Brendan Calling » Blog Archive » Hey, What’s $25 Billion Here or There Anyway? Says:

[...] Via Comrade John Cole, the House just passed a $25,000,000,000.00 giveaway to our collapsing auto industry. [...]

Comrade Napoleon Says:

. . . and somewhere Vladimir Ilyich Lenin and Karl Marx smile.

Bootlegger Says:

How’s that for mega-irony. The Deustchlanders from the European (socialist) Union complaining about the US subsidizing the auto industry. The irony isn’t necessarily that they use to do it more than we did, but that we bitched and moaned until they curtailed it.

Foot, meet mouth.

brendancalling Says:

will we get our flying cars now?

Cus if not, I’m gonna be PISSED.

cleek Says:

trade war!

bring on the tarrifs, baby.

El Cid Says:

Isn’t this time for another right wing hack pseudo-economist essay on how Old Europe staggers on with weak economies and it’s all the fault of the bad old unions and such?

Dennis - SGMM Says:

Give us $25 billion or we’ll keep building shit cars that no one wants!

The Grand Panjandrum Says:

Let me get this straight. When you or I need help from the government its irresponsible financial practice that got us in trouble. When Wall Street or Detroit needs help its a “hand up”? You know know those folks must be in shock what with having to give up the private jet and all. (Oh, and all those po’ motherfuckers on the assembly line get to remain employed.)

Keith Says:

I just want to know how I can use this to suspend both my mortgage AND my car note! I could save, like, $2k per month if my car and house are free! That’s how bailouts work, right? Right?

Mithras Says:

It’s so strange how people’s reactions get changed by extraneous factors. A couple of months ago, liberals would largely have approved of Congress making loans (which, you know, get paid back, with 5% interest) to the car industry to change their older plants over to producing more environmentally-friendly cars, and conservative hacks would have grumbled about the free market.

The bailout changed everything. We’re all conservative hacks now!

El Cid Says:

Most liberals don’t disapprove of real industrial incentives.

What we hate are 30 years of right wing hacks blathering on about the magick of the Fee Mahket and cutting apart any corporate-controlling regulation then turning around and handing them taxpayer money left & right when that suits them.

Svensker Says:

Not to mention the $600 Billion war bill that just went through without a peep or a comment.

If I’m going to pay all these damn taxes, I want something more for it than crumbling bridges, blown up brown people, and Masters of the Universe getting their lifestyles supported. I want stuff for me and my family, not just for military types and suits.

I think I am Officially Fed Up.

Joshau Norton Says:

What is this “free market” nonsense of which they speak? It’s Crony Capitalism or nothing at all. And Chimpy found a way to give us both, all at the same time.

patrick Says:

well, if we’re going to help an industry, why not an industry that actually makes something tangible, instead of existential financial “securities”, paper, and hype?

IMHO one of the biggest reasons for the current economic woes is our ignoring manufacturing and transforming into a service/speculatory economy. That is unsustainable. You need to create real wealth. Real wealth is created by making stuff.

Most studies have shown approximately 1 in 12 jobs in the US are impacted by the domestic auto industry either directly (at the OEM’s, suppliers, and dealers) or indirectly (aftermarket product manufacturers and retailers, businesses that service the employees of the OEMS, suppliers, etc, etc).

Right now, the automotive and defense industries are really the last big manufacturing industries in the country.

hopefully this “bailout” is more like the loan guarantees (not bailout) Chrysler got in the early 80’s, where they paid it back in full with interest, IIRC a full 3 years early. I don’t expect the wall street firms to ever pay any taxpayer money back….

Dennis - SGMM Says:

@Mithras, I’d be more inclined to agree with you save for the fact that Detroit and its allies in Congress have resisted even the most modest attempts to compel it to make its products environmentally friendly.

These bailouts comprise the biggest faith-based initiative in the history of the world: if we just give the people who oversaw these screwups enough money we have faith that they’ll suddenly turn into realistic, competent, responsible managers. Hallelujah Comrades!

brendancalling Says:

Mithras: “The bailout changed everything.”

While I see your point about a loan versus a bailout, i think it was 8 years of getting treated like a bunch of idiots while the government continually lied and cheated the American people is what did it.

Detroit wants a fucking loan? Gee, guess what: so do I. I need $7,000 for some home repairs, and I haven’t spent the last 8 years going bankrupt. However, due to the fact that I neglected to return a modem worth $89-fucking-dollars to Verizon, my bank and my credit union rejected my application. That is NOT an exageration, nor is the rest of my credit that bad.

meanwhile, detroit loses billions, oldsmobile folds, the industry refuses to make cars people want and they get $25 billion.

Maybe I should start incorporate as a car company.

