last night Citigroup just got $20 billion more from the bailout. they also get some loans too. Detroit has been asking for $25 billion to keep from bankruptcy which would likely sow the seeds of death, if i may mix my metaphors.
i just dont get how we can keep throwing money at Citi and ignore the Big 3. maybe im missing something, but the heart of american manufacturing is sputtering, and we cant allow it to die.
Monday, November 24, 2008
Wednesday, November 19, 2008
a letter to M. Gerson, and America at large
Michael Gerson understands one thing about the auto industry: Ford and GM cannot be allowed to fail. Chrysler, maybe, but Detroit's two biggest brands are too big to allow to fall. the ripple effect in the US and around the globe would almost surely send the world into a deep recession if not worse. these are global companies directly employing hundreds of thousands and indirectly employing millions.
GM and Ford would not just be loss of a US manufacturer it would result in the loss of jobs in the neighborhood of 5-1o million just based on their failure. then the ripple effect based on all those people no longer being able to make their mortgages, rent, and cutting way back on their consumer spending. as that drop ripples through the world, the result could be a new depression.
to address what the free marketers will counter, yes Toyota and Honda and VW and the rest would fill some holes, but the production shut down and immediate drop off would not start to fill back up for years or decades as those companies move in to old Ford and GM factories and retool to produce their products. and even when that happens, the new guys arent going to pick up the retirement and health care costs of all the retired UAW guys. we will as taxpayers.
propping up these giants is essential. to not save them would be dime smart and dollar stupid. look at the long run. the costs of these guys failing will have ramifications for decades.
i also want to address the why. the Big Three are suffering from a consumer and media bias that is a holdover from the 80's and early 90's. their cars are not junk and they are every day moving to make the cars that consumers want. the Malibu is one of the most fuel efficient and highest rated cars around. people point to trucks ans SUV's as the downfall of the US autos. US companies made what people bought. and people bought lots until fuel went sky high, then demand plummeted. consumer habits have changed faster than car companies can respond to.
Ford and GM both have a full line of cars, sure the smaller ones may not be as attractive as foreign rivals, but those companies have been competing in places where gas has been high for decades because of taxes and import costs. no they are not free from blame, but the American consumer also has to share the blame for buying what they do.
in the end you have to just realize what is at stake and how to fix the problem. when Chrysler was rescued from the brink the government actually made money and a similar agreement could be reached this time around. we can fork over money for an ownership stake that the companies can later buy back when they turn around. this way, if it works, the car companies win and the taxpayers are paid back. if they fail, now or later, were all fucked, so we need to try, but in a responsible way.
GM and Ford would not just be loss of a US manufacturer it would result in the loss of jobs in the neighborhood of 5-1o million just based on their failure. then the ripple effect based on all those people no longer being able to make their mortgages, rent, and cutting way back on their consumer spending. as that drop ripples through the world, the result could be a new depression.
to address what the free marketers will counter, yes Toyota and Honda and VW and the rest would fill some holes, but the production shut down and immediate drop off would not start to fill back up for years or decades as those companies move in to old Ford and GM factories and retool to produce their products. and even when that happens, the new guys arent going to pick up the retirement and health care costs of all the retired UAW guys. we will as taxpayers.
propping up these giants is essential. to not save them would be dime smart and dollar stupid. look at the long run. the costs of these guys failing will have ramifications for decades.
i also want to address the why. the Big Three are suffering from a consumer and media bias that is a holdover from the 80's and early 90's. their cars are not junk and they are every day moving to make the cars that consumers want. the Malibu is one of the most fuel efficient and highest rated cars around. people point to trucks ans SUV's as the downfall of the US autos. US companies made what people bought. and people bought lots until fuel went sky high, then demand plummeted. consumer habits have changed faster than car companies can respond to.
