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Piling On The Straw

By Big Tent Democrat, Section Economy
Posted on Mon Mar 30, 2009 at 12:21:34 PM EST
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Jed Lewison creates a straw man, acting as if the complaint about the Obama auto industry plan is that Rick Wagoner got the boot. No one cares about Rick Wagoner. The issue is about how Wall Street has gotten a free ride while President Obama says this about the auto industry stakeholders:

It will require unions and workers who have already made painful concessions to make even more. It will require creditors to recognize that they cannot hold out for the prospect of endless government bailouts. Only then can we ask American taxpayers who have already put up so much of their hard-earned money to once more invest in a revitalized auto industry.

President Obama has said nothing like that about Wall Street. THAT is the issue. The auto industry plan is not the problem. The free, no strings bailouts to Wall Street are the problem.

Speaking for me only

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    Piling On The Straw | 87 comments (87 topical)

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    Quelle surprise (5.00 / 11) (#1)
    by lambert on Mon Mar 30, 2009 at 12:53:59 PM EST
    A tool then, a tool now.

    But the business models (5.00 / 7) (#2)
    by Militarytracy on Mon Mar 30, 2009 at 01:02:45 PM EST
    for the two industries are different therefore  one must be beaten severely, chastened before God and all other beings, and challenged to prove its ability to survive while the other is treated like a golden child.  Everyone knows that the one propping up those damned Unions deserves a beating.

    Hmmm... (5.00 / 7) (#9)
    by jbindc on Mon Mar 30, 2009 at 01:47:40 PM EST
    He certainly liked the unions when they were giving money to his campaign, huh?

    Or when they helped like putting out ads for him?

    Parent

    Bur the unions didn't give nearly (5.00 / 2) (#36)
    by rennies on Mon Mar 30, 2009 at 04:05:23 PM EST
    as much as Wall Street's giant bundlers.

    Parent
    Union support in a political race (5.00 / 2) (#39)
    by inclusiveheart on Mon Mar 30, 2009 at 04:08:49 PM EST
    is a lot more than just cash money.

    Parent
    True (5.00 / 3) (#42)
    by sj on Mon Mar 30, 2009 at 04:17:10 PM EST
    But one has to value physical labor to appreciate that. Or at least value Labor.

    Parent
    Obama is comfortable in these circles. (5.00 / 10) (#3)
    by Romberry on Mon Mar 30, 2009 at 01:09:05 PM EST
    I no longer have the book and I can't recall the quote verbatim, but in The Audacity of Hope there was a section where Obama talked about how he had grown comfortable moving in the circles of rich Wall Street investment bankers and other finance industry types and how they were smart, interesting people who knew what was going on with policy.

    Is Obama nearly as comfortable among the rank and file blue collar union workers who come home with dirty clothes, hands and fingernails after a hard day's work? Does he find these people also to be smart, interesting and aware? Does he find that their work is also just as valuable as that of the money changers (who, in retrospect, appear to have created only the illusion of value)? I tend to think that the answer is...no.

    Contrast and compare Obama to FDR for a second...

    From FDR's first inaugural address:

    (O)ur distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered, because they believed and were not afraid, we have still much to be thankful for... Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply.

    Primarily, this is because the rulers of the exchange of mankind's goods have failed, through their own stubbornness and their own incompetence . . . Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

    True, they have tried. But their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit, they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They only know the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

    That FDR was a 'purtysmart fella. But it gets better. Here's something FDR said that I think is more than just relevant, it's an explanation of exactly where we are today:
    "The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power."

    I am to the point now where I am truly beginning to believe that the federal government, right up to and including Obama, is essentially become a wholly owned subsidiary of Wall Street/big finance (as well as the military-industrial complex which Eisenhower warned about.) In effect, ownership of government by private power. We the people are simply here to be of service. Any illusion of actual freedom is just that, an illusion.

    See what I get for not reading the book? (5.00 / 2) (#6)
    by Militarytracy on Mon Mar 30, 2009 at 01:23:00 PM EST
    I could have saved myself a lot of this painful grappling with his choices and I could have cut right to the chase.

    Parent
    On the money! (no pun intended)! (5.00 / 2) (#38)
    by rennies on Mon Mar 30, 2009 at 04:08:11 PM EST
    What amazes me is how few people (especially Democrats) cannot see that Obama is owned by Wall Street.

    Woe is us.

    Parent

    Well. . . (5.00 / 10) (#5)
    by LarryInNYC on Mon Mar 30, 2009 at 01:12:47 PM EST
    It will require unions and workers who have already made painful concessions to make even more.

    No unions on Wall Street to go after, are there?

    And probably not a (3.00 / 1) (#17)
    by dallas on Mon Mar 30, 2009 at 02:17:39 PM EST
    bunch of bank creditors either. Outside of some bonds and depositors money who do the banks have as substantial creditors? Not many that are owed big money like in the auto industry who is raw material heavy.

    Maybe you do have some other banks owed money from inter-bank loans. So do you have one bank take a hit to help another bank and possibly just end up trading one problem while creating another?

    Seems to me that this argument that banks should be treated exactly like the auto industry is not well founded until there can be exact circumstances shown.

    If you have no unions to make concessions. If you do not have a ton of creditors, then the circumstances are completley different.

