Beep Beep

“I believe that the power to make money is a gift from God.” -John D. Rockefeller

I ran into that quote this morning, on the Forbes website. Forbes seems to think it exemplifies wisdom.

Anyway, this morning President Obama announced a policy toward the automobile industry, GM and Chrysler in particular, that lays out what the administration thinks needs to be done to put the automobile industry back on its own four wheels without subsidizing it forever and ever. Alex Koppelman has a succinct explanation of the policy.

Also at Salon, Andrew Leonard asks the question on many minds — Why so hard on the Rust Belt, and so easy on Wall Street?

Treasury Secretary Tim Geithner’s plan to create a market price for toxic assets has been widely lambasted as a scheme to paper over banking sector insolvency. If Obama can force Wagoner to resign, based on his record, then why haven’t Citigroup’s Vikram Pandit and Bank of America’s Ken Lewis been forced to step down? If the White House can declare that G.M.’s bond-holders must accept they will not be repaid in full what they are owed, then why aren’t Citigroup and Bank of America’s debt-holders being told the same thing?

Well, yeah?

Leonard cites Simon Johnson’s article “The Quiet Coup” at The Atlantic, which argues there’s a long pattern of nations being unwilling to squeeze the financial sector hard enough to correct crises such as ours. The Obama Administration appears to be falling into this pattern. The financial team has excessively close ties to Wall Street. Obama policies are crafted to prop up failing executives, not resolve the financial crisis.

However, Leonard continues,

But it is not the only possible explanation. There are a few brave, or perhaps foolhardy, analysts who are willing to argue that the administration’s approach to the banking sector could actually be preparation for the ultimate endgame of nationalization or government-expedited bankruptcy restructuring, rather than the free pass to the banks it currently appears to be.

In this scenario the ongoing stress tests, in conjunction with the price discovery mechanism for toxic mortgage-backed securities that is at the heart of of the Geithner plan to fix banking balance sheets, will reveal once and for all which banks are truly insolvent and cannot survive in their current form. Having established that beyond a doubt — much as the government’s analysis of G.M. and Chrysler’s situation has established pretty conclusively that they cannot continue as currently structured — there will be no other alternative than a government takeover.

See also The Double-Standard Question Haunting Today’s Detroit Announcement.

22 thoughts on “Beep Beep

  1. Will it reveal ? or will it continue to hide mismanagment? It seems all along that hiding the true depth and breadth of the problem is why WS gets all the props.

  2. I get it:
    If you’re a rich shareholder, we can’t affod to have you lose any money in your crappy investment.
    If you’re an hourly or union worker, we can’t afford your jobs, let alone your pension.

    Oh, and btw, did anyone see where the Bush people had the Pension money invested in stocks just shortly before the end of last summer?
    Read it and weep:

    Was there anything the Bush people ever did right? Any ONE thing? Don’t answer that question – we all know the answer to that one!

  3. FDR did say shortly after taking office that his proposed regulations of banks were to “keep them from committing suicide” (in the future). At this point in time since the financial sector realizes half again as much profit as all the the other businesses in the economy put together, we ‘others’ are literally up the creek without a paddle. The only way we can save ouselves is to save them. Indeed, a revolting development.

  4. I want to believe that Obama knows what he’s doing. But the article in the Atlantic really rattled me. Time will tell.

  5. I think Obama knows exactly what he is doing; he’s being held hostage and paying the ransom to the banksters. These fucks on wall-street have our entire economy by the balls and Obama knows it. What is he gonna do about it? I’m not sure but I aint real happy with what he’s done so far. On the other hand he aint got alot of good choices as he freely admits.

    I blame the failing auto industry on the American consumer. Get out on the highway, half the cars are of foreign brand, many with American flags and “patriotic” bumper stickers. If you don’t drive a domestic car (Big-3) then don’t bitch, your part of the problem.

    Hungry? Eat your Nissan.

  6. I might be persuaded that the power to create value is a gift from God, but money’s just a man-made abstraction for value storage and barter simplification, isn’t it? I’m way over my philosophical head here, but it strikes me that the world got lost in the weeds when we lost that concept. There is certainly no value to be had from naked credit default swaps.

