Well – - – the gov’t could allow the automakers to bring in all their rest of the world products like the little diesels and city cars. Yes, we would have quite a selection of 35 mpg cars to choose from in no time and no they would not automatically be unsafe or gross polluters. These little cars could be products produced by the very same GM and Ford we already know so well. Ooops! Opel is sold. GM may no longer have any European products except rebadged Daewoos.

I hope the new Opels come to America. I really like the Astra and the newest Vue. Just not in the market for a new car right now…

The problem would be the delay between when the average American consumers first saw them and then first gave them a chance. Around here (small town TN) European cars are still a rarity. Still meet people who would never buy anything but a Detroit product no matter how bad it was or how good the competition is. This IS changing. Had an elderly relative who asked if my later 90s VW still had the engine in the back like his 60s Beetle. Alot of people just don’t know that much about those products.

Wonder how that would work. I imagine the car mags slaying any newcomers to the American market worrying about all sorts of minutae and ignoring a good product if it was one. Can’t have a Corvette guy reviewing working man’s cars. They too often just don’t “get it”.

I mean, if changing fuel efficiency is as simple as passing a law, why not have Government Motors lead by example and start immediately producing a full line of vehicles that get 35.5 miles per gallon?

Then Americans could shed all those spacious, safe SUVs and Mini-Vans they hate so much and drive match box cars made out of straw and bark that run on Hope and Rainbows and Unicorn poop.

You’re all for flimsy, unreliable cars? How about auto repairs, are they expensive?

I’ve had 5 Toyotas and no major repairs. My brother-in-law has had 2 Cadillacs and no end to his headaches, including a transmission that died 2 months in.

GM is toast, especially once the government forces them to build “the tiny vehicles Americans want so badly”.

This is gonna be fun.

I’m all for it, cars are way too expensive.

Personally, I’d be happy to just sit back and watch this house of cards burn to the ground. Then perhaps people would finally wake up and stuff the federal government back into the Constitution.

Hmm… learn something every day.

Democrats control the WH, The House and the Senate. They want full control, they got it. They also have 100% responsibility for everything that happens, just like Bush was blamed every time some nutjob in Iraq exploded a roadside bomb.

>>> They want me to consider them in the next election?

Actually, does it really matter? Until Obama showed them how to *really* steal from the next generation, Bush and the Republicans spent like drunken sailors.

>>> It might lead to a Depression again but I think once that dark period was over we’d be alot smarter about how we managed our money and our consumer habits.

Agree with ya there. The government cannot make financial pain go away, all it can do is prolong the agony by mortgaging it out to future generations.

Personally, I’d be happy to just sit back and watch this house of cards burn to the ground. Then perhaps people would finally wake up and stuff the federal government back into the Constitution.

But until we realize that prosperity is not built on getting the government to rob Peter to pay Paul, we’re %$#&ed.

Oh no – that’s just letting the Republicans sit this one out. They want me to consider them in the next election? They better be contributing constructive criticism or assistance to the president we have right now. If Barack Obama won’t play nice then the Republicans ought to out him with public policy suggestions that are actually public. Just looks like the Republicans are running interference to me.

Anything else is just another version of Rush Limbaugh. “Barack Obama sucks!” Why Rush? Ahhhhhh… What would you have him do??? Ahhhhh…

What worries me about the Democrats is that in addition to trying to fix America’s immediate problems, I worry they’ll be pushing through a bunch of long term traditional liberal policies whatever their cost – tangible and intangible.

Maybe this is where a third party might step up with something credible? Never mind…

Yeah I agree with you JMATT – irresponsible companies ought to be allowed to fail. It might lead to a Depression again but I think once that dark period was over we’d be alot smarter about how we managed our money and our consumer habits. Do I want to live through a Depression? Not really.

Am braced for the other shoe to drop though. The talking heads are telling us we’ll be back to spending our money willy-nilly come later this summer. Riiiight. Like all of these layoffs and consequent frugal spending by laid-off Americans isn’t going to have some sort fo ripple effect. As if inflation isn’t right around the corner thanks to the gov’t spending. As if folks with a job aren’t going to continue to chill this summer.