    Parent

    I don't think anyone's suggesting. . . (5.00 / 5) (#19)
    by LarryInNYC on Mon Mar 30, 2009 at 02:25:33 PM EST
    that Wall Street be treated exactly the same as the auto industry.  However, it would be nice to hear the words "sacrifice" and "responsibility" used in connection with the banking industry.  Exactly what form that would take isn't clear, but  something, something ought to change on Wall Street.

    Now, to be fair, the Obama administration has talked about a new regulatory environment and it's entirely possible that they do have major changes in oversight and possibly remuneration in store for Wall Street.  But if that's true (and it only might be true) then the longer they delay the pain for Wall Street the longer they'll be accused of favoring banking interests over unionized manufacturing companies.

    Parent

    well bud I must admit (none / 0) (#20)
    by dallas on Mon Mar 30, 2009 at 03:01:08 PM EST
    that yours is the first time I read anyone use the word "exactly" as a qualifier. I keep reading exactly the opposite saying 'why is Obama not saying this to the banks?' Well because like I wrote he probably can't because the circumstances are different.

    Now on sacrifice and responsibility there has been some of that. There are people working for $1 a year right now. And as for responsibility I think they are paying the ultimate responsibility because their businesses are not doing as well as they could be. They aren't making the money they could be. In addition to that they are showing some organizational responsibility like with AIG shutting down it's FP division. Some banks are also separating their FP divisions from the banking division in order to strengthen their core banking business. I see that as responsible.

    Now as for Obama being accused be accused of favoring banking interests over unionized manufacturing companies, I don't really think he cares what you and others think. I'm under no illusion that he cares what I think. Of course I was never under the illusion that he cared what I or you thought. Which is why I didn't vote for him for President or anyone else for that matter. The choices sucked big time. But I do support what he is trying to do with the bad asset deal. Their are no easy answers and trying to get other people involved and trying to create a market for those assets is smart I think.

    Parent

    Come on (5.00 / 2) (#32)
    by Dadler on Mon Mar 30, 2009 at 03:48:31 PM EST
    He's playing chess when all that is really required, what is really necessary, is checkers.  All money boils down to is how we treat each other.  Nothing more nothing less.  It is a proxy for our relationships, our abuses, our passions, our prejudices, all of it.  It has no value, zero, but for our belief it does.  And the belief in money is really no different that that of Children for Santa at Christmas.  Except it lasts all year.  What we need to do, and have for some time, is to change the paradigms of profit.  That is, assert that the centrist American position is that it is better to make a little less and share a little more, it is better to have a stable and fully employed society than it is to take a bigger bonus -- that it is more American in principle and deed to say, you know what, I don't need a five million dollar bonus, I'm only taking 750 grand, that's more than enough of a reward.  Shame the f*ck outta the people who have earned that shaming for a long time.  Assert, unequivocaly that we must put this nation back to work on a reformed and finally somewhat level playing field, put it back to work making and remaking things, like the nation, so that the wealth of this nation might be earned by and spread to those workers in a manner more generous and more productive that any nation in human history has seen.  

    Obama can't even shift the rhetoric slightly when he has to, I have no faith he's got the smarts to fix a mess that is rooted, ultimately, in nothing more or less than the Golden Rule.

    If he'd started with that, we'd be better off already.  Instead, he is perpetuating the vile untruth that there is such a thing as shared sacrifice.  The wealthy would have to give up their million+ bonues and MUCH more to even approach the kind of impact this shared sacrifice is having, for example, on those for whom a single paycheck is the difference between food and medicine.  That he can even use the word "shared" within the context of the paradigm he is preaching is just disturbing.


    Parent

    Good luck with that bud (none / 0) (#51)
    by dallas on Mon Mar 30, 2009 at 05:36:08 PM EST
    I want to see every one working too but I'm not under the illusion that CEO's taking millions less is going to put everyone to work. You can add up all the million dollar bonuses you like and say they can't get them and it does nothing about putting people to work. Maybe the shareholders in the company would get a larger dividend but that is about it. What do you suggest that the gov demand that the excess bonus money be turned over to them so they can spend it wisely? He haw, politicians spending money wisely. Now that would be a first.

    And just how are you going to regulate what people are paid when times turn good and they are not taking gov money? You can't. The board of directors can. And maybe you can enact laws where major shareholders can have a say but don't hold your breath.

    Unless you want true Socialism then you are just changing pockets of where the big money is going and that ain't you. We live in a Capitalist society and most people like it that way. Even Lefties like me like capitalism because it gives me choices and opportunities.

    And I'm not so sure Americans would want Socialism anyway. People may be angry but the main reason they are angry is because it is not them getting those millions. If it were they would change their tune real fast. Why do millions plan Mega Lotto? It's not because they want to be poor.

    And you keep wishing for what you want Obama to do. Ain't going to happen bud. I tried to tell people that when he was running against Hillary but people wouldn't listen. They make excuses and then pile on you on the blogs and call you names and try to run you out of town. They'd laugh at people like me. Well who's laughing now? Not long after he took office and started to disappoint I read some people start to say, 'Told you so'. Yup.

    You go on and tell Obama about the Golden Rule. You know what will happen. He'll smile at you with that big smile and tell you that you are right. And then go on and keep doing what he is doing.

    Parent

    Sheesh (none / 0) (#22)
    by Big Tent Democrat on Mon Mar 30, 2009 at 03:11:24 PM EST
    I know you are a zombie commenter but my gawd, this is as bad as I have seen.

    Parent
    yeah man (none / 0) (#25)
    by dallas on Mon Mar 30, 2009 at 03:29:51 PM EST
    I do like those rum drinks.

