Even on those rare occasions when the Bush Administration makes the right call they bungle the implementation. After nearly eight years of gross incompetence this is hardly surprising, but here we go again. The latest bonehead blunder concerns the financial bailout. Of the $350 billion distributed so far, hardly any of the recipients either know or will say where the taxpayers' largess has gone, or if it is being used for the intended purposes of continuing to make loans or preventing foreclosures.
The total lack of accountability recalls earlier blundering performances such as Iraq and Hurricane Katrina. These dimwits never seem to learn from their mistakes. Or maybe as long as welfare is going to the rich they really don't care. The Associated Press conducted a revealing investigation. It's called "Where'd the Bailout Money Go? Shhhh, It's a Secret."
Given the financial meltdown and the burden of bad debt brought on by the subprime mess, a bailout to get money circulating again was needed. I myself agreed with the necessity of doing this, as you can check by referencing my earlier posts on the economy. What I did call for, however, was some strict accountability. But no such luck, apparently. The money no doubt is helping these firms in general, but no one can or will say how much is going to free up funds for intelligent loans and how much for mergers or executive bonuses.
JP Morgan Chase's spokesman said, "We've not given any accounting of, 'Here's how we're doing it.' We have not disclosed that to the public. We're declining to." The firm received $25 billion. Sun Trust Banks of Atlanta got $3.5 billion. They say, "We're not providing dollar-in, dollar-out tracking." Mellon Bank said of its $3 billion, "We're choosing not to disclose that." Comerica said of its $2.25 billion, "We're not sharing any other details."
Treasury Secretary Paulson's lame comment on the matter is, "What we've been doing here is moving, I think, with lightning speed to put necessary programs in place, to develop them, implement them, and then we need to monitor them while we're doing this. So we're building this organization as we're going." He wouldn't demand an accounting for every dollar as an up-front requirement before anybody got a single buck? And he's the Secretary of the U.S. Treasury? Unbelievable.
Now, after the fact, a bipartisan Congressional oversight panel is trying to get to the bottom of things. Chair Elizabeth Warren, appointed by the Democrats, will begin calling witnesses. Republican Scott Jarrett of Ohio remarks, "A year or two ago, when we talked about spending $100 million for a bridge to nowhere, that was considered a scandal."
Indeed, the more one finds out about this benighted gaggle of incompetents the more it seems they might indeed be the worst presidential administration in American history.
Showing posts with label Recession of 2008. Show all posts
Showing posts with label Recession of 2008. Show all posts
Monday, December 22, 2008
Wednesday, December 17, 2008
Reasons Behind Auto Rejection
There are three main reasons Congressional Republicans scuttled the move to provide a bridge loan to keep the Big Three automakers out of bankruptcy. They were to strike a blow against organized labor, curry favor and increased support from business and to serve the foreign automakers in their own states. It was a cold matter of political calculation. See the facts here.
An e-mail "Action Alert" December 10 to GOP Senators told them, "Republicans should stand firm and take their first shot against organized labor." They lost in the Senate by 17 votes, 52-35, but did prevent the Democrats from getting the 60 votes needed to break their filibuster, which was all they needed to do. Humiliating organized labor was their top priority. By breaking the union they can undercut a major source of funding for their Democratic opponents. The UAW has given $12.5 million to Democrats since 2000. That millions of Americans will lose their jobs or that the economy as a whole will suffer about $240 billion in losses if the companies go down is of little concern to them.
By beating down the union the GOP will stand to become even more popular in business circles and garner increased support from them. It is true that the Big Three have been supporting Republicans 3-1 over Democrats, so they are alienating the car companies. But they stand to more than make up for that with the rest of business and industry. They went along with the twenty times larger bailout of the (non-union) financial industry, so it's not that they are against helping corporations per se. They had no problem with no-bid contracts in Iraq or paying for mercenary forces there. And it's not that they have a problem with micromanaging private institutions. No, their requirements for agreeing to the help were to dictate reductions in workers' pay. Not management pay, of course, mind you. No, the signals are clear. Goodies for corporations, sure. But not if any of the help winds up in the hands of hourly workers. That is against their principles.