Who cares? He lost. I was screaming at Bush in September when this whole chicken-little bailout hysteria started. They should just let irresponsible companies go out of business and let the responsible companies scoop up the assets for 10 cents on the dollar.

So, no. “What Would John McCain Do?” is not a defense Obama can hide a few trillion dollars behind.

But I must admit I am having fun watching Democrats suddenly drooling all over themselves, ga-ga in love with Corporate Welfare. All those decades pretending they hated it when really they were just biding their time, patiently waiting for President Bailout to arrive.

http://www.ftc.gov/privacy/glbact/glbsub1.htm

They should also tell about this provision subsequently allowed anyone who bought some thrifts to use the understaffed Office of Thrifts to regulate parts of their operation (like AIG FP which sold poison, and bagged billions in bonuses including ~500million just this January) instead of the SEC:

(D) savings associations the deposits of which are insured by the Federal Deposit Insurance Corporation, and any subsidiaries of such savings associations (except brokers, dealers, persons providing insurance, investment companies, and investment advisers), by the Director of the Office of Thrift Supervision.

–

These things are never reported in the mainstream press (much less conservative websites), but you can be sure the banks very well knew what they were doing, the external costs of which we suffer today. I hope at this point we’re beyond questioning if the feds need to be diligent watchdogs over the scum who’ll screw us all for a few dollars in their pocket. And anyone who ever supported the scum need to look deep into why they ever did because you are providing them cover.

The “bad times” in this case is a recession, versus a spiral that can potentially reset everyone back to precredit pregrowth days. Recessions are bad, but not worse than phenomena that cannot be monetarily managed. Some people think deflation is something that can be walked off, amongst many other silly ideas due to the way economies work in their heads.

While it’s true bad gov action can prolong recovery, those are generally idiotic actions that decrease the money supply, which fuels deflation, and we learned that is what not to do because deflation cannot be controlled (except through massive fiscal spending which I believe many here are well aware of the deficiencies in) and thereby kills economies.

-

Allowing banks and securities firms to affiliate under the same holding company has had no effect on the current financial crisis.

Except entities like citibank self-perpetuating MBS’s and the like to help get the ball rolling. As I’ve said before on this point (and you didn’t reply), this was very symptomatic of the times, tho perhaps only an auxilary cause of failure.

Note is a very conservative statement, because unlike some, I do not exaggerate my assertions so that fools may find the truth somewhere in the middle.

And none of the banks that have major securities affiliates — Citibank, Bank of America, and J.P. Morgan Chase, to name a few — are among the banks that have thus far encountered serious financial problems.

Uh, the investment arms of those banks are what were selling the crap MBS’s and such, which is what we’re buying at huge losses to the taxpayer now to prevent bank failure.
-

Note that the most diversified financial institutions – J.P. Morgan – survived, but the least diversified – Lehman – didn’t.

How does that logic work? Without the “diversity” they’d be in much less trouble. So I guess diversifying into crap investments must be a good thing to you.
-

It’s easy to blame this on a free-market mindset or Republicans Gone Wild

The housing bubble is like any other, except much larger. Bubbles are systematic problems, so they require the active participation of the many involved. In the case of bubbles, people stop assigning value to stuff and become only concerned with the price, which they are only interested in pushing up to make their profit.

It’s this motivation that needs to be ended, either through legal regulation that outlaw the worst techniques used, or though education of the masses who participate. The classic problem of short term greed, which is promoted by the free market crowd to the extremely, is simply poison.

You keep asking why it’s a “Republican” problem, when this not what I asserted. It’s a problem where profits made through these schemes are used to unduly influence policy. Whether or not Republicans exactly are wholly responsible is an auxiliary issue, although they are well known for actively promoting underregulation through their politics. I’ve posted before that the Democratic party in recent years has been following this folly at times in order to get corporatist swing votes. Tho in comparison in a two party system, it’s quite clear who is the better party in this department.