    Parent
    Naw (none / 0) (#28)
    by Big Tent Democrat on Mon Mar 30, 2009 at 03:32:26 PM EST
    Your recent appearance makes me qwuite sure you are a banned commenter returning.

    No biggie, just make sure you keep it between the lines.

    Parent

    Naw man (none / 0) (#31)
    by dallas on Mon Mar 30, 2009 at 03:47:19 PM EST
    the only thing I've ever been banned from is a local Hooters because them little southern girls couldn't keep their hands off me. He Haw!

    Parent
    Charming... (5.00 / 1) (#37)
    by otherlisa on Mon Mar 30, 2009 at 04:08:08 PM EST
    a zombie and sexist to boot. Fail on the humor there, guy.

    Parent
    Oh Lordy (1.00 / 1) (#48)
    by dallas on Mon Mar 30, 2009 at 05:02:38 PM EST
    Like when I see women fawn over Brad Pitt or Matthew McConaughey what is that girlfriend? Saintly? Or when the women swooned over Obama taking of his coat at a town hall?

    My goodness. I'm sure there is not a single woman here including you, married or single, who has ever looked at a man in a sexy way. Never made eyes and stuff like that. He haw!

    Parent

    Hooters = fail (none / 0) (#81)
    by otherlisa on Tue Mar 31, 2009 at 01:23:32 AM EST
    Sorry. And the constant "bud" thing is really irritating too. Set phasers to ignore.

    Parent
    Whatever (none / 0) (#34)
    by Big Tent Democrat on Mon Mar 30, 2009 at 04:02:21 PM EST
    Just mind your ps and qs.

    No personal attacks and keep it on topic.

    I have no problem with what you have done so far but I won't have any tolerance for the standard tripe.

    so far so good, but no warnings, just gone.


    Parent

    Union members and ... (5.00 / 9) (#11)
    by Robot Porter on Mon Mar 30, 2009 at 01:54:05 PM EST
    tax payers must feel the pain.

    "Masters of the Universe" given financial Valium.

    Obama's comfort level with Wall Street, (5.00 / 13) (#12)
    by Anne on Mon Mar 30, 2009 at 01:59:21 PM EST
    and his thinly-disguised distaste for the blue-collar land of the auto industry, gives me a very uncomfortable feeling about the future of Social Security, the chances for health care reform that actually serves the interests of the people and policies that look out for the average person; I am getting a feeling that he has been listening a little too closely to people who think unions are ruining the country and that preserving Wall Street's entitlements to huge salaries and bonuses is more important than making sure that the average person has access to affordable health care.

    It's just a feeling - one I hope I am wrong about; if I'm right, this is going to be a much bigger mess than we ever imagined.

    Oh you got it right alright (none / 0) (#29)
    by dallas on Mon Mar 30, 2009 at 03:39:23 PM EST
    Obama pretty much told us what he thought of health care when him and Hillary were going at it. Kept telling every not to let it be forced on you. What we end up with between him and the Republicans will set back universal healthcare a generation at least.

    Parent
    As Obama hails Detroit for its history (5.00 / 8) (#21)
    by Cream City on Mon Mar 30, 2009 at 03:05:21 PM EST
    he might remember how Henry Ford made history there with his cars, mass-produced to be priced, as he put it, so low that his own workers could buy them.

    That meant not only low-priced cars but also better wages and benefits for his employees, which shocked his industry and others.  But then, they saw that it worked, and they raised wages and benefits, too.

    I think we've got that backwards, these days.

    Funny thing, isn't it, C.C? (5.00 / 1) (#60)
    by NYShooter on Mon Mar 30, 2009 at 07:13:38 PM EST
    I mean how a racist, anti-Semitic slug like Henry Ford actually had a good idea.

    When his early Model-T's started rolling off the assembly line he actually had orders for many, many cars from people willing to pay thousands of dollars for them. But ole Henry wanted more than money, he had a vision; he wanted everyone in the world to be driving a Ford. So he ordered his production people to work with his bean counters to produce a car that could be sold, at a profit, for $500.

    Not sure of the exact formula of how he came up with that number, other than he made sure he paid his workers enough so that every one of them could afford to buy one.

    "Spread the Wealth;" Now, if Obama could only channel ole Henry...


    Parent

    Exactly (5.00 / 5) (#30)
    by joanneleon on Mon Mar 30, 2009 at 03:41:03 PM EST
    The differences between the way the auto companies are being treated and the way the Wall St. execs are being treated are stark.  I say good riddance to Wagoner and any other parts of the bureaucracy at GM that keeps them from making the enormous changes they need to make.  At this year's auto show, the GM exhibit was a complete embarrassment.  But the auto companies deserve fair treatment in comparison to Wall St.  They've screwed up badly, but so did Wall St.  And it could be said that at least the auto companies didn't bring down the whole financial system in the process, and they don't require anything near the amount of money that Wall St. does from the government.


    Minutes later, Burnett spotted Lloyd Blankfein and John Mack, also asking them for a short interview. The Morgan Stanley exec summed up the meeting with: there was no tension in the meeting and "it's all about cooperation." Blankfein had a similar sentiment, saying "all of us were on the same page" and that they recognized that the interests of CEO's should be aligned with that of their company over the long-run.
    http://www.streetinsider.com/Insiders+Blog/Bank+CEOs+Seem+Optimistic+After+Meeting+with+Obama/451851 1.html

    Yet the auto companies are expected to make more concessions.  And the unions are expected to make more concessions.