Andrew Says:

Meh, at least it looks like they’re putting it to good use.

http://detnews.com/apps/pbcs.dll/article?AID=/20080925/AUTO01/809250440

SGEW Says:

[my economics quote for the day]

“. . . we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.”

– John Maynard Keynes “The Future”, Essays in Persuasion (1931)

Shorter John M. Keynes: “The road to heaven is paved with bad intentions.”

Dennis - SGMM Says:

Maybe I should start incorporate as a car company.

I hear that the name “WeSaySo” is open.

jake Says:

Bu-but, if the US Auto Industry just eats a ham sandwich it will leap up sing the Star Spangled Banner!

On the bright side, we’re about to find out just how quickly and cheaply foreign auto-makers can make a car that runs well, has great gas mileage.

binzinerator Says:

A couple of months ago, liberals would largely have approved of Congress making loans (which, you know, get paid back, with 5% interest) to the car industry to change their older plants over to producing more environmentally-friendly cars, and conservative hacks would have grumbled about the free market.

Did those loans come with any stipulation or condition that Detroit has to actually produce more environmentally friendly cars? Or increase CAFE? I don’t know much about this loan, but somehow I am certain there were no strings attached.

Mithras Says:

Did those loans come with any stipulation or condition that Detroit has to actually produce more environmentally friendly cars?

I dunno. I don’t think anyone else here does, either. I would check with environmental groups before calling this a sham.

I would also check with the UAW to see how they feel about it before labeling it Wall Street welfare.

I’m not saying it’s wrong to be against the loan package. What I am concerned about is the knee-jerk reaction to a Congressional move that ostensibly – at least – is meant to further aims that progressives believe in: Good-paying skilled blue-collar jobs and environmental protection. Giving subsidized loans and investment tax credits are what we mean when we talk about encouraging alternatives to drilling for more oil. Even if those programs are directed at small start-ups, when those start-ups are successful in their research and get bought out by the big car companies, the economic effect is the same.

Start from your first principles as progressives: The government can and should use its power in a constructive way to help make life better for the American people as a whole. Then decide whether the program makes sense. We’re about to seize an even greater margin of control over Congress this fall, so this question is going to come up more and more frequently.

Mithras Says:

Oh, also? If a $25 billion loan at 5% is what is needed to win Michigan on November 4, I consider it well worth it.

Comrade John Cole Says:

Actually, Mithras, I approve of these loans, assuming there are assurances the treasury will get their money back, and think they are a great idea. I also think we should do the same thing with those working to develop renewable energy sources.

What I am laughing at is that after someone chucks out the number 700 billion, 25 billion just seems like chump change.

The additional humor is found in being openly mocked by “socialist Europe.” You have listened to my former allies on the right call Europe socialists for the past two decades, haven’t you.

PS- I am not a liberal.

Marshall Says:

Apparently the Pres didn’t get a warm reception in Germany from the bankers, either :

Peer Steinbrück, the German finance minister, countered in a speech in Berlin that the conditions that gave rise to the current turmoil in the markets were allowed to develop because of a reckless pursuit of short-term profit and huge bonuses in “Anglo-Saxon” financial centers — along with a lack of political backbone to stand up to what he characterized as bankers’ greed.

“Investment bankers and politicians in New York, Washington and London were not willing to give these up,” he said. “The financial market crisis is above all an American problem”

The long-term consequences, Steinbrück added, could be serious for the United States. “The U.S. will lose its status as the superpower of the world financial system,” he told the Bundestag. “The world financial system will become multipolar.”

Marshall Says:

Oh, and the Pakistani army is now admitting that they are firing on NATO aircraft that penetrate Pak airspace.

Comrade The Moar You Know Says:

Did those loans come with any stipulation or condition that Detroit has to actually produce more environmentally friendly cars? Or increase CAFE? I don’t know much about this loan, but somehow I am certain there were no strings attached.

No, and it should, although strictly speaking it doesn’t need to – Detroit wants the money to convert all the large truck/SUV plants over to smaller cars as large vehicles are not selling too well these days.

Although I’d agree that increased and more inclusive (all vehicles and not just “passenger cars”) CAFE standards should have been included. Just to drive the point home.

Comrade Zifnab Says:

Give us $25 billion or and we’ll keep building shit cars that no one wants!

Fix’d!

I’m not saying it’s wrong to be against the loan package. What I am concerned about is the knee-jerk reaction to a Congressional move that ostensibly – at least – is meant to further aims that progressives believe in: Good-paying skilled blue-collar jobs and environmental protection. Giving subsidized loans and investment tax credits are what we mean when we talk about encouraging alternatives to drilling for more oil. Even if those programs are directed at small start-ups, when those start-ups are successful in their research and get bought out by the big car companies, the economic effect is the same.

