The Bailouts? Not Much For the Common Guy

Trillions to financial Terra Incognita; So far very little for ordinary Americans
By Sherman DeBrosse / The Rag Blog / January 8, 2008

At this moment, the cost of the bailouts, including guarantees, stands at $ 7.2 billion. That includes a $600 billion guarantee for money market funds, $200 billion so far for credit card issuers, $345 to Citigroup, the Fanny and Freddy loans, $200 billion for hedge funds, and on and on and on. Now we hear that the remaining $350 billion from the Troubled Assets Recovery Program has already been committed.

This writer has spent several weeks trying to find one person who could coherently explain why so much money had to be spent covering bad investments that are nearly impossible to understand. No one came forward.

Yes, the money for AIG and a few investment house bailouts were probably necessary because they involved bad securities Americans peddled abroad to people in nations who were accustomed to responsible regulations and did not know casino economics reigned supreme here. It was a matter of joining a joint effort in propping up the international financial system.

Covering the Bets of the Rich

What about trillions committed to banks and banking houses that have not been satisfactorily explained and justified? One of the people I respect most pointed out that we were talking about two economies, one we more or less understand, and the other being the terra incognita of the private casinos of the rich. The Treasury refuses to tell us who gets the remaining $350 billion of TARP, and many of the known recipients refuse to tell how the money was used.

Until someone in Washington begins to explain what is going on, we should be prepared to assume the worst. We have incurred trillions in obligations to cover the bets of the wealthy and keep their private casinos open. None of this resulted in making much more money available for ordinary loans. It is true that some of our pension funds are heavily invested in the hedge funds and derivatives.

Without some explanations, our representatives in Congress should be demanding that no more FED obligations or TARP assets be invested in covering exotic economic transactions. It would be far less expensive to prop up some pension funds than to ship off more money into terra incognita. It is also important to put the trillions of guarantees on hold or drag out indefinitely making good on those promises. First someone should assign verifiable values to all the ethereal financial instruments that have been guaranteed. We all recall in the previous S and L crisis how the culprits were able to repurchase seized assets at pennies on the dollar from the Resolution Trust Corporation.

Let’s Look at the Pig in the Poke

The next administration must take a close look at the loans and guarantees that have already been made and find ways to use them to serve the interests of most Americans. It seems that the TARP money was largely invested in warrants and senior preferred stock. We know far less about what the FED money gained for the taxpayers. In both cases, there should be federal representative on the boards of assisted banks and brokerage firms. Recipients who do not resume normal commercial loans must feel some pain, perhaps inflicted through the tax code.

The banks and financial institutions live in both worlds -- terra incognita and the ordinary world of goods and services. So far, the U.S. government has only moved to cover the bets of the big players in the casino. The Democratic Congress has generously bailed out the capitalist system and purchased what appears to be a “pig in a poke” for the taxpayer. I’s no wonder consistent progressives are so often to abandon the Democrats.

Address Suffering in the Real World

Now is the time to address the economic concerns of ordinary people in a financial world we all more or less understand. Congress and the spokesmen for the big money players must be reminded that their long term survival depends on their utility to the American economy.

Funds were extended to banks and the financial services industry with the expectation that credit would again be available to turn the wheels of the economy. But little happened. At first, most of us assumed the recipients of federal money were sitting on these funds because they were covering still more bad debt. There is probably some truth here. We all know that the CPI fell by the greatest amount in 62 months in November and that it still is plunging. The bankers are using our money to cover their balance sheets because they fear a certain amount of deflation is coming and that it will be followed by inflation in several years. We have the twin deficit crises -- federal debt and the balance of payments -- coupled with a dishonest, Wild West financial industry. Even commercial banks have become high risk operations. The instability of the system and the real threats of deflation and inflation account for why lenders are holding their cards near their chests and the wealthy in record numbers are shipping money overseas.

Free Up Credit

To ward off deflation and eventual inflation, banks must return normal commercial activity now, and the taxpayers need to establish an insurance program for responsible loans. AIG, the taxpayers’ new asset, can be put to use here. Above all, the mortgage crisis must be stemmed to avert a deflationary plunge. One fifth of home mortgages are under water -- meaning the value of the mortgaged homes is less than what is owed. Initially,12% of outstanding mortgages were in deep trouble. That number is growing. Housing prices continue to plummet as deflationary forces begin to take hold. Deflation is not a certainty at this point, but it is a possibility that grows with each day of flat consumer spending and inactive credit markets.

