The Republicans Want A Depression
A frantic, last-ditch attempt to forge a relief package for the auto industry collapsed in the U.S. Senate, dealing a giant blow to the immediate hopes of the Big Three.
Senate Majority Leader Harry Reid of Nevada suggested the $14 billion wouldn't be revisited until January. "It's over with," he said.The talks, which appeared close to a deal several times, broke off due to a sharp partisan dispute over the wages paid to workers at the manufacturing giants.
After a marathon day of negotiations, top Democrats appeared close to a deal that would toughen the bailout package in a bid to raise Republican support, which had proved an insurmountable stumbling block. The focus of talks was on seeking commitments to restructure the industry's debt load and bring labor costs in line with wages paid by Toyota Motor Corp. and Nissan Motor Co. in the U.S., among other things.
But those talks fell apart after Republicans insisted that wages reach parity in 2009. Sen. Bob Corker (R., Tenn.), who emerged as a pivotal player this week in negotiations over the industry's future, said negotiators were close to striking a bipartisan compromise.
Democrats were willing to reach parity, but not on such a swift timetable. Mr. Reid declared talks at an impasse. "We have not been able to get this over the finish line," he said. "We have worked and worked...that's just the way it is."
This is without a doubt one of the most insane gambits possible. In case the Republicans have forgotten the general economic backdrop, let's rehash the facts. According to the BLS:
Nonfarm payroll employment fell sharply (-533,000) in November, and the unemployment rate rose from 6.5 to 6.7 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. November's drop in payroll employment followed declines of 403,000 in September and 320,000 in October, as revised. Job losses were large and widespread across the major industry sectors in November.
The most generous reading of the employment numbers for the latest expansion is that 7.2 million jobs were created. Over the last three months we've lost 17.44% of those jobs. Continued weekly unemployment claims are at multi-year highs:
The economy is officially in a recession and has been since December 2007.
The committee identified December 2007 as the peak month, after determining that the subsequent decline in economic activity was large enough to qualify as a recession.
And yet, at a time when the US economy cannot withstand another shock the Republicans have decided that is exactly what they want to do. Instead of helping Detroit out the Republicans have decided to screw the country in the name of ideology. Here is what I wrote about the bail-out earlier this week:
Here's my basic opinion. I have spent a fair amount of time criticizing lampooning the US auto industry. All three companies are run by people who give the word idiot a bad name. And the fact the head of Ford made $50 million over the last 2 years indicates the Board of Directors is just as stupid (I am sure he's not alone -- I just happen to know that number off the top of my head). And no -- this is not the unions fault. The problems rest squarely with management -- you know, the people who are supposed to run the company.
What the auto execs are basically doing right now is using their employees as hostages. At any other time in economic history a bankruptcy the size of GM or Ford would lead to a quarter of negative US growth followed by a resumption of 3%+ growth (maybe two quarters, but you get the idea). Unfortunately, right now the economy cannot afford a bankruptcy of that size without running the risk of that particular event leading to a major and prolonged downswing. It would be like throwing a boulder into a puddle -- the puddle will probably disappear.That being said, I am an incredibly reluctant supporter of the bail-out, not because I think it's a good idea but because letting a US car company go bankrupt would be an incredibly bad idea. As a result, I would attach a ton of conditions to the money. For example, mileage standards would have to improve big-time. The big three's reliance on the SUV business model would go bye-bye. Executive compensation would have to be cut until the companies showed a profit (personally, I would propose a package and then subtract the total compensation for the last 5 years for the Board of Directors and Executives from the package total because these guys clearly didn't earn that money). Major financial cuts at all levels would happen. That means executive fly coach and rent compact cars on business trips. Downsizing from a physical plant and personnel perspective is a must. Simply put, the car companies would still have to face major restructuring. It's simply unavoidable at this point; the US auto industry would look very different when this is all said and done.
As I mentioned above the situation is pretty simple: the US economy cannot take the shock of a GM and/or Chrysler bankruptcy. It's just not in the cards. And yet, that's exactly what these idiots are proposing because in their esteemed judgment that's what is best for these companies and the country. Remind me again why people think Republicans are good with economics?
I want to add this correction: In August 2003 there were 129,822,000 establishment jobs in the US. In December 2007 there were 138,078,000 for a total gain of 8.2 million. That means the total job losses over the last three months represent 14% of all jobs created during the last expansion. I wrote the column from memory and lost 1 million people. I apologize for the mistake.