The big three have a bad business model. They’ve been in the process of failing for the last 30 years. I just don’t trust that auto industry won’t take the handout and – once the check is in the bank – declare bankruptcy, roll over, and play dead. This deal looks better than the Paulson mortgage industry bailout by a long shot, even at first glance, because its $675 billion cheaper. But that’s the nicest thing that can be said about it.

Tony J Says:

Okay, the Wordpress fairy had another spasm. we’ll try again.

When asked

Did those loans come with any stipulation or condition that Detroit has to actually produce more environmentally friendly cars?

You replied

I dunno. I don’t think anyone else here does, either. I would check with environmental groups before calling this a sham.

But then continued

I’m not saying it’s wrong to be against the loan package. What I am concerned about is the knee-jerk reaction to a Congressional move that ostensibly – at least – is meant to further aims that progressives believe in: Good-paying skilled blue-collar jobs and environmental protection.

You know, I could be reading you all wrong, but you appear to be tut-tutting at people based on a strawman argument of your own creation, which looks a hell of a lot like basic concern-trolling.

Wordpress Error, ACTIVATE!

Comrade Napoleon Says:

Did those loans come with any stipulation or condition that Detroit has to actually produce more environmentally friendly cars?

My understanding is they did and the car companies have complained and I read 2 weeks ago that they had asked for a waiver. That is like any of us going and getting a construction loan then acting surprised when the bank wants to send out and inspector to make sure the work is done. If the loans are to improve MPG and make cars more environmentall friendly, then they should be held to some standards.

But accountability is old fashion I guess with the powerful in this country.

Comrade PeterJ Says:

Oh, and the Pakistani army is now admitting that they are firing on NATO aircraft that penetrate Pak airspace.

Good thing for Georgia that they aren’t a NATO member, since they don’t have to attack Pakistan.

Rick Taylor Says:

So let me get this straight. We have to lend the industry 25 billion dollars because they were caught flat footed by the fact there are limited quantities of oil, and it cost jobs if we don’t help them adjust to changing conditions. Meanwhile, they’ve been telling us for years we must not impose higher mileage standards on them for then they could not compete and it would cost jobs.

Tony J Says:

Oh, that time it worked.

BTW, can anyone fill me in on how I can get Bold Quote to neatly package quotes, rather than sprawl a big grey splodge around the quote like newspaper floating in gravy? All I do is highlight the quote and press the B-Quote icon, but it doesn’t come out looking as tidy as everyone else’s.

Comrade Napoleon Says:

So let me get this straight. We have to lend the industry 25 billion dollars because they were caught flat footed by the fact there are limited quantities of oil, and it cost jobs if we don’t help them adjust to changing conditions. Meanwhile, they’ve been telling us for years we must not impose higher mileage standards on them for then they could not compete and it would cost jobs.

You got a problem with that?

The best part of it is that over the years there has been tremendous improvement in vehicle technology. My first car was one I bought brand new in 1980 which had a carburetor and basically was very similar in many ways to something built in the 50s (except for some add on emmision equipment). Since then with electronics, as well as using direct injection and a bunch of technologies, which if they were around at all were on racecars or specialty vehicles, the car companies have vastly improved the efficency of engines, but instead of using the increased efficiency to improve mileage and lower emissions it has almost totally gone to power. So in reality they could have done what they originally said that they could not and our world and our current account balance would be much better, while our dependence on the Middle East would be that much less.

comrade scott Says:

Anybody interested in a running commentary on the bailout of the Big 2.8 should go to:

http://www.thetruthaboutcars.com/

Look on the right, down a ways, for the Editorials. They have two running “death watches” (GM and Ford) and one “suicide watch” (Chrysler).

Marshall Says:

BTW, can anyone fill me in on how I can get Bold Quote to neatly package quotes, rather than sprawl a big grey splodge around the quote like newspaper floating in gravy? All I do is highlight the quote and press the B-Quote icon, but it doesn’t come out looking as tidy as everyone else’s.

All of the special text features come in pairs – one before the text, one (starting with a slash) after the text. Are you doing that ?

(And, URLs cannot end in a number. If they do, end them with an extra “?”, which is harmless.)

stickler Says:

Zifnab:

They’ve been in the process of failing for the last 30 years. I just don’t trust that auto industry won’t take the handout and – once the check is in the bank – declare bankruptcy, roll over, and play dead.

A colleague of mine in the school of Business told me last year that the only way to make sense of GM’s management screwups since 1970 is to look at things thus:

In 1970, the management of GM decided that having 50% of the domestic market was just too much work and unmanageable. So every decision since then has been aimed at getting GM down to a more manageable slice of the domestic market: probably about 12% or so.

This explains the performance of GM quite nicely, actually.

datacine Says:

I’m back in the USS…....A??????