    The counterparties to AIG?  The Wall St. companies and other banks?  No concessions.  Their contracts are paid 100%, billions in bailouts were rushed to the banks with no requirements that they do anything, give up anything, etc.  They even get to keep their contracted bonuses.  

    Who has power over who here?  It's very hard not to ask that question and come to the conclusion that Wall St. rules Washington.

    I have a strong feeling that this is not going to end well.

    The lack of restrictions (none / 0) (#33)
    by Lacey on Mon Mar 30, 2009 at 03:55:13 PM EST
    Was a left over from the Bush Treasury Dept. Obama and Geithner have put in place restrictions on any further bailout money to banks. Which is why, as Talk Left has noted early today, some of those banks are giving back money or not taking any more. Because they don't like the strings the administration has placed on them. But please continue with the 'Obama is in bed with evil bankers' argument. It's brings such comedy to my afternoon.

    Parent
    Did working the phones for TARP I... (5.00 / 3) (#63)
    by lambert on Mon Mar 30, 2009 at 07:41:56 PM EST
    ... put Obama in bed with the bankers?

    Quite possibly, unless you believe based on his early money, that he was already there.

    Parent

    See, lambert (5.00 / 1) (#68)
    by joanneleon on Mon Mar 30, 2009 at 08:13:01 PM EST
    that TARP thing was all Bush's fault.  That's what people like you and me are failing to understand.

    Parent
    Restrictions (none / 0) (#40)
    by joanneleon on Mon Mar 30, 2009 at 04:13:02 PM EST
    There were some salary restrictions going forward.  Any contracts in place were allowed to be honored.  Bailout money was given in return for equity or warrants, non-voting stock, and in some cases dividends.  Recently, some of that equity was quietly converted to common stock.

    Any other restrictions were the result of some investment banks becoming bank holding companies, which the Fed permitted so that they could receive bail out money.  

    Their money market accounts were quickly covered by the FDIC after even those were gambled with to such an extent that they broke the buck.  They were in danger of all of their customers pulling all of their money out of the brokerage firms in a matter of days, which would have created a huge capitalization problem.  But the government stepped in and guaranteed all of those accounts, just like that.  

    Do you not see any preferential treatment?  

    Perhaps you could offer a bit of a substantial argument instead of just insulting me?  

    For instance, do you have any sourced information that shows what additional restrictions Obama and Geithner put on the Wall St. firms that wasn't already there in the TARP bill?  Can you provide a substantial argument that shows how Pres. Obama is not giving preferential treatment to the banking industry?

    I look forward to your well-sourced response.

    The reason that the Wall St. banks want to give back the TARP money is that they've gotten what they wanted from the government, they are on stronger ground now, they've been bailed out, and they want to be off and running ahead of their competition (some of whom they helped to destroy), doing business as usual, and before any potential regulations might happen.  They'll be out there lobbying against regulations too.

    Parent

    What I see are two different situations (none / 0) (#59)
    by Lacey on Mon Mar 30, 2009 at 07:07:36 PM EST
    Requiring different answers. In the case of banks and financial insitutations, if we simply allowed those large companies to fail than it is game over for the world economy. Restrictions, as you noted, were put in place moving forward so I find it a bit disengenious when people are saying Wall Street is getting billions with no strings attached. It's just not true.
    But with GM and Chrysler, the situation is not anywhere near as dire for the world economy.
    Besides, why shouldn't the union make more concessions? And why shouldn't management and all others involved.
    GM is in bad shape. They have to fix the problem to be viable for the long term. That may result in workers having to take more concessions. But the union doesn't have to agree. But if they don't than there is a good chance they won't have a job. But again, I guess Obama can continue to prop up a company that, under its current form, has little prospect of being viable. And it can tell the banks to jump off a cliff. Of course, both of those moves would be irresponsible.

    Parent
    A word for you (5.00 / 1) (#62)
    by Big Tent Democrat on Mon Mar 30, 2009 at 07:25:13 PM EST
    Receivership.

    Parent
    You said (none / 0) (#67)
    by joanneleon on Mon Mar 30, 2009 at 08:11:39 PM EST
    that the lack of restrictions were a left over from Bush and Paulson, and that Obama and Geithner added additional restrictions.

    I was asking for a source for that information because I believe it is incorrect.

    Again, I hope for a well-sourced answer instead of just another opinion.

    Parent

    Irrelevant argument (2.00 / 1) (#70)
    by abdiel on Mon Mar 30, 2009 at 08:51:39 PM EST
    Comparing Wall Street to the auto industry is counterproductive and ignorant to the problems of banks and GM.  

    While blue collar populism is in vogue these days, it is important to understand that there will be no sustainable recovery if the banks don't get fixed. The banks need cash to grease the wheels of credit and get money flowing through the economy again.  If you recall Japan's experience in the 1990s, the total cost to fix the banks is probably about 5x what the economists think it is.  Tightening their risk requirements and forcing them to lend again (i.e. take risks) is a contradictory struggle, one that costs an enormous amount of money.  

    GM has a completely different set of problems, it has to face the ugly fact that the days of easy work for generous pay are over and that workers have to compete with those from Toyota who don't get pensions or guaranteed pay raises.  If you believe the government report, GM has a tarnished brand, enormous inventory it can't get rid of, and an awful cost structure that it can't change.

