Miken

GM's Tough Treatment Should Be a Model for Other Bailouts

Treatment of the auto companies vs the banks and Wall Street will never be the same for two reasons:

1. The auto companies are not part of the east coast elitists. They are primarily a mid west concern. If there's any doubt about that, simply look at the market share of the Detroit 3 on the east coast. Even in the face of irrefutable data on quality, market share has not grown. It's simply not cool to drive a domestic car. For proof of that, I can provide a link that shows what the Auto Task Force members are driving for their personal cars.

2. You have to follow the money. I can also provide a link showing how much money the financial services industry has given to congressmen, senators, and Presidents.

So, to expect that there will be similar treatment is not likely.

How Bailouts Are Messing with Capitalism

As I am writing this, apparently the Obama administration has decided that the CEO of GM should be terminated. I agree that someone should be terminated, however, their zip code should be between 20001-20599. Please see reasons 1,2,3 below.

Actually, I thought that was the job of the BOD and shareholders.

If this makes them feel better, so be it.

Who is John Galt?


On Mar 29 09:49 AM Miken wrote:

> With regard to the auto companies, I believe that everyone is overlooking
> the fundamental issues. I don't think there is any doubt that the
> current Wall Street fiasco has damaged the ability of the American
> based, and even foreign based companies to survive. But even before
> the Wall Street mismanagement, the American companies were in a state
> of decline. The central question should be why the American companies?
>
>
> I don't think the simplistic answer is management or unions. I believe
> the simple answer is a view of the people running the country, and
> those on both coasts that a healthy manufacturing sector is passe
> and not important. The reasons I have drawn that conclusion are
> the following:
>
> 1. There is no articulated industrial policy. What do we think a
> manufacturing base should look like? What are the policies that
> should shape our industrial policy? Have we developed the infra
> structure to support our vision? There apparently is no appetite
> in Washington, or anywhere else in the country to have a dialogue
> on this.
>
> There certainly is in countries that are emerging as the new manufacturing
> base in the world order. In countries such as China, Mexico, South
> Korea, Japan, Thailand, etc. there is a very clear priority given
> to the manufacturing sector because they recognize the economic value
> stream connected with making things.
>
> 2. More fundamentally, is a manufacturing base important? Or should
> the country try to exist on retailers, services, and shuffling other
> people's money around (Wall Street)? I don't think so. See the
> value stream discussion in item 1.
>
> 3. What is our energy policy? The beginning of the current crisis
> for the American based auto companies was the sudden spike in gasoline
> prices because we have continued to let ourselves vulnerable to foreign
> despots and royal families whims to control energy prices. At $1.50
> per gallon, customer preferences are significantly different than
> at $4.50 per gallon. Were the American companies asleep at the wheel,
> or were they better at building larger cars and trucks than the foreign
> companies? Were they callous or were they giving the customers what
> they wanted? The evidence suggests the latter. Toyota, Honda, Nissan,
> BMW etc. all where trying desperately to break into the truck market
> without much success.
>
> When our foreign dependence allowed a drastic change in energy costs,
> not only were the American companies caught off guard, but others,
> especially Toyota was closing plants delaying start ups, etc.
>
> I don't care if prices are high or low, the auto companies can exist
> in either scenario. When Washington decides to address this, it
> will help them develop better strategies. After all, most of the
> American companies have world wide operations that were doing just
> fine making small economical cars using a variety of fuels from CNG
> to ethanol.
>
> Too long for a post, sorry, but I don't buy the simplistic answers
> to the question, "what's wrong with Ameican companies?".

How Bailouts Are Messing with Capitalism

With regard to the auto companies, I believe that everyone is overlooking the fundamental issues. I don't think there is any doubt that the current Wall Street fiasco has damaged the ability of the American based, and even foreign based companies to survive. But even before the Wall Street mismanagement, the American companies were in a state of decline. The central question should be why the American companies?

I don't think the simplistic answer is management or unions. I believe the simple answer is a view of the people running the country, and those on both coasts that a healthy manufacturing sector is passe and not important. The reasons I have drawn that conclusion are the following:

1. There is no articulated industrial policy. What do we think a manufacturing base should look like? What are the policies that should shape our industrial policy? Have we developed the infra structure to support our vision? There apparently is no appetite in Washington, or anywhere else in the country to have a dialogue on this.