Comrade Zifnab Says:

This explains the performance of GM quite nicely, actually.

In a rather sad and twisted way, that makes a whole lot of sense.

MikeL Says:

This is awesome.

Mithras Says:

John-
PS- I am not a liberal.

I know. I am, and I was really speaking to your liberal commenters and linkers.

TonyJ-
You know, I could be reading you all wrong, but you appear to be tut-tutting at people based on a strawman argument of your own creation, which looks a hell of a lot like basic concern-trolling.

I think you’re reading me wrong. I’m saying I don’t know what assurances there are in the bill about environmental standards, but neither do you. On the face of it – which is why I said “ostensibly” – the purpose of the bill is to cause more green cars to be made. That’s not a straw man. I’m just saying that prima facie there is no reason to think it’s just a corporate giveaway.

Is there some sort of offering which will appease the Wordpress fairy?

D-Chance. Says:

But while you were not looking a 25 billion dollar giveaway to the auto industry passed the house, and actual free-market democracies are pissed

Google “Germany” and “auto subsidies”. Free market democracies, my ass.

Ditto for Sweden, France, England, and any other Euro-country you wish to trot out as an example.

stickler Says:

Mithras:

Is there some sort of offering which will appease the Wordpress fairy?

One of whatever reproductive organs you’d care to spare. Most men don’t actually need two testicles, for example. I’ve heard that this makes WordPressFairy happy.

Nylund Says:

That “markets free you!” line made me laugh. How had I not heard that soviet joke applied to free markets before?

binzinerator Says:

I’m just saying that prima facie there is no reason to think it’s just a corporate giveaway.

I’d say I got plenty of reasons to be suspicious, and plenty to doubt good faith here. It’s just you know the little nagging in the back of my head as a result of the last 8 years of government and corporations working together to do anything but

But more to the point, loaning $25 billion to an industry that has been riding the FAIL train for years is a corporate giveaway.

Any car manufacturer that couldn’t figure out how read the 10,000-foot-high incandescent orange handwriting on the wall back in 2003, 2004, 2005, 2006, or even fricking last year—the writing that suggested that a massive clusterfuck in the middle of the world’s supply of oil just might cause oil prices to rise and the popularity of their big-ass gas hog vehicles to tank—and now as a result of that illiteracy of the obvious needs $25 billion in loans to keep out themselves out of bankruptcy is, I’d say, asking for a corporate giveaway.

(Oh hell, the writing was on the wall in 1973, ferchrissakes, and has been re-inked several times since then.)

What I am concerned about is the knee-jerk reaction to a Congressional move that ostensibly – at least – is meant to further aims that progressives believe in: Good-paying skilled blue-collar jobs and environmental protection.

I’m all for furthering good paying jobs, skilled blue-collar or otherwise. And for environmental protection. I’m saying that prima facie there is no reason to think that loaning $25 billion no strings attached to the Big Three will get us that. Jeebus did they even bother outlineing any measures they would take to get profitable again so they can pay us back?

I was essentially asking, what keeps these guys from doing the same thing over and over again and insisting they’ll get a different result?

I dunno. I don’t think anyone else here does, either. I would check with environmental groups before calling this a sham.

You know something I don’t about commitments the Big 3 have made wrt environmental goals? I recall asking if there had been. Cause I don’t see any.

I would also check with the UAW to see how they feel about it before labeling it Wall Street welfare.

What? That’s gonna offend them? They could care shit about what it’s called, as long as the union can tell their members they will all keep their jobs and pensions. But that’s not going to happen. Sure they’re happier than the alternative—a big loss is better than a total loss. But when management wrings concessions out of the unions, how does that jibe with furthering good-paying blue collar jobs?

Incidentally, Bushie-style disaster capitalism applies here. Starving a beast until it can be drowned in a bathtub is also being pursued by the auto company management. What they will do to the unions is also a microcosm of what the bushies are doing to the taxpayer: Management broke it, but Joe Blow pays for it.

I’m for the loan if it furthers those aims you mentioned. And I’m looking for any evidence it will.

Mithras Says:

I’m pretty sure I’m not making myself clear here. Forget it.

Phoenician in a time of Romans Says:

well, if we’re going to help an industry, why not an industry that actually makes something tangible, instead of existential financial “securities”, paper, and hype?

Because, dear chap, America shouldn’t be making cars. It lacks competitive advantage, and investing in car manufacture puts it into a losing game competing with other nations who can do just as well, if not better, driving down the terms of trade.

You want to invest in industries where you either have an absolute advantage, or a competitive advantage. there are reasons why most clothing is made in China; there are reasons why most cars come from South East Asia.

You are hanging on because of the political economy; auto companies are big donors and auto unions are still pretty strong. But it is inefficient, and it hurts your economy as a whole in subtle ways.