    Complaining that Wall Street isn't being asked to "sacrifice" is a non-sequitur.  You don't WANT Wall Street to sacrifice, you want them to lend and do so in a way that's sustainable.  Since we want GM to look like Toyota, we need them to sacrifice quite a lot.

    GM and Wall St. have different products (5.00 / 2) (#76)
    by joanneleon on Mon Mar 30, 2009 at 09:59:27 PM EST
    but they both have products.  And the last time I checked, they also have problems with tarnished brands, pay scales and inventory.

    If you believe the government report, GM has a tarnished brand, enormous inventory it can't get rid of, and an awful cost structure that it can't change.

    Does Wall St. not have an even worse inventory problem than GM?  They are also sitting on an even more enormous inventory that they can't get rid of.  The government solution for that is Geithner's plan -- getting people to buy them with a 5% down payment and a government guarantee on any potential losses.

    As for the salary problems, the government solution is a cap that is temporary, until they pay back government loans, and lots of loopholes.

    The blue collar populism that you poo poo might just be in vogue because it is, in fact, the solution that gives the middle class a fighting chance, and the strengthening of the middle class and the revival of manufacturing, innovation (innovation in real things that is, in things other than overly complex and fraudulent financial instruments) and other businesses might be the only thing that will save this country.

    Parent

    Side question:Can we bring back science/engineers? (none / 0) (#80)
    by abdiel on Mon Mar 30, 2009 at 11:04:48 PM EST
    Since you bring up the glory of the middle class, I was wondering how you think we can bring back science or engineering or manufacturing back in vogue.  

    For an anecdote, my girlfriend works in a biological research lab in Berkeley.  Not one of the PhD students or post-docs is American.  And the problem is found among the undergrads: of the ten they hired as research assistants, nine want to go to medical school and would never consider a career in scientific research.  

    So what do we do about the fact that a lot of bio students would prefer careers in medicine than research?  Does that make it okay that we may have fewer scientists because we have more doctors?

    Parent

    Obama's plan won't fix the banks (5.00 / 3) (#77)
    by Big Tent Democrat on Mon Mar 30, 2009 at 10:27:29 PM EST
    And the main reason is he is unwilling to be tough on them as he is with Detroit.

    you entirely missed the point.

    Parent

    Difference of opinion (none / 0) (#78)
    by abdiel on Mon Mar 30, 2009 at 10:51:49 PM EST
    I don't think Obama's plan will work either, but I don't think it has anything to do with his being "tough" or not.  Actually, I think he has asked much more of Wall Street than GM, as far as actual change.  His plan for GM doesn't seem to be much more than "Hey Toyota is profitable, why don't you try to be more like them?"  

    The difference (and the problem) is that he doesn't have a comprehensive picture for what AIG or Citi or B of A should look like.  If that's what you mean by "tough", then I guess you're right.  

    It's still misleading and irrelevant to compare Wall Street to GM.

    Parent

    Well (none / 0) (#84)
    by Big Tent Democrat on Tue Mar 31, 2009 at 09:52:48 AM EST
    Everyone is entitled to their opinion.

    Yours seems unconnected to what has been announced about what GM will have to do.

    Parent

    Why don't we just turn the banks... (none / 0) (#73)
    by lambert on Mon Mar 30, 2009 at 09:16:22 PM EST
    ... into regulated public utilities?

    Parent
    Savings aren't a right, they're a choice (none / 0) (#79)
    by abdiel on Mon Mar 30, 2009 at 10:55:48 PM EST
    Government only serves as lender of last resort.  Period.  Asking the government to guarantee the risks of private individuals or corporations on a more proactive level is bad policy.  

    One thing that has gone unsaid in this crisis is that a feature of a sustainable market is the probability of failure.  It must always be greater than 0.  So when you ask poor people to invest in real estate, it's good social policy to share the fruits of economic growth more equally, but we have to accept the risk that they also share the costs of downturns.  

    Parent

    You are against bank bailouts then? (none / 0) (#85)
    by Big Tent Democrat on Tue Mar 31, 2009 at 09:53:24 AM EST


    Parent
    Thanks for making your ideology clear (none / 0) (#86)
    by lambert on Tue Mar 31, 2009 at 01:24:33 PM EST
    Why do I have to accept any of your premises?

    Parent
    Yes Then (none / 0) (#82)
    by squeaky on Tue Mar 31, 2009 at 01:55:22 AM EST
    Bankers would be civil servants.

    Parent
    Obama's Tongue's Up The Banksters' Asses (1.00 / 2) (#7)
    by tokin librul on Mon Mar 30, 2009 at 01:39:17 PM EST
    It will require unions and workers who have already made painful concessions to make even more. It will require creditors to recognize that they cannot hold out for the prospect of endless government bailouts. Only then can we ask American taxpayers who have already put up so much of their hard-earned money to once more invest in a revitalized auto industry.

    so far they're all cuming from the prostate massage...

    WHAT THE PHUQUE!

    What was your FIRST Clue? (1.00 / 1) (#8)
    by tokin librul on Mon Mar 30, 2009 at 01:42:09 PM EST
    I am to the point now where I am truly beginning to believe that the federal government, right up to and including Obama, is essentially become a wholly owned subsidiary of Wall Street/big finance (as well as the military-industrial complex which Eisenhower warned about.) In effect, ownership of government by private power. We the people are simply here to be of service. Any illusion of actual freedom is just that, an illusion.

    and what took you so long to arrive at the truth that has been self-evident to anyone with the cognitive faculties surpassing those of a sea-urchin for about the last 30 years???

