Tag Archives: TARP

On Smashing the Plutocracy

30 Nov

From CBS News, our budding banana republic plutocracy/kleptocracy unravels itself:

An interview with Lloyd Blankfein is as rare as a look inside the Goldman Sachs money machine. He showed us one of seven trading floors at his Manhattan headquarters. Goldman is one of America’s most successful investment banks. It had net earnings of $4.4 billion dollars last year. When we asked Blankfein how to reduce the federal budget deficit, he went straight for the subject politicians don’t want to talk about.

BLANKFEIN: You’re going to have to undoubtedly do something to lower people’s expectations — the entitlements and what people think that they’re going to get, because it’s not going to — they’re not going to get it.

PELLEY: Social Security, Medicare, Medicaid?

BLANKFEIN: You can look at history of these things, and Social Security wasn’t devised to be a system that supported you for a 30-year retirement after a 25-year career. … So there will be things that, you know, the retirement age has to be changed, maybe some of the benefits have to be affected, maybe some of the inflation adjustments have to be revised. But in general, entitlements have to be slowed down and contained.

Blankfein is CEO of Goldman Sachs, a Wall Street institution that was about as deep into the Wall Street scandal and collapse of 2008 as could be.  Goldman Sachs received a $12 billion TARP bailout related to its holdings in then-defunct insurer AIG. Goldman Sachs repaid the government through a sale of equity in April 2009

Despite the fact that it’s become quite evident that Wall Street is Washington’s puppetmaster, and not vice-versa, Blankfein now has the audacity to come to Capitol Hill to lecture the government about good governance and how we need to aggressively cut so-called “entitlements” like Medicare and Social Security. As if caring for the sick and elderly was some sort of societal ill, while committing fraud against one’s own customers is perfectly reasonable, and the sanctions wrought therefrom a mere cost of doing business. 

Here’s what America’s favorite socialist Senator, Vermont’s Bernie Sanders has to say about it all. Thing is, he’s right, and the plutocracy must be exposed and, frankly, smashed and replaced with the representative democracy the Constitution guarantees. 

Sanity Restored

1 Nov

I watched a good deal of the Rally to Restore Sanity and/or Fear on Saturday, and was struck by the sheer size of the crowd – it rivaled, if not eclipsed – recent teabagging fiestas that have been held on the mall to protest … what, exactly?

A poll recently revealed

that by a two-to-one margin, likely voters in the Nov. 2 midterm elections think taxes have gone up, the economy has shrunk, and the billions lent to banks as part of the Troubled Asset Relief Program won’t be recovered.

The reality is…

The Obama administration has cut taxes — largely for the middle class — by $240 billion since taking office on Jan. 20, 2009. A program aimed at families earning less than $150,000 that was contained in the stimulus package lowered the burden for 95 percent of working Americans by $116 billion, or about $400 per year for individuals and $800 for married couples. Other measures include breaks for college education, moderate- income families and the unemployed and incentives to promote renewable energy.

The meme that Obama is nothing but a tax-raiser is as false as the notion that he’s a soshulist moozlim sleeper agent.

Almost all of the TARP bailout money has been repaid.  The government will take a hit on AIG and the automotive bailouts, and the mortgage bailouts, but had those all been allowed to fail, it would have been an epic economic catastrophe along the lines of a great depression, or worse.

So, we can – and should – debate how we go forward to further grow and strengthen the economy, and how to help lower the unemployment rate.  But the rhetoric – much of it false and manufactured – needs to be tamped down.  Saturday’s event may have been a bit plodding, but it’s hard to play to a crowd of 250,000-ish people.  But it was a great reminder that many, many more of us are just normal people who think normal things about politics than are followers of cable news network pseudo-evangelists of hatred and falsehoods.

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Clearing it Up

29 Apr

When health care reform is enacted to help insure almost all Americans, and initiate dramatically needed consumer protection into the health insurance industry, there was an outcry against it from the right, blathering about unconstitutionality.

When GM and Chrysler got massive loans from the government collateralized by stock, the right whinged about socialism, as if that somehow represented workers’ control of production.

