Somewhere, over the Atlantic Ocean, aboard Air Force One, sometime on December 14 or 15, President Bush was asked about the status of negotiations, relative to funding a bail out and/or bridge loans for the US auto industry. The President stated that he wouldn’t give a precise timetable, and that, “This will not be a long process
Because of the economic fragility of the autos”.
Precision, the King’s English and eloquence all struck like proverbial lightning, at the same place and time and all at once, together, simultaneously. You betcha.
The news is this: The President of the United States has finally figured out what the crux ,central core, and hugely responsible issues are at the center of the country’s current economic crisis: freaking autos are economically fragile. Whew. Finally. What a goddam relief. I was afraid we would go another few weeks (five, to be exact) before someone figured out just exactly what the sam-hill was wrong with America. It must be Christmas. We have been given a gift.
But as with all “gifts” that come from the government, I suspected something else was in play, and I chose not to be entirely euphoric.
While I was reading the report of this presidential revelation/proclamation, I was also reading about and watching videos telling about and showing the shoes of an Iraqi reporter, being hurled through the air at Bush’s head, during a press conference in Baghdad. Suddenly I had an epiphany, and I am guessing that W had epiphanied, as well. I realized the great likelihood that, for perhaps the first time in his life, without alcohol or drugs, George W. Bush had been faced with real trauma.
We need to keep this incident in its’ proper perspective if we are to fully appreciate the devastating implications of what really happened here. W was on foreign soil, in a newly liberated country (Cheney says so, anyway), standing behind an unfamiliar lectern, next to a world leader (?), amid a sea of doubt and potential hostility (only because he has been lying about this country, liberation, democracy and war for years), and suddenly, unexpectedly, without warning, two pieces of footwear came flying through the conference room, aimed more or less directly at his head. The shock and awe must have been terrifying. Unfathomable fear and previously undreamt-of terror must have grasped the President by his very being and shaken him to his ephemeral core. This manner of precarious and fright-laden situation is what many would call trauma inducing ,and it is highly likely that it indeed descended on the mind (?) of George W. Bush, as he stood, there, chock full of hubris and assumed self-righteousness.
Such an assault, coming as it were, from out of a crowd of reporters, previously assumed to be filled with adoration, must have been the penultimate shock. I know it would have rattled my underpinnings, and I don’t even lie that much (and if I did, or you did, I, or we, would not get caught so often).
Sometime later, during an interview, the President attempted to brush off the severity of the event, saying that it was no different that when “people wave at you, using less than five fingers”, and claiming to fail to see what “his beef” was ,when it came to the Iraqi version of a shoe-bomber. However, I suspect that the incident had a lot more to do with the remarks about “auto fragility”, quoted above.
Trauma can be truly revelatory. It can be a real eye-opener, after the fact. Trauma, neurologically speaking, induces autonomic reactions of fight or flight. Since the president stood his ground, ducking the missiles very effectively, as he has ducked morality, vision, common decency , logic and good grammar for eight years, indicated that he did not choose flight: he stood his Texas cowboy ground and remained steadfast, clutching the lectern with both hands. To reinforce the impression that he was not shaken or unduly moved by what had happened during the attempted sole-ful attack, he conjectured that this little skirmish did not “reflect the broad attitude” of the Iraqi people (I though it would have been a broad “spectrum”, but that word is much too big for him). Clearly the depth of the traumatization caused him to lose sight of the symbolism involved when, many years earlier, as the statute of Saddam was pulled down in the Baghdad square, the Iraqi citizenry pounded it with their shoes. This public behavior is generally believed to be a display of contempt and hatred in the Arab world. . But when you have been traumatized to the extent that W obviously was, some of the details get a little blurry, in hindsight. Like, ya know, lookin’ over yer shoulder?
Nevertheless, I am led to believe that this very event is what caused the president to proclaim, just a short time later, that our economic woes could be laid squarely at the feet (tires) of fragile auto economics. I am grateful that, in his somewhat unstable state, he did not refer to either “auto erotics” or any form of frigidity rather than fragility ( either mispsokeness, while probably not being any big surprise, would have been a dead give-away about his condition). My guess is that Hank Paulson might have come to a similarly grand economic revelation if he had been hit on the head by a falling brick from the Lehman Bros. building on Wall Street. But we have not been so lucky as to have that “befall” us, so to speak. .
As it stands now, we are vey fortunate to know that our President has “got it right”, as Monty Python might perchance observe. Surely, now that we (and W) are armed with such valuable insight as to why we have no money to spend on Christmas gifts, while the financial and banking CEO’s of New York are in Dubais, on holiday, and why Detroit products cost so much, break down so often and consume so much gasoline, time and energy, that our national quality of life will improve, shortly. Or at least as soon as W forms a Presidential commission to investigate the auto economic fragility problem. Perhaps Mitt Romney can head that up, as the (sic) Car economic fragility czar.
The alleged assailant, by the way, is being held in jail, apparently for attempting to induce harm, or creating an environment of danger, or something like that, in the presence of a world leader. Of the two men behind the lectern, the authorities in Iraq have chosen to say that it was the Iranian President they were referring to. I think we all know how and why they made their distinction.
However, we should consider one other nasty eventuality that might have come about: had either one (or both ) of the shoes hit their intended target, there would have been the recorded sound of the non-resonating thud of the shoe(s) hitting an empty vessel. Had that occurred, the main stream media would have given us much more coverage to wade through, the pundits and analysts would be almost as busy as they were covering the gaffs of Sarah Palin, and Christmas would not have something like the “economic fragility of the autos” to blame for our aggregate misery. It could have been worse.
Monday, December 15, 2008
Saturday, December 13, 2008
Great Expectations
Whenever we place unrealistic expectations upon ourselves or someone else, disappointment and sorrow are soon to follow. Both the "Audacity of Hope" and the Obama administration have just been dragged into unfair territory.
Articles just this morning include:
-A plea by many for Obama to legalize "Mary Jane";
-An expose' demanding that Obama stop sexual exploitation of children;
-A call for Obama to nationalize and oversee American automobile production;
-More calls for immediate universal health care;
This weeks' emails included:
- Various invitations from multiple groups, sponsoring Obama "house parties". At these gatherings, they will apparently produce lists of issues and problems, which they will presumably submit to the Obama administration for immediate action. This presupposes an immdiate response, but no one seems braced for disappointment. Proverbial caution has been thrown to the proverbial wind.
- I recieved no less than 8 (eight) petitions from assorted groups, asking Obama to save whales, save polar bears, end poverty, stop global warming, reduce nukes, reform banks, turn coal green and reform Congressional ethics laws. And they all "expect" them to be a fait accompli by early 2009.
In none of these do I see or hear the word "compromise", nor do I sense any reasonable approach concerning just how long it takes to accomplish any of these. Obama does, after all, have to work with and through the Congress to effect any of this. But perhaps I have erred on the side of realism.
The "Audacity of Hope" is mutating into unreasonable demands and expectations. The only way for the new administration to succeed, to any measureable degree, is for the American people NOT TO BURDEN it with lists of demands founded on the wildest of dreams and unrealistic expectations. Southern plantation owners did that to black slaves 250 years ago. Surely we can do better, today.