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The GOP conservatives aren't happy with being rich.
The GOP wants you to be pathetically poor too.
http://www.businessweek.com/the_thread/hotproperty/archives/2007/10/biggest_decline.html
Helping gm and not all the other businesses that are in exactly the same situation is discriminatory
Now Bank of America is saying GM will need 30 billion to survive. That is many times what GM is currently worth
Instead of sinking billions into corporate and union welfare, we ought to be putting an end to the deflation. that would help everyone and maintain a level playing field instead of just helping the politically connected businesses
We can end the deflation by having the Fed create new dollars and using them to purchase some of our $10 trillion in existing US debt.
To avoid inflating again, the Fed set the value of the dollar to some amount of a stable commodity like gold and just buy enough US debt to maintain that price. The Fed can always resell that debt later if the dollar's value begins to decline. We should have a target price and a range around that price that triggers the appropriate action if exceeded.
And we should avoid re-inflating. The housing bubble was caused by Fed-created inflation.
Why is it a surprise to anyone that the only things important on Capitol Hill are the consolidation of power and the assurance of re-election? That is true for both parties and has been for a long time. The interest and concerns of the American people will always take a backseat to these priorities. If you are holding your breath waiting for our elected leaders to develop a wonderfully inspiring rescue package for this economy, please tell me in what newspapers you want me to write your obituary. If you want to become proactive and demonstrate to Capitol Hill and the White House that the American people do have the capacity to rescue themselves from the demoralizing mess Washington helped create, go to http://taxpayercommonsense.blogspot.com. The rescue model outlined there describes how we Americans can rescue the auto industry wothout lending a single dollar of taxpayer money to the Big Three. Please...be proactive, be smart, take five minutes of your time to read the model.
The plain and simple truth is without homeowners rescued, the economic recovery won't hold water. Government MUST start implementing the "Hope for Homeowners" act in all seriuosness. I have a lot of friends and relatives in real estate and ALL have told me that they have not received any guidelines on "Hope for Homeowners" loans.
Excuse me but as history has shown, the worse the economy the more we must rely on the government. Talk about a subservant population. The Democrats utopia, everyone working for the government. Personally I would rather work for myself and the government just leave me the hell alone.
In a sense, everyone who pays taxes IS working "for the government" AS WELL AS themselves.
The White House Plan on the Auto Bailout is easy to envision.
They take GM and Chrysler right to the edge of the precipe of bankruptcy. As the 2 car companies and the Unions are looking into the maw of oblivion, the White House offers the 15 billion dollar bailout, under the EXACT same conditions that the GOP wanted...
Take it or leave it...
Michale......
Why don't the lawmakers take a pay cut to help save our country???
Ummmm. There are what roughly 500 lawmakers in the two houses of Congress. The salaries are around $160,000 or so. So if they took a 25% pay cut, that would save $40,000 per lawmeaker, for a total of $20 million.
Not a bad start but kind of a drop in the bucket, don't ya think?
I wonder what the equivalent in Japan to a legislator earns? and I would like to see our senate and congress give up their health benefits... just to keep parity.
I could care less about the executives of the Big 3 auto makers, but we do need to give them
a loan to keep them from going under. We can boot the executives out and we won't miss
their decision making. If that is what you want to call it. I do not want 1 1/2 to 2 million taxpaying
Americans to end up on the unemployment line. With the job cuts that have taken place in this
country already and then you add those in the auto industry and those that rely on the auto industry,
you are heading for a Depression worst that what we previously had in this country. These out of
work people are taxpaying and you can wipe those taxes out of the coffers that go to the federal
government. WHO IS GOING TO REPLACE ALL THESE TAXES. THE SENATORS WHO ARE
TRYING TO HOLD THE UNIONS HOSTAGE AND PLAYING POLITICAL FOOTBALL WITH THE
HEALTH OF THIS COUNTRY.?
YES....fire the hard line executives that forestalled environment friendly innovation that could have appealed to the other half of the country and doubled their profits.