When the banks got too clever for their own good and found themselves almost insolvent, when the entire economy collapsed and was on the brink of a once-in-a-century downward spiral, the right bitched and moaned that bailouts – many of which have since been repaid, with interest – were the worst thing since Hitler murdered 6,000,000 innocents and Stalin collectivized farms.

When Arizona passes a law that has the effect of requiring natural born United States citizens of Latino origin to carry citizenship papers with them at all times for wholly domestic travel, the right shrugs and tells the brown people, tough shit.

Just wanted to clear up what they do and don’t consider an unconstitutional outrage.  Social programs = bad, unconstitutional police-state-junior = dandy.

Maybe we need to institute the same policy in Florida and direct it at illegal Cuban immigrants. Let’s see how that goes over.  How about it, Mr. Rubio?

Punitive “Progress,” not Policy

15 Jan

Let no one accuse the Obama administration of failing to channel populist anger at an easy political target. For a bunch of smarty pants, egg-head, ivory tower intellectuals, the economic policy recently laid out has more to do with felling opportunistic targets than sharp policy.

Determined to get back “every single dime the American people are owed,” Obama is going to go after the dimes of those who have them, not those who owe them.

“We want our money back, and we’re going to get it,” says Obama. Fair enough. But this program sounds like the pound of flesh is required too once all the money is paid back.

The government estimates that it will lose $117B of the $700B loaned during the Troubled Asset Relief Program. The vast majority of the losses are projected to come from loans to auto companies, not banks, but more on that in a moment. To offset losses of tomorrow that haven’t happened yet, Obama would today collect money now from the 50 largest financial institutions, about $9B annually for the next 10 years.

The amount of reality this ignores almost boggles the mind:

1) The Fed Reserve just handed over, like two days ago, a record amount of profit to the Treasury Department. $45 billion. Where did they get it? Loaning money to banks as part of the bailout. Seems like the banks are paying back plenty of Obama’s dimes.

2) The banks are paying back the TARP $$$ in droves already. Two thirds of it (loaned to banks) is already paid back overall. All five of the biggest firms, Morgan Stanely, Goldman Sachs, Citi, Bank of America, and JP Morgan, have already paid it back. Locally, so has First Niagara. All of these loans were paid back with interest, so the Treasury is actually making money on the TARP program, $16B as of mid-December 2009. Astoundingly, this new fee applies to firms whether they have paid back their money or not.

3) Despite the fact that this is about recouping losses from the TARP, this new fee would apply to banks who WERE NOT ELIGIBLE for the TARP. Under the new scheme, British-owned and TARP ineligible HSBC owes $100 million a year . . . for the privilege of having suddenly unpopular back office operations in Buffalo.

Why defend financial institutions, that caused so much trouble and bear so much of the responsibility of the crisis? Because there is a simple matter of fairness: taxes should not be so clearly punitive, and the rules of the game shouldn’t change once the game is over, so the government can keep playing. Not to mention the inconvenient truth that healthy and financially successful banks are important for the success of the American economy, as evidenced by the last two years.

Insulated from the new taxes? Auto companies, not because they didn’t receive a bailout too, but because figuring out a way to tax them would be too “logistically difficult.” How about another 0.15% tax on all auto company assets? There, I figured it out. The only difficult logistical problem would be figuring out how to maintain union financial support if the Big 3 cut more jobs in response to higher taxes and fees.

Best yet, Obama has the gall to suggest that the bank executives should take their medicine like good little boys and girls and keep their mouths shut.

Obama said executives of large banks should take responsibility for the fee rather than fighting it. “I’d urge you to cover the costs of the rescue not by sticking it to your shareholders or your customers or fellow citizens with the bill.”

Let me remind everyone of a tiny important detail in the business world, known as the contract. I believe the financial institutions can be forgiven for believing that they were borrowing money at a certain percentage rate, and then once the loan was paid back in full, further financial obligations for that loan would cease.

You want new taxes, unrelated to the TARP, to pay for a future safety net for financial institutions? Fine. You want to limit bonuses and salaries on companies that have yet to pay back their loans? Fine. But it is fitting that a liberal Democratic administration would start imposing new fees before Congress has even finished hearings about what went wrong in the financial crisis, much less passed new regulations.