Put yet another way, why should we party so hearty that we give Obama a hangover before he even reaches office?
And does anyone we remember how we scoffed at the Bush administration, for proposing "Aspirational horizons"? I am also inclined to think that unbounded ecstasy and euphoria can lead to catastrophic misery.
Life goes on in Texas.
Articles just this morning include:
-A plea by many for Obama to legalize "Mary Jane";
-An expose' demanding that Obama stop sexual exploitation of children;
-A call for Obama to nationalize and oversee American automobile production;
-More calls for immediate universal health care;
This weeks' emails included:
- Various invitations from multiple groups, sponsoring Obama "house parties". At these gatherings, they will apparently produce lists of issues and problems, which they will presumably submit to the Obama administration for immediate action. This presupposes an immdiate response, but no one seems braced for disappointment. Proverbial caution has been thrown to the proverbial wind.
- I recieved no less than 8 (eight) petitions from assorted groups, asking Obama to save whales, save polar bears, end poverty, stop global warming, reduce nukes, reform banks, turn coal green and reform Congressional ethics laws. And they all "expect" them to be a fait accompli by early 2009.
In none of these do I see or hear the word "compromise", nor do I sense any reasonable approach concerning just how long it takes to accomplish any of these. Obama does, after all, have to work with and through the Congress to effect any of this. But perhaps I have erred on the side of realism.
The "Audacity of Hope" is mutating into unreasonable demands and expectations. The only way for the new administration to succeed, to any measureable degree, is for the American people NOT TO BURDEN it with lists of demands founded on the wildest of dreams and unrealistic expectations. Southern plantation owners did that to black slaves 250 years ago. Surely we can do better, today.
Put yet another way, why should we party so hearty that we give Obama a hangover before he even reaches office?
And does anyone we remember how we scoffed at the Bush administration, for proposing "Aspirational horizons"? I am also inclined to think that unbounded ecstasy and euphoria can lead to catastrophic misery.
Life goes on in Texas.
Friday, December 12, 2008
The Economy of Illinois Politics
A great many people who know me, and know that I am not only from Illinois, but also from Chicago, have been asking me what I think about the recent disclosure and exposure of the attempt by the Honorable (I use the term loosely) Illinois Governor Blagojevich to "sell" the Senate seat left open by President-Elect Barack Obama (please hold the Polish jokes). After reading blogs and articles and columns and op-eds, and looking through a mountain of political editorial cartoons, I think I am ready to make a statement. Any condemnation is premature.
Despite the rancor and cries for damnation that have come from other (I'm certain) innocent Democrats, along with numerous calls for his resignation and threats to impeach, I have to say that the Governor makes me proud. There. I said it. He's my boy.
America is a land of traditions and traditional values. And American Illinois is a state of commerce, ingenuity, world class corn and dairy products (screw Wisconsin; damn cheeseheads) , and the Land of Lincoln (Honest Abe, you know). Chicago has grown from being a lakeside native American Indian resort and fishing hole, to the home a great and memorable fire, a head-bashing spree by corrupt police in 1968, interminable terms by Daleybots and the only river in America (I think) that not only flows backwards, but turns bright green every March, in spite of the pollutant level.
And the Governor's office, the state drivers licensing bureau, the Chicago City Council and its' Aldermen, the Farm Bureau (probably) and IDOT (or whatever it is called now, which never really finished any highway or tollway it ever started), in conjunction with the remnants of Al Capone's mafia structures...all of these have traditions to be upheld. And the greatest of these is corruption ( Think, "And the greatest of these is love"). Blagojevich was simply holding up his end of a long-standing bargain and keeping tradition alive, by trying to actually sell a Senate seat. This man understands the true role of the Governor of Illinois and has strived mightily to uphold the values entrusted to him. He done good (now you can tell a Polish joke).
However, this all raises an economic question which I had never pondered until now. Since nobody in Illinois ever buys anything, invests in anything or seeks to acquire anything that they cannot make money on, what, exactly does one want with a Senate seat? It is obvious now, since there were apparently several bidders, that there is much profit to be made by this purchase, and those of us who did not bid, and did not pick up on this new trend in economics, have lost an investment opportunity. Sarah Palin might say that we had missed out real traditonal American values.
While it may be that holding a federal Senate seat in Illinois is financially akin to managing a Wall Street hedge fund, this angle and aspect of political fund raising had never occurred to me. Where have I been, all my life? (gratefully, not in Illinois, for most of it).
So here is the question you must answer, if we are to truly understand the dynamics of this affair: (frankly I am dumbfounded that Krugman or Reich or Freidman or Paulson or Geithner haven't yet asked this or set forth an equation):
Part one: How much does one actually pay for an Illinois Senate seat? We really do need a dollar amount or the number of first-borns one must pledge.
Part two: In order to determine the fair market value (like hog belly futures... they do that in Chicago, as well) one must be able to calculate, well in advance, the ROI (that's "Return on Investment" for those of you who flunked Econ 101 at Wharton) of said Illinois Senate seat, as well as be able to know how long it will take to achieve that ROI.
While this mathematical challenge has me completely stumped, clearly good ole' Blago and at least five other bidders had it figured out, otherwise the potential transaction would not have made it this far. And I am amazed that the Chicago Tribune has not had a bevy of economists at U of I working on it.
As far as holding one of the Senate seats is concerned, the must be "gold in them thar hills" and most of us have been too stupid to look there. Blago is to be commended for keeping the faith and holding the tradition high, for all to see. Perhaps it will get his picture on the new license plates they stamp out at the prison he will attend. Who knows. All fame has a price.
But I want the equation for future use. If the ROI is that good, I could become a traditionalist, real quick.
Despite the rancor and cries for damnation that have come from other (I'm certain) innocent Democrats, along with numerous calls for his resignation and threats to impeach, I have to say that the Governor makes me proud. There. I said it. He's my boy.
America is a land of traditions and traditional values. And American Illinois is a state of commerce, ingenuity, world class corn and dairy products (screw Wisconsin; damn cheeseheads) , and the Land of Lincoln (Honest Abe, you know). Chicago has grown from being a lakeside native American Indian resort and fishing hole, to the home a great and memorable fire, a head-bashing spree by corrupt police in 1968, interminable terms by Daleybots and the only river in America (I think) that not only flows backwards, but turns bright green every March, in spite of the pollutant level.
And the Governor's office, the state drivers licensing bureau, the Chicago City Council and its' Aldermen, the Farm Bureau (probably) and IDOT (or whatever it is called now, which never really finished any highway or tollway it ever started), in conjunction with the remnants of Al Capone's mafia structures...all of these have traditions to be upheld. And the greatest of these is corruption ( Think, "And the greatest of these is love"). Blagojevich was simply holding up his end of a long-standing bargain and keeping tradition alive, by trying to actually sell a Senate seat. This man understands the true role of the Governor of Illinois and has strived mightily to uphold the values entrusted to him. He done good (now you can tell a Polish joke).
However, this all raises an economic question which I had never pondered until now. Since nobody in Illinois ever buys anything, invests in anything or seeks to acquire anything that they cannot make money on, what, exactly does one want with a Senate seat? It is obvious now, since there were apparently several bidders, that there is much profit to be made by this purchase, and those of us who did not bid, and did not pick up on this new trend in economics, have lost an investment opportunity. Sarah Palin might say that we had missed out real traditonal American values.