    Did you mean to... (5.00 / 4) (#14)
    by Romberry on Mon Mar 30, 2009 at 02:03:07 PM EST
    ...come of as insulting in that reply or was it wholly unintentional?

    My cognitive faculties are certainly ahead of a sea-urchin, of this I assure you. My failing really boils down to a certain naivete which causes me to hold out hope for things like truth, fairness, justice, freedom, the principles underlying the Constitution of the United States of America and other such childish nonsense as that.

    I don't mean that in any condescending way. I mean it really is a failing, and time and again I find myself disappointed by "leaders" who are supposedly on our (read "the people's") side. I know better, but I just have a hard time not hoping for something different.


    Parent

    I don't know.... (5.00 / 2) (#18)
    by Dr Molly on Mon Mar 30, 2009 at 02:20:47 PM EST
    sea urchins have an unusually elaborate nervous system for an invertebrate, and are used as a model organism in developmental biology research for that reason.

    :)

    Parent

    But still (5.00 / 1) (#43)
    by TeresaInSnow2 on Mon Mar 30, 2009 at 04:24:34 PM EST
    the sea urchins get eaten by the sea otters...and the sea otters are so cute holding the chubby little tribble-like urchins that nobody seems to mind.

    Sea urchins get no respect.  A sad state of affairs, it is. (shaking head).  And maybe symbolic of the unions getting screwed by the Obama administration? (just to make this side thing on-topic)

    Parent

    hm (none / 0) (#4)
    by connecticut yankee on Mon Mar 30, 2009 at 01:11:19 PM EST
    I can think of several alternate theories.

    A) political cover.   It takes a Nixon to go to China and if you arent Nixon (or a union buster in this case) then youll need to give the appearance of tough love.   This is what right-wingers at red state are saying right now.  It's all show while Obama shovels more cash to Detroit.

    B) profitability projections. I'm sure it's easier to see banks recovering.  The auto industry has been on its knees for years.

    There is a difference. (none / 0) (#10)
    by elrapido on Mon Mar 30, 2009 at 01:53:42 PM EST
    Employee salaries are not one of the factors harming banks.  For GM and Chrysler, they are.

    employee salaries are 10% of the cost (5.00 / 1) (#13)
    by of1000Kings on Mon Mar 30, 2009 at 02:02:14 PM EST
    of the car....


    Parent
    and uh....how do (none / 0) (#15)
    by of1000Kings on Mon Mar 30, 2009 at 02:03:49 PM EST
    hundreds of millions of dollars in bonuses 'not effect' a company's bottom line?

    companies that came hat-in-hand for any money they could get from the government...

    Parent

    Oh, please. (none / 0) (#24)
    by elrapido on Mon Mar 30, 2009 at 03:23:25 PM EST
    Let's not pretend that the bulk of the employees are making "hundred of millions of dollars" in bonuses or millions in salaries for that matter.

    As for coming "hat-in hand" to the government, I have no problem with telling them "no cash for you."  Just don't complain about what happens after that.

    Parent

    Stop pretending (none / 0) (#27)
    by Big Tent Democrat on Mon Mar 30, 2009 at 03:31:35 PM EST
    that is what was written.

    Parent
    Oh, good grief (none / 0) (#44)
    by elrapido on Mon Mar 30, 2009 at 04:30:09 PM EST
    Hair well split, BTD.  Jeez.

    Parent
    Mirrors are available (none / 0) (#45)
    by Big Tent Democrat on Mon Mar 30, 2009 at 04:30:47 PM EST


    Parent
    Alright, then. (none / 0) (#47)
    by elrapido on Mon Mar 30, 2009 at 04:41:07 PM EST
    Please be specific as to your complaint.

    Parent
    I was specific (none / 0) (#55)
    by Big Tent Democrat on Mon Mar 30, 2009 at 05:54:09 PM EST


    Parent
    Not exactly (none / 0) (#23)
    by elrapido on Mon Mar 30, 2009 at 03:19:48 PM EST
    Be careful when taking Dailykos postings for gospel.  You need to include all the employee benefits and those for retirees as well.  When you read that "wages" are only 10% of the cost of a car, you are not getting the whole story.  

    Parent
    Retirees (5.00 / 5) (#26)
    by Big Tent Democrat on Mon Mar 30, 2009 at 03:31:11 PM EST
    Interesting.

    so their contracts are not sacrosanct I take it?

    Why then are AIG counterparty contracts sacrosanct?

    Parent

    The ugly truth is that the answer (5.00 / 1) (#49)
    by inclusiveheart on Mon Mar 30, 2009 at 05:03:40 PM EST
    to your question is probably that a lot of people are thinking (consciously or not) that the retirees will die eventually and AIG's counter-parties, not being mortal and all, have the potential to live on forever given the chance.

    I'd like to think that there was a time in US history when people's lives were at least as important as the life of a business entity was, but that's probably very naive of me.  I do feel like the trickle-down theory of economics has been so ingrained in our economic philosophy that the idea of sacrificing people like retirees to the alter of big business is more acceptable than it might have been in the pre-Reagan era.  