The banks are refinancing about 200,000 homes a month. To do more, they need a program that guarantees existing bad housing loans and incentives to greatly accelerate the process. People who are able to handle their mortgages might stop making payments if they see other folks get stabilization deals that are too good. For that reason, the stabilization loans should be for at least 35 years, and interest rates must be at a level to discourage new and unnecessary foreclosures. If there is any appreciation on a covered house, the federal government must receive a piece of it in return for the guarantee. The program would probably have to exclude mortgages that are more than $150,000 under water, unless the banks agreed to swallow some of the loss.

If commercial lending institutions are afraid to participate, use the various federal housing programs to buy up the paper and rewrite the loans. Every month that is wasted adds momentum to deflation. During the New Deal, the Home Owners Loan Corporation saved one in five home owners. The mission was to save people, not banks. We, the people may lose some money, but it will not be the trillions that will disappear by underwriting bad paper in terra incognita. Sheila Bair, head of the FDIC, would be the ideal housing czar to supervise this massive guarantee program.

How Much of a Recovery Can there be Without a Reinvigorated Industrial Sector?

Other decisions about what to do about restoring economic health should be made with the knowledge that we have relied on bubbles in the past to revive the economy. There are no new ones on the horizon, and reliance on bubbles is unhealthy in the long run. The green economy is a necessary and good thing, but many are mistaken in believing it will be an engine powerful enough to make Americans again the consumers of last resort for the entire world. The economy will not recharge itself with a surge in the service and information industries. They still are not large enough to accomplish that. The simple fact is that the industrial sector is essential to recovery -- and this means automobiles and heavy industry. European governments understand this and are moving to assist their automakers with loans in the neighborhood of $50 billion.

The debate over the auto industry loan has been fascinating and has revealed a great deal of mendacity and downright ugly attitudes. All sorts of factual matters were distorted. Yes, the domestic industry made many bad decisions, and labor agreements gave workers more than most Americans thought appropriate. But the fact is that the domestic industry was close to bringing labor costs into line, moving legacy costs over to the unions, and dealing with other fundamental issues. Those who advocated Chapter 11 bankruptcy overlooked the fact that the process would be long and tedious and that there would be no private lenders out there with money to but the Big Three back together. Like Chapter 7, it would be a death sentence. Letting the Big Three sink would amount to an irreversible decision to give up on any serious plans to revitalize the manufacturing sector. Those, led by short-sighted Southern senators, who want to destroy the UAW and the Big Three overlook what the wreckage would cost the taxpayers in unemployment benefits for three million people, welfare benefits, decreased income tax revenue, and federal assumption of retirement fund obligations.

There must be a stimulus plan for restructuring the domestic auto industry. In addition to strict accountability components, it might include generous federal assistance to the Big Three’s lending agencies, making it possible for people to acquire new, fuel efficient vehicles with 3% loans. A higher but still advantageous rate would be assigned to the existing inventory of less efficient vehicles. Directly provide them with the funds to make car loans. We are now considering the possibility that 16 million vehicle sales years may never be restored. Federal assistance, through the Big Three, for car loans might rekindle Americans’ love affairs with cars.

Yes, the UAW will have to bite the bullet again. Excess production capacity could be acquired by the federal government and sold or leased bit by bit, in very sweet deals, to small industries with long term-growing pains -- outfits that need space but cannot afford to build. Some of the capacity could be used to help build rapid transit and public transportation equipment and machinery and to start restoring the military inventories depleted by two wars.

Rebuilding the American manufacturing sectors will require lowering employer benefit costs, and that can only be done by providing a universal health plan unburdened with successive pharmaceutical costs and insurance company profits. It would be good to pass this now, but it might require a much deeper recession before enough Congressmen acquire enough courage to vote in the interests of most of their constituents.

Consideration should also be given to a Value Added Tax as a means of leveling the playing field among countries that adhere to the General Agreement on Trade and Tariffs. Unfortunately, that is a regressive approach, but is used by our competitors and there seems to be no other approach that works as well to help domestic producers. Given the likelihood of millions more lost jobs in 2009 and 2010, now is the time to consider this.

Of President-Elect Obama’s stimulus package, it appears that $300 million will go to tax cuts -- a bow to University of Chicago economics, and $400 billion to the kinds of project that will create assets, work , and send money coursing through the economy. The latter is a tip of the hat to John Maynard Keynes’s economics.

