God, that was fast! Hardly had David Brooks' words about why the auto bailout will lead to lousy auto companies died away when Congress announces it will interfere in the management of its newly nationalized subsidiaries.
Is this going to be just the first instance? Probably. Certain Brooks thinks so and he is a pretty smart guy. The logic is strong. So here's a prediction. We have not seen the last bailout money. Once the taxpayers own most of GM, it becomes nearly impossible to let it actually die.
Since GM has spent half a century assiduously driving away innovators and risk takers, who exactly is now going to lead the innovation and risk taking that the company needs if it hopes to compete? We now own the equivalent of a manufacturing post office. Good luck to us!
Showing posts with label bailout. Show all posts
Showing posts with label bailout. Show all posts
Wednesday, June 03, 2009
Tuesday, January 27, 2009
Consider Gillibrand Carefully
It seems that the new Senator Gillibrand of New York is not entirely appreciated within her own party in her own state. That may be a good thing.
She's catching flak for her opposition to illegal immigration, for which she has earned the term "xenophobe." Note that senators are sworn to uphold the laws of the country.
I'm not going to defend her extreme enthusiasm for personal weaponry, but it's a fair statement that few of America's crime problems are due to people with properly licensed guns. Some deranged people have gunned down people on campuses, but I'm not aware of any of them who had a concealed weapons permit. Statistically, it would make more sense to require everyone attending classes to pass the test of earning such a permit.
But I digress. More important is Ms Gillibrand's opposition to the bailout last fall. Representative Peter DeFazio (D-Oregon) also opposed it, and he's fairly well established in the progressive wing of his party. We're used to Peter being an heir to the maverick Oregonian tradition, a much longer established theme than that of Arizona or Alaska. New York should be able to tolerate some dissent, even with their dependence on the financial industry that was bailed out. After all, Gillibrand and DeFazio lost and the bailout passed.
And interestingly, the consequences that it was supposed to prevent just seem to keep on coming down the pike. The taxpayers have forked over hundreds of billions, hundreds of billions are to follow, and yet bank lending is tight, bank solvency is questionable, the stock market has dropped to the area that people were fretting about, and generally everything stinks.
I'll be interested to hear her position on the stimulus, a much more benign word than "bailout." I'm getting very skeptical myself. It all seems like a Ponzi scheme, where we keep borrowing money to pay interest on what we borrowed before while distributing bread and circuses to the mob.
Rather than being a formula for recovery, it looks a lot more like a guarantee that there will never be one. Because we're only able to sell all this federal paper because people are so loath to invest in anything else. But if things once start to go back up, there's going to want their money back in order to invest in alternatives, and the treasury won't be able to handle it.
Some day we're going to have a run on the people we've designated to prevent runs on banks. I have no idea what happens next.
She's catching flak for her opposition to illegal immigration, for which she has earned the term "xenophobe." Note that senators are sworn to uphold the laws of the country.
I'm not going to defend her extreme enthusiasm for personal weaponry, but it's a fair statement that few of America's crime problems are due to people with properly licensed guns. Some deranged people have gunned down people on campuses, but I'm not aware of any of them who had a concealed weapons permit. Statistically, it would make more sense to require everyone attending classes to pass the test of earning such a permit.
But I digress. More important is Ms Gillibrand's opposition to the bailout last fall. Representative Peter DeFazio (D-Oregon) also opposed it, and he's fairly well established in the progressive wing of his party. We're used to Peter being an heir to the maverick Oregonian tradition, a much longer established theme than that of Arizona or Alaska. New York should be able to tolerate some dissent, even with their dependence on the financial industry that was bailed out. After all, Gillibrand and DeFazio lost and the bailout passed.
And interestingly, the consequences that it was supposed to prevent just seem to keep on coming down the pike. The taxpayers have forked over hundreds of billions, hundreds of billions are to follow, and yet bank lending is tight, bank solvency is questionable, the stock market has dropped to the area that people were fretting about, and generally everything stinks.
I'll be interested to hear her position on the stimulus, a much more benign word than "bailout." I'm getting very skeptical myself. It all seems like a Ponzi scheme, where we keep borrowing money to pay interest on what we borrowed before while distributing bread and circuses to the mob.
Rather than being a formula for recovery, it looks a lot more like a guarantee that there will never be one. Because we're only able to sell all this federal paper because people are so loath to invest in anything else. But if things once start to go back up, there's going to want their money back in order to invest in alternatives, and the treasury won't be able to handle it.
Some day we're going to have a run on the people we've designated to prevent runs on banks. I have no idea what happens next.
Friday, November 14, 2008
Who exactly are we bailing out in Detroit?
Understandably, the plan to bail out the Big Three has some formidable problems. First is that the $25 billion is probably three times the market value of the businesses. GM and Ford are worth about six billion and Chrysler can't be that hot itself.
When the CEO of GM said he just needed money to fill a gap, he said it was until 2010 when his UAW cost savings would kick in. Why 2010? We're not being asked to bail out GM, we're bailing out the UAW. Remember how they had this deal where if the economy slowed down, laid off workers got paid just like they were working?
The country is full of workers who have been displaced by the economy and who got no golden parachutes. Why tax money to make this happen for auto workers? I suggest we let them go bust, so they can start over. A new board, new management, and a new union contract. They can do all that without my money.
When the CEO of GM said he just needed money to fill a gap, he said it was until 2010 when his UAW cost savings would kick in. Why 2010? We're not being asked to bail out GM, we're bailing out the UAW. Remember how they had this deal where if the economy slowed down, laid off workers got paid just like they were working?
The country is full of workers who have been displaced by the economy and who got no golden parachutes. Why tax money to make this happen for auto workers? I suggest we let them go bust, so they can start over. A new board, new management, and a new union contract. They can do all that without my money.
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