Senator and president-elect Barack Obama held his first post-election press conference on Friday– the same day that Ford and GM revealed their respective arterial sprays of red ink and third degree cash burns. Rather than highlight those stats and go for the close, bailoutwise, Obama played his political cards close to his chest. The exact text of his remarks are extremely revealing, in that politicians don’t really reveal anything unless they absolutely have to kinda way. “The auto industry is the backbone of American manufacturing and a critical part of our attempt to reduce our dependence on foreign oil.” Translation?
Obama’s opening salvo reveals that America’s next President expects Detroit to stop messing with Democratic promises to improve America’s vehicular fuel efficiency, buckle down and build fuel sippers.
The implication doesn’t exactly plow new political ground. Lest we forget, Detroit and Washington have been at loggerheads regarding Corporate Average Fuel Economy (CAFE) regulations since they were first introduced in 1975. For CAFE’s most recent update, Motown [once again] lobbied Democrats to keep the standards as low as possible, then cried poverty when it was clear they’d lost the fight. The Department of Energy loans were designed to assuage Motown’s sore-headed losers by providing access to $25b to do what they’re legally obliged to do.
Bottom line: any new federal money for The Big 2.8 will come with the same old strings attached. In case you missed the point…
“I would like to see the Administration do everything they can to accelerate the retooling assistance that Congress has already enacted.”
Retooling = building more fuel-efficient cars. As TTAC has highlighted, federal foot-dragging is not Detroit’s enemy. The regs for the $25b Department of Energy loans have been written with unprecedented haste. In fact, they’re more or less done. The more part is that they’re done.
The less part is that Detroit can’t use the money for anything other than which it was intended (fuel efficient cars not corporate liquidity). What’s worse, GM, Ford and Chrysler don’t qualify under strictures regarding financial viability. Obama’s message was code: tacit clearance for Congress, the DOE, President Bush, someone, anyone to pervert the legislation’s original intent and current restrictions.
Does Barack Obama know that the situation is well beyond retooling? If he does, he ain’t admitting it. And if he doesn’t, his economic advisers might want to write a memo on that one. STAT.
“In addition, I have made it a high priority for my transition team to work on additional policy options to help the auto industry adjust, weather the financial crisis, and succeed in producing fuel-efficient cars here in the United States.”
Weather the economic crisis. Now that’s what Detroit’s talking about! The first part of the statement is a not-so-clear signal to Motown (plausible deniability rules) that financial assistance will arrive via the Troubled Asset Relief Program, another economic relief stimulus bailout pork barrel package, and whatever clever shit the Obama administration and Congress can devise (tax credits for loan interest, etc.). But the second part of that statement… again with the fuel-efficient cars.
Clearly, Obama doesn’t want to be seen using taxpayer money to help Detroit build more SUVs, pickup trucks or automotive gas guzzlers. Which puts Motown in even more of a bind than before. Before, they could meet CAFE regs by balancing production of small, relatively fuel-efficient, uncompetitive, unprofitable small cars with sales of large, gas-guzzling, competitive, profitable trucks. Reading between the lines, Obama’s not going to let one red cent of public money sustain that mix.
So Detroit’s being painted into a corner: build competitive, fuel-efficient cars or fuck off and die. But what are the chances that GM can build these fuel-efficient machines and sell them in enough quantity at enough of a profit to make enough money to pay off their existing loans PLUS the federal assistance? Teen-tiny. Ford. Slim. Chrysler. None.
“I have asked my team to explore what we can do under current law and whether additional legislation will be needed for this purpose.”
Translation: Obama is not throwing the weight of his political victory– assured in no small part thanks to Motown/UAW-friendly states– behind a wider Detroit bailout (under some sort of new economic stimulus passage). Not yet.
For Detroit, that’s an industrial-size mixing bowl of not good. Without Obama’s unqualified support, and soon, they’ve got a real PR mountain to climb. On a more general level, the same “lack of urgency” that put GM, Ford and Chrysler where they are today could ruin their chances in the political sphere. If so, it’s game over.
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Well, well, well. Mr “I Usta Drive A Chrysler 300 But Ditched It For An Escape Hybrid When The Media Found Out” still claimes he wants Detroit to build fuel efficient cars? I don’t think it’ll ever happen like outlined here (sorry RF). He and his party can’t afford to piss off the unions or the voters in the auto-centric blue states by telling the automakers to toe the line to get the fed funding or go under.