While it may be that holding a federal Senate seat in Illinois is financially akin to managing a Wall Street hedge fund, this angle and aspect of political fund raising had never occurred to me. Where have I been, all my life? (gratefully, not in Illinois, for most of it).
So here is the question you must answer, if we are to truly understand the dynamics of this affair: (frankly I am dumbfounded that Krugman or Reich or Freidman or Paulson or Geithner haven't yet asked this or set forth an equation):
Part one: How much does one actually pay for an Illinois Senate seat? We really do need a dollar amount or the number of first-borns one must pledge.
Part two: In order to determine the fair market value (like hog belly futures... they do that in Chicago, as well) one must be able to calculate, well in advance, the ROI (that's "Return on Investment" for those of you who flunked Econ 101 at Wharton) of said Illinois Senate seat, as well as be able to know how long it will take to achieve that ROI.
While this mathematical challenge has me completely stumped, clearly good ole' Blago and at least five other bidders had it figured out, otherwise the potential transaction would not have made it this far. And I am amazed that the Chicago Tribune has not had a bevy of economists at U of I working on it.
As far as holding one of the Senate seats is concerned, the must be "gold in them thar hills" and most of us have been too stupid to look there. Blago is to be commended for keeping the faith and holding the tradition high, for all to see. Perhaps it will get his picture on the new license plates they stamp out at the prison he will attend. Who knows. All fame has a price.
But I want the equation for future use. If the ROI is that good, I could become a traditionalist, real quick.
Wednesday, December 10, 2008
I Always Write Too Soon
There will be a short pause
http://www.msnbc.msn.com/id/28138287/
While we all get screwed.
Happy Holidays.
http://www.msnbc.msn.com/id/28138287/
While we all get screwed.
Happy Holidays.
Idiocy Prevails On the One Side, Cools Heads on the Other
And apparently ne’er the twain shall meet.
‘Twas the night before Christmas..and some kind gentleman just told me a few days ago that we have three ways of thinking in America (remember this?): Right brained, left brained and lame brained. Guess who (or what) is winning?
http://www.msnbc.msn.com/id/28108346/
And the beat goes on. " White House and democrats have limited intercourse and produce handicapped child". For $14M.
I have already sent out pieces by both Krugman (German/European cars) and Freidman (Electric cars and software upgrades) earlier this morning (check all the stuff you deleted). There have been comments.
Martha said:
Tracey said (along the way, after reading Krugman and me):
‘Twas the night before Christmas..and some kind gentleman just told me a few days ago that we have three ways of thinking in America (remember this?): Right brained, left brained and lame brained. Guess who (or what) is winning?
http://www.msnbc.msn.com/id/28108346/
And the beat goes on. " White House and democrats have limited intercourse and produce handicapped child". For $14M.
I have already sent out pieces by both Krugman (German/European cars) and Freidman (Electric cars and software upgrades) earlier this morning (check all the stuff you deleted). There have been comments.
Martha said:
I've seen Friedman interviewed before and he gives a lot to think about. Habits of mind are dangerous things, and hard to break. What we need is a merge of expertise in vehicle manufacturing and the new business platform. Then we could have the best of both worlds. It doesn't have to be a "either/or" proposition, if the two could co-exist, which, so far they haven't, in the automobile industry. Friedman makes it sound that some in the world have seen that it's in their best interest to do so. I don't think Detroit, or Washington has caught on to that yet. They better get out of the box, or they will be left behind. That goes for the consumer too.
Tracey said (along the way, after reading Krugman and me):
Uh - I am one of those "underclass" who are more plugged in, and wear my "pretentious Eco-Snob" badge with great pride. Please convey that to all you know. THEY are the underclass of insensitives whose karma will catch up with them. Intellect and awareness trumps conspicuous consumption any day.
(Tracey drives a Prius.)
Barbara said that the "idea of a Czarina" was much more attractive. Or words to that effect. When I later told her that "Czarina" had just called me, from down on 6th St. in Austin, and wanted me to come buy her a beer, Barbara said it did not much help the cause of female equality. Touche'.
It sounds like having a “car czar” appears inevitable, because everyone in Congress is thinking exactly the way in which Friedman (see the NYT article) urged that we should not. I think the decisions (in spite of what I think about republicans) probably are ass-backwards, but that is because we have so many asses making them.This is a really crappy thing to do to Santa Claus.
Tuesday, December 9, 2008
A Czar, A Czarina, or A Dis-czar-ster?
Now that the jury has mostly come in on the fall-out that was has been called a bail-out of Wall Street, most opinions are that it did too little, too late, or did nothing at all to stave off economic mayhem. We saved the bankers’ salaries and paid for parties for brokers and hedge fund hedge hogs, and the banks that got the money used it to pay off stockholders and invest it to make money elsewhere. Seemingly none of it went out as loans to help anyone who needed it: Republic Door and Window in Chicago is an example of how not to manage money, save jobs and work in the interest of the public good. The employees are sitting in, the company is sitting out, the bank is sitting pat and everyone will not have a Merry Christmas. Obama has said the workers have his support: he should be grabbing B Of A by the throat and making them turn blue. I doubt anyone at that bank will go without a turkey or ham on Dec. 25.
I have lost track of the numbers involved: Faced with a huge public outcry, the congress said no to a $700B deal for Wall Street. The weekend passed and then so did a new bill, for $850B. To date, there has been about $152B (?) spent with no visible effect. There is another story (or group of them) that Paulson and his minions have doled out about $2T (yes, trillion) which is largely unaccounted for. All that seems certain I that the Paulsonites will certainly have jobs after Jan. 20. Somewhere on Wall Street. And today the CEO of Merrill cavalierly asked to receive his $10M bonus, anyway. How did we manage to raise and propagate these idiot totems of industry? This man has inadvertently stuck his head up his own posterior. No mean trick but he is clearly a mean man: why should we be surprised? Tar and feathers would be good, here.
But, while the current Governor of Illinois is whisked off by the feds for selling government congressional seats (hell, he was only fulfilling his traditional role in IL politics), there is the ongoing, low-level blip on the radar screen in Detroit, the Big used-to-be Three and the paltry matter of somewhere between $15 and 34B. This is another public display of bail-out or life-line or bridge loan or congressional pocket change change rattling. I have never seen a story grow up so fast over so little, change as rapidly, get twisted so violently or produce so few results as this one has. Whatever this amount of money eventually turns out to be (if it does at all), it will be, by any reasonable estimate, like pouring a bucket of warm water into an Olympic-sized swimming pool to heat it up. Most believe that whatever forms this measure takes, it will only stave off a manufacturing holocaust for a few months…if that. You might read www.alertnet.org/workplace/111029, if you want to hear more. The biggest and most startling line in that article is that the business of Detroit is “more transparent” than that of Wall Street: “With Wall street, lack of clarity, helped bag the money”.
Enter Uncle Sam and the regulatory watchdogs (just when I thought this could not get worse, it gets worse).
It has been suggested that any bail-out/bridgeloan/lifeline/credit extension bring along with it the appointment of a “Car Czar”. Oh joy.