  7. uncledad – I hate to step into this argument, but I’m now driving a Toyota truck, made in California. Automaking is largely international these days. Based on the many Toyotas I’ve owned, I expect it to last a long time. I previously owned a Dodge, and while it ran well, it wasn’t designed to last. Stuff that should never wear out – like a soft aluminum oil pan whose drain plug threads would strip after x oil changes, guaranteed (“they all do this around 80 to 100,000 miles” my mechanic said) – is an example of this short sighted mentality. This is one reason why people drive foreign cars – there is a perceived as well as demonstrable superiority of quality that leads to greater longevity. The US brands have gotten better over the years, but there is a reason why a company like Toyota is the top selling automaker in the world (they started out bulding sewing/knitting machines), and why the US companies have lost market share. Our engineers and workforce can build anything that can compete and win worldwide, but if the design goal is flashy and cheap, flashy and cheap is what you’ll get.

  8. uncledad – I’ll rephrase mine. I’m not hungry (thankfully!), and I’ll be glad to buy American cars when they decide to build something I like and feel is money well spent. If I were hungry, I’d sell the truck and walk/bike/take the bus. I don’t like to reward incompetence, and I feel that his is how Detroit has behaved, by the kinds of vehicles they’ve decided to produce. Apparently I’m not alone.

    Again, this is not a knock against American workers, who can compete with the best. It’s a knock against how the auto companies were run.

  9. Moonbat.. I drive a Toyota pick-up also. I bought a T-100 back in 1994 and drove it for 13 years without any problems. When it came time to purchase a new vehicle, I went right back to Toyota without even considering the other manufacturers. My allegiance is to quality, dependability, performance, and good pricing…and Toyota delivers on all of those counts. I think my truck was made in Kentucky, but I know for sure that the truck’s radiator was made in Canada.

  10. Fava beans and Chianti, anyone?
    I drive me a ford F-150, ‘got a picture of Toby Keith with it!

  11. Moonbat,

    I’m not looking to convince you that you should be buying domestic cars, you have obviously convinced yourself that you riceburner is of superior quality (I disagree my wife and I have been buying and driving the big-3 for 30 years never a real problem). I am only saying that you are part of the reason the domestic auto industry is failing. If every American decided to buy foreign cars then we will have no domestic car industry end of story. Oh and maybe you should look into the tax subsidies that Toyota gets to build plants in this country (tax subsidies for foreign corporations mean higher property taxes for American citizens some has to pay the fucking taxes), and how Toyotas low wages and lack benefits have lowered the real wages and benefits of union domestic autoworkers in this country.

    Not Hungry? Then fuck everybody else!

  12. I currently drive a Nissan sedan, and before that I drove a Honda sedan, and because I tend to keep cars forever this means I’ve been driving Japanese sedans for more than 20 years.

    In both cases, I bought cars made by Japanese corporations because at the time I was car shopping Japanese corporations were making what I was looking for, and American corporations were not. What I was looking for was a small 4-door sedan that would give me good gas mileage, was mechanically reliable, and which I could purchase for less than X. I think 20 years ago my limit was $10,000, and 10 years ago it was $15,000.

    And when I was car shopping, every model that met all of those criteria was made by Japanese corporations. Some American cars almost met them, but the 4-door sedans that fell into the right price range were all getting bad reviews for either mechanical reliability or gas mileage. Getting the most value for my money trumps patriotism, sorry.

    At the time, the Big Three were making other vehicles that were selling well and may have been perfectly good, like trucks and bigger sedans. But I didn’t want a truck or a big sedan.

    And this, IMO, is part of the Big Three’s problem. Michael Tomasky has an article online that speaks to this. He writes that he wants to buy a midsize sedan hybrid. But the Big Three aren’t making midsize sedan hybrids. They are making SUV hybrids.

    It may be that the market isn’t showing a big demand for sedan hybrids. But as Tomasky says, markets are created.

    When my antique Centra finally falls apart, I probably will want a sedan hybrid, too, which means I’ll probably end up with another Japanese (or other foreign) car.

  13. “Getting the most value for my money trumps patriotism, sorry.”

    Well Maha that’s were you and I differ. I was raised in Gary Indiana, Steel is king and back in the old days nobody in my neighborhood would be caught dead in a foreign car. We used to have bumper stickers that read “the threat is real from foreign steel” so that is my mindset right or wrong. I don’t think the domestics are without fault they gave the small car market that you speak of away to the transplants, I agree. On the other hand it is difficult for them to compete today; the transplants have tax subsidies, low often non-union wages, wal-mart style benefit programs. So the big-3 made what they could sell (big trucks and SUV’s). To me it just comes down to being pro-union. I don’t shop at wal-mart and I don’t buy foreign cars. I hear people complain all the time how our jobs are being outsourced, and that we have no manufacturing in this country, and that corporate America is selling out the workers, and the race to the bottom. Well one thing I can control is what car I buy, and I choose to buy American made domestic cars.