Honestly....we will not see millions of Americans unemployed. The auto industry need not fail and we do not need to loan them a single dollar of taxpayer money. Want to see a wonderfully inspiring rescue model that will absolutely put the industry on a the course to recovery and create new jobs in the process? Go to http://taxpayercommonsense.blogspot.com. This model was developed by a hard working small business owner in one of the Mid-aAtlantic states who has no ties to the auto industry. Washington has ignored this model because it can be successful and will demonstrate to our elected leaders that ordinary Americans can think for and rescue themselves from the current economic deilemma. Please take five minutes of your time to read the model. Do it for your family, do it for yourself, do it for America.
George Bush is a "free market guy." He wants to give give American auto workers stock options in the big three along with their pink slips.
5 trillion http://www.forbes.com/2008/11/12/paulson-bernanke-fed-biz-wall-cx_lm_1112bailout.html
7.8T$ http://www.ritholtz.com/blog/2008/11/78-trillion-bailout/
Not just 700 B$ For the GOP bankers, no questions asked.
World War II cost "only" 5 Trillion!
The Whole New Deal was only 500B$ (adjusted$).
By now you should know what a CDS and a CDO are.
By Now you should understand that it's off Market gambling. Off track Horse Betting.
The Derivatives and off market deals created trillions in "profits" that vanished with the slightest wiggle of the real market they are betting on.
Had we let them go, the real economy would have just sat there. All the hedge gambling accounts based on derivatives would gamble our trillions. Somebody wins, and we all owe that group REAL money.
Just invalidate all Derivative contract by Fiat.
Revert them to direct asset ownership.
Instead We are Bailing out the Bookies and marks?
Bailout the real economy, of products and real services and the banks will rebuild.
Keep the FDIC solvent.
Public works, energy, at a war level intensity: Trillions for public works and energy, not for Gamblers.
That investment will restart the real economy.
Sounds very very appealing. Is there enough honesty among us to go in that direction or is the system so hopelessly rigged it's doom to fail.
We desperately need very BRIGHT, FOCUSED, HONEST, FAIRMINDED leadership to fix our financial sector!
we're all hoping Obama will provide the leadership we need.
Don't you think that if the ultra rich investors all of you demonize thought
that the auto makers were viable, that they would pony up the cash
and invest in them.??..I'm talking about Buffett...Gates...Soros...Bloomberg..
the Bass family....the Rockefellers...etc...
They made their money investing in going companies...not going away companies
No amt of tax payer money can cure what ails them......
It is typical of Republicans to worry about how much money a middle class worker is allowed to earn.
They did nothing to limit the multi-million dollar wages and bonus packages of the Wall Street tycoons when they passed the first bail out bill.
But then the bankers are not unionized and we know what Republicans think of organized labor when it eats into corporate profits and the dividends paid to share holders.
It is those very wage earners who's tax dollars are being tapped to support the bail outs.
I also wonder if they realize that reducing wages on families already strapped to live could lead to even more foreclosures when those wage cuts make it impossible to make mortgage payments.
That only goes back to what everyone now realizes. Republicans don't understand economics. In their fantasy world, cutting jobs and wages somehow stimulates growth. Just like tax cuts for the rich magically pay for themselves.
Democrats wrote the 700 pg legislation known as TARP. Why not explore facts before pointing fingers? Isn't this important enough to research, or do you accept one-sided sound bytes for your information? The $700 billion was written by Dems for Democrats on Wall St. (most are Democrats).
Oh puh-leeeze. The majority of rich folks vote Republican because they know that's the only political party DUMB enough to believe that giving them tax breaks is good for the economy.
Yes on bailing out auto makers?!?!?!, i don't agree sir. when these rich people need help, they want thier socialism, but when the little people, such as myself, need help, we can't have socialism!? this is socialism for the rich and no socialism for the poor. this whole situation is unfair and corrupt. i say let the auto makers fall and give that money to consumers. for example; sending checks for EVERY americans would be much better than bailing out the auto makers. bailing out consumers would do more to help our ailing economy than bailing out the rich who doesn't know how to run thier business. i don't like rewarding failure. and FIRE the incompetent managers of Ford, chrsler, and GM. the american auto industry must start anew and WITHOUT government interference!
Thank you AsianMan....no amt of money will "fix" the Little 3...see my other post about
Uncle Sam sending all of us money...