Before I tell you why I think this idea stinks and what might be an alternative, just let me remind you of two or three other events in our history that have been much ballyhooed and accomplished little or nothing. Several years ago, our sense of societal guilt/philanthropy/elitism led to us to appoint a “Drug Czar”. We could have just said “NO”, but we bought off on the idea anyway. For all of the clamor and cheering, today we have more drugs on the street than ever, more law enforcement time and money engaged in drug traffic fighting than ever and more people incarcerated for petty drug crimes per 100 members of the population (more than any other country in the world) than ever. This has been a spectacular accomplishment, along with winning the war in Viet Nam, eradicating poverty and homelessness in the US, making all educational programs equal in quality and introducing “Intelligent Design” (with saddles on dinosaurs) as a way to interpret science. For all of our “fundamental” beliefs, we are fundamentally screwed up.
Yu might remember that more recently, the Bush administration promoted the position of a “war czar” (how did we get so tied up in Russian history, anyway?). We had so many wars (like the old woman who lived in a shoe), that we didn’t know what to do. The notion was that we should consolidate, oversee and coordinate our comprehensive plans to implant democracy all over the world (in order to lower oil prices and eradicate terrorism). Well, we all know how well that has worked out, as well. My heart is warmed by both little nuggets of American ingenuity in action.
The notion of a “car Czar” is preposterous and laughable from almost any angle. Already today a TV pundit has recommended brain-dead, non-managerial “mental recession” Phil Gramm for the Job. Hell, we might as well appoint “Heckuva Job Brownie”: the next fuel efficient car off of the Detroit assembly line could be called a “Katrina”. It could run on crawfish ettoufee’ and warm beer.
I have no doubt whatsoever than anyone appointed by our government to oversee the American car industry, for a week or a month or a year, would have a snowball’s chance in hell of having any positive impact on this floundering manufacturing beast. They can barely manage themselves and the insertion of government interference will simply exacerbate the nightmare of needed reform and re-structure. Despite his pedigree, Mitt Romney would be a joke; any past auto insider would have no ability to see beyond the way things have always been done; a neophyte or Wharton school guy would have no clue about where to start. The Board would give a new car, an allowance and the keys to the executive dining room, and that would be that.
This is all comes , of course, before you realize that the money will be used to shore up failing pieces of Detroit, scattered and battered around the world and will not save any American jobs? Probably? Anyone who cannot se that boondoggle coming deserves dog food for breakfast.
If we are going to do this (I am on my hands and knees praying as I have seldom ever done that we don’t) maybe we should appoint a “Czarina”, and I don’t mean Fiorina. A woman would understand better how to manage a day-to-day budget. Women probably write more checks to Chrysler Finance, FoMoCo and GMAC than anyone else (they know how much money those clowns get now, much better than anyone else) and they do not believe that monster pick-up trucks with nudie profiles on the rear mudflaps will help the country’s transportation woes. They drive more mini-vans and cross-overs and hate the smell that gasoline leaves on their clothing, and are mostly correct in believing that all big truck drivers are red-necked a**holes who cause accidents, drive drunk and clog the highways. Give the job to a bright, economically minded, stiff—necked woman, throw away the keys to the “privileged” men’s room and clubhouse and the company limo and let ‘er rip. Testicles in the auto industry will shrink up and recede, nation-wide, but some good decisions might be made. (The boards of directors of all three “giants” would have to be replaced with women, too, if this is going to work).
Waggoner should be given a wagon to ride upon, Mulalay should go back to building model airplanes (Bill Ford can be a stay-at-home dad) and that Chrysler guy should go back to moving 2X4’s at Home Depot or be shipped back to Italy (Iacocca is waiting).
Someone just recently said (oh, that was me I the last blog or so) that Chrysler is already on life support and someone should just pull the plug. It was a bad product buy by the investors, like when I by a cheap lawnmower at Wal-Mart, and GM should just do what very red-oil-blooded American entrepreneur does and file for re-organization in bankruptcy court. Somebody in Tokyo will pickup the pieces, and American ingenuity will find something else to do with our tooling and resources. Ford seems to be holding up. Henry may be only rolling half-way over in his grave.
This situation has become ludicrous, in its’ scope and disproportionate media coverage. The pickets have been circling the fences in Detroit for years, holding signs that say, “The end is near”, and until gas went to $4.00 and Dishes on Wall Street ran away with the spoons, nobody noticed that more members of Congress drive Hondas than Chevys.
A car czar is a pending dis-czar-ster. As surely as the polar ice caps are melting and there is no such things as clean coal, Detroit is on the skids. The world is changing. And you can’t freaking drive your big pick-up to the hardware store anymore anyway: there aren’t any left.
I have lost track of the numbers involved: Faced with a huge public outcry, the congress said no to a $700B deal for Wall Street. The weekend passed and then so did a new bill, for $850B. To date, there has been about $152B (?) spent with no visible effect. There is another story (or group of them) that Paulson and his minions have doled out about $2T (yes, trillion) which is largely unaccounted for. All that seems certain I that the Paulsonites will certainly have jobs after Jan. 20. Somewhere on Wall Street. And today the CEO of Merrill cavalierly asked to receive his $10M bonus, anyway. How did we manage to raise and propagate these idiot totems of industry? This man has inadvertently stuck his head up his own posterior. No mean trick but he is clearly a mean man: why should we be surprised? Tar and feathers would be good, here.
But, while the current Governor of Illinois is whisked off by the feds for selling government congressional seats (hell, he was only fulfilling his traditional role in IL politics), there is the ongoing, low-level blip on the radar screen in Detroit, the Big used-to-be Three and the paltry matter of somewhere between $15 and 34B. This is another public display of bail-out or life-line or bridge loan or congressional pocket change change rattling. I have never seen a story grow up so fast over so little, change as rapidly, get twisted so violently or produce so few results as this one has. Whatever this amount of money eventually turns out to be (if it does at all), it will be, by any reasonable estimate, like pouring a bucket of warm water into an Olympic-sized swimming pool to heat it up. Most believe that whatever forms this measure takes, it will only stave off a manufacturing holocaust for a few months…if that. You might read www.alertnet.org/workplace/111029, if you want to hear more. The biggest and most startling line in that article is that the business of Detroit is “more transparent” than that of Wall Street: “With Wall street, lack of clarity, helped bag the money”.
Enter Uncle Sam and the regulatory watchdogs (just when I thought this could not get worse, it gets worse).
It has been suggested that any bail-out/bridgeloan/lifeline/credit extension bring along with it the appointment of a “Car Czar”. Oh joy.
Before I tell you why I think this idea stinks and what might be an alternative, just let me remind you of two or three other events in our history that have been much ballyhooed and accomplished little or nothing. Several years ago, our sense of societal guilt/philanthropy/elitism led to us to appoint a “Drug Czar”. We could have just said “NO”, but we bought off on the idea anyway. For all of the clamor and cheering, today we have more drugs on the street than ever, more law enforcement time and money engaged in drug traffic fighting than ever and more people incarcerated for petty drug crimes per 100 members of the population (more than any other country in the world) than ever. This has been a spectacular accomplishment, along with winning the war in Viet Nam, eradicating poverty and homelessness in the US, making all educational programs equal in quality and introducing “Intelligent Design” (with saddles on dinosaurs) as a way to interpret science. For all of our “fundamental” beliefs, we are fundamentally screwed up.