That’s why the statement “I have asked my team to explore what we can do under current law and whether additional legislation will be needed for this purpose” is so important. That’s his out. All the Detroit 3/the UAW/Michigan politicians have to do is start whining about how there are too many restrictions on the money and they’ll have to put thousands more out of work and there’s no way they can stay afloat until they can get the “retooling” done without liquidity assistance, and shazam! “Additional legislation” that totally prostitutes the original legislation and turns a highly-structured diet into an all-you-can-eat buffet at the taxpayers expense.
Obama is a VERY brilliant lawyer and I hope he can stick to his words and force our auto makers to cooperate with our needs. We can not keep sending large amounts of money to other countries to buy 70% of our oil. And please don’t bother mentioning drilling for oil off our coasts – that would take 10 years and supply maybe 1% of the oil we need.
The executives at GM, Ford, and Chrysler fought against safer cars in the 1950s, they fought against cleaner cars in the 1960s, and they fought against fuel efficiency since the 1970s.
Hell, allowing the auto executives to put the Detroit 2.8 out of business is kind, we should be putting them in jail for being anti-American.
I appreciate the cynicism, but I would look at this a bit differently.
The overriding message of Obama’s Friday press conference: I’m not the president until the January inauguration. He does not want to be held responsible for whatever goes wrong between now and the inaugural. Accordingly, he is not going to be stating any grand agendas between now and then, for he is not the president and has no authority to do anything presidential until he becomes the president.
Obama has no choice to comment on the automakers, because it’s now the topic du jour on the nightly news. But he isn’t the president yet. Accordingly, he said as little as possible.
With respect to the automakers, he’s basically telling the Bush-era Congress and administration to carry on with their program. That message is in line with his overall message of his not yet being the president.
Since Detroit’s request for aid was supposedly based upon fuel efficiency, it’s easy to take a position that Detroit should use the money to make fuel efficient cars. It was really Detroit’s mistake to use fuel efficiency as an excuse to get the money, for that allows Washington to use the failure to deliver fuel efficient cars as an excuse to withhold the cash if it chooses.
Obama is wise to avoid claiming leadership when he doesn’t have it. However, he has a tendency to rely heavily on generalities and to avoid specific public agendas, presumably because he does not want to provide details that can provoke disagreement or create a basis for accountability.
I don’t know if we really know what he’s going to do, or whether Detroit will care for the result. I presume that his advisers will deal with the specifics. The members of his economic team are more pragmatic than ideological, so I’m hopeful that if they learn something about the auto business, they’ll realize that money alone is not enough to save it.
“Obama is a VERY brilliant lawyer”
And where did you get this idea? He’s been a VERY brilliant self-promoter – you bought it! – but his legal career consisted of activism and grant gleaning. His academic career was as an adjunct professor and he published no scholarly articles, which is almost unheard of. I guess he was too busy with the two autobiographies.
“Obama is wise to avoid claiming leadership when he doesn’t have it. However, he has a tendency to rely heavily on generalities and to avoid specific public agendas, presumably because he does not want to provide details that can provoke disagreement or create a basis for accountability.”
At this point, he’s been extremely specific on what he plans to do ONCE he becomes President. A middle class tax cut, winding down the war in Iraq, expanding health care for minors, and developing an economic plan that focuses on building up our infrastructure.
You can like all that potential and deficit spending or lump it. However, I seriously Detroit will be viewed as anything more than an opportunity to fulfill the later. The pensioners and retirees may be bailed out by the Feds… to some degree (I doubt they will get everything promised due to the cash involved).
But other than that, and the possibility of providing a protective umbrella via legislation that would give Detroit a unique opportunity for restructuring WITHOUT a C11 filing, I don’t see a direct ‘business as usual’ subsidization taking place.
Pch101: “(Obama) has a tendency to rely heavily on generalities and to avoid specific public agendas, presumably because he does not want to provide details that can provoke disagreement or create a basis for accountability.
He’s speaking in generalities for two reasons:
1. He’s a leader. A leader’s duty is to paint the target, the overall picture of what is to be done. It is up to the people who are tasked with the “how” parts to figure out the details and the specifics.
2. Like you said, he’s not the President yet. No need for details there either.
I do like the fact that he’s not explicitly caving in to either the UAW or the Management of Detroit by NOT saying “we’re here to help you.” He is sticking to the message of his campaign: “There are no easy ways out of a mess, it is going to take work. Detroit fucked themselves, so their going to have to unfuck themselves. We might offer a little assistance but only with the condition that Detroit do what it should have been doing all along.”
Honestly, I would rather see GM just go C11 or C7 than start allowing those bastards to feed at the public trough. Capitalism rewards success, not failure.
–chuck
At this point, he’s been extremely specific on what he plans to do ONCE he becomes President. A middle class tax cut, winding down the war in Iraq, expanding health care for minors, and developing an economic plan that focuses on building up our infrastructure.