There certainly is in countries that are emerging as the new manufacturing base in the world order. In countries such as China, Mexico, South Korea, Japan, Thailand, etc. there is a very clear priority given to the manufacturing sector because they recognize the economic value stream connected with making things.

2. More fundamentally, is a manufacturing base important? Or should the country try to exist on retailers, services, and shuffling other people's money around (Wall Street)? I don't think so. See the value stream discussion in item 1.

3. What is our energy policy? The beginning of the current crisis for the American based auto companies was the sudden spike in gasoline prices because we have continued to let ourselves vulnerable to foreign despots and royal families whims to control energy prices. At $1.50 per gallon, customer preferences are significantly different than at $4.50 per gallon. Were the American companies asleep at the wheel, or were they better at building larger cars and trucks than the foreign companies? Were they callous or were they giving the customers what they wanted? The evidence suggests the latter. Toyota, Honda, Nissan, BMW etc. all where trying desperately to break into the truck market without much success.

When our foreign dependence allowed a drastic change in energy costs, not only were the American companies caught off guard, but others, especially Toyota was closing plants delaying start ups, etc.

I don't care if prices are high or low, the auto companies can exist in either scenario. When Washington decides to address this, it will help them develop better strategies. After all, most of the American companies have world wide operations that were doing just fine making small economical cars using a variety of fuels from CNG to ethanol.

Too long for a post, sorry, but I don't buy the simplistic answers to the question, "what's wrong with Ameican companies?".

AIG: Geithner's Outraged? He Should Be Embarrassed

Thank you Dr. Morici for you expression of all of our thoughts. Finally a SA contributor who is on track.

AIG: Geithner's Outraged? He Should Be Embarrassed

Absolutely right!! Where are the Republican fanatics of the South when we need them....awfully quiet out there. It just goes to further expose their hypocrisy and anti main street people as well as their self serving statements paid for by their Japanese bosses. We all knew it was there, but this just adds to the proof.

I see that Shelby has a quote out there, not attacking AIG, but the Obama administration. C'mon Senator, you'll have to do better than that!


On Mar 16 11:11 AM slowdown wrote:

> Oh no….Let’s not stop with the Treasury Department….where the hell
> is Corker, Shelby and the rest of the Republicans that were more
> interested in where the Auto Execs stayed, ate and how there got
> to DC then they were about working with us to save our jobs and economy.
> They were the first ones to call our Execs “bumbling idiots” and
> immediately targeted the labor contracts as being out of touch with
> the market. They demanded viability plans that included re-opening
> the contracts and forcing workers to take reductions, bondholders
> to take less and the UAW to take company stock instead of cash to
> fund their pension plan. Yeah…..I’m not buying this contract thing
> at all and I’m more than angry, frustrated and furious.
>
> I want those contracts reviewed and any that were written in the
> last 18 months declared null and void.
> I want all of those employees severed and brought back the next day
> as contract bundled services at 60% of their current salaries with
> no benefits. If Delphi Automotive can do it to their salaried employees
> and it’s legal….so can AIG…and take my word for it – they’ll take
> the jobs because there aren’t any replacement jobs available. If
> they don’t…I’ll be happy to jump ship from Automotive to Financial…I’m
> sure my degree and skill-sets are transferable and I have plenty
> of co-workers that would be willing or are free to join me.

AIG: Geithner's Outraged? He Should Be Embarrassed

As a further update on my earlier post, Barack Obama was the highest recipient in the Senate, and Rahm Emanuel in the House.

Hmmmm

AIG: Geithner's Outraged? He Should Be Embarrassed

www.opensecrets.org/in...

You only have to go to the above web site to see why the financial services industries gets preferential treatment. They are the third highest industry (behind retired people and lawyers) in terms of giving to members of congress coughing up almost $63 million, 64% of that to Democrats.

We'll see what substantive action comes from this 'outrage'. I doubt very much. Detroit's biggest mistake is thinking they can get a fair shake without the big bribe.

Term limits are the only answer.

Why Capping Pay Is Likely to Work

It occurs to me that the biggest losers are skating scott free here. Sure GM is $50 billion in debt and needed a loan. But that's only because they don't have the ability to print more money.

How about the organization that is $11TRILLION in debt? Why don't we take away their executive air fleet? Why don't we limit their compensation and benefit package? After all, they have received a bailout from the taxpayers already. Are we thinking that the government will cease to attract the highly qualified people that are there now...don't make me laugh. The organization that has demonstrated a total lack of fiscal skill is making rules for everybody else.

Am I the only one that finds that odd?