Yu might remember that more recently, the Bush administration promoted the position of a “war czar” (how did we get so tied up in Russian history, anyway?). We had so many wars (like the old woman who lived in a shoe), that we didn’t know what to do. The notion was that we should consolidate, oversee and coordinate our comprehensive plans to implant democracy all over the world (in order to lower oil prices and eradicate terrorism). Well, we all know how well that has worked out, as well. My heart is warmed by both little nuggets of American ingenuity in action.
The notion of a “car Czar” is preposterous and laughable from almost any angle. Already today a TV pundit has recommended brain-dead, non-managerial “mental recession” Phil Gramm for the Job. Hell, we might as well appoint “Heckuva Job Brownie”: the next fuel efficient car off of the Detroit assembly line could be called a “Katrina”. It could run on crawfish ettoufee’ and warm beer.
I have no doubt whatsoever than anyone appointed by our government to oversee the American car industry, for a week or a month or a year, would have a snowball’s chance in hell of having any positive impact on this floundering manufacturing beast. They can barely manage themselves and the insertion of government interference will simply exacerbate the nightmare of needed reform and re-structure. Despite his pedigree, Mitt Romney would be a joke; any past auto insider would have no ability to see beyond the way things have always been done; a neophyte or Wharton school guy would have no clue about where to start. The Board would give a new car, an allowance and the keys to the executive dining room, and that would be that.
This is all comes , of course, before you realize that the money will be used to shore up failing pieces of Detroit, scattered and battered around the world and will not save any American jobs? Probably? Anyone who cannot se that boondoggle coming deserves dog food for breakfast.
If we are going to do this (I am on my hands and knees praying as I have seldom ever done that we don’t) maybe we should appoint a “Czarina”, and I don’t mean Fiorina. A woman would understand better how to manage a day-to-day budget. Women probably write more checks to Chrysler Finance, FoMoCo and GMAC than anyone else (they know how much money those clowns get now, much better than anyone else) and they do not believe that monster pick-up trucks with nudie profiles on the rear mudflaps will help the country’s transportation woes. They drive more mini-vans and cross-overs and hate the smell that gasoline leaves on their clothing, and are mostly correct in believing that all big truck drivers are red-necked a**holes who cause accidents, drive drunk and clog the highways. Give the job to a bright, economically minded, stiff—necked woman, throw away the keys to the “privileged” men’s room and clubhouse and the company limo and let ‘er rip. Testicles in the auto industry will shrink up and recede, nation-wide, but some good decisions might be made. (The boards of directors of all three “giants” would have to be replaced with women, too, if this is going to work).
Waggoner should be given a wagon to ride upon, Mulalay should go back to building model airplanes (Bill Ford can be a stay-at-home dad) and that Chrysler guy should go back to moving 2X4’s at Home Depot or be shipped back to Italy (Iacocca is waiting).
Someone just recently said (oh, that was me I the last blog or so) that Chrysler is already on life support and someone should just pull the plug. It was a bad product buy by the investors, like when I by a cheap lawnmower at Wal-Mart, and GM should just do what very red-oil-blooded American entrepreneur does and file for re-organization in bankruptcy court. Somebody in Tokyo will pickup the pieces, and American ingenuity will find something else to do with our tooling and resources. Ford seems to be holding up. Henry may be only rolling half-way over in his grave.
This situation has become ludicrous, in its’ scope and disproportionate media coverage. The pickets have been circling the fences in Detroit for years, holding signs that say, “The end is near”, and until gas went to $4.00 and Dishes on Wall Street ran away with the spoons, nobody noticed that more members of Congress drive Hondas than Chevys.
A car czar is a pending dis-czar-ster. As surely as the polar ice caps are melting and there is no such things as clean coal, Detroit is on the skids. The world is changing. And you can’t freaking drive your big pick-up to the hardware store anymore anyway: there aren’t any left.
Thursday, December 4, 2008
The Big Three, the Big Swindle and The Boat We Might Catch
“Would you care for some rot-gut red, with your crow, sir?”
These are confusing, trying and muddled times. Several weeks ago, Henry Paulson, aka The Harbinger of Death, threatened our country (in a sniveling, poorly written two-page memo) with mayhem, cultural dissolution, financial disaster and the end of American life as we know it, if we did not consider and immediately approve, post haste, a bailout for Wall Street bankers and financiers, in the amount of $700B. The country rose up in a loud voice and said, “NO!”, the Congress backpedaled for a few days, then re-grouped and instead approved a bail-out bill for more than $850B. Weeks later, we are all still scratching our heads about exactly what happened.
Unless you have been completely isolated from the recent news reports, you know a number of events have since transpired, none of which are particularly encouraging or heartening. The office of the GAO has reported that there is virtually no oversight for how this money is being spent; there are reports that Paulson, et al, without any oversight, have doled out some $2T that is unaccounted for; AIG has used large amounts of its’ cash for parties; we have had to rescue Citibank; most of the $850B is still not apportioned; the stock market has tanked; mortgages and still foreclosing, nation wide; 401K plans are shrinking faster than anyone could imagine…the list of consequent, contingent and ongoing disasters goes on and on. This is what we might chose to call “The Big Swindle”. There is a rumor that there is a new economic team on the way, but their impact is some months off, their effectiveness is still mere speculation and we have no leadership in this tumultuous transition period between the Bush and Obama administrations (W has been hiding behind a Christmas tree in the Whitehouse, revealing his “regrets” to Charles Gibson. That is really helpful.)
But the scenario ripens with both age and the reported availability of mountains of disposable cash from the treasury. Now, as it happened, at the end of November, the CEO’s of Detroit’s Big Three (which are not as big as they used to be…or think they are) came, hat-in-hand, via private jet, to Washington to make their own plea for survival funding. They brought with them a myriad of problems, conundrums, contradictions and perplexing issues. What they did not bring was any humility.
Their lavish method of travel notwithstanding, these three titans of industry also appeared with their hand out, pleading poverty, with a silk top hat in which to collect the funds and wearing silk suits. In a manner nearly as obscene as the one Paulson used in demanding funds for the original $700B, they had no plan for what they would do with the money, other than to keep on “doing what they have always been doing”. In the only smart move any congressional body has made in at least a decade, the auto industry moguls were sent home. They were told to come back when they had a plan, a strategy and some vision of the future which had any shred of credibility. Recently some plans have been leaked, including the bald-faced insult that they will all forego their annual multi-million dollar salaries (maybe) if their companies get government money, that they will all travel by hybrid vehicle this time and they have considered the future (at least a little) in their plans for use of the funding (Ford has actually promised a very small percentage increase in their CAFÉ standards within five years. Wow.).
There remain some glitches in the procedure. First of all, on this return trip, the “guys” have had time to think up reasons to increase the originally proposed bail-out/loan/bridge loan/grant/funding proposal from $25B to $34B. While Ford says it would only like their share to be in the form of a $9B line of credit (to be used should one of the other two fail, which is a fall-back position no one understands), Chrysler just simply says that it needs the money to survive and GM promises that this money (they want $18B) will ensure plant closures and the layoffs of up to 30,000 workers over the next few years. On top of this, GM has suddenly announced that with out at least $4B before the end of the year, they will collapse completely. Somehow, I find it very difficult to believe that the army of bean counters at GM did not have any clue that this collapse might take place before it became clear that the Feds were loosely throwing money around. These guys from Detroit must really believe that we are as stupid as we look. After how we responded to Paulson, we must look pretty stupid.
