2009 @ 04:09am

41. Low wages, no disposable income, no markets, and the destruction of their wealth. They are committing economic suicide!

    Posted by pjcasey at 05/17/2009 @ 7:44pm

    Good post and spot on.

    Posted by Wolfgang1 at 05/18/2009 @ 06:31am

42. So far, all the bailout activities look like trickle-down bailouts to me. I'm not at the bottom of the pile but I'm at the bottom of the middle. The only thing I've seen from this is approximately $10,000 in future tax liability (for our 2 member household) and a promise of a $232 check for my wife, who is on Social Security.

    The whole theory of the bailouts is to preserve the system. To the people taking this money from our future, the "system" is the structure of corporations, government, financial institutions, and "free market" that got us this hosed up.

    I feel that I've been hoodwinked by Obama's fancy talk, as I worked for his campaign during the Iowa Caucus. I soon switched sides to Nader though, after it became clear that Obama doesn't have a progressive bone in his head, except for his jaw bone. He talks a good game, but when push comes to shove he will go center-right every goddam time.

    This economic fiasco is just one tiny part of how awful this presidency has become. On every progressive issue, from Constitutional law enforcement to the trajectory of American foreign policy, it's all the same crap. Center-right, placate the military/intelligence/financial establishment, and screw the people.

    Are you sick of it yet? What are you ready to do? Send an email to your congress person? (Yeah, THAT will fix it).

    -Wexler

    Posted by WWWexler at 05/18/2009 @ 09:21am

43. Yes, JOHN NICHOLS, the VERY short answer.

    What did you expect after 30 years of stagnate corporate thinking which never allowed the car companies to get on board with the fuel efficient car competition from overseas? Between the big three only 50% of the American market is control, and thats not counting the future introduction of Chinese and Indian cars. Its almost criminal that they let it get this bad.

    Or the constant paying of undeserved perqs and salaries to workers, way in excess of thier positions' worth. How long can a company survive paying people to be off or sleep on top of the refrigerator in the break room?

    Not to sound prophetic, but I do remember YEARS ago thinking that one day the Piper would have to be paid.

    Will Lefties EVER get it that you can't keep shelling out more than you're bringing in without eventual negative consequences for all concerned?

    Posted by PRESTERJOHNofASIA at 05/18/2009 @ 09:23am

44. This is focusing on one small example of something that has been going on for decades: the transfer of manufacturing jobs to low-wage countries. We simply have not had a frank discussion in this country about whether this is what we want or not, and if not what we do about it. This is simply another example of laissez-faire capitalism. An individual company executive can only look at the profits of his own company (in general), even if moving ALL the jobs overseas eventually bankrupts his own customers. They cannot act in concert for the public good. That is up to we the people through our government---some sort of Industrial Policy, or whatever you feel like calling it, is something we should probably consider.

    Posted by SK9 at 05/18/2009 @ 09:55am

45. ITA with WmKostak and SK9

    If you compete with slaves, you ARE a slave. And we are doing just that, thanks to the Masters of the Spreadsheets. Labor is nothing but a cost, cut it.

    What is supposed to replace these jobs? More service jobs? Notgonnahappen.

    Anyone with an ounce of comon sense has realized that without decent jobs there will be no return to prosperity. But as SK9 so accurately states, each company looks to itself and figures it will be able to sell its product to the remaining employees of sucker-companies who still can afford to consume. Eventually there is no one left to buy. It is a tragedy of the commons.

    Ah, well. Once we drive out the auto manufacturers, the rest of you can pay through the nose for the welfare and unemployment that we in Michigan will experience. Enjoy--till your jobs go away too.

    Posted by VEH at 05/18/2009 @ 10:11am

46. Posted by snowball666 at 05/18/2009 @ 09:32am

    Don't mock the Purists, snow.

    They're better people than all the rest of us!

    (says so in their literature....heheh)

    Posted by Mask at 05/18/2009 @ 11:47am

47. This whole debacle is a repeat of the 70's when the big 3 insisted on making gas guzzling monsters and had their asses handed to them by the Japanese and Germans. The dealerships in Detroit couldn't give those cars away, since they were pieces of crap anyway. Then as now they refused to consider, and actively lobbied against, mileage standards and the Government backed down. Then as now they insisted that they alone knew what Americans wanted and it turned out to be wrong.

