Friday OT
I'm running a bit late so I won't be able to create my as-of-late detailed overview of the news.
The big story today is the collapse of the auto industry bailout. It seems the GOP and the UAW are refusing to come to acceptable terms with each other. Though the latest news suggests Bush and Co. might dig into the $700 billion to give to the big three instead. Looks like someone is bucking his own party.
Submitted by Specter on Fri, 2008-12-12 11:05
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Tinfoil hat perspective
Now that the election results are in the GOP is deliberately attempting to bring down the economy. This accomplishes several political objectives:
1. Limits spending, particularly on social programs to which the GOP is ideologically opposed.
2. Disproportionately hurts Democratic-leaning blocks, such as union workers.
3. Creates conditions that will enable attacks of Obama and Congressional Democrats on the economy.
4. Elevates social issues in political importance, since these tend to resonate during hard times.
5. Encourages an anti-immigration climate for similar reasons.
6. Pushes the inevitable bounce-back further into the future, making it more likely the GOP can take credit.
7. Distracts from attempts to investigate GOP-enabled mistakes committed in the Iraq war.
Tinfoil, right? But the actions of the GOP in Congress lend support to such conspiracy theorizing. Contrast with Bush, who is desperately trying to secure a semi-positive legacy, and who has always had more moderate views than the GOP Congress on some of these issues (e.g., social spending, immigration).
Come, my friends. 'Tis not too late to seek a newer world -- Tennyson
Wow, Brendan
Uncharacteristically antagonistic of you. I like it.
I don't know if anyone would want to intentionally bring down the economy. The economy is so intertwined that one failing area inevitably leads to problems elsewhere. It effects everyone--from the rich guy who makes his living on Wall Street to the uber-religious lady in Utah. In other words, if the GOP name is tagged to the failure of the economy (which looks to be the case), then they will only become more obsolete in the future.
That is one of the arguments for the automotive bailouts--it's not so much about the failing companies, but what that failure might mean to the overall economy (suppliers, transportation, dealerships, and the multitude of multipliers from such a major strike to one sector of the economy).
Though, the email PM showed and the tit-for-tat nature of politics may show that what you speak is the truth.
Republicans had their own version of this argument at the height of the Iraq War disillusionment--the Dems were said to have cheered on our loss so that Bush would look bad. Hmm. . .
We are all mediators, translators. - Derrida
http://signicide.blogspot.com/
Maybe I'm just trying to stir up debate on a Friday afternoon
=)
It seems to me this is the question: if the GOP name is tagged to the failure of the economy (which looks to be the case), then they will only become more obsolete in the future. They are certainly trying to avoid that framing, and I think that public disgust with bailouts in general right now gives them some hope of claiming the role of principled defenders of taxpayer money from greedy workers and incompetent bosses. I think it's more of an "if" than you imply.
I agree that the fear of a cascade effect is partially driving the push for the bailout, and from what I can tell it's a legitimate concern. It looks very strange to me to fork over $700 billion for Wall Street but make a "principled stand" against $14 billion for the auto companies. The collateral damage from financial sector meltdown would have been huge, but as you say a GM bankruptcy would cause widespread problems too.
Come, my friends. 'Tis not too late to seek a newer world -- Tennyson
Apples and Oranges
That's because it's two different things. Does the term "cash flow problem" not click with anybody?
They need the $14 billion just to keep the doors open and the lights on for the next few months. Fourteen billion will not change ONE THING about how these companies are run, how profitable they are, or what kind of vehicles they make or don't make.
Let's pretend for one second that it wasn't the auto industry, but the oil industry. Not GM, but Exxon. Both employ millions. Would there be this same emotional response to help them?
"The human race divides politically into those who want people to be controlled and those who have no such desire." --R. Heinlein
The 'cash flow' problem
is directly related to the Wall Street problem, because the credit markets are frozen. If the banks were able/willing to lend money then the cash/flow problem would not have reached these critical proportions.