With the exception of the Iraq war pledge, I would lump those into the “generalities” category. Politicians on both sides of the aisle tend to make promises that they can’t and won’t keep, and I doubt that Mr. Obama is an exception.
I would imagine that Detroit will get something, if but for the sake of 2012’s electoral votes. But whether those amounts will be significant and meaningful are another matter.
I suppose that it will ultimately depend upon how his advisers view the problem. Bush is leaving behind a massive budget deficit, and the next president will have no choice but to contend with that. That is going to put some constraints on how much they can do.
I’m curious that no one is mentioning some the biggest tools in the left leaning economist’s toolkit. That is tariffs, import restrictions and other forms of protectionism. I recognize the cash crunch is the immediate problem and the auto industry is increasingly global, but can you really doubt Obama’s ability to put some form of protectionism in a politically palatable package. Pardon my alliteration.
The fuel efficient cars are coming, thanks to the new CAFE standards. That’s a given, so I am not worried that the Big 3 will restarted idled SUV factories with the government money.
The question is whether tying the loans to new fuel efficient models and forcing the smaller cars via CAFE actually solves the problem. What if gas is cheap and people want to buy bigger cars and trucks, but now the Big 3 don’t have them to sell? What then? Toyota Tundra and Sequoia sales go through the roof and the Big 3 are on the short end of the stick yet again?
I can see it now: It’s 2013, and gas is cheap. Ford has lots full of Fiestas, Focuses and hybrid Fusions. A couple Expeditions hide out in the back lot. GM has fleets of overpriced Volts, Cruzes and 4 cylinder Caddys. No customers to be found. Meanwhile Sequoias and Armadas are selling for $3k over sticker because the Big 3 stopped selling full size SUVs.
I’m curious that no one is mentioning some the biggest tools in the left leaning economist’s toolkit. That is tariffs, import restrictions and other forms of protectionism.
Please, let’s all stop it with the faulty claims about what the left does and doesn’t do.
Import restrictions were a hallmark of the Hoover administration. Hoover, as you may recall, was a Republican.
The last time that we had substantial restrictions on the importation of cars was under Reagan, who imposed “voluntary quotas” that were anything but voluntary.
The US continues to maintain the import tariff on trucks, an old holdover of a Kennedy-era trade dispute called the “chicken tax.” Nixon, Reagan and both Bushes could have repealed this if they wanted to, but clearly, they either supported it or else could live with it.
Import tariffs as a tool for protecting Detroit are highly unlikely, the odds are approaching zero. We all know that wide-scale tariffs produce wide-scale retaliation.
As it so happens, the folks who sell us lots of imports are the very same folks who buy our debt, so we couldn’t do it even if we wanted to. Unless Rick Wagoner has several hundred billion dollars in his checking account that he can use to purchase US treasuries, you can pretty much forget having any tariffs.
the federal government should just
guarantee the warranties of vehicles purchased.
then the auto companies can reorganize under
Chapter 11 and still not lose sales because
they are in bankruptcy
Tariffs ain’t gonna cut the cheese anymore.
They really aren’t imports anymore, ya see. Honda still makes the Fit and I think the CR-V in Japan. That’s about it. Not sure about Toyota, but plenty of their stuff is made in the US. Probably more than enough to cover demand in this awful market.
Hell, Detroit makes plenty of cars in Mexico, so if they mess with Nafta that will screw with them too.
I’m hoping Obama doesn’t cave too bad. The public at this point is what 70% against bailing them out? More people than voted for Obama…
As I was listening to Obama’s press conference, my ears heard ‘ More Money for Detroit‘ but the little voice in the back of my head heard ‘Higher CAFE Standards‘.
I totally agree with Frank Williams comments with the only thing I will add is…The people at the very tops of the Big 3 have never played by the rules, especially with money, and as such, I fully expect they will do whatever they want to do with the money once they have it in their control-rules be damned…same as always, right?
But…it sure would be interesting to see an activist Treasury or Commerce Department or even White House start asking ” So…Toyota is on Prius Mark3 at $20,000 and you’re trying to sell me on Volt Mark1 that isn’t even out yet and will cost $40,000+?!?!? Huh? Tell me once again why we gave you the money? The idea of the loans was to make you more competitive, remember?!?!”
I of course, temper my rhetorical Washington questions of the Big 3 with the FULL expectation that most of the people in DC have nearly ZERO understanding of the concept of ‘Lead Time’…no, no, no they expect finger-snap solutions and NOW!!