    As long as we remain complacent and battling each other the Government will never represent us. We seem to believe that the "Government" is all powerful and forget that they are elected.

    I started life as a Democrat, but realized that there is little difference between the parties except for Ideology.

    We have spent 3 decades worrying about who's taking our jobs now. First the blacks, and now the Mexicans while our corporate masters shipped the jobs overseas. Obama can't fix it and we are too frightened of change to vote an Independant candidate into office.

    Posted by poonchkie at 05/18/2009 @ 2:08pm

48. Just a general question. What day to day products are still mfd in the USA. Seems like everything I own comes from somewhere else. Sure my Toyota truck was made in the USA. But all my clothes, books, etc. Are made by workers elsewhere. How are we to compete or have a viable future if we don't make anything?

    Posted by Extraneous at 05/18/2009 @ 2:24pm

49. As Avi Lewis and Naomi Klein suggest elsewhere on this site, one solution is for the workers themselves to take over the plants and refuse to allow the machines to be taken out. Frankly, I'd go farther and say to hell with the Tea Parties, how about a General Strike to demand that Congress repeal the bank and auto company bailouts and:

    - Break the big national banks up into smaller regional ones;

    - Implement rules to NOT allow the off-shoring of jobs;

    - Implement rules cracking down on tax evasion via tax havens, making it harder and more expensive for the bastards to find their loopholes, thereby cutting down on if not eliminating the number of cheats;

    - Pass the Employee Free Choice Act;

    - Raise the Minimum Wage to $12/hour and index it to the CPI, speaking of which...

    - Return to the statistical measurments used prior to the Reagan/Clinton/Bush era so that we have more honest unemployment and inflation numbers;

    - Pass Single Payer Health Insurance legislation.

    Posted by cka2nd at 05/18/2009 @ 3:30pm

50. - Implement rules cracking down on tax evasion via tax havens, making it harder and more expensive for the bastards to find their loopholes, thereby cutting down on if not eliminating the number of cheats;

    - Pass the Employee Free Choice Act;

    - Raise the Minimum Wage to $12/hour and index it to the CPI, speaking of which...

    - Return to the statistical measurments used prior to the Reagan/Clinton/Bush era so that we have more honest unemployment and inflation numbers;

    - Pass Single Payer Health Insurance legislation.

    Posted by cka2nd at 05/18/2009 @ 3:30pm

    And this produces products the world wants to buy, which now cost even more than they do now, because of your several trillion dollar increase in costs?

    Posted by sntauri at 05/18/2009 @ 3:51pm

51. Give us consumers CREDIT and incentives to turn in our 15 year old clunkers and we will buy Impalas, Fusions, 300s, Mustangs and even Pontiacs. The plants will be working overtime to keep up with the demand. We want new American cars but they are being kept out of reach.

    Posted by CMI at 05/18/2009 @ 4:48pm

52. The AMC Rambler.

    Now that was a car for the masses.

    Posted by schnellerheinz at 05/18/2009 @ 5:07pm

53. Socialists don't drive.

    Posted by winyahn at 05/18/2009 @ 11:23pm

54. - Raise the Minimum Wage to $12/hour and index it to the CPI, speaking of which...

    Posted by cka2nd at 05/18/2009 @ 3:30pm

    Think if 10~15 million illegals are `invited' back to where they came from, the `market' minimum wage would be just $12????

    I think most of us can afford an extra dollar for whatever combo meals we buy....that extra dollar will double the labor cost component of every HAPPY meal.....:)

    That said, I won't like the price increase from my cleaning lady or the occasional manual labor I hire....but, I could use more exercise and do it myself? Nope, doesn't bring any thrills up my legs!

    Posted by Happy at 05/19/2009 @ 12:09am

55. It has become obvious that Obama is a corporate lackey who cares nothing for the working class. Although he pretended to care while campaigning for votes, his actions (or lack thereof) have revealed his true allegience. He has stabbed in the back all progressives and unions who supported him. He bails out huge banks, but turns a cold eye toward workers. He is a Clinton Republicrat. (I am glad I voted for Nader.)

    Posted by philbq at 05/19/2009 @ 06:24am

56. Ahhhh, the rumblings of the 2012 Nader Presidential bid have already started, huh?

    Too bad Ralph himself won't come out of his "undisclosed location" for another 3 and a half years.