  14. Also when you need a new car look into the ford focus, I rented one recently on vacation and it was a fantanstic very small 4 door sedan.

  15. Swami,

    I never called anyone un-American, I’m just saying those of you who have chose to purchase cars manufactured and marketed by foreign corporations are part of the reasons the domestic car companies are failing. I never said the big-3 are without blame. I have chosen to purchase domestic cars, not necessarily out of patriotism but out of my belief in labor unions movement.

    If and when the domestic auto industry fails the 4-5 million people that will be out of work won’t be able to blame me. I do however predict that their will be a backlash right or wrong against the foreign car makers.

  16. I grew up 38 miles north of Detroit. My dad was a lifer at GM, his dad was a lifer at GM, and my brother recently retired from Ford. I know those companies well. I know their products inside and out.

    I drive a Honda. And I’ve had this conversation many, many times in my family.

    My last two Big Three cars were an Oldsmobile (made in Ontario), which fell appart at 36K miles, and a GMC Safari van which fell appart at 45K miles (and also would no longer pass emissions tests). I also had a Caprice wagon (made in Mexico, as I recall) that had the A-frame fall apart at 40K miles or so; I traded that one in on my first Honda. My last Honda ran 135K miles before I gave it to my son, in perfect mechanical condition. The one before that ran 360K miles before I got rid of it. All of my Hondas were made by American labor in Ohio.

    I want to emphasize that point a bit here. Two of my last three GM cars were foreign made. My last three Hondas were American made, and they have proven to be quite reliable. There is no problem with American labor. There is a problem with Big Three marketing, design, and management.

    Before I bought my latest Honda, I looked at everything comparable from the Big Three. I would have paid $6-10K more for less gas mileage and fewer features. And I don’t trust the reliability.

    I did not abandon the Big Three. They abandoned me. They weren’t making reliable products that I could afford. They can win me back, but they’re going to have to start designing and marketing products I can use.

  17. Frankly, I think not ENOUGH of Americans were buying foreign-designed cars, because then the Big 3 might have sat up and taken notice that they had not bothered designing anything that could compete. They counted on the majority of American consumers buying a disposable product – cheap up front but a black hole down the road.

    The Japanese did not design their cars to be thrown away and replaced at the drop of a hat. I have a 15 year-old Honda sedan that will knock the socks off of ANY 15 year-old Big 3 sedan. I have never had even ONE major repair. I’ll probably have this car for another 5-10 years. It is NOT the consumer’s responsibility to be loyal to anyone except whomever can design a better car for the price. Consumer does not mean lap dog.

    Neither is it my responsibility to buy crap foods grown on American industrial farms, nor to buy American industrial hormone- and disease-laden meat or dairy products. As a consumer, I but what is best for me, not what is best for some lame, greedy corporation.

  18. Sorry – I got carried away by the comment section with my previous post.

    In response to the subject, I agree with most of the articles you cite (and though I adore Andrew Leonard and his late father as well, I think he is is overly optimistic).

    In fact, I feel your comment that “[t]he financial team has excessively close ties to Wall Street” is a gross understatement.

    The quote from John D. Rockefeller is ugly. Uglier still, however, is David Rockefeller. The disdain for those who shower after work is no longer even tastefully hidden by this man or his fellow oligarchs. I fear Obama’s newly acquired position of power is dragging him quickly to that dark side.

  19. “I believe that the power to make money is a gift from God.” -John D. Rockefeller”

    So the Wall St wizards were the devil’s spawn?

  20. uncledad – There is no such thing as an American-made car. At best (or worst) it is American-assembled, but the engine may be made in Mexico, the transmission, Canada, and if it’s assembled in Detroit, you are happy? I understand that some GM cars were using Japanese motors. So in the end, are you supporting union workers (and I am in a union, and I drive a Ford) or are you supporting Wall Street? Now if any US maker has a real honest-to-God American-made car, that’s 90% American – motor, transmission and assembly, I haven’t heard of it.

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