At any rate, the polarizing discussion swirling about for the last two weeks or so has been something like Hamlet’s dilemma, with each side asking the other, “To bail-out or not to bail out?” You can (and probably have) read stories in Newsweek, MSNBC.com, the MSM, in blogs and on numerous web sites, either vehemently urging the demise of these dinosaurs (and how they got to be and stay alive), as well as those wailing about the millions of sub-contract and supplier tier jobs that will be lost if the Big Three go Big Belly Up. (Michael Moore, whether you like him or not, did a nice job of summing it all up last night on “Countdown”, with Keith Olbermann, on MSNBC-TV; you can watch it on your computer). But we may be missing the boat, here.
Whilst everyone has been looking the other way, hoping for gas prices to go down, buying more and more goods produced in China and ignoring the 800 pound reality gorilla in the room, everyone has also known (but wouldn’t admit) that Detroit can not seem to build cars that anyone wants, its’ cost structures were non-competitive, it had little R&D in the pipeline for needed future transportation technologies, had too many brands and had made too much money for the last 60 years without planning effectively for old age. They just seem to have woken up and started wondering where their 401K had gone.
My name is not Krugman or Reich or Friedman or Keynes, but it occurs to me that the boat we might catch might look something like this:
To begin with, if everything I have read is true, last year the government approved a $25B grant for the auto industry to work on new electric and hybrid auto technologies. It is my understanding that Japan has made the same effort for their auto industry. This would push ahead some competitiveness and forestall complete disaster in the industry, here. WE SHOULD GIVE IT TO THEM, NOW. But there should be accountability strings attached, and progress reports. We deserve to know how they are spending our money. If it is mal-appropriated, it should be returned.
Secondly, and with as many strings attached, we should pull another $25B out of the sum already allocated (since Paulson has no real plans for spending it anyway) and set it up in an interest bearing account. The Bogus Three can draw upon it as a line of credit, as needed, to keep things afloat and weather the current storm, as best they can.And this money should be put into a repayment schedule, to begin in 18-24 months. We should also recognize that this will only limit layoffs and lowered productions, not stop them. The general state of the economy right now indicates that very few people will be out buying new cars in any record numbers, any time soon.
A third bold move would be to change the name of the UAW to the United Manufacturing Workers (the UMW) and get them to join in the re-training (help provide funding) of their members to build, assemble and manufacture other and more diverse goods. For instance: The hot ticket everywhere these days seems to be wide-screen HD, digital televisions sets. I cannot help but believe that with the creativity and resourcefulness of Motorola, GE, Hitachi, Panasonic, and Sony (to name just a few) with deep roots and pockets in the US, we could not manage to assemble those TV’s in this country. In fact, we could even think about using our vast resources to supply the raw materials. It might push a few low-end Korean manufacturers out of the spotlight, but there would be some immediate consequences and benefits to our economy and employment statistics. Look at it this way:
An auto assembly line worker making $26.00/hr. is currently an endangered species (that $70/hr worker is a myth). Were he/she to be re-trained to assemble/manufacture the thousands of HD TV sets that are in such huge demand, they might only make $16/hr., but they would not be out of work and in danger of losing their home. The money would run back through the economy and eventually the new “hybrid” vehicles that Detroit would be selling by then could be a much needed purchase by the people who would now have the money (from jobs) to pay for them.
The Obama administration is (already) talking about (finally) paying attention to rebuilding our crumbling infrastructure. We will need more skilled workers to rebuild electrical transmission lines, gas lines, bridges, tunnels, roadways and sewer and transportation systems. We will need to build windmills and water transmission routes. We will need communications workers, more draftspeople, more environmental researchers and more teachers. And all of that means that we need more earth moving machines (Caterpillar can’t build them all, and Komatsu shouldn’t), dump trucks (hello, General Motors: nobody needs a Cadillac), surveying gear, cranes, steel production, rebar and electronic measuring devices. There is no reason that all of this cannot be manufactured and produced in the United States. There is no reason the 30-50,000 auto workers, whose jobs are at risk cannot be trained to do these jobs and save their homes and send their children to college. And we should not forget that we may a nearly endless supply of empty, under or un-utilized manufacturing facilities which could be pressed into service, in very short order. And the nations’ governors just m et with the President elect, and they told him that their states were literally days, weeks and months way from being able to put “shovels in the ground” for rebuilding projects.
But we will need to face some tough realities (you thought I forgot about the crow by now, didn’t you?). Initially, we need to put a harness on greed and the seemingly insatiable appetite Wall Street has for instant profits and shareholder “overnight” wealth. That may never happen in America again. The Dellionaire/Microsoft phenomenon may never occur again, ever. Secondly, that US –made TV set may cost 5-10% more than the one we used to buy at Circuit City from Indonesia…but the worker will have the money to pay for it. And Circuit City will not make the retail profit it used to, but it will still be in business as a retailer. Wal-Mart may have a problem if they cannot buy everything from China. Sorry.
GM may eventually have to file for bankruptcy and restructure, despite the federal aid dollars. That would not be the end of the world. Too much has been written recently about what will happen: other companies will move in to the vacuums created and address the new needs: the small company that paints plastic bumpers for GM can move on to paint plastic parts for TV’s from Motorola. It will take some time, but Rome was not built in a day (and the US will not go away in one, either). Ford will most likely soldier on or at least plans to. Chrysler is a lame duck on life support. When Daimler Benz gave up on it, and Cerebrus bought it, their clear intention was to either make a go of it or write it off. It was their risk, they took it, and they lost. The tax payer should no more be held accountable or responsible for that gamble than they would be if Proctor and Gamble gambled on a new laundry detergent and failed. The only difference is in the scale of the economies involved.
Mary Ann Keller, a noted automotive journalist, has been saying for years, that there would eventually only be two or three automobile companies in the world. Every day it becomes clearer that one of those will be Toyota (or some Japanese conglomerate with Toyota at the center). We are witnessing manufacturing Darwinism as the world gets “flatter” (Friedman) and GM’s position as the center of (their own) universe is passing. Must I remind you of the old adage about throwing good money after bad?
This discussion about saving the US auto industry, as I alluded to earlier, is quite polarized. As many people want to save it (for many of the wrong reasons) using tax payer money (a very wrong solution) as want to see it die (for some other wrong reasons, like spite); the Michigan legislators are screaming for it (their job security) and many others (including many members of congress) are screaming against it (which has something to do with our nose in spite of our face). I am suggesting a middle ground.
I am left with three principal thoughts. Right up front, we should recognize that the model employed by Wall Street for the past several decades simply does not work. The events of the past several weeks and months have borne this out, without contradiction. Short-term, high yield greed is no way to build and maintain a robust economy. It should not be difficult for anyone to see that the net loss in earning power without reasonably equal accumulations of wealth for the traditional middle class has been both destructive and counter productive. And as far as the auto industry debate is concerned, GM, Ford, Chrysler and their minions are representatives of this failed model. Simple life support and prolongation of life as it has been is no remedy.