For example, it’s quite well known that AIGFP et al were not sufficiently overseen by the OTS. They essentially did whatever they wanted to. In the end, the people in power who allowed this are mostly responsible, and the people who voted for them are partly responsible. You can dig your head into the sand all you want, but anyone who voted for these incompetent bastards (and anyone who can vote, really), needs to evaluate what they want out of their gov, and hopeful a watchful eye over “the market” is large part of it.

—

Ps. I typed this up before NBK-Boston’s post and subsequent work distractions and I’m too lazy to change it now, so any overlap was unintentional.

You wrote:

Originally, you claimed that the cause was predatory loans, based on the article that you provided a link to – but this was never proven – and now you are blaming it on subprime loans. Those aren’t necessarily the same thing.

Subprime lending and predatory lending are two highly overlapping sets. Feigning confusion about this fact does not help your credibility, again.

You also wrote:

It’s called getting the WHOLE story, something I recommend highly.

Note that the most diversified financial institutions – J.P. Morgan – survived, but the least diversified – Lehman – didn’t.

What IS this whole story you are referring to? The fact that survival of some institutions and not others turned entirely on the vagaries of the bailout-by-backroom-deal policies of a Republican administration? Not one of the institutions you named survived because of its inherent soundness. They all survived because of Fed intervention and the TARP. That’s systematic risk for you.

Regarding Ginsburg, you wrote:

She didn’t understand what she was preempting?

Maybe she did, and maybe she didn’t. Maybe she understood, and didn’t like the Federal policy in this instance, but was more interested in establishing a precedent for a strong pre-emption doctrine (a useful tool for a liberal, interventionist Federal government to have) than she was in righting this particular wrong. The fact that one liberal justice did not throw herself in the way of a policy overwhelmingly forwarded by Republicans does not suddenly shift the blame for this mess to other quarters.

You then wrote:

The simple fact is that you’ve argued that one way to stop this was by allowing the state governments to pre-empt the federal government, but a Republican President and Congress thwarted the efforts.

I then argued that another way to stop this would have been to vote Democrat in 2004, which would have given the proposed federal legislation on this subject a chance at passage. But alas, the Democrats, who had proposed national regulations that would have slowed or blunted the current crisis, were thwarted by the Republicans, who saw fit not to pass such regulations, and to use the federal government to pre-empt states that would.

What was your initial query?

Oh yes… I want to know EXACTLY which non-enforced regulations or unenacted rules would have prevented this financial crisis from happening. Thank you.

Well, I pointed out two related sets of rules as examples of things that would have helped prevent the current crisis, had the Republicans not thwarted them: 1. State rules on predatory and subprime loans that would have been enforced had the Republican-controlled federal government not pre-empted them. 2. A proposed federal law on the subject of predatory and subprime loans that would have done much of what the pre-empted state rules would have done (and uniformly, too!), filed and co-sponsored by a host of Democrats, and killed in committee in a Republican controlled House.

In response you dug your head into the sand and pretended (among other things) that:

1. Subprime and predatory loans are unrelated.
2. The 2003 move by the Bush Administration’s OCC to preempt state rules on the above is the fault of the Democrats, because when the issue finally reached the Supreme Court in 2007, Ruth Bader Ginsburg sided with the preemption doctrine.
3. Subprime and predatory loans played no part in triggering, causing or exacerbating the current financial crisis. (”Except that, once again, we have no proof that predatory lending is the root cause of all this, or that state action would have stopped it. So we are back to square one.”)

I mean, you can go ahead and say “it’s not true ’cause I say it’s not true,” but that’s not going to win over too many skeptics, I think.

windswords:

You misunderstand me. I’m not saying it’s Phil Gramm’s fault. Not hardly. When mentioning that Act, I mentioned it to say how it might taint Bill Clinton because he signed the thing. But that it shouldn’t, because what really did us in was George W. Bush and the Congressional Republicans being asleep at the switch during the 2001-2007 period. Gramm-Leach-Bliley was or was not good policy. It was not the proximate cause of the current mess. I’ve been saying that for several posts now.