Finally, there is a decidedly home field interest element working here. The most vociferous opponents were from states where foreign, non-union automakers have set up shop. Sen. Bob Corker of Tennessee has Nissan plants and its U.S. headquarters in his state. Sen. Richard Shelby of Alabama has Mercedes, Hyundai and Honda plants in his. These men have a vested interest in favoring foreign corporations over American ones, and are wasting no time in doing so.
Their machinations are harmful to the well-being of the country and should be seen as such. Hopefully the Bush Administration will free up the $14 billion it has at its disposal to tide GM and Chrysler over until Obama takes office and a much larger contingent of Democrats takes office. Until then we are seeing once again the short-sighted, tit for tat, me first politics as usual that Obama was elected to end. The old guard has 34 days left and seems intent on trying to make the most of them. Their departure will come none too soon.
An e-mail "Action Alert" December 10 to GOP Senators told them, "Republicans should stand firm and take their first shot against organized labor." They lost in the Senate by 17 votes, 52-35, but did prevent the Democrats from getting the 60 votes needed to break their filibuster, which was all they needed to do. Humiliating organized labor was their top priority. By breaking the union they can undercut a major source of funding for their Democratic opponents. The UAW has given $12.5 million to Democrats since 2000. That millions of Americans will lose their jobs or that the economy as a whole will suffer about $240 billion in losses if the companies go down is of little concern to them.
By beating down the union the GOP will stand to become even more popular in business circles and garner increased support from them. It is true that the Big Three have been supporting Republicans 3-1 over Democrats, so they are alienating the car companies. But they stand to more than make up for that with the rest of business and industry. They went along with the twenty times larger bailout of the (non-union) financial industry, so it's not that they are against helping corporations per se. They had no problem with no-bid contracts in Iraq or paying for mercenary forces there. And it's not that they have a problem with micromanaging private institutions. No, their requirements for agreeing to the help were to dictate reductions in workers' pay. Not management pay, of course, mind you. No, the signals are clear. Goodies for corporations, sure. But not if any of the help winds up in the hands of hourly workers. That is against their principles.
Finally, there is a decidedly home field interest element working here. The most vociferous opponents were from states where foreign, non-union automakers have set up shop. Sen. Bob Corker of Tennessee has Nissan plants and its U.S. headquarters in his state. Sen. Richard Shelby of Alabama has Mercedes, Hyundai and Honda plants in his. These men have a vested interest in favoring foreign corporations over American ones, and are wasting no time in doing so.
Their machinations are harmful to the well-being of the country and should be seen as such. Hopefully the Bush Administration will free up the $14 billion it has at its disposal to tide GM and Chrysler over until Obama takes office and a much larger contingent of Democrats takes office. Until then we are seeing once again the short-sighted, tit for tat, me first politics as usual that Obama was elected to end. The old guard has 34 days left and seems intent on trying to make the most of them. Their departure will come none too soon.
Sunday, December 7, 2008
Detroit Must Be Saved
Have you noticed a strange sense of proportion among some policymakers these days? It seems that some who couldn't approve the $750 billion bailout for the financial industry fast enough have major misgivings about committing $25 to $35 billion to save the auto industry. Now, why would that be? Might it have anything to do with a white collar v. blue collar bias? With antipathy toward unionized industry? With an exceptionally cozy and often politically lucrative relationship between many lawmakers, lobbyists, and financial houses?
The collapse of any of the three major US car makers, GM, Ford or Chrysler would probably lead to the loss of 3 million American jobs. Not only the company itself but most US parts suppliers would probably go down. They operate on thin margins and the loss of one of their three major domestic customers would likely do them in. Thousands of dealers would go out of business too. It would spread to affect jobs in shipping, advertising, mining, insurance, lending and would echo through the stores, restaurants, service businesses and charities of every community where an auto plant, parts supplier, garage or dealership is located.
The loss of all that income would reduce funding for schools and state and local government as well. A widening circle of layoffs, falling demand, dropping sales and resulting additional layoffs would reprise the infamous downward spiral of the Great Depression.
There are also international competitive and national security implications. It is essential to retain a manufacturing base for competitive technological reasons. Similarly, a domestic vehicle production capacity must be maintained for military needs. A nation cannot safely leave the production of its military equipment in the hands of others. For all these reasons, economic, technological and defense, President-elect Obama is right to say that simply allowing them to fail "Is not an option." As usual, he looks at the overall national interest and answers the shrill voices with reason.