Everyone repeat the new slogan after me! Taxes before Policy! Taxes before Policy!

Stuff You Should Care About

11 Nov

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This is a bit of a dumping ground for stories I think are important and deserve your attention.  I’ll keep a running list of these stories in the sidebar of this site under the Headline “Your Daily Homework”.  I’m not giving you the full backstory on each of these, just links that I hope you’ll follow.  Also, if you have something to add to any of these stories, please post the links and I’ll add them or write a longer piece on what you’ve provided.

Blackwater and The Mercenary Military

Jeremy Scahill is an independent journalist and author who has spent several years documenting the privatization of the American military and what that means for the future of our combat forces and ability to fight.  His latest story highlights a bribery scandal of epic proportions involving Blackwater officials and the Iraqi Government.

The mercenary firm Blackwater has become a symbol of the utter lawlessness and criminality that permeates the privatised wing of the US war machine. The company’s operatives have shot dead scores of Iraqi and Afghan civilians, while former employees allege in sworn statements that Blackwater’s owner Erik Prince “views himself as a Christian crusader tasked with eliminating Muslims and the Islamic faith from the globe”, and that Prince’s companies “encouraged and rewarded the destruction of Iraqi life”. Five Blackwater employees will stand trial in federal court in the US on charges that they slaughtered 14 innocent Iraqis, while a sixth Blackwater operative has already pleaded guilty. The company faces allegations of illicit weapons-smuggling and tax evasion, and is being sued for war crimes. The private army is under fire. And yet, despite all the action, none of the legal bullets has – to date – landed a serious blow.

Institutionalized Torture and Who We Are Becoming As A Nation

Glenn Greenwald tells the story of Maher Arar, a Canadian and Syrian who was tortured through America’s policy of rendition.

In 2002, he was returning home to Canada from vacation when, on a stopover at JFK Airport, he was (a) detained by U.S. officials, (b) accused of being a Terrorist, (c) held for two weeks incommunicado and without access to counsel while he was abusively interrogated, and then (d) was “rendered” — despite his pleas that he would be tortured — to Syria, to be interrogated and tortured.  He remained in Syria for the next 10 months under the most brutal and inhumane conditions imaginable, where he was repeatedly tortured.  Everyone acknowledges that Arar was never involved with Terrorism and was guilty of nothing.

The story that we sanction and commit torture has been told and sadly fails to inspire indignation amongst the chattering class nor the general populace.  However, the shocking aspect of this story isn’t necessarily what happened (even though it’s horrific), it’s that our courts are refusing to scrutinize the actions of the government.

In January, 2007, the Canadian Prime Minister publicly apologized to Arar for the role Canada played in these events, and the Canadian government paid him $9 million in compensation.  That was preceded by a full investigation by Canadian authorities and the public disclosure of a detailed report which concluded “categorically that there is no evidence to indicate that Mr. Arar has committed any offense or that his activities constituted a threat to the security of Canada.”  By stark and very revealing contrast, the U.S. Government has never admitted any wrongdoing or even spoken publicly about what it did; to the contrary, it repeatedly insisted that courts were barred from examining the conduct of government officials because what we did to Arar involves “state secrets” and because courts should not interfere in the actions of the Executive where national security is involved.

Yesterday, the Second Circuit — by a vote of 7-4 —  agreed with the government and dismissed Arar’s case in its entirety.  It held that even if the government violated Arar’s Constitutional rights as well as statutes banning participation in torture, he still has no right to sue for what was done to him.  Why?  Because “providing a damages remedy against senior officials who implement an extraordinary rendition policy would enmesh the courts ineluctably in an assessment of the validity of the rationale of that policy and its implementation in this particular case, matters that directly affect significant diplomatic and national security concerns” (p. 39).  In other words, government officials are free to do anything they want in the national security context — even violate the law and purposely cause someone to be tortured — and courts should honor and defer to their actions by refusing to scrutinize them.