From what I see Obama has done just what I expected the Republicans to do had they won.

Maybe left the UAW out in the cold but I expect the bailout money would have been given to Detroit and the banks. From where I stand the companies that got the big bailouts were the same companies that got favored status with the Republicans during previous administrations.

That means that in order to compete, Toyota et al will have to start churning out flimsy, unreliable cars too, just like the UAW does.

Your tax dollars at work. Do I file this under Hope or Change?

And let’s not forget that even before this entire fiasco, people didn’t trust GM quality. Throw in all the badwill they are generating by becoming Obama’s automobile welfare project and customers will be more scarce than ever.

In fact, that should be the new acronym for the UAW: United Auto Welfare.

I can’t wait to see the marketing campaign once the “new” GM debuts: “Try a GM. Hey, we couldn’t wreck two companies, could we? Come on down to a GM showroom to visit your taxdollars today!”

GM is not a brand, Chevrolet, Buick, GMC and Cadillac are.

This “Phil Gramm did it” is an old canard that doesn’t hold water. Gramm-Leach-Bliley wasn’t the root of the problem as it only repealed the second provision of the Glass-Steagall Act, prohibiting banks affiliating with firms that engaged principally in underwriting or dealing in securities.

And yes it prevented the current crisis from becoming worse. Citibank, Bank of America, and J.P. Morgan Chase, who affiliated with securities
firms have not had nearly the problems that banks like Wachovia, Washington Mutual and IndyMac have had. The diversification into nonbanking activities has helped rather than hurt. The fact that any of the former are in any kind of duress today is not due to Gramm-Leach-Bliley but to the overall spread of the cancer that is now infecting the economy. To say otherwise is like saying that Toyota and Honda’s recent losses are due to the same poor product execution, bad management, and legacy costs that are at the root of GM’s losses, and not due to the overall economy and credit freeze. Of course they are not.

Originally, you claimed that the cause was predatory loans, based on the article that you provided a link to – but this was never proven – and now you are blaming it on subprime loans. Those aren’t necessarily the same thing.

NBK-Boston: What are you smoking? To argue that Citi and Bank of America are not deeply troubled institutions, and would not have gone the way of Lehman if not for some extraordinary government interventions, is simply to be detached from reality. These banks have indeed encountered serious financial problems. No two ways about it. You lose massive credibility for even suggesting otherwise.

It’s called getting the WHOLE story, something I recommend highly.

Note that the most diversified financial institutions – J.P. Morgan – survived, but the least diversified – Lehman – didn’t.

NBK-Boston: I don’t understand where you are going with the Ruth Bader Ginsburg argument. Just because she — a liberal — approves of a broad reading of the doctrine of federal preemption does not mean that she approved of, or even understood, what it was that the federal government was preempting in 2003.

She didn’t understand what she was preempting? She’s a Supreme Court Justice with access to the best law clerks and research facilities in the nation, not just another pundit opining on the crisis.

If she didn’t approve, she could have dissented. It’s not like justices – both “conservative” and “liberal” – haven’t found rationales and justifications to stop actions by state and federal governments that they don’t like.

The simple fact is that you’ve argued that one way to stop this was by allowing the state governments to pre-empt the federal government, but a Republican President and Congress thwarted the efforts. Well, apparently, it was a bipartisan effort – unless Justice Ginsburg is now a closet Republican.

NBK-Boston: She provided the constitutional tool which allowed a Republican administration to do some very stupid things.

Except that, once again, we have no proof that predatory lending is the root cause of all this, or that state action would have stopped it. So we are back to square one.

Well said! And now we shall have zombie automakers to go with our zombie banks/financial houses. The Dead really do walk the earth again. Where is George Romero (or Bruce Campbell) when you need him?

And the credit for it’s customers who have been on a spending spree for 20 years. Just wait until this generation retires. No savings, SS has no real spending power, etc.

brucestmpl3: Going to school for 4 years at Daddies’ expense and partying much of that time doesn’t earn you any special status in my eyes. Go buy an import and that worker in Japan, Korea, Mexico and China will surely spend his money on your product.