It will be very interesting to watch the Big 3 slop up the money and do whatever they want with it and then later watch the higher-CAFE-standard lovers demand that Obama explain why we still have 7-passenger SUVs in the Big-3 dealerships; that will be amusing.
I hope Obama is doing exactly what I think he is doing.
I hope he is planning to invest in the big 3 car companies of America to force them to re-open American factories in Detroit, and other parts of this country hardest hit by the economy.
Some call it socialism, some call it protectionism but I CALL IT COMMON SENSE.
This is how you deliver on promises to produce JOBS and to improve the economy. I want Obama to protect American jobs by giving companies INCENTIVES to keep them in America and taxing them for outsourcing.
Producing crap vehicles is the problem of GM/Ford and especially Chrysler. The ghosts of UAW past will never leave. I love how the UAW leaders say they are “victims” of this debacle. Idiots. I say let the natural cycle of bad cars and bad management be eliminated by the companies dissolving. Toyota/Honda/Nissan/Kia/Hyundai/Mitsubishi and the others will pick up the slack. If needed, these companies will certainly purchase assets from the Detroit Bad Boys.
Perhaps a dose of Ghosn would be the right fix.
As it so happens, the folks who sell us lots of imports are the very same folks who buy our debt, so we couldn’t do it even if we wanted to. Unless Rick Wagoner has several hundred billion dollars in his checking account that he can use to purchase US treasuries, you can pretty much forget having any tariffs.
When I said “left leaning” I knew someone was going to bring up Hoover – my bad. Still, in recent history (let’s say Nafta) the left side of the isle has been more protectionist.
Regardless of that fact, protectionism has forms besides tariffs and no one is talking about them. I’m not even sure protectionism is bad in this case. Plenty of people play ball with China despite their Automobile Industry Development Policy.
People buy US debt because they believe it is safe (witness the recent increase in the value of the dollar) but I wonder if it will be viewed as more or less safe without a viable auto industry.
In Europe, VW has several high performance small cars that get 30 plus mpg. How long was their lead time?
Flashpoint :
Common sense says that government money shouldn’t spend our tax money on any company that can’t become profitable.
It’s what the Brits call a non-starter. Look at the UK’s nationalization of the coal, steel and automotive industries.
william442 :
You can’t view this in isolation. These new Detroit cars– whenever they arrive (should they arrive) must compete against transplant products– which already account for over 50% of the U.S. new car market.
What are the odds? And why play with MY taxes?
This is how you deliver on promises to produce JOBS and to improve the economy.
That isn’t how to do it at all.
Let’s suppose that I open a burger stand. As it so happens, I buy rotten meat — after all, it’s cheaper! — the buns are stale, the lettuce is wilted, the service is indifferent and even the pickles aren’t so good.
Once the public figures out that I sell a lousy burger, I’m going to steadily lose business. As time goes on and word gets out that there is a better burger stand down the street that sells better burgers for just slightly higher prices, things will get even worse for me.
If the government loans me money to support my failing burger joint, it will prop up the business temporarily but unless I figure out how to get more customers, it’s a matter of time before I either fail or need more money.
Detroit has been selling lousy burgers for quite some time. They’ve seemingly tried everything — they’ve cut the price of their burgers, negotiated down the price of the relish, taken out plenty of advertising (including lots of discount coupons) and fired workers who have nothing to do, thanks to the lack of customers.
Except that they haven’t tried everything. They haven’t done the one thing that counts the most — they have failed to make a better burger. Since there are plenty of other places for customers to buy burgers, that’s a problem for them.
Giving them money and factories doesn’t fix the bad burger problem. Detroit needs customers, and more importantly, managers who understand that there is a reason why they are losing customers. That requires admitting that the customer is right to have abandoned them — Detroit’s products are inferior to the competition, and improving those products is key to their survival.
The lack of money is a symptom of the problem, not the problem itself. Companies such as Toyota had enough foresight to build the reserves that would allow them to survive periods like this with lower profits or even losses. The fact that GM didn’t do the same says much more about GM’s management than it does about the economy.
lets asess MPG on seats and haulage capacity rather than number of vehicle. MPG per seat, or MPG per ton, rather than MPG per vehicle
And tax the things that way. Big time.
Then someone who wants 7 passenger SUV or F-350 to go buy cigarettes at the corner store, can do it with 6 open seats, or empty bed, and pay out the nose for it. No guilt.
Obama? At least he actually HAS ideas. GWB? none of his efforts reflected his own thought. It was all people behind the curtain.
Yes, CH 11, I really don’t know why mgt has opposed this all along. Well obviously for reasons of personal compensation, but no other reason.
Still, in recent history (let’s say Nafta) the left side of the isle has been more protectionist.