If you’re interested in the details as to how the United States sent this innocent man to Syria to be tortured, you can read it here.  You can also read the details of his treatment while rendered by clicking here.  He was kept in a six foot whole, unfed, naked, urinated upon and beaten with electrical cables.  What did they get from him?  Nothing, he was innocent.  Detained due to false confessions given by other prisoners in exchange for an end to their torture.  All done in your name, for the security of America.

Senator Bernie Sanders Introduces the “Too Big To Fail?  Too Big To Exist!” Bill

Sen. Bernie Sanders introduced a very sensible bill into the Senate the other day, essentially saying that if a bank is to big to fail, (“any entity that has grown so large that its failure would have a catastrophic effect on the stability of either the financial system or the United States economy without substantial Government assistance.”) it needs to be identified by the Treasury Secretary and broken up into smaller corporations.  We all hate bailouts, right?  Both lefties and righties agree that bailouts are bullshit.  So, let’s do something about it.

Glass-Steagall

And while we’re at it, how about we go ahead and listen to Paul Volcker and re-institute the Glass-Steagall Act which kept commercial and investment banks separate.  Repealing Glass-Steagall in 1999 was a primary precursor to the huge economic collapse we just experienced.

“The banks are there to serve the public,” Mr. Volcker said, “and that is what they should concentrate on. These other activities create conflicts of interest. They create risks, and if you try to control the risks with supervision, that just creates friction and difficulties” and ultimately fails.

The only viable solution, in the Volcker view, is to break up the giants. JPMorgan Chase would have to give up the trading operations acquired from Bear Stearns. Bank of America and Merrill Lynch would go back to being separate companies. Goldman Sachs could no longer be a bank holding company.

In the Volcker resurrection of Glass-Steagall, commercial banks would take deposits, manage the nation’s payments system, make standard loans and even trade securities for their customers — just not for themselves. The government, in return, would rescue banks that fail.

On the other side of the wall, investment houses would be free to buy and sell securities for their own accounts, borrowing to leverage these trades and thus multiplying the profits, and the risks.

The bill was enacted shortly after the Great Depression began and helped maintain sanity in the banking sector until 1999.  The largest economic downturn since that Great Depression began shortly after it’s repeal.  Coincidence?  Not really.

The Right Wing In American Politics

As I discussed last week, the right wing is regionalizing and religifying in the runup to the 2010 and 2012 elections.  No politician represents the growth of the stupid in American politics like Sarah Palin.  At a speaking engagement in Wisconsin, Palin banned all recording devices, but one guy sneaked in an audio recorder.  Palin spent a lot of time talking about the “change” that Obama has brought and how that “change” doesn’t represent “real” American values.  As an anecdote, she points out that our new American coins no longer say “In God We Trust” on the front or back.  She was troubled by the fact that our national motto was moved to the edge of the coin and was no longer as visible as it once was.  She wondered who would make a decision like that.  Well, Crazypants McGee clearly didn’t do her research as it was the 2005 GOP Congress and President Bush who made that decision, not Obama.

Two things on this; (1) “In God We Trust” was adopted as our national motto during the McCarthy Red Scare.  The motto was originally “E Pluribus Unum”. or “Out Of Many, One”…too collectivist and socialist-y for today, I would imagine.  (2) Palin defines herself not by the issues she advocates or the positions she holds, but rather by her enemies.  She connects with people left behind by corporatism and capitalism by making it seem as if she is just as persecuted and left behind as they.  To them, she seems a regular person who reflects their values and is fighting against the machine that seemingly ridicules their uneducated and faith-based existence.  As America grows less educated and more angry by the year, Palin becomes a very dangerous politician and a very troubling threat to those of us who value intellectual analysis and thoughtful policy in our governmental leaders.

Rep. Alan Grayson’s Greatest Hits

1 Oct

Rep. Alan Grayson (D, FL) will undoubtedly be all over the news today for the following unapologetic slamming of Republicans

His statement on the floor of Congress which caused a controversy:

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It’s important to remember that he isn’t necessarily making blind accusations here.  Several Republicans have taken to the floor and made statements which informed Grayson’s speech yesterday.