    It seems to me that it is easier these days for people to rationalize laying waste to a group of not so powerful and now "less productive" people if the case can be made that it will help a business to survive and be more profitable.  The perception being that the retirees won't offer the "trickle down" potential that a business does...  An attitude which at the end of the day, ensures that Wall Street will always get preferential treatment.  One could easily invoke the business model of private health insurers - which exist in profitable form largely because Congress has enacted numerous laws that basically favor the survival of the industry over survival of the patients - in this context as well.


    Parent

    Amazing inconsistency, BTD. (none / 0) (#46)
    by elrapido on Mon Mar 30, 2009 at 04:38:07 PM EST
    Did I say that?  I really loathe the idea of changing or voiding the contracts of retirees.  I say that assuming that they have no say in negotiations, which I don't know to be true.  

    All that said, I'm not sure that all contracts must be treated the same way.  Do you think that they must be?

    Parent

    I do not (5.00 / 1) (#54)
    by Big Tent Democrat on Mon Mar 30, 2009 at 05:53:48 PM EST
    I am much more aligned with the idea that retiree contracts need to be given much more deference than AIG counterparty ocntracts.

    you obviously are more interested in those poor Masters of the Universe.

    Parent

    Let's keep an open mind here (5.00 / 1) (#65)
    by lambert on Mon Mar 30, 2009 at 07:48:32 PM EST
    After all, we also have our authoritarian followers wearing the D, now. So there's an alternate theory!

    Parent
    retiree benefits amount to about (none / 0) (#56)
    by of1000Kings on Mon Mar 30, 2009 at 06:02:38 PM EST
    1300 a car...I'd say that considering the average car is about 22-30,000 then that is about 5%....add in the cost of the current labor force and it's about 10%....

    but ya, lets cut into that 10% like it's going to make a difference...

    to a point where the people making the cars cannot even afford to buy them...

    Parent

    That's pretty funny actually. (5.00 / 9) (#16)
    by inclusiveheart on Mon Mar 30, 2009 at 02:12:25 PM EST
    Have you seen what the folks on Wall Street are taking home in terms of salaries and bonuses?  I think a lot of people would argue that the compensation in the financial industry is a part of their problem.

    Parent
    A lot people might argue all sorts of things. (none / 0) (#52)
    by elrapido on Mon Mar 30, 2009 at 05:44:59 PM EST
    If you mean that in a broad sense - that many on Wall Street are overpaid - it may well be true.  It is not true however, that salaries are a significant part of the problem for financial firms as they are at the Big Three (Two?).

    Parent
    Yeah, if only we had single payer... (5.00 / 2) (#64)
    by lambert on Mon Mar 30, 2009 at 07:47:19 PM EST
    ... US wages would be competitive with  Canada.

    Parent
    Stress Tests (none / 0) (#35)
    by Amaliada on Mon Mar 30, 2009 at 04:02:35 PM EST
    I think you have a point about the difference in how the banks and the auto industry have been treated.

    But the auto industry knew that this was their "judgment day" about whether or not they would continue getting money and the report that came out earlier saying that neither company was sustainable probably didn't help.

    I expect several of the "too big to fail" banks to fail the stress test.  If, at that point, the banks are not nationalized, then I'm going to join the group that thinks Obama isn't treating the two industries the same.  

    I just think he'll wait until he has the ammunition before he pulls the trigger.  

    Fair points and interesting perspective (5.00 / 1) (#50)
    by joanneleon on Mon Mar 30, 2009 at 05:34:26 PM EST
    about waiting until after the stress tests are performed.  Assuming that the stress tests will done fairly, the president will be in a better position to demand management or structural changes of the banks at that time.  Perhaps we are jumping the gun here.

    Given that, it still does seem that Wall St. was given preferential treatment.  They were given more money, more quickly and had more time to get their act together.  They are also being given a mechanism to take the toxic assets off their balance sheets.  As far as I know, the auto companies are not being given an equivalent way to take their debts off of their books.

    The banking industry, as far as I know, hasn't been required to change the way they do business.  For example, I heard Sec. Geithner saying that he doesn't know if they will be able to regulate credit default swaps, and as far as I know, the brokerage firms are still trading derivatives.  Other than some "mark to market" and uptick rules, I don't know of any regulation changes that will be made in the near future.  Structural changes, such as separating banking from investment and insurance have not been required, nor are they even being considered, to the best of my knowledge.  The auto industry, on the other hand, is required to provide plans for major restructuring both in its organization and its products.  I think everyone agrees that this is necessary for the auto industry, but is it not also necessary for Wall St.?

    Pres. Obama is talking about govt. help with consumer incentives for the auto industry and some accelerated spending for govt. vehicles, but does that really compensate for the destruction done to the auto industry sales by the Wall St. industry?

    The last thing that I find very curious is the contrast between Pres. Obama's recent actions toward the auto industry and his actions toward Wall St.  On Sunday's Wagoner was fired, today GM and Chrysler's restructuring plans were rejected and there were strong words about what they need to do in the next 30-60 days before any government aid will be given.

    On the other hand, Friday we saw 13 CEO's from Wall St. invited to a lunch at the White House from which they emerged with a positive message about how they were all going to work together.  It seemed that none of them had any worries nor were they under any great mandates for changes to their businesses.

    Parent

    Is the Geithner Plan (5.00 / 1) (#53)
    by Big Tent Democrat on Mon Mar 30, 2009 at 05:51:48 PM EST
    coming AFTER the stress tests> No, it is not.