NAFTA was supported by Clinton. NAFTA is not exactly a stellar example of protectionism.
Plenty of people play ball with China despite their Automobile Industry Development Policy.
That’s because nobody can compete with Chinese labor costs and their market potential makes foreign companies and their governments salivate.
In the case of the US, it’s also a matter of the Golden Rule — he who has the gold makes the rules. The US needs to prop up its deficits, both trade and budget, with sales of treasuries, and the Chinese buys loads of them. If they stopped buying them, we would be in a world of hurt.
folkdancer:
Hell, allowing the auto executives to put the Detroit 2.8 out of business is kind, we should be putting them in jail for being anti-American.
You must have missed the memo from the campaign. The term “re-education camp” is the preferred usage over “jail”.
The buck stops here. – President Harry S. Truman
Free trade – does not exist. It is a fairy tale. When I took my economics classes – admittedly at an engineering school, not a business school – we were taught free trade was always good, because if (this is the big if) the currencies were allowed to float, trade deficits would always be eliminated (the yen would strengthen to the point it would be cheaper to produce in the US eliminating deficits).
We have a massive trade deficit with Japan (Honda does not offset all that is imported here). For over four decades. Floating currencies never solved the problem. Therefore we do not have free trade. Japan publicly states they will do whatever it takes to trash the yen to maintain their manufacturing exports.
Allowing the auto industry to expire means it will never come back. Not in any real sense, only in a very token form.
Has US management sucked? yes. Has the UAW sucked? yes. Do we want to be a third world nation? No. So the auto industry has to be saved in some form. It makes no sense to provide a bailout which will fail. The key is, how to provide a bailout which will succeed. Which at the very least means all new management. And maybe chapter 11 is needed to get there. The bondholders are probably the biggest obstacle to Chapter 11.
Regarding protectionism…
Pch101:
Please, let’s all stop it with the faulty claims about what the left does and doesn’t do.
Import restrictions were a hallmark of the Hoover administration. Hoover, as you may recall, was a Republican.
Please. Going back ~80 years for party political positions is nutty. And Hoover’s successor, saintly FDR, was hardly a free-trade stalwart. He and his vast Democratic majorities let Smoot/Hawley stand.
Currently, it’s reasonable to state that most of the protectionist sentiment in the country comes from the left of center. And yes, thank god, there are plenty of exceptions in both parties, so that the chances of another Smoot/Hawley are minor.
“In addition, I have made it a high priority for my transition team to work on additional policy options to help the auto industry adjust, weather the financial crisis, and succeed in producing fuel-efficient cars here in the United States.”
Welcome back Malaise Era… I hardly missed ya.
Matt51:
So the auto industry has to be saved in some form.
The auto industry IS saving itself. It’s transforming from Michigan and the rust belt to the ‘red’ and ‘near-red’ states. Heck, a new Honda plant opened just last month in Indiana.
If Michigan wanted to help itself, a simple solution would be to (C)ut it’s current labor law, (C)opy Texas’ labor law, and (P)aste Texas’ law to Michigan statutes. A good lawyer could do it in a day…
And Michigan may even get a future Toyota plant – although they’d probably build it in the U.P.
And Hoover’s successor, saintly FDR, was hardly a free-trade stalwart. He and his vast Democratic majorities let Smoot/Hawley stand.
That is incorrect. FDR’s administration crafted Bretton Woods, which fundamentally reoriented the international map toward free trade and low tariffs, and eliminated Smoot Hawley.
Smoot Hawley was a byproduct of Republican congressmen who were attempting to deal with the depression by eliminating US excess capacity and conserving cash. That was a huge mistake, and the FDR era led to a new wave of thinking that did the opposite, expanding liquidity through support of the credit system and employment.
With Bernanke running the Fed, you can expect more of the same. The US made the same contraction mistakes time and time again with every depression prior to Roosevelt, and now we know better.
Troonbop: For starters, Obama was president of the Harvard Law Review. As a lawyer, I can tell you that that’s the pinnacle of law school achievement. It was only then that he did community organizing. (And anyway, why that work should be met with such contempt is a mystery.) In addition, he taught law at the University of Chicago Law School, one of the top law schools in the country (they offered him a full professorship also). He then went on to write two highly praised books, got elected to the U.S. Senate, became one of the two Democratic finalists, beat out a formidable contender in Hillary Clinton and proceeded to defeat a famous and heroic American senator who had endlessly more experience on the world stage. And all this by age 47! You must have had some remarkable accomplishments in your own life to be so cavalier about Obama’s.
Pch101: “Bush is leaving behind a massive budget deficit, and the next president will have no choice but to contend with that. That is going to put some constraints on how much they can do.”