His non-apology apology:

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Doubling down on his non-apology apology in front of corporate media enablers at CNN:

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As a dedicated C-SPAN nerd, I’ve been a fan of Alan Grayson’s antics on the floor for about a year.  He spices up floor debates with gimmicks, but he also kicks a whole lot of ass in the House Financial Services Committee.

I’d like to pull a few of my favorite Alan Grayson videos featuring his tough questioning of Federal Reserve personnel.  Plain and simple, he is a YouTube All-Star for politinerds and he asks tough questions in an attempt to figure out exactly what the Fed has done with $1,200,000,000,000.

Who did the money go to?

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Who the hell is in charge at the Federal Reserve?

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This one is my favorite.  He asks if the Federal Reserve has engaged in market frontrunning.  The general counsel for the Federal Reserve is totally flummoxed.

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Is he a grandstanding muckraker?  Probably, but he’s one of the few guys in Congress asking tough questions, regardless of his reasons for doing so.  After all, we are talking about $1.2 Trillion in money which has been lent/spent on the bailout of our financial industry and a healthcare system in horrible disrepair.  It would be nice if more Congresspeople spent their time on these two issues rather than worrying about fucking ACORN and birth certificates.

GM and Chrysler – Last Exit Before Bankruptcy

30 Mar

McClatchy is reporting as follows:

President Barack Obama on Monday will reject requests for almost $22 billion in new taxpayer bailout money for General Motors Corp. and Chrysler, saying the car makers have failed to take steps to ensure their viability.

The government sought the departure of GM chief Rick Wagoner and said the company needed to be widely restructured if it had any hope of survival. It said it would provide the company with 60 days operating capital to give it time to undertake reforms.

The government will grant Chrysler 30 days operating funds, but said it must merge with another carmaker in order to remain viable. Talks with Italian carmaker Fiat are underway.

GM and Chrysler have already received $17+ billion in federal funding to stay afloat, and had a further need for federal bailout money in order to avoid bankruptcy. They had both submitted strategic plans for recovery which have been deemed inadequate.

The problems with GM and Chrysler are so long-standing and fundamentally structural, there’s probably little way they can be fixed without something drastic like bankruptcy. The problem is that the public’s already weak confidence with these automakers will only become weaker when questions about warranty service enter into it. The feds, therefore, have instituted a warranty guarantee program to avoid that problem.

Many are making much of the idea that forcing Wagoner out represents little more than communism. The difference, of course, is that under communism the government expropriates private industry without recourse. Here, the companies came to the federal government begging, hat in hand, for money – and they accepted it under certain conditions.

Chrysler already got bailed out once in the early 80s, and it repaid the government every penny. This is nothing new, and accusations that the government is just trying to run business is intellectually dishonest and silly. The government didn’t ask to bail out GM or Chrysler – the automakers made the plea.

When Chrysler needed that bailout it was in the wake of the 70s era energy crises which saw MPG trump HP in people’s purchasing choices. Honda, Toyota, and Datsun sold fun, fuel-efficient cars while Detroit was still making crappy gas guzzlers. Attempts to compete in the small car arena came too slowly, and more often than not, they were failures. GM’s horrific late-70s diesels still curse passenger car diesel acceptance in the US to this day.

Throughout the earlier part of this decade, GM, Ford, and Chrysler relied on the sales of gas-guzzling pickups and SUVs. People love them, and the companies’ margins were higher when they sold these vehicles. All of a sudden, when gas hit about $4.00/gallon, SUVs and pickups getting 15 MPG were unsellable, and domestic automakers were faced with a small handful of decent, attractive, fuel-efficient cars. It’s no surprise that the company that would put the Aztek to market would soon fail.

GM and Chrysler have made poor decisions, and built mediocre vehicles for many years. They’re also the backbone of American manufacturing. When they came begging for public money, they sacrificed a great deal.

The Doomsday Clock of Aught-Nine

22 Mar

I am not a financial guy. I am not a patient or careful observer of the ins and outs of Wall Street, ancillary entities, or the ostensible regulatory schemes overseeing the markets. My eyes glaze over almost instantaneously at all of it.

