So there's a lot of conversation out there about car dealerships being told they won't be selling cars for Chrysler and GM any more.
The idea, we are told, is to save the auto manufacturers money by reducing the number of dealerships with whom they do business.
I don't really know that much about the car business; and I really didn't understand where these cost savings would come from, but I was able to have a conversation with the one person I do know who actually could offer some useful insight.
Follow along, Gentle Reader, and you'll get a bit of an education at a time when we all need to know a bit more about these companies we suddenly seem to own...and about the closure of thousands of local businesses that will make the news about our bad job market worse.
by Zach Carter, Media Consortium MediaWire Blogger
With new bailout plans for Wall Street being unveiled almost every week, it's easy to forget that nearly all of the work that fuels our economy takes place outside of Manhattan. While reviving the financial sector is an important part of recovery, any lasting economic solution must also empower American workers and protect them from corporate abuses.
The South's attempt to kill the North's auto industry is the latest battle in an ongoing conflict. It's time for a Third Reconstruction to put an end to it.
Dec. 18, 2008 | It is just as well that Barack Obama is emulating Abraham Lincoln by traveling to his inauguration in Washington by train. As the regional politics of the automobile bailout controversy demonstrate, the Civil War continues. If the major U.S. automobile companies go under, it will be partly because timely federal aid for them was blocked by members of Congress like Tennessee Senator Bob Corker, whose states have created their own counter-Detroit in the form of Japanese, Korean, and German transplant factories. The South will have risen by bringing down the North. Jefferson Davis will have had his revenge.
The most shocking thing about the alliance between the Southern states and America's friendly but earnest economic rivals to destroy America's most important industry is the fact that so few people find it shocking. Contrast the U.S. with the European Union. The nation-states of the European Union collaborate with each other in order to compete against foreign economic rivals, including the U.S., Japan, and China. By contrast, many states, particularly in the South, collaborate with foreign economic rivals of the U.S. in order to compete against other American states. Any British or French or German leader who proposed collaborating with Japan or the U.S. in order to wipe out industry and destroy jobs in neighboring EU member states would be jeered out of office. But it is perfectly acceptable for American states to connive with Asian and European countries in the destruction of industry elsewhere in the U.S.
Is it really that simple? In a word: yes!
I mean, look, these people are traitors. They tried to destroy the country in order to preserve slavery. They are the last people to be lecturing anyone on patriotism. And yet, quite unlike them, we cannot respond by trying to make them suffer.
President Bush will make an announcement at 9 a.m. Eastern today about an auto bailout, the White House said.
The plan is likely to include taxpayer assistance for GM and Chrysler in return for radical restructuring. And they will have to present a credible plan to become viable firms, according to administration sources.
"It's all about viability," one official said. "We aren't going to throw good money after bad."
Officials said the most likely scenario is a plan that looks like bankruptcy but is not legal bankruptcy -- an orderly restructuring in return for taxpayer assistance, as the administration is putting it.
First, Josh Orton points out that if the Bush Administration steps in and uses TARP funds, it will be a big victory for Senate Democrats. After all, Senate Democrats originally just wanted to use already approved TARP money to pay for the auto industry loan, but the Bush administration refused. If the auto industry loan is paid for by TARP then, among other things, the punitive measures against the unions don't apply, money is taken away from Wall Street, and the fund to promote fuel efficient vehicles remains intact. In other words, as Josh notes, Harry Reid and Senate Democrats will have actually won a game of chicken with Senate Republicans, not the other way around. Clearly, it helps a whole lot to have the White House on your side. Hopefully, this is a harbinger of legislative fights to come.
Second, Joseph Stiglitz points out that Wall Street is actually to blame for the demise of the Big three, not unions or even executives:
The debate about whether or not to bail out the Big Three carmakers has been mischaracterised. It has been described as a package to help the undeserving dinosaurs of Detroit. In fact, a plan to bail out the carmakers would benefit shareholders and bondholders as much as anybody else. These are not the people that need help right now. In fact they contributed to the problem.
Financial markets are supposed to allocate capital and monitor that it is used to good effect. They are supposed to be rewarded when they do that job well, but bear the consequences when they fail. The markets failed. Wall Street's focus on quarterly returns encouraged the short-sighted behaviour that contributed to their own demise and that of America's manufacturing, including the automotive industry. Today, they are asking to escape accountability. We should not allow it.