Your analysis is quite thoughtful, but I’d partially disagree on this point. Economic pump priming is the name of the game right now, and deficit reduction will become a higher priority only once the economy has stabilized.
I expect that over the next year or so we will see levels of new spending that would not have been conceivable before Wall Street’s collapse. This would have happened regardless of who won the presidency.
troonbop: “His academic career was as an adjunct professor and he published no scholarly articles, which is almost unheard of.”
I get that you want to be dismissive of Obama, so I suspect that it doesn’t matter how I respond. But for the record, Obama is a fairly typical example of a “pracademic.” The only reason to publish scholarly articles is if you seek a tenure-track career. Obama didn’t. That doesn’t reflect badly on his scholarly abilities, e.g., editing the Harvard Law Review was quite an honor.
To borrow money, one must have a willing party who will buy the bonds/notes/etc.
It is not that far of a day into the future when the Chinese, Japanese, and Arabs realize the U.S. economy is a house of cards built upon debt, and loaning to the U.S. that will be paid off in the future with widely reduced U.S. dollars is not a good investment.
The policies espoused by Obama is nothing but old school big government spending, which long term is the exact opposite of what should be done. But when did politicians ever think long term? A Trillion dollar deficit will be chump change in next few years, as the collapse of the U.S. government’s finances reaches it’s pinnacle.
The only answer left for the U.S. is to fire up the printing presses. That means inflation or hyperinflation. Consumer goods, all imported, will cost a ton, but you can get a restaurant meal cheap, just like in any other 2nd world country.
Obama is a VERY brilliant lawyer
Without using Google, can you name a single case he argued successfully?
There’s nothing to indicate that he’s brilliant, let alone very brilliant. He’s smart, no doubt, and probably has an IQ around 135 or 140, but that’s a long way from brilliant. As for his expertise in practicing law, you’d be hard pressed to find a single example of brilliant lawyering in his history. Actually, other than working hand in glove with ACORN to get Citibank to issue subprime mortgages, you’d be hard pressed to find any actual lawyering on real cases on the record. There are attorneys who graduated from second and third tier law schools who have had more noteworthy legal careers than Obama with his Ivy League credentials.
That doesn’t reflect badly on his scholarly abilities, e.g., editing the Harvard Law Review was quite an honor.
He never was an editor of the Harvard Law Review, he was named president of the Review. You’re correct about it being quite an honor, as it’s mostly an honorary position with little legal scholarship involved.
Instead of showing proof of his supposed legal scholarship, you offer an excuse why no such proof exists.
Give them their damn money, we don’t want to see GM, Ford and Chrysler go under.
Bozoer Rebbe: I see a lot of Republican spin in your analysis. This kind of debating gets real old, because it essentially amounts to politics as a demolition derby.
Bozoer Rebbe: I see a lot of Republican spin in your analysis. This kind of debating gets real old, because it essentially amounts to politics as a demolition derby.
Perhaps I’ve learned from how Democrats have acted for the past 8 years.
For the record, I’m an independent, not a member of either political party. I voted for some Democrats last week, including Carl Levin (mostly because I think he’s a mensch and fairly honest for a politician, and because he’s responsive to his constituents, though I disagree with him on ideology).
Now that the left is in power, they want an end to partisan bickering.
In any case, my comment was not partisan at all and factual, not spin. Obama has a thin resume, no record of real legal scholarship and what little lawyering he did was on behalf of left wing political agendas. Them’s the facts, not spin.
The guy is smart, but he’s no genius and doesn’t appear to have had an original thought in his life.
Perhaps the problem is that most folks are not very smart. To someone of average intelligence, a person with an IQ over 130 will appear to be very smart. I’m not sure what my own IQ is, but I typically test in the 98th or 99th percentile and it’s probably about 140 or 145. All my life I’ve had people call me a genius or brilliant and I admit to being clever. Fortunately, though, I’ve met some true geniuses so I have some perspective on my own intelligence. One friend has a PhD in nuclear chemistry from Princeton. Another is a transplant cardiologist who graduated #1 in her class at Harvard med school and trained with DeBakey in Texas. I’ve also been fortunate to know some brilliant rabbis like Adin Steinsaltz, Shmuel Irons and Nathan Lopes Cardoza. As I said, most folks think I’m exceptionally smart but real geniuses have to go slowly for me to keep up.
Obama may be smart, but he’s no genius.
All this talk about “fuel-efficient cars” when fuel is back in the $1.00/gal range is a tough sell. Not much interest, excitement, or support for it.