To some degree, it seems that every decade needs its doomsday clock. In the 70s, it was an actual doomsday clock, figuring that the Soviets were going to throw some ICBMs our way at any moment, and it was up to Steve Austin to use his bionic powers to save us. In the 80s, it was pretty much the same thing, especially as the communist world began to destabilize and ultimately unravel. The 90s began the runup to the complete disaster we have on our hands today. The 90s started with Saddam Hussein giving the world the finger and raping Kuwait, combined with the new dangers in the wake of the breakdown of a bipolar world. While most people worried more about where Bill Clinton put that cigar, all hell was breaking loose in the middle east, and the dot com bubble burst, teaching us no lessons whatsoever in the process. Finally, this decade, we’ve had 9/11, two wars, all topped off with a steaming pile of financial meltdown.

My lack of patience and deficit of attention to financial things extend even to this Matt Taibbi Rolling Stone article exposing the massive kleptomaniacal fraud perpetrated by AIG, Goldman Sachs, the Fed, and other masters of the universe, all without any governmental oversight at all – not just meaningful oversight with teeth, but any at all. To this day, the lending practices of the Federal Reserve are not only secret, but any inquiry whether from Congress or journalists is met with the kind of eye-rolling you’d expect from a teenager engaged in conversation with her parent in a public place.

Taibbi analyzes what went wrong with AIG, how it committed massive fraud and left us footing the bill. He also argues that the whole bailout is, for all intents and purposes, merely a coup d’etat by Wall Street investment banks acting in concert with compliant politicians and impotent regulators.

There are plenty of people who have noticed, in recent years, that when they lost their homes to foreclosure or were forced into bankruptcy because of crippling credit-card debt, no one in the government was there to rescue them. But when Goldman Sachs — a company whose average employee still made more than $350,000 last year, even in the midst of a depression — was suddenly faced with the possibility of losing money on the unregulated insurance deals it bought for its insane housing bets, the government was there in an instant to patch the hole. That’s the essence of the bailout: rich bankers bailing out rich bankers, using the taxpayers’ credit card.

The thing about all this Wall Street bailout stuff is that you really do need to have some background in it to get any of it. The auto bailout is easy – everyone understands that if you sell a shitty product, you’ll fail. This stuff is complicated by design to ensure plunder without oversight.

The New York Times sort of pre-revealed yesterday what the Geithner – Bernanke plan is to “fix” the financial markets. As this guy points out, there’s not a single independent economist you can find who’ll say it’s a good idea.

Calculated Risk, Naked Capitalism, Paul Krugman,
The shorthand analogy would be to say that Wall Street is in cardiac arrest, and the government’s solution is to inject pure bacon grease into its circulatory system. Balloon Juice shorthands it:

If this were a medical emergency, it appears it would look something like this:

The Illness- reckless and irresponsible betting led to huge losses
The Diagnosis- Insufficient gambling.
The Cure- a Trillion dollar stack of chips provided by the house.
The Prognosis- We are so screwed.

Politically, the problem is twofold and paradoxical. On the one hand, the problem is so acute and crippling that swift action is needed. On the other hand, rushing into this sort of stuff isn’t necessarily the best way to handle such an acute and fundamental problem. Add to that a supercharged political atmosphere, the fact that the vast majority of media figures and politicians are as clueless about all of this shit as you or I, there seems to be way too much on the line to leave it all to chummy Wall Street insiders and doltish Washingtonians.

Brad DeLong has a Geithner Plan FAQ and two of the Q/A are:

Q: What is the Geithner Plan?

A: The Geithner Plan is a trillion-dollar operation by which the U.S. acts as the world’s largest hedge fund investor, committing its money to funds to buy up risky and distressed but probably fundamentally undervalued assets and, as patient capital, holding them either until maturity or until markets recover so that risk discounts are normal and it can sell them off–in either case at an immense profit.

Q: What if markets never recover, the assets are not fundamentally undervalued, and even when held to maturity the government doesn’t make back its money?