The New Deal Example

Much has been said of late about how FDR’s deployment of Keynes did not end the Great Depression. The fact is that he did not spend enough on pump priming. Before becoming president, he read a book popularizing Keynes, and he scrawled in it something to the effect that you do not get something for nothing. FDR should have spent a lot more because ordinary people no longer had the ability to recharge the economy because there was an inequitable distribution of income. The depression lasted so long due to under-consumption and maldistribution of income. The $300 billion in tax cuts, mostly for ordinary folks, will not accomplish a great deal even if government succeeds in getting the money out fast, perhaps through sharp cuts in FICA deductions.

Those discussing the New Deal example forget that Roosevelt took some steps to deal with inequities in income, particularly by backing unions. That helped prevent economic downturns due to under consumption. It is doubtful if the national climate is such as to make progress on this front possible.

The key is in the pump-priming initiatives, and it is possible that this two year package is too small. The Obama Administration might be in danger of repeating the New Deal’s mistake. The stimulus plan must have a component to rebuild American industry, and that will be costly. There must be enough money borrowed and committed now, while other nations are still taking shelter in Treasury bonds and willing to lend. Our advantage is in being able to borrow at rates far less than those at which we lend. This situation will not last much longer as the world’s monetary situation is due for drastic changes that will not be to our long-term best interest. If the world monetary situation shifts in the direction most expect, we had better have a healthy and productive manufacturing sector or accept the consequences of long-term decline across many fronts.

It will require a number of pieces of separate legislation to implement these plans. We progressives will be facing a four year campaign in putting out accurate information about economic policy if the Obama administration is to prevail in heading off a depression. Already the Republican leadership has signaled that the GOP will delay the stimulus package. It would be a great mistake to promise Republicans up front that concessions would be forthcoming on new estate tax legislation or that the tax cuts for the rich can continue another year. Republicans have 42 more or less disciplined votes and the not-so covert help of a handful of Democratic conservatives in the Senate. It is possible that Mitch McConnell and his minions will be in a position to stop whatever they wish without fear of being punished by the voters. Most of them are in safe red states, and their leaders know that odds are Republicans could pick up seats in 2010, as the opposition party usually gains in off-year elections.

[Sherman DeBrosse, the pseudonym for a retired history professor, is a regular contributor to The Rag Blog and also blogs at Sherm Says and on DailyKos.]

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An American Icon, the SUV, Is Slowly Vanishing

Billy Bob Grahn, a county official, paid tribute Tuesday as a G.M. plant in Janesville, Wis., became one of three to close. Photo: Andy Manis for The New York Times.
Nearly the End of the Line for S.U.V.’s
By Nick Bunkley and Bill Vlasic / December 23, 2008

JANESVILLE, Wis. — Even a federal bailout could not save three of the last remaining plants in the United States still making sport utility vehicles.

Reeling from its financial problems and a collapsing S.U.V. market, General Motors on Tuesday closed its factories in this city and in Moraine, Ohio, marking the passing of an era when big S.U.V.’s ruled the road. The moves followed the shutdown last Friday of Chrysler’s factory in Newark, Del., which produced full-size S.U.V.’s.

The last Chevrolet Tahoe rolled off the line here in Janesville shortly after 7 a.m. in the 90-year-old plant, which had built more than 3.7 million big S.U.V.’s since the early 1990s.

Most of the plant’s 1,100 remaining workers were not scheduled to work the final day, but many showed up for an emotional closing ceremony. Dan Doubleday, who had 22 years on the job, broke down in the plant’s snowy parking lot afterward.

“I was a fork lift driver,” he said, glancing at his watch through welling tears. “Until about seven minutes ago.”

At the Mocha Moment coffee shop around the corner, two co-workers, Michael Berberich and Lisa Gonzalez, exchanged Christmas presents just as they had most years since they were both hired in 1986.

“For a while we had it made,” Ms. Gonzalez said. “I just wish it would have lasted.”

The fate of the Janesville, Moraine, and Newark plants was sealed this spring, when rising gas prices suddenly made S.U.V.’s unpopular, and long before President Bush approved $17.4 billion in emergency loans last week to keep G.M. and Chrysler out of bankruptcy.

While the overall new vehicle market has dropped 16 percent so far this year, sales of big S.U.V.’s have plummeted 40 percent.

