Saturday, December 06, 2008

The Big 3 --- Good for us, bad for us?


For the life of me I can't understand why so many "middle class" people want to let the Big 3 auto manufacturers die. I can understand why some Republicans from Southern states that have foreign auto companies' plants would love to see their constituents' competitors be eliminated. Other Republicans want to use this as an opportunity to crush the auto unions, because of their support of the Democrats. Most Democrats legislatorsare feckless, so while Congress fiddles, Detroit burns (actually the whole Midwest). And the media... don't get me started! It just gets worser and worser. It's very simple... the government ruined the financial industry and hasn't restored liquidity... people can't borrow money for car loans and the Big 3 can't get the bank to provide bridge loans until liquidity is restored and they start to sell cars again.The guv'mint broke it, they need to fix it.

UPDATE: Dubya has relented and is providing US auto manufacturers a $17 B bridge loan... $13 B from TARP and $4 B from petty cash. So he saved $14 B in income tax and $13 B in avoiding unemployment claims. A net gain of $10 B for the taxpayers. And who said his Ivy League education was a waste?

Roots, seeds, and why the leaves fell off the tree


As our economy (and the world's), plunges downward, we need to examine the situation from a macro level AND a micro level and from a political perspective as well. The seed of the problem has been cheap money (credit) for 40 years made available to Americans to cope with the difficulties caused by competing with cheap foreign labor. The credit mega-bubble enabled people to live above their means; buy it today... pay later, artificially altering the supply/demand ratios. It made all Presidents look good, because the consumer spending gave us significant and sustained GNP growth. Corporations had growing profits, stock values rose . And Banks ruled the world.

The root of the problem was the "unfettered free market/deregulation political philosophy" fed by corrupt financial industry titans taking control of our government by bribing corrupt politicians, D's and R's, whose votes were for sale. (nothing new here)

The leaves came off the trees because of Darwin's survival of the fittest principle. The Guys at the top who are driven by huge performance bonuses were able to rig the rules of the game, kidnap our government, to follow their insatiable appetite for more 'n more. (Sarbanes Oxley was intended to put some spotlights on guys like Bernie Ebbers, Ken Lay, John Scrushy and others.) An argument can be made that Bush wanted a booming housing market to stimulate consumer spending so he could claim that our economic growth was attributable to his tax cuts. He didn't care about risk. Slight of hand, misdirection, now you see it, now you don't

If we successfully avoid a "D" somehow, join me in insisting that we stick with capitalism and free markets, but with a fair and balanced set of regulations. And that we are unrelenting in our DEMANDS that all who violated laws are rooted out and prosecuted.

We can keep this from happening again. We have to!