Someone at work was always very bummed out that his 2004 Expedition only got 13mpg on the highway back when fuel was $3/gal isn’t concerned now that it is $1.80/gal,
Prius and Smart cars have fallen off everyone’s radar.
Guess someone will have to pump the prices up to $4/gal to create some change.
Unreal that it was only back in July when oil was like $150/barrel and only seemed like and looked like it could only go towards $200 and beyond. $50 a barrel now and it’s considered pretty much worthless. A lot of money was made at $150. The stuff is three for the price of one now.
GM doesn’t have the years it takes to “retool” and make these new special magical cars out of thin air. All they’ve got lined up is a $40,000 Volt and $80,000 Hybrid Escalade, and $100,000 supercharged Vette.
Aveo? An $8,000 price tag just isn’t enough for me to run out and buy one paying cash up front. Hybrid at that price? Maybe, but it would have to get insane mileage. Great mileage as a 4 banger? Maybe at 75mpg, but I just don’t know. Don’t much mind my V8 at 22mpg at these current fuel prices.
A low cost electric Aveo? I’d be all over that. Easy to build those too. Already have the car, just put the third party drive line and pack in it! But it would take away from the Volts smoke and mirrors.
You see, GM is in the same hole they have always been in with the Vette. Couldn’t have lesser cars offering more performance then their flagship vehicle. Can’t have something better come out before the Volt, even if it is more logical.
$40k for a fuel burning Volt? That’s a no go GM. Lead balloon. Hybrid Escalade.
GM needs to start making all their money from the stock market like Porsche does!
Give them their damn money, we don’t want to see GM, Ford and Chrysler go under.
Sure, Davey, that is a great idea. But when you look at the bottom line of your pay check, remember who is paying for it….it is you.
The word ‘capitulation’ is being used often given the sorry state of investments now, and I think it should apply to those of the Republican bent after the VERY sorry performance of W and his cronies in congress. But no; we see Obama’s legitimate accomplishments being dissed already and see him blamed for things he hasn’t done. No surprise really, and it’ll only get worse no matter how stellar his performance, which the country desperately needs.
We’ve seen Paulson & Co. dish out billions to the likes of AIG with zilch results on the plus side, and huge bundles to other financial institutions, that was intended to thaw the credit markets. But the $ millions in bonuses for failed executives seem to be safe for the most part, and, instead of using the loot to thaw the credit markets, they’re talking of takeovers and dividends. And we’re bitching about the car companies? OK, they, the car companies, or rather their execs and stock holders, deserve to be targeted and wiped out financially, and I hope it happens. If it takes a few tens of billions to prove the obvious of their non-viability, it’ll be a bargain relatively speaking. The best, and only eventual path, is bankruptcy in which the sleeping stockholders get nothing, and the execs replaced. I think it just that the workers, line, engineers, IT, etc., get sufficient help in the way of unemployment assistance to survive until this thing stabilizes at whatever level it does.
I think there’s a good chance that lots of people will get a graduate course in real life experience by the time this settles down, which might be some years from now. I’ve read countless nasty comments relishing the fall of UAW members and that anyone without a degree should expect to have an income below the poverty level no matter how hard they work, their ability, etc. Hopefully we’ll have more empathy for one another in a few years. If Obama and the Democrats aren’t able to right the ship, Ms. Pallin will be ready to step in and fix things.
I’m OK with my taxes going up if it means at some point in my life I can buy a new F150 or SuperDuty that was built in the US by people who are paid well and have health benefits.
OK, Davey, but are you OK with Wagoner and Lutz’s bonus payments? Is welfare only for corporations or should poor people also receive “bailouts?”
The national debt of your country has doubled in the last six months. It is higher than it ever has been in the entire history of the USA. That might be a very expensive F-150. In fact, your grandchildren might be paying for it, Davey.
krj1965 :
November 9th, 2008 at 11:39 am
I’m curious that no one is mentioning some the biggest tools in the left leaning economist’s toolkit. That is tariffs, import restrictions and other forms of protectionism.
Thing is, he can’t do that. Imagine the outcry from enviromentalists if he raised tariffs on the Prius.
Yeah, that’s not going to work.
Plus, a lot of his voters buy imported cars. They will be pissed if the price of such goes up due to his actions.
I don’t expect tariffs to be part of any government package to save the Detroit automakers. I expect a large variety of low-interest loans to be the main part of the package.
mel23, cronies in Congress? Democrats have been in control for the past two years.
Hey, does anyone here know the average Total Cost per Employee on a Big 3 Assembly Line?
(salary, health, pension, union crap, other benefits, etc.)
Reason: How Far above what a Reasonable Market Rate for the work is that cost?
GM needs to start making all their money from the stock market like Porsche does!