    Parent
    Geithner's Plan (none / 0) (#57)
    by joanneleon on Mon Mar 30, 2009 at 06:06:25 PM EST
    We're in agreement.  I mentioned that as a reason why there is preferential treatment for the banks:


    Given that, it still does seem that Wall St. was given preferential treatment.  They were given more money, more quickly and had more time to get their act together.  They are also being given a mechanism to take the toxic assets off their balance sheets.  As far as I know, the auto companies are not being given an equivalent way to take their debts off of their books.



    Parent
    In addition (none / 0) (#58)
    by joanneleon on Mon Mar 30, 2009 at 06:30:58 PM EST
    I'm actually not sure how the Geithner plan figures into the stress tests.  Supposedly the stress tests are being performed right now and the results are due in April.  April starts in two days.  I don't know if the toxic asset sale has started yet, or what stage it will be in when the stress tests are done.  I'm not sure if they are using a snapshot of the banks' books at some point in time.  End of the first quarter?  End of the previous year?  And I'm not sure if the favorable results of the toxic assets sale will be taken into consideration.

    If I had to guess, I'd say that the sale of toxic assets will somehow be figured into the stress test and the banks will be given the benefit of the doubt that they'll be able to sell off the bad assets.  But it's an interesting question.  Did Geithner address the effects on the stress test, or timing, when he announced the plan?

    Parent

    It's not even clear that the stress tests... (5.00 / 3) (#66)
    by lambert on Mon Mar 30, 2009 at 07:51:40 PM EST
    ... can be any more than window dresssing to support whatever predetermined conclusion is desired. See William Black of Charles Keating fame. And if there's widespread accounting control fraud, as many believe that there is, then the stress tests will undoubtedly miss them. Of course, that couldn't possibly be their real purpose.

    Parent
    Well they never said (5.00 / 1) (#69)
    by joanneleon on Mon Mar 30, 2009 at 08:25:23 PM EST
    that the "stress tests" would be an audit, now did they? :)

    I always found the term "stress test" to be an interesting choice of words.

    As much as I suspect the stress tests are exactly as you said, "window dressing to support a predetermined conclusion," I still hope that there will be some substance to them.  

    But, for kicks, what's your best guess of the predetermined conclusion?  

    I say that one big bank will go down, and the most likely candidate is Citigroup.  As for CEO's, the only thing I would bet on is that Goldman's CEO won't go down.  Since the Obama admin. does tend to respond to public outrage to some extent, I think there may be one or two forced retirements on Wall St. as a result of the response to the Wagoner situation.

    Parent

    Accountability and transparency (none / 0) (#71)
    by lambert on Mon Mar 30, 2009 at 09:11:12 PM EST
    Neither are gained by firing one or two CEOs.

    Although I do support pour encourager les autres as a general policy, especially for banksters, the real solution for systemic risk is to change the system, not add the next candidate for cognitive regulatory capture on top of it.

    Parent

    I was speculating (none / 0) (#75)
    by joanneleon on Mon Mar 30, 2009 at 09:38:30 PM EST
    about what I thought would happen, not what I think should happen, because there's virtually no chance of that.

    Parent
    I think we should scream for what's right (none / 0) (#87)
    by lambert on Tue Mar 31, 2009 at 01:26:00 PM EST
    Leave the 11-dimensional chess to the experts.

    Why limit our sense of possibilities to what conventional wisdom permits?

    Parent

    After reading the Yves/William Black article (none / 0) (#74)
    by joanneleon on Mon Mar 30, 2009 at 09:24:01 PM EST
    my confidence is not improved.  In fact, the whole thing is so freakin' unbelievable that I hate thinking about it, and I hate facing the fact that all or parts of another administration might be engaged in this fraud and robbery, either directly or as part of a cover up.  Though Obama wasn't my first choice and I had a lot of doubts about him, I just can't believe the things he is promising this country are completely insincere.  

    An aside: I read some documents from a Congressional hearing regarding the ratings agencies.  In those, it was disclosed that the loan tapes were often not available.  The "executive committee" demanded that the subprime analysts come up with a method of rating them anyway.  One recipient of the email commented that in all his (long) career he had never seen anything like it.

    How do you stress test financial instruments that have mystery components?

    Parent

    Let's not, and say we did? (none / 0) (#88)
    by lambert on Tue Mar 31, 2009 at 01:26:52 PM EST
    That's how we do it!

    Remember, it's more important to look forward....

    Parent

    Re: Stress Tests (none / 0) (#61)
    by ChiTownDenny on Mon Mar 30, 2009 at 07:17:45 PM EST
    The stress tests are to gauge needs for additional capital under a further deteriorating  economy.   At conclusion, additional capital  could be supplied by gov't.

    Parent
    Well, an alternative interpretation... (none / 0) (#72)
    by lambert on Mon Mar 30, 2009 at 09:15:17 PM EST
    ... is that the stress tests are there to give the banks a clean bill of health without doing the investigation that would reveal widespread accounting control fraud. Just saying.

    Parent
    A New Way Forward (none / 0) (#41)
    by deetee on Mon Mar 30, 2009 at 04:14:55 PM EST
    Join the protests against the Wall Street "bail outs" and the power of the financial services industry.  APRIL 11

    http://www.anewwayforward.org/demonstrations/host_demonstration.php?

    Check out the current issue of The Atlantic, Mr. Johnson, who served as the chief economist at the I.M.F. and is now a professor at M.I.T.

    In America as in the third world, he writes, "elite business interests -- financiers, in the case of the U.S. -- played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive."

    Piling On The Straw | 87 comments (87 topical)

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