I must add to that a quote I read in a NYT editorial this week by Prof. Krugman. An Indian economist, Prabhat Patnaik, said that, the “free market system [demonstrates] the incapacity to distinguish between speculation and enterprise.” Put simply, greed ( unfettered speculation) is what prompts GM to have far too many “brands” (who the hell needs a Hummer, anyway?), and for Wal-Mart, Home Depot, Lowes and Handy Andy or some other home supply company or discount outlet to have a big box store on every available scrap of land in America. As Michael Moore pointed out (again) last night on “Countdown”, if no one has a job, who will there be to buy the automobiles, shop at Wal-Mart or buy even discounted clothing? If we engaged in and invested in real growth-oriented enterprise, we would not be confronted so bluntly by this dilemma. It seems that you can buy anything at Wal-Mart except logic.
In a new blog (here comes point number three) on 12/3, Robert Reich (http://robertreich.blogspot.com) points out that while we are scrambling to “rescue” financial capital, we are ignoring and squandering human capital. I.e., while we work harder and harder to keep solvent and propagate the financial frontispieces of our economy, we are ignoring the workers and the human infrastructures that constitute the lifeblood of our culture (and perhaps even our existence).
The realities and the disappointments of the Wall Street rescue plan are becoming more obvious every day, and we surely do not need to have a repeat performance when it comes to Detroit, even if it is on a much smaller scale. But we cannot merely set the auto industry completely adrift, either. We should find a method and pathway that will rescue the untapped potentials that are lying about to be optioned nearly for the taking. But, as we learned from the Wall Street debacle, that old line about “too big to fail” is too big to swallow. And this applies equally to Detroit.
There is much crow to eaten in the near future. Sadly there is plenty go around, and the Big Three should figure that out and ditch the caviar along with their corporate jets. But unless we want to re-enact the champagne breakfasts of AIG, we had better make sure that everyone knows that rot gut red is all there is with which to drink it down.
Life Goes On In Texas
These are confusing, trying and muddled times. Several weeks ago, Henry Paulson, aka The Harbinger of Death, threatened our country (in a sniveling, poorly written two-page memo) with mayhem, cultural dissolution, financial disaster and the end of American life as we know it, if we did not consider and immediately approve, post haste, a bailout for Wall Street bankers and financiers, in the amount of $700B. The country rose up in a loud voice and said, “NO!”, the Congress backpedaled for a few days, then re-grouped and instead approved a bail-out bill for more than $850B. Weeks later, we are all still scratching our heads about exactly what happened.
Unless you have been completely isolated from the recent news reports, you know a number of events have since transpired, none of which are particularly encouraging or heartening. The office of the GAO has reported that there is virtually no oversight for how this money is being spent; there are reports that Paulson, et al, without any oversight, have doled out some $2T that is unaccounted for; AIG has used large amounts of its’ cash for parties; we have had to rescue Citibank; most of the $850B is still not apportioned; the stock market has tanked; mortgages and still foreclosing, nation wide; 401K plans are shrinking faster than anyone could imagine…the list of consequent, contingent and ongoing disasters goes on and on. This is what we might chose to call “The Big Swindle”. There is a rumor that there is a new economic team on the way, but their impact is some months off, their effectiveness is still mere speculation and we have no leadership in this tumultuous transition period between the Bush and Obama administrations (W has been hiding behind a Christmas tree in the Whitehouse, revealing his “regrets” to Charles Gibson. That is really helpful.)
But the scenario ripens with both age and the reported availability of mountains of disposable cash from the treasury. Now, as it happened, at the end of November, the CEO’s of Detroit’s Big Three (which are not as big as they used to be…or think they are) came, hat-in-hand, via private jet, to Washington to make their own plea for survival funding. They brought with them a myriad of problems, conundrums, contradictions and perplexing issues. What they did not bring was any humility.
Their lavish method of travel notwithstanding, these three titans of industry also appeared with their hand out, pleading poverty, with a silk top hat in which to collect the funds and wearing silk suits. In a manner nearly as obscene as the one Paulson used in demanding funds for the original $700B, they had no plan for what they would do with the money, other than to keep on “doing what they have always been doing”. In the only smart move any congressional body has made in at least a decade, the auto industry moguls were sent home. They were told to come back when they had a plan, a strategy and some vision of the future which had any shred of credibility. Recently some plans have been leaked, including the bald-faced insult that they will all forego their annual multi-million dollar salaries (maybe) if their companies get government money, that they will all travel by hybrid vehicle this time and they have considered the future (at least a little) in their plans for use of the funding (Ford has actually promised a very small percentage increase in their CAFÉ standards within five years. Wow.).
There remain some glitches in the procedure. First of all, on this return trip, the “guys” have had time to think up reasons to increase the originally proposed bail-out/loan/bridge loan/grant/funding proposal from $25B to $34B. While Ford says it would only like their share to be in the form of a $9B line of credit (to be used should one of the other two fail, which is a fall-back position no one understands), Chrysler just simply says that it needs the money to survive and GM promises that this money (they want $18B) will ensure plant closures and the layoffs of up to 30,000 workers over the next few years. On top of this, GM has suddenly announced that with out at least $4B before the end of the year, they will collapse completely. Somehow, I find it very difficult to believe that the army of bean counters at GM did not have any clue that this collapse might take place before it became clear that the Feds were loosely throwing money around. These guys from Detroit must really believe that we are as stupid as we look. After how we responded to Paulson, we must look pretty stupid.
At any rate, the polarizing discussion swirling about for the last two weeks or so has been something like Hamlet’s dilemma, with each side asking the other, “To bail-out or not to bail out?” You can (and probably have) read stories in Newsweek, MSNBC.com, the MSM, in blogs and on numerous web sites, either vehemently urging the demise of these dinosaurs (and how they got to be and stay alive), as well as those wailing about the millions of sub-contract and supplier tier jobs that will be lost if the Big Three go Big Belly Up. (Michael Moore, whether you like him or not, did a nice job of summing it all up last night on “Countdown”, with Keith Olbermann, on MSNBC-TV; you can watch it on your computer). But we may be missing the boat, here.
Whilst everyone has been looking the other way, hoping for gas prices to go down, buying more and more goods produced in China and ignoring the 800 pound reality gorilla in the room, everyone has also known (but wouldn’t admit) that Detroit can not seem to build cars that anyone wants, its’ cost structures were non-competitive, it had little R&D in the pipeline for needed future transportation technologies, had too many brands and had made too much money for the last 60 years without planning effectively for old age. They just seem to have woken up and started wondering where their 401K had gone.
My name is not Krugman or Reich or Friedman or Keynes, but it occurs to me that the boat we might catch might look something like this:
To begin with, if everything I have read is true, last year the government approved a $25B grant for the auto industry to work on new electric and hybrid auto technologies. It is my understanding that Japan has made the same effort for their auto industry. This would push ahead some competitiveness and forestall complete disaster in the industry, here. WE SHOULD GIVE IT TO THEM, NOW. But there should be accountability strings attached, and progress reports. We deserve to know how they are spending our money. If it is mal-appropriated, it should be returned.