The auto industry already had agreed under an energy bill, that allocated funds to help them retool and redesign some of their cars.
The auto industry is already restructuring it's business plan. They just need to get through a tough time because the credit markets are broken.
Just to be clear, the whole of the auto industry sales are down, including foreign autos made in the US.
I don't think that allowing millions of workers to cede their retirement to the PGA, the federal pension plan will help. I don't think that having thousands of workers collecting unemployment from state and federal taxes will help.
Nothing is going to help if thousands and thousands of folks don't have jobs, more homes go into foreclosure, and more taxes are eating up with unemployment.
Comparing the UAW to Exxon is like comparing raisins to watermelons.
I'm only half stupid
Actally PF
the oil industry employs a hell of a lot less people. Exxon employs about a hundred thousand. GM employs over a quarter million. Similarly Ford and Chrysler employ more people than Chevron and Conoco.
Personally I'm fine with letting the auto companies go through bankruptcy at some point. I just think letting it hapopen now, when we are teetering on the edge of a depression, is a bad idea. If 14 billion will kick the problem down the road until we've recovered a bit from the mortgage and credit crunches then that seems a very small price to pay.
YMMV.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
Ford employees
some of them, anyway, are bound to be looking at this through old-fashioned competitive goggles, and can't wait to outlast their rivals. They'd love a chance to come out on top.
Did you include the refineries, chemical plants, transport, underground lines, etc in your calcs? :-) Regardless, though, conceptually it is equivalent for the purposes of my main point. Few liberals will admit to crying for an oil sector employee's job.
I would agree with you, but the price tag is too high and "bankruptcy" is not the big scary boogeyman the press is making it out to be. And it's just a minor delay --- months, not even a year. And jobs are going to be lost, lots of them, no matter which way this shakes out.
"The human race divides politically into those who want people to be controlled and those who have no such desire." --R. Heinlein
I don't disagree as far as ford
I didn;t include any of the secondary industtries for either cars or oil, but I'd be wlling to bet that again the car related companies require a lot more manpower.
I'm not crying about the loss of jobs to either sector, Ijust don't want to give a good shove to a teetering economy. I have to disagree about your contention that bankruptcy isn;t scary. When talking about bankruptcy on this kind of scale, and during an already bad economic time, adding a million or more people to the unemployment lines is very scary.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
That's my point
Those million people are going to be added to the unemployment line regardless of whether we choose the bailout or bankruptcy route. These companies must shed jobs, factories, and obligations to remain viable for more than 2009. And they must do so quickly, if they are to staunch their cash flow problems.
Unless of course you're betting solely on consumers deciding all of a sudden that now is a good time to buy an SUV?
How else can these companies solve their cash flow problems? It's either increase revenue, or decrease expenses, immediately. Or keep asking for handouts. Or do you see some other force coming in in January to increase revenue or decrease expenses to the tune of several billion a month?
I don't want this to happen either; nobody does. I just don't see how it can be stopped.
EDIT: How about paying each of us to buy a new GM car? Funding the companies that way might be a much more effective way of helping the industry than anything being contemplated now. And yes, that's facetious....sort of.
ANOTHER: "Bankruptcy" does NOT mean closing the doors and selling the assets, by the way. It means buying the companies time, through lawful, tried methods, so they can reformulate their business plans, shed expenses, and restructure.
"The human race divides politically into those who want people to be controlled and those who have no such desire." --R. Heinlein
Delaying action
A million people out of work today is not the same as a million people out of work in mid-2009 because the overall economic picture will change. What I'm betting on is that the US economy will have recovered enough in 6 months that it will cope with the impact better.
Now you might disagree about the likely direction of the economy in that timeframe, but surely the basic concept makes sense given the underlying assumption.