Not all college students go to school all expenses pay. My friends and I went to school working our way through. Parties were fun but we knew how much tuition “hurt” to save up.

As the middle class continues to be wrecked by lack of stable jobs, careful consumer spending, and the blue collar folks continue to see their jobs evaporate as well – AND commodities prices begin to rise (my predictions) as the rest of the world tries to climb into the 1st world lifestyle – then America will have more and more problems selling things like cars and homes and $3K lawn tractors and $1500 stainless steel BBQs. In this regard we’ll become more like Europe I think where people generally have good lives but fewer expensive toys to “play” with. Fewer boats, motorcycles (the expensive kind), and RVs among other things. We’ll be wiser for it but it won’t necessarily be a fun experience to watch our spending power dry up.

Not too many MSM talking heads discussion inflation but it’ll come too. Again fewer cars sold. Nobody talking much about the Obama adminsitration’s healthcare plan expenses. How are we going to pay for that? Noble idea, but expensive. Will we see a re-election of the Democrats as more and more identify with the “underclass” and minorities – strong supporters of the Democrats?

I have to wonder if we won’t see more boom and bust cycles in the near future with more volatile prices.

We either need huge amounts of credit available to everyone (just had that) or little credit available to anyone that needs it leading to a smarter group of consumers long term who can’t rely on credit so they learn to live without it. Imagine families going generation after generation without car loans and mortgages. That’s alot of interest money that stays in the family’s accounts or translates into more stuff and no debt. I think that would be a healthier America and much more like Italy when I lived there. Italy has problems to be sure but few people I knew carried any debt.

Kevin: Just as I was grudgingly deciding the CTS was not completely without its charms… It’s like some hack artist accidentally turns out a Mona Lisa, and then decides what she really needs is a mustache.

Oh I disagee! The wagon (have not seen one in person, only pics) is REALLY nice looking. Would MUCH rather have a wagon than a sedan or SUV or Minivan. Fingers crossed that it is a GOOD vehicle (if it every makes it to market).

If all the people who worked with their hands made 8 dollars an hour would anyone be abe to afford the product or service you you are providing?

Standby – we’ll see… Give us a few more years. I live in the south where wages are low. We get by just fine. Perhaps the pace of spending is a little slower than other regions…

Oh, when you said “Democrats,” I thought you meant, well, “Democrats,” not “Congressional Democrats” or some other arbitrary sub-group.

No matter. Congressional Democrats were also on board the sub-prime-regulation train at the same time as their state legislature counterparts. And they were equally shut down by Republicans.

As the minority party in Congress, it is no surprise that they never got far with the Republicans blocking the way. The real surprise is that Republicans went out of their way to preempt state law action on the same subject — a rare instance of Republicans siding with Ruth Bader Ginsburg and being happy with big, central government intervention at the expense of state and local self-determination.

A few other miscellaneous observations:

1. You write: And none of the banks that have major securities affiliates — Citibank, Bank of America, and J.P. Morgan Chase, to name a few — are among the banks that have thus far encountered serious financial problems.

What are you smoking? To argue that Citi and Bank of America are not deeply troubled institutions, and would not have gone the way of Lehman if not for some extraordinary government interventions, is simply to be detached from reality. These banks have indeed encountered serious financial problems. No two ways about it. You lose massive credibility for even suggesting otherwise.

2. I don’t understand where you are going with the Ruth Bader Ginsburg argument. Just because she — a liberal — approves of a broad reading of the doctrine of federal preemption does not mean that she approved of, or even understood, what it was that the federal government was preempting in 2003. She provided the constitutional tool which allowed a Republican administration to do some very stupid things. Unfortunately, as any believer in the rule of law will tell you, the rules are the rules — if strong preemption really is the constitutional rule, you can’t ignore it just because you dislike what the federal government is doing with it. As they say in federal jurisprudence, that’s a question for the elected branches.