With consumers shifting rapidly to smaller, more fuel-efficient cars, G.M. no longer needed to produce big S.U.V.’s in Janesville as well as in a plant in Texas.

Still, some Janesville workers felt G.M. broke a pledge in its 2007 contract with the United Automobile Workers to keep the factory running.

“We didn’t deserve this,” said John Dohner Jr., shop chairman at U.A.W. Local 95. “We’ve all put a lot of hard work into trying to secure a future here.”

Shrinking market shares have forced G.M., Chrysler and the Ford Motor Company to close more than a dozen assembly plants and shed tens of thousands of workers in recent years. The moves have devastated communities from Georgia to New Jersey and from Michigan to Oklahoma.

Even so, G.M. and Chrysler are likely to close more manufacturing facilities as they overhaul their operations to meet conditions of the federal loans.

“The companies are moving very fast now to close plants, but it may be too little, too late,” said John Casesa, a principal in the Casesa Shapiro Group, a consulting firm. “They’re doing now what they should have done 15 or 20 years ago.”

G.M.’s Moraine plant was the last to build the midsize Chevrolet Blazers and GMC Envoys that were once among the best-selling vehicles in the country.

The Janesville factory built three of the biggest and most profitable vehicles in G.M.’s lineup, the Chevrolet Tahoe and Suburban and GMC Yukon. The Chrysler plant in Newark also made big S.U.V.’s — the Dodge Durango and Chrysler Aspen.

Their closings leave the Big Three with only one factory each still devoted to making traditional big S.U.V.’s — Ford in Kentucky, G.M. in Texas, and Chrysler in Detroit.

The Janesville plant once employed more than 5,000 workers and turned out 20,000 Tahoes, Yukons and Suburbans each month. With its closing, residents worried about the future of this city of 64,000 people, about 75 miles southwest of Milwaukee.

“Janesville will lose a lot,” said Patti Homan, as she finished a strawberry-topped waffle at the nearby Eagle Inn restaurant. “I expect my electricity to go up, water rates to go up, property taxes to go up, and the value of my home to go down.”

Ms. Homan worked in the plant for 23 years, and her father, brother and husband all retired from the factory. “It’s generation after generation for so many families here,” she said.

The empty feelings in Janesville were echoed in Moraine, a suburb of Dayton and last week at the Chrysler plant in Newark.

More than 1,000 workers were laid off at the Moraine plant. Under terms of the U.A.W. contract for all its members, they and the workers in Janesville and Newark will collect unemployment checks and payments from G.M. that together equal about 80 percent of their take-home pay.

“It’s been a good ride, man,” said Frank Hereford as he left the G.M. Janesville plant. Photo: Andy Manis for The New York Times.

But those payments will only last about a year. And with the U.A.W. prepared to suspend its “jobs bank” program as a condition of the federal loans, there will be no safety net after that.

Some workers will have an opportunity to transfer to other plants. But with the industry contracting so quickly, there is little job security in making a move.

“I can’t risk transferring,” said David Williams, one of the remaining 1,100 workers at the Newark plant when it closed. “I don’t want to go 1,200 miles away to get laid off again.”

Mr. Williams installed a sunroof on the last Dodge Durango to come down the assembly line in Newark. Now he plans to take massage-therapy classes and pursue a new career far from the factory floor.

“Enough with the concrete,” he said. “It’s time for some carpet and climate control.”

On the last day for the Newark plant, 84-year-old Woody Bevans unlocked the weight room at the U.A.W. union hall and began brewing coffee for a handful of retirees who passed the time there.

A Texan who started work at the plant when it opened in 1952, Mr. Bevans recalled how the factory was first used to build tanks for the Korean War. He retired in 1983, but thought the plant would go on forever.

“We had hope right up until the last,” Mr. Bevans said. “We’re really going to feel it when it shuts down. There’s a big chain reaction, believe me.”

The University of Delaware is negotiating with Chrysler to buy the plant and redevelop the 270-acre site with academic buildings and a technology park.

After the plant closed, one of the workers, Merle Black, drove directly to a Delaware Department of Labor office and registered for job openings. He is hoping to become a heavy equipment operator, and possibly be involved in the demolition of the factory where he used to install airbag parts.

“If I can get in there to help take it apart, I don’t mind,” Mr. Black said. “That’s where I spent the last 19 years. That’s what I know.”