    Posted by Mask at 05/19/2009 @ 08:51am

57. Why didn't the US government bail out AMC and Studebaker? And what about the Edsel; that was a good car and shouldn't have suffered just because the front end looked like a hemorrhoid pad, why didn't the government subsidize that?

    Posted by Mistral at 05/19/2009 @ 08:53am

58. Rescue of auto corporations (not jobs), bailout of Wall Street failures, continuing war in Iraq and Afghanistan, healthcare reform that saves private insurance companies . . .Time for progressives to recognize the Obama definition of "change": "Plus ça change, plus c'est la même chose."

    Posted by fragen at 05/19/2009 @ 10:14am

59. Too bad Ralph himself won't come out of his "undisclosed location" for another 3 and a half years.

    Posted by Mask at 05/19/2009 @ 08:51am

    Never voted for Nader myself, but I never did buy your characterization of him as having devolved into being obsessed only with running for office, and sure enough, a quick Google on him and 2009 found that, just in March and April of this year, he has initiated a lawsuit regarding the U.S. fence on the Mexican border and released statements on the following issues:

    The Bailout Single-Payer The Environment CPA's and the Wall Street Meltdown Obama's First 100 Days

    Posted by cka2nd at 05/19/2009 @ 10:45am

60. Those ungrateful, but not entirely dumb (today), union folks!

    Union reluctant to grab wheel in Detroit

    NEW YORK (CNNMoney.com) -- The current plans to restructure General Motors and Chrysler LLC will leave the United Auto Workers union in the driver's seat at both companies. But it appears that the union would rather be in the back seat.

    Posted by Happy at 05/19/2009 @ 10:47am

61. "Why didn't the US government bail out AMC and Studebaker?"

    Studebaker tanks, most of those sales migrate to other American brands (very few imports at the time). I'd venture a guess that the demise of Studebaker didn't cause much of a net job loss. Studebaker workers ended up at another factory or found something else to work at.

    AMC got bought by Chrysler (subsequently bailed out in the late 70's, all money repaid with interest). AMC workers either ended up working for Chrysler or found another job (back in those days the domestic manufacturers were practically always hiring).

    The problem is that the economy has no place to absorb the unemployed right now. Or ever, if we don't figure out that we need real jobs in THIS country if we would like to have anything resembling a middle class.

    Posted by VEH at 05/19/2009 @ 11:39am

62. I guess you should ask the UAW and the dealers how that "hope and change" thing is going.

    Posted by pyeatte at 05/19/2009 @ 3:09pm

63. .....ask the UAW and the dealers how that "hope and change" thing is going.

    Posted by pyeatte at 05/19/2009 @ 3:09pm

    Ask NOT what the UAW and the dealers can do for you, but ask, what you can do for the UAW and the dealers,........

    Posted by Happy at 05/19/2009 @ 3:22pm

64. I have an idea. Since the government keeps throwing money at the car manufacturers who are shutting down plants in the U.S. to reopen plants in Mexico and South Korea, how about this.

    Take that money instead and give it to a start up company that can use the closed plants GM, Chrsyler or Ford just closed. Let them hire the engineers, technicians laid off and so forth and perhaps this start up company could design a friggin car that wasn't an air craft carrier with a huge ass V-8 engine in it.

    The Germans, Japanese and Koreans don't out engineer American engineers, but their companies outspend the American companies on R&D. To fix the car companies, they need to get rid of all of the dead wood at the top, not the workers and engineers. So, here's a different approach, don't bail the companies out, bail the workers out by letting them start their own company bankrolled by the federal government to start it off. Once the company starts making money, the employees can buy it back as well as anyone wishing to purchase stock in it (besides the big 3 or any foreign auto companies or interests).

    Posted by Wolfgang1 at 05/19/2009 @ 3:50pm

65. Incentivize hybrid, high efficiency cars/trucks through tax breaks. Also, make gas less expensive and offer free boob jobs, I mean, free health care and preferential treatment when flying, etc., for anyone driving high efficiency cars. Create a menu of perks, let people choose their perk. Expand it to the whole carbon footprint, as the metric being incentivized.

    Posted by winyahn at 05/19/2009 @ 11:39pm