Ford and GM both have a full line of cars, sure the smaller ones may not be as attractive as foreign rivals, but those companies have been competing in places where gas has been high for decades because of taxes and import costs. no they are not free from blame, but the American consumer also has to share the blame for buying what they do.
in the end you have to just realize what is at stake and how to fix the problem. when Chrysler was rescued from the brink the government actually made money and a similar agreement could be reached this time around. we can fork over money for an ownership stake that the companies can later buy back when they turn around. this way, if it works, the car companies win and the taxpayers are paid back. if they fail, now or later, were all fucked, so we need to try, but in a responsible way.
cabinetry
theres been a lot of speculation and advice flying around lately over who will make up Obama's cabinet. i think what is most important is that Obama picks the smartest and most expert people in their fields to head up cabinet positsions. i really hope that Obama follows his Lincoln-esque rhetoric with picks from the whole political spectrum. if he fills his cabigh ranking net full of left leaning politicians, it will become an echo chamber. he ought to appoint some political opponents to these high ranking offices.
some ideas:
Al Gore for Secretary of State. i dont know if he would accept it, he may rather continue to pursue his climate change work. however, as SoS he would bring that very topic to the top of the national and international agenda with the gravitas it never had before. Gore is also a respected statesman in a day when politicians rule.
Colin Powell for Secretary of Defense. hes been there, he knows the job, and he brings a point of view from the right. he was also duped by Bush&Co which drove him from the position. that experience i think would force hime to become very skeptical of other and assert his own a opinion, which is key.
Energy: we need someone who will push the green agenda as well as using existing US resources and technology. im thinking T. Boone Pickens. the problem with him is that he has a monetary interest in this agenda. i think we can all appreciate the importance of this cabinet job now, and he has the vision for a transition to green technologies and i think he has realized that good ideas come from all over and will hear them out. i doubt he will get the pick, but the only other person that comes immediately to mind is Gore, and i have bigger plans for him.
Transportation: this is going to be a huge challenge with enegy issues, pollution concerns, and an increasingly crumbling infrastructure. i have no front runner. i have heard of no one with the policy objectives to get us where we need to be. this is going to be a big job. we need more mass transit (read:trains), we need to step up maintanence on out roads and interstates. what comes to mind is someone at NYC's MTA. a system that is still expending and has been in operation for a century or so. they would have the experiance with crumbling infrastructure, rail, and expanding needs that will be at the forefront of this office.
Homeland Security: i think this office needs to belong to a former military officer. this job requires running things like the military. you need a strong supply chain that can deliver goods quickly where they are needed, like a moving front in a war. it also demands military experiance to deal with terrorist and military threats to the US. Ann Dunwoody comes to mind after she became the first woman to acheive four star status. who knows if she would leave the Army to take on this post, but i think shes more than qualified.
i dont have the time or knowledge to sort through the rest, but i think thats a good start.
some ideas:
Al Gore for Secretary of State. i dont know if he would accept it, he may rather continue to pursue his climate change work. however, as SoS he would bring that very topic to the top of the national and international agenda with the gravitas it never had before. Gore is also a respected statesman in a day when politicians rule.
Colin Powell for Secretary of Defense. hes been there, he knows the job, and he brings a point of view from the right. he was also duped by Bush&Co which drove him from the position. that experience i think would force hime to become very skeptical of other and assert his own a opinion, which is key.
Energy: we need someone who will push the green agenda as well as using existing US resources and technology. im thinking T. Boone Pickens. the problem with him is that he has a monetary interest in this agenda. i think we can all appreciate the importance of this cabinet job now, and he has the vision for a transition to green technologies and i think he has realized that good ideas come from all over and will hear them out. i doubt he will get the pick, but the only other person that comes immediately to mind is Gore, and i have bigger plans for him.
Transportation: this is going to be a huge challenge with enegy issues, pollution concerns, and an increasingly crumbling infrastructure. i have no front runner. i have heard of no one with the policy objectives to get us where we need to be. this is going to be a big job. we need more mass transit (read:trains), we need to step up maintanence on out roads and interstates. what comes to mind is someone at NYC's MTA. a system that is still expending and has been in operation for a century or so. they would have the experiance with crumbling infrastructure, rail, and expanding needs that will be at the forefront of this office.
Homeland Security: i think this office needs to belong to a former military officer. this job requires running things like the military. you need a strong supply chain that can deliver goods quickly where they are needed, like a moving front in a war. it also demands military experiance to deal with terrorist and military threats to the US. Ann Dunwoody comes to mind after she became the first woman to acheive four star status. who knows if she would leave the Army to take on this post, but i think shes more than qualified.
i dont have the time or knowledge to sort through the rest, but i think thats a good start.
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