The closing of an auto plant draws a crowd, with some people somber and nostalgic and others defiant and energized.

Outside the Janesville plant on Tuesday, a few workers posed for pictures in front of the building while others said their goodbyes as they loaded gear in their snow-covered S.U.V.’s

One man had two small children with him on the last day. Another man wearing an orange ski mask waved a large American flag as departing workers drove by.

Many of the workers trudged over to a one-story, cinder-block building on the grounds of the factory, a bar called the Zoxx 411 Club. A sign said “customers only” and forbade reporters and media from entering.

Outside, a cluster of reporters, including a documentary film crew from Japan, tried to interview workers about the last days of the S.U.V. plant.

“It’s been a good ride, man,” said Frank Hereford, a body shop worker, as he left the plant with a microwave oven that heated up countless lunches during many of his 38 years with G.M. “Good people worked down here.”

Source / The New York Times

Thanks to Betsy Gaines / The Rag Blog

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Lame Duck Dubya's Belated Bailout

President Bush pauses during a statement on the auto industry at the White House on Friday, December 19, 2008 in Washington. Photo by Evan Vucci / AP.
'It looks like the feds are going to end up owning and supporting a failed industry that lacks the cheap oil to give it a credible future.'
By Roger Baker / The Rag Blog / December 20, 2008

See 'Bush: auto plan only way to stave off collapse' by Tabassum Zakaria, Below.

The real problem is that keeping a failed and mismanaged industry on life support for a few more months doesn't do much good. Not unless somebody in charge can think of a smart way forward after that down payment runs out.

"...the carmakers would provide a restructuring plan by March 31 that would show they would survive, or they would be required to repay the loans..."

Is this requirement really serious? How could these companies possibly repay the bridge loans if they need the money so badly right now? Or is it considered acceptable to lie to the public this openly about how our future tax obligations are being handled.

It looks like the feds are going to end up owning and supporting a failed industry that lacks the cheap oil to give it a credible future.

(Gasoline is cheap for the moment, but future fuel affordability is an illusion.)

If Detroit can make cars, they SHOULD be able to make the trains and wind turbines we will really need in the future. But how could the Detroit car companies, given their track record, possibly decide to do something that bold on their own?

It is obviously going to take the feds to tell them they must make such basic changes. We are groping toward socialist management and public control of the unprofitable sectors of US basic industry, all the while being afraid to admit that this is happening.

Bush: auto plan only way to stave off collapse
By Tabassum Zakaria / December 20, 2008

WASHINGTON -- President George W. Bush on Saturday said offering government loans to U.S. automakers was the only option left to prevent the industry from collapsing after alternatives were ruled out or failed.

Bush on Friday announced the government would provide $17.4 billion in emergency loans to financially strapped General Motors (GM.N: Quote, Profile, Research) and Chrysler LLC CBS.UL to prevent them from failing. Ford decided it did not immediately need similar loans.

In return, the carmakers would provide a restructuring plan by March 31 that would show they would survive, or they would be required to repay the loans.

Lawmakers from Bush's own Republican Party criticized the plan, which can be changed by the incoming administration of Democratic President-elect Barack Obama after he takes office Jan. 20.

"We have ended up with an agreement open to interpretation, that eliminates the sense of crisis, where taxpayer dollars are expended and we are left to hope that the next administration has the will to enforce the tough concessions necessary to make these companies viable for the long term," Sen. Bob Corker, a Tennessee Republican said.

Bush in a weekly radio address said his economic advisers warned that if the automakers filed for bankruptcy it would lead to a "disorderly collapse" of the industry and send the economy into a "deeper and longer recession."

After Congress was unable to pass legislation to bail out the auto industry, the only way to stave off a collapse was for his administration to step in, Bush said.

The automakers are capable of demonstrating by the end of March that they can restructure into viable companies, he said. If not, the loans would provide time for the carmakers to prepare for an "orderly" Chapter 11 bankruptcy process that offered a better prospect of long-term success, Bush said.

"This restructuring will require meaningful concessions from all involved in the auto industry -- management, labor unions, creditors, bondholders, dealers, and suppliers," he said.

"The actions I'm taking represent a step that we all wish were not necessary," Bush said. "But given the situation, it is the most effective and responsible way to address this challenge facing our nation."

Source / Reuters, UK

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Rabbi Arthur Waskow : Autos, Plagues and Passover

Pharaoh 2 