Secondly, and with as many strings attached, we should pull another $25B out of the sum already allocated (since Paulson has no real plans for spending it anyway) and set it up in an interest bearing account. The Bogus Three can draw upon it as a line of credit, as needed, to keep things afloat and weather the current storm, as best they can.And this money should be put into a repayment schedule, to begin in 18-24 months. We should also recognize that this will only limit layoffs and lowered productions, not stop them. The general state of the economy right now indicates that very few people will be out buying new cars in any record numbers, any time soon.
A third bold move would be to change the name of the UAW to the United Manufacturing Workers (the UMW) and get them to join in the re-training (help provide funding) of their members to build, assemble and manufacture other and more diverse goods. For instance: The hot ticket everywhere these days seems to be wide-screen HD, digital televisions sets. I cannot help but believe that with the creativity and resourcefulness of Motorola, GE, Hitachi, Panasonic, and Sony (to name just a few) with deep roots and pockets in the US, we could not manage to assemble those TV’s in this country. In fact, we could even think about using our vast resources to supply the raw materials. It might push a few low-end Korean manufacturers out of the spotlight, but there would be some immediate consequences and benefits to our economy and employment statistics. Look at it this way:
An auto assembly line worker making $26.00/hr. is currently an endangered species (that $70/hr worker is a myth). Were he/she to be re-trained to assemble/manufacture the thousands of HD TV sets that are in such huge demand, they might only make $16/hr., but they would not be out of work and in danger of losing their home. The money would run back through the economy and eventually the new “hybrid” vehicles that Detroit would be selling by then could be a much needed purchase by the people who would now have the money (from jobs) to pay for them.
The Obama administration is (already) talking about (finally) paying attention to rebuilding our crumbling infrastructure. We will need more skilled workers to rebuild electrical transmission lines, gas lines, bridges, tunnels, roadways and sewer and transportation systems. We will need to build windmills and water transmission routes. We will need communications workers, more draftspeople, more environmental researchers and more teachers. And all of that means that we need more earth moving machines (Caterpillar can’t build them all, and Komatsu shouldn’t), dump trucks (hello, General Motors: nobody needs a Cadillac), surveying gear, cranes, steel production, rebar and electronic measuring devices. There is no reason that all of this cannot be manufactured and produced in the United States. There is no reason the 30-50,000 auto workers, whose jobs are at risk cannot be trained to do these jobs and save their homes and send their children to college. And we should not forget that we may a nearly endless supply of empty, under or un-utilized manufacturing facilities which could be pressed into service, in very short order. And the nations’ governors just m et with the President elect, and they told him that their states were literally days, weeks and months way from being able to put “shovels in the ground” for rebuilding projects.
But we will need to face some tough realities (you thought I forgot about the crow by now, didn’t you?). Initially, we need to put a harness on greed and the seemingly insatiable appetite Wall Street has for instant profits and shareholder “overnight” wealth. That may never happen in America again. The Dellionaire/Microsoft phenomenon may never occur again, ever. Secondly, that US –made TV set may cost 5-10% more than the one we used to buy at Circuit City from Indonesia…but the worker will have the money to pay for it. And Circuit City will not make the retail profit it used to, but it will still be in business as a retailer. Wal-Mart may have a problem if they cannot buy everything from China. Sorry.
GM may eventually have to file for bankruptcy and restructure, despite the federal aid dollars. That would not be the end of the world. Too much has been written recently about what will happen: other companies will move in to the vacuums created and address the new needs: the small company that paints plastic bumpers for GM can move on to paint plastic parts for TV’s from Motorola. It will take some time, but Rome was not built in a day (and the US will not go away in one, either). Ford will most likely soldier on or at least plans to. Chrysler is a lame duck on life support. When Daimler Benz gave up on it, and Cerebrus bought it, their clear intention was to either make a go of it or write it off. It was their risk, they took it, and they lost. The tax payer should no more be held accountable or responsible for that gamble than they would be if Proctor and Gamble gambled on a new laundry detergent and failed. The only difference is in the scale of the economies involved.
Mary Ann Keller, a noted automotive journalist, has been saying for years, that there would eventually only be two or three automobile companies in the world. Every day it becomes clearer that one of those will be Toyota (or some Japanese conglomerate with Toyota at the center). We are witnessing manufacturing Darwinism as the world gets “flatter” (Friedman) and GM’s position as the center of (their own) universe is passing. Must I remind you of the old adage about throwing good money after bad?
This discussion about saving the US auto industry, as I alluded to earlier, is quite polarized. As many people want to save it (for many of the wrong reasons) using tax payer money (a very wrong solution) as want to see it die (for some other wrong reasons, like spite); the Michigan legislators are screaming for it (their job security) and many others (including many members of congress) are screaming against it (which has something to do with our nose in spite of our face). I am suggesting a middle ground.
I am left with three principal thoughts. Right up front, we should recognize that the model employed by Wall Street for the past several decades simply does not work. The events of the past several weeks and months have borne this out, without contradiction. Short-term, high yield greed is no way to build and maintain a robust economy. It should not be difficult for anyone to see that the net loss in earning power without reasonably equal accumulations of wealth for the traditional middle class has been both destructive and counter productive. And as far as the auto industry debate is concerned, GM, Ford, Chrysler and their minions are representatives of this failed model. Simple life support and prolongation of life as it has been is no remedy.
I must add to that a quote I read in a NYT editorial this week by Prof. Krugman. An Indian economist, Prabhat Patnaik, said that, the “free market system [demonstrates] the incapacity to distinguish between speculation and enterprise.” Put simply, greed ( unfettered speculation) is what prompts GM to have far too many “brands” (who the hell needs a Hummer, anyway?), and for Wal-Mart, Home Depot, Lowes and Handy Andy or some other home supply company or discount outlet to have a big box store on every available scrap of land in America. As Michael Moore pointed out (again) last night on “Countdown”, if no one has a job, who will there be to buy the automobiles, shop at Wal-Mart or buy even discounted clothing? If we engaged in and invested in real growth-oriented enterprise, we would not be confronted so bluntly by this dilemma. It seems that you can buy anything at Wal-Mart except logic.
In a new blog (here comes point number three) on 12/3, Robert Reich (http://robertreich.blogspot.com) points out that while we are scrambling to “rescue” financial capital, we are ignoring and squandering human capital. I.e., while we work harder and harder to keep solvent and propagate the financial frontispieces of our economy, we are ignoring the workers and the human infrastructures that constitute the lifeblood of our culture (and perhaps even our existence).
The realities and the disappointments of the Wall Street rescue plan are becoming more obvious every day, and we surely do not need to have a repeat performance when it comes to Detroit, even if it is on a much smaller scale. But we cannot merely set the auto industry completely adrift, either. We should find a method and pathway that will rescue the untapped potentials that are lying about to be optioned nearly for the taking. But, as we learned from the Wall Street debacle, that old line about “too big to fail” is too big to swallow. And this applies equally to Detroit.
There is much crow to eaten in the near future. Sadly there is plenty go around, and the Big Three should figure that out and ditch the caviar along with their corporate jets. But unless we want to re-enact the champagne breakfasts of AIG, we had better make sure that everyone knows that rot gut red is all there is with which to drink it down.
Life Goes On In Texas
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