In the rest of the article, Stiglitz goes on to call for a Chapter 11 restructuring of the Big Three.
It is refreshing to see these different perspectives. Any more good auto industry thoughts out there?
I have stated recently that I am fundamentally skeptical about the political and media establishment's willingness to pass the sort of legislation that will help pull us out of the many crises--economic, environmental, military--that we face. This skepticism carries over to the Democratic political establishment, and has been visible in some of my discussions of Obama's personnel appointments.
Broadly speaking, and not accounting for the considerable detail and nuance involved, my skepticism of the incoming Obama administration is not widely shared among other Democrats and progressives. However, if the word "Obama" is removed from the equation, and the term "Democratic leadership" is substituted instead, then, keeping in mind all of the same caveats from the previous sentence, I think my skepticism is shared. As BarbinMD shows, the auto bailout deal is one reason why (more in the extended entry):
by Zach Carter, Media Consortium MediaWire blogger
President-elect Barack Obama rolled out his highly anticipated priorities for an economic recovery package this weekend, but the current Congress remains focused on bailouts, with the fate of U.S. automobile manufacturers still hanging in the balance.
Mike Madden details the Detroit drama for Salon.com, reporting on how lawmakers who would ordinarily be receptive to a salvage plan have become skeptical in the wake of the Bush administration's handling of the Wall Street bailout. After being promised that their votes would be used to help fend off foreclosures, members of Congress have responded with outrage as Treasury Secretary Henry Paulson has devoted all of his legislatively allocated funds to the purchase of preferred stock in financial companies.
STOCKHOLM, Sweden (AP) - Nobel economics prize winner Paul Krugman said Sunday that the beleaguered U.S. auto industry will likely disappear.
"It will do so because of the geographical forces that me and my colleagues have discussed," the Princeton University professor and New York Times columnist told reporters in Stockholm. "It is no longer sustained by the current economy."
Krugman won the 10 million kronor (US$1.4 million) Nobel Memorial Prize in economics for his work on international trade patterns. Some of his research on economic geography seeks to explain why production resources are concentrated in certain locations.
Speaking to reporters three days ahead of the Nobel Prize ceremony, Krugman said plans by U.S. lawmakers to bail out the Big Three automakers were a short-term solution, resulting from a "lack of willingness to accept the failure of a large industry in the midst of an economic crisis."
What's it mean in several senses:
(1) If Krugman is right.
(2) That he would say something like this, phrased the way that he is quoted.
(3) That he is seemingly ignoring "outside the box" thinking that is so clearly called for in this case.
The Canadian governmental crisis is heightening. Tonight, Prime Minister Stephen Harper will address the nation, followed by Liberal opposition leader Stephane Dion. Tomorrow, widespread protests on both sides are expected as Harper will probably meet with the Governor-General, the Queen's representative in Canada, in order to ask for parliament to be shut down for the rest of the year. The goal is to avoid a no confidence vote next Monday that, right now, would pass and make Dion Prime Minister. Given that the opposition had earlier asked the Governor-General to remove Harper as prime minister, this marks, I'm pretty sure, the only time since World War Two when the representative of a monarch will have real deciding power over the fate of a G-7 nation. Crazy stuff, and absolutely fascinating. For more information on the recent developments, read Daniel De Groot's excellent primer.
Lisa Jackson seems to be the frontrunner for the EPA. I think this is a very solid pick, both because she currently heads up an auction-based effort to reduce greenhouse gases, and because she is currently slated to be New Jersey Governor Jon Corzine's Chief of Staff. Auctioning is the way to go, and I implicitly trust Corzine. Absent any outcry of environmental activists, she seems like a very good person to head the EPA.
Michael Moore proposes having the federal government just buy the big three, which would actually cost less than the bailout. Additionally, he suggests firing all the executives, and hiring a bunch of new, green-oriented people to run the companies. Works for me. Not only is it cheaper, not only does the government get a real ownership stake for its investment, but we can avoid rewarding those who have failed at those companies. I know it won't happen, because we are not quite at that point in the Overton window yet. However, we are actually getting kind of close to the point where that idea would become widespread and popular.
Syracuse is ranked third in the RPI. Maybe we The 'Cuse is finally back in the House this year. If only Dante Green had stayed around, we Syracuse could have won the whole thing.
This is an open thread. Tell the world what is on your mind.
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