In other words: yes I am explicitly arguing for hand outs to keep GM running until we can let them fail safely. The collapse may be inevitable, but that doesn't mean it has to be imminent.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
Sorry, Brendan
But that's a little over the top.
Besides, the irony is that all these interventions are what is actually pushing recovery further into the future. If the Dems just sit on their hands, the economy would be doing better before the midterms.
Oh, I know,
I'm not claiming proof of anything, just throwing out wild ideas.
I don't think your second paragraph is necessarily the case, but even if accurate I guarantee that sitting on their hands would be a political loser for Dems.
Come, my friends. 'Tis not too late to seek a newer world -- Tennyson
I strongly suspect
that Rove is sweating bullets right now because he knows the congressional republicans just painted a bullseye on the party's back. The last thing they needed was to become the party that killed a major american industry which, rightly or wrongly, they will be accused of at least trying to do.
In some ways i thinkthis move has been representative of the party of late- short sighted personal victory at the expense of the party as a whole. People like Corker can take their pound of flesh home to their conservative constituents and in the process further alienate moderates.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
The GOP can kiss the Midwest goodbye
After this performance, Indiana has just become a blue state. Ohio and Michigan are now behind enemy lines as far the the GOP is concerned.
Even Florida -- with its thousands of Republican-voting auto retirees -- is up for grabs.
qui tacet consentire
Anecdote or harbinger?
It isn't clear yet how many people are involved. It may be one really active guy. At the same time it's no secret that hard economic times cause increases in crime rates. Unfortunately organizations like the DoJ don't seem to compile stats quickly enough (or publish them if they do have them) for us to look for an uptick in such crimes since the economic colapse.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
If I seem anti-corporate
it is because I deeply deeply am. And with damn good reason:
http://www.nytimes.com/2008/12/12/business/13wyeth.html
I can put up with a certain amount of shady businesss between rival companies. This goes so far past that line that I'd ike to see these people get life in prison. They cynically not only retarded the progress of human knowledge but also endangered the lives of women across the country (and, realistically, internationally as well).
The fundamental nature of truly capitalist companies is quite simply inimicable to human life.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
Didn't you know?
Capitalism and unethical behavior are mutually exclusive to those that try to have others drink the Flavor Aid.
In our society, people are rewarded for pretending to be certain about things they're clearly not certain about. -- Sam Harris,
Streaming consciousness
Corporations exist to do one thing: create wealth for shareholders. There are different opinions on how best to get there, but the goal is always the same. If raping children or drowning puppies was profitable, I guarantee you there'd be people offering to do those things -- regardless of legality.
This brings me to the infamous Fight Club quote:
A new car built by my company leaves somewhere traveling at 60 mph. The rear differential locks up. The car crashes and burns with everyone trapped inside. Now, should we initiate a recall? Take the number of vehicles in the field, A, multiply by the probable rate of failure, B, multiply by the average out-of-court settlement, C. A times B times C equals X. If X is less than the cost of a recall, we don't do one.
If the fine for breaking a law and the subsequent loss in sales from such conduct still puts them in the green, they could care less. Its all about money and always about money. In any case, a good PR team will get those sales back up in no time. Then, of course, comes the person who abhors such behavior but has that company's stock in their portfolio, who I might add is morally no better than the person who gives money to their 401(k) manager who puts the company's stock in their portfolio.
When its all said and done, people are willing to turn a blind eye to anything to save a buck. Why do you think people knowingly buy stolen merchandise? I guarantee you if you could get a 50in plasma screen TV for $50 with the catch that it was made by child slaves (who'd be willing to work as a slave driver if it paid seven figures?), people would still trample to death as many Wal-Mart employees as it took to get one. Better yet, they'd attempt to remain willfully ignorant in order to assuage their guilt. Ignorance of the law isn't an excuse, but ignorance of the market apparently is.
Oh, and work has been going well so far (that isn't sarcasm, btw).
I never broke the law; I am the law! --
George W. BushJudge DreddI'm listening to...