Ideologues on the right and left must be ignored. The rightists proclaim that the market must be allowed to work, even if it leads to 10 million Americans living in packing crates. The leftists seem happy to "stick it to the man," in the persons of the corporate chiefs, apparently forgetting the social calamity it would cause for millions of average citizens.
A short-term set of low-interest loans along the lines proposed by Sen. Carl Levin and Rep. Barney Frank should be approved so the Big Three can make it through the New Year. Then a comprehensive recovery package entailing substantial "restructuring," as Obama puts it, can be set up as his new Administration comes in. Corporate heads may be required to roll. Excess lines (Pontiac, Saturn) may have to be discontinued. Intelligent fuel economy standards and/or hybrids and plug-in EVs may need to be mandated. New distribution systems may need to be devised. The UAW has indicated a willingness to offer even more concessions, though hopefully they will not have to Wal-Mart themselves. (In spite of all the hysterical fulminations of right wing mouthpieces, labor expenses are only 10% of US car costs.) Perhaps the public will acquire an ownership stake in the companies, as it has in many of the financial firms undergoing rescue, until they can pay back what has been lent to them.
If $125 billion can be committed to one insurance company, AIG, surely a quarter of that amount can be applied to save the American auto industry and all the ancillary sectors and people who directly and indirectly depend on it. Chrysler was bailed out in this fashion decades ago and has repaid the loan many times over, both directly and through the good jobs it has provided and the taxes it has paid ever since. This is not simply altruism; it is in our national self-interest. Not to act is to take a step into the economic abyss. Detroit must be saved.
The collapse of any of the three major US car makers, GM, Ford or Chrysler would probably lead to the loss of 3 million American jobs. Not only the company itself but most US parts suppliers would probably go down. They operate on thin margins and the loss of one of their three major domestic customers would likely do them in. Thousands of dealers would go out of business too. It would spread to affect jobs in shipping, advertising, mining, insurance, lending and would echo through the stores, restaurants, service businesses and charities of every community where an auto plant, parts supplier, garage or dealership is located.
The loss of all that income would reduce funding for schools and state and local government as well. A widening circle of layoffs, falling demand, dropping sales and resulting additional layoffs would reprise the infamous downward spiral of the Great Depression.
There are also international competitive and national security implications. It is essential to retain a manufacturing base for competitive technological reasons. Similarly, a domestic vehicle production capacity must be maintained for military needs. A nation cannot safely leave the production of its military equipment in the hands of others. For all these reasons, economic, technological and defense, President-elect Obama is right to say that simply allowing them to fail "Is not an option." As usual, he looks at the overall national interest and answers the shrill voices with reason.
Ideologues on the right and left must be ignored. The rightists proclaim that the market must be allowed to work, even if it leads to 10 million Americans living in packing crates. The leftists seem happy to "stick it to the man," in the persons of the corporate chiefs, apparently forgetting the social calamity it would cause for millions of average citizens.
A short-term set of low-interest loans along the lines proposed by Sen. Carl Levin and Rep. Barney Frank should be approved so the Big Three can make it through the New Year. Then a comprehensive recovery package entailing substantial "restructuring," as Obama puts it, can be set up as his new Administration comes in. Corporate heads may be required to roll. Excess lines (Pontiac, Saturn) may have to be discontinued. Intelligent fuel economy standards and/or hybrids and plug-in EVs may need to be mandated. New distribution systems may need to be devised. The UAW has indicated a willingness to offer even more concessions, though hopefully they will not have to Wal-Mart themselves. (In spite of all the hysterical fulminations of right wing mouthpieces, labor expenses are only 10% of US car costs.) Perhaps the public will acquire an ownership stake in the companies, as it has in many of the financial firms undergoing rescue, until they can pay back what has been lent to them.
If $125 billion can be committed to one insurance company, AIG, surely a quarter of that amount can be applied to save the American auto industry and all the ancillary sectors and people who directly and indirectly depend on it. Chrysler was bailed out in this fashion decades ago and has repaid the loan many times over, both directly and through the good jobs it has provided and the taxes it has paid ever since. This is not simply altruism; it is in our national self-interest. Not to act is to take a step into the economic abyss. Detroit must be saved.
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