A: Then we have worse things to worry about than government losses on TARP-program money–for we are then in a world in which the only things that have value are bottled water, sewing needles, and ammunition.

Assigning blame isn’t necessarily of critical importance at this point. Taibbi spends a tremendous amount of ink going through the historical events that led to banks taking advantage of a dangerous combo of loosening regulations and regulatory loopholes to make incredibly huge bets which ultimately collapsed in on themselves. We then bailed them out, and still have no real regulatory oversight or sunlight clauses to both protect and inform the taxpayers.

Too many people are predicting cataclysm if all of this fails to work. Arguably, it’s the same catastrophe that would have happened had the original bailout not taken place.

Because it’s all so complex and specialized, and the stakes are unprecedentedly high, it’s time for the political elites to stop focusing on sideshows like AIG bonuses, and carefully examine what’s being proposed by the Fed and Treasury here. It’s time for the experts to step in – not the politicians. I don’t care what your representative or my representative thinks about it all. I care what respected economists and financial experts have to say about it. We ought to demand that everything is exposed in the sunlight and that every reasonable solution is considered and deliberated.

This is not the time for schoolyard bullshit. The grownups need to step up.

GM & Chrysler Look for $35 bn Combined

17 Feb

I’m not a bank aficionado, so don’t ask me about the bailouts or the Swedish model for nationalization or anything else. I haven’t read the stimulus bill signed into law today, so don’t ask me about that, either.

I do know, however, that GM and Chrysler are in trouble after 3 or 4 decades of making cars and trucks that are/were, for the most part, a bunch of crap. The Dodge Charger I rented in Vegas was nice enough, but it was rough enough around the edges that I’d never consider buying one. The Dodge Caravan I rented in Florida last year was adequate, but seemed to be light-years behind the class-leading Honda Odyssey. GM has gotten better, but not across the board, not for every car.

So, GM needs $30 billion, will eliminate 20,000 jobs by 2012, and will put Saturn to death by 2011 and consider getting rid of Hummer, too.

Chrysler needs $5 billion, and will eliminate a few thousand jobs.

If I was GM, I’d throw out the Saturn name and just import or build Opels, and let the Germans run it. I’d sell Hummer, and I’d re-configure the entire operation to enable it to be quicker to market with new cars, and get plants to be as modern and efficient as those anywhere else in the world. If I was Chrysler, I’d hire some new designers right away and start an entire new line of vehicles across the board. Jeep should have 3 – 4 models, and Chrysler should focus on luxury while Dodge focuses on muscle cars like the Challenger, and mid-range passenger cars. The Fiat deal gives Chrysler access to small, fuel efficient cars, and luxurious stuff like Alfas.

Every SUV should be available with a common-rail diesel engine for economy. Every car should have a diesel or hybrid engine option. GM and Chrysler both need to innovate not just in terms of engine technology, but also with respect to interior design and perceived quality. It doesn’t take much – hell, just copy a new Hyundai and it’d be an improvement over all of what Chrysler shits out and half of what GM bothers to try and sell.

When the car market is in a slide, the most innovative and economical cars are going to do well. GM and Chrysler don’t have too many of those, but Honda is going to sell a $19,000 4-door Insight that gets close to 60 MPG. Honda’s sales may be down, but it doesn’t have its hand out. During the SUV boom, it chose to innovate with the Pilot and Ridgeline while still investing in the Insight and Civic hybrids. Toyota built 4Runners and Highlanders, but it also built Echos, Yarises, and Priuses.

GM? It built Silverados, Cobalts, and a decade’s worth of awful Trailblazers. Chrysler built fugly Sebrings and $40,000 Grand Cherokees with rental-car interiors. No wonder they’re in trouble.

Their paths to salvation don’t lie in staff reduction or bailouts or plant closings. They must innovate and build cars that can compete with the Germans, the Japanese, and most pathetically, the Koreans – the country that gave us a joke called a “Hyundai” in 1985, and now builds the Genesis, which puts most of GM’s cars to shame.

Calvin & Hobbes on the Bailout

11 Feb
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Cue the freeners bleating on about the free market.

HT Expat