I vehemently agree in principle, no corporate welfare, ever. And if we had not just financed a far larger bailout of incompetent and dishonest financiers; and if we had seen generally satisfactory economic policies from the current administration over the past eight years, then I could agree with the course of selectively-destructive inaction proposed. But it will not be selective because or the Bush administration's policies, which have stacked the deck against the United States laborer, and especially against the United States automobile laborer.
Evidence of the Bush-Cheney cartel's war against all laborers includes continuation of the tax cuts for the wealthiest 1%, against the strongly-worded objection of true capitalist and authentic economic expert Alan Greenspan, whose testimony from the beginning was that such tax cuts were of dubious value, little value at best, and would be harmful if continued past the minor, jobless "recovery" following the first dot-com implosion; we have the "ownership society" 1999-2000 campaign meme of George Walker Bush simultaneous to Phil Gramm-sponsored legislation "Gramm-Leach-Bliley Act" and "Commodity Futures Modernization Act"; and of course, as finale, we have outright re-distribution of wealth to incompetent, non-working "investors," from a badly under-employed and unemployed populace.
In the context of these real circumstances, George Walker Bush's HESITATION to use TARP funds to extend a bridge loan to Ford and GM already constitutes treason, even if he changes course this week and finally does the right thing.
Due to word count constraints, evidence of the targeted assassination attempt by Bush-Cheney of the automobile laborer had to be postponed to this follow-up post.
Shortly after 11 September 2001, and for many months hence, we were told by the Bush-Cheney administration of the need to cure our "oil addiction," nearly as incessantly as we were warned to be "Orange Afraid" and of the need for "Expanded Surveillance" and "Enhanced Interrogation" to be made legal. At the same time, government research establishing the extent and rate of global warming were suppressed by "Executive Orders." James Hansen's protest made the news, but one diligent weekend of analyzing findings on noaa.gov and comparing to their own predictions of the same year, certainly proves to any and all honest amateur researchers (aka, informed voters) that the experts predicting higher frequency of storms and severer storms as a direct result of higher average global thermal energy, understand their field of expertise far better than Bush, Cheney, Rumsfeld, Rice and the rest of the administration warmongers understand geo-politics.
The propaganda campaign of this illegitimate administration, in lockstep partnership with Fox News, has influenced public opinion contrary to relevant facts and is directly responsible for GM and Ford's lagging behind their global competitors, in producing hybrid and battery-powered passenger vehicles. Those companies actually have been serving the demands of their market, which have been fraudulently influenced by a military/petroleum corporatist agenda.
IF YOU HAVE HEARD THE SENATE DEBATES, YOU'VE HEARD SENATOR BYRON DORGAN STANDING UP FOR AVERAGE PEOPLE, HE'S AN OUTSTANDING SENATOR, HE SHOULD HAVE GOTTEN A POSITION IN OBAMA'S ADMIN
I agree, except that Obama will bring principled leadership to the White House staff and the conduct of the rest of the Executive Branch. Dorgan will continue to be needed in the Senate, to do the same for the Legislative Branch. Durbin, Leahy, Feingold, Specter, Paul, and Kucinich are also extraordinary, and provide the leadership I always ask my Senators to follow. They seem to be hard of hearing, but I'm hopeful that Gordon Smith's replacement, Jeff Merkley, will earn his place among those representatives who consistently, aggressively advocate the general welfare OVER the corporate welfare.
They should not be extraordinary in that; it's just what the Constitution requires of them.
Unfortunately, the Democrats are on a binge of Corporate Welfare spending that will make all previous Republican efforts look puny.
Obama is all for it. Watch his actual motions, not his words and sleight of hand.
He is solidly behind every massive transfer of wealth that's been proposed.
Look around you. Since $350 billion of the $700 billion has already been spent, have the plights of real working people been improved?
Remember, all spending bills originate in the House, and the House has been controlled by Democrats for more than two years.
*THIS* is what the Democrat Party stands for now,
By the time you true believers figure it out, the country will be broke and the lives of working people will be worse than ever.
The Press likes to compare BHO to FDR. Well, the plight of working people got absolutely no better in the first 5 years of FDR's administration and the Depression didn't wane until we got onto a War footing.
Take a look back at footage of life in 1933-1935. That's what BHO is about to bring you.
BUSH, SR< SUPPOSEDLY CALLED US THE BUDS/ BROKE< USELESS< AND DEPRESSED
What?
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