Actually, there have been periods in the past three decades when the domestic car companies were flush with money and making greater profits off their cash than they were off their cars. When a company makes more money off of finances than with product it’s never a good omen for the quality and value of the product.
I’m no great businessman, but it’s always seemed to me that the primary focus of a business should be product and I’ve never been a fan of interchangeable CEOs. While there are things common with all businesses, people who run Whirlpool should care about appliances. I don’t really care if the CEO is a bean counter or engineer as long as they have a passion for the particular product they make or market they serve and what makes that company unique. Otherwise it’s just a job.
RF is big on brands and TTAC has discussed how Porsche has diluted and corrupted their brand. The Porsche family’s financial machinations and takeover of VW are of a piece with the Cayenne and Panamera, because the Porsche family doesn’t care about making cars as much as they care about making money. Considering the patriarch of the clan is a contender for the title of history’s most amoral engineer*, this doesn’t surprise me.
*Don’t bother citing Godwin’s Law. It’s changed meaning to the point where it’s now a heckler’s veto to any reference, however oblique or however pertinent, to the events in Germany circa 1933-1945.
The opinion polls that I’ve seen all show that something like 75% of the American people are opposed to the bailout of the Big 2.8. Obama can let them go under and it won’t have that big of an impact on his ability to do the other aspects of his job.
The word ‘capitulation’ is being used often given the sorry state of investments now, and I think it should apply to those of the Republican bent after the VERY sorry performance of W and his cronies in congress.
Please Google [Dodd, Franks, Fannie Mae, Countrywide] before discussing cronies. Did you know that Barney Frank’s lover during the 90s was a VP at Fannie Mae in charge of creating derivatives sold to Wall Street?
While many have a role in the current financial crisis (that includes anyone who benefited from low interest rates over the past 15 or so years) there’s no question that Democratic fingerprints are all over this debacle. Should the Republicans and Bush done more to stop it when they held Congress? Sure. Did the Republicans spend like drunken sailors when they were in power and did gov’t debt contribute to the problem? Absolutely – and they’ve been roundly condemned for doing so by most ideological conservatives. However, Bush’s role in the financial meltdown is a relatively minor role compared to that of Dems in Congress and Dems on Wall Street.
We’ve seen Paulson & Co. dish out billions to the likes of AIG with zilch results on the plus side, and huge bundles to other financial institutions, that was intended to thaw the credit markets.
Credit markets have indeed measurably thawed. The LIBOR rate has dropped every day for the past 3 or 4 weeks and is half what it was when the credit markets locked up.
I think it just that the workers, line, engineers, IT, etc., get sufficient help in the way of unemployment assistance to survive until this thing stabilizes at whatever level it does.
It won’t stabilize. If GM, Ford & Chrysler all go down, taking suppliers with them, the unemployment rate could more than double from its current rate of 6%. It’s won’t be just workers, line, engineers, IT, etc. at the domestics that will be unemployed. It will be people at HP, Dell, Cisco and maybe Apple and Microsoft too because the Big 3 buy a lot of computers and software. Electronics companies, textile companies, steel companies, you name it, they’ll take a hit. About one in 13 workers in the US are employed directly or indirectly by the domestic auto industry. If their jobs go away (and no, they won’t all be employed by increased sales of US made Toyotas and Hondas), I can see unemployment here reaching 15% or more.
Take away 8% of US jobs and you’ll start seeing plenty of collateral damage wiping out businesses completely unrelated to the auto industry.
Johnster:
Probably that’s the same 75% of Americans who bought a domestic vehicle sometime in the last 20 years.
The opinion polls that I’ve seen all show that something like 75% of the American people are opposed to the bailout of the Big 2.8. Obama can let them go under and it won’t have that big of an impact on his ability to do the other aspects of his job.
The problem is that those 75% of Americans don’t understand that if the domestics go under it will have a big impact on their ability to do their own jobs because their own jobs may go away.
At the risk of being Johnny one-note, this country hasn’t had any kind of industrial policy since the late 1960s at least. We’ve allowed the gutting of our manufacturing base because people were being employed by the growth of the service and information technology sectors. That’s been foolish. It’s like saying that just because less than 3% of Americans make their living farming that we no longer need agriculture and domestically produced food.
A healthy manufacturing base is vital to any modern economy. We’ve allowed our manufacturing base to wither and now we’re paying the piper.
Probably that’s the same 75% of Americans who bought a domestic vehicle in the last 20 years.
Actually, if 75% of Americans had bought domestics for the past 20 years, GM, Ford & Chrysler would be in much better financial shape.
A country doesn’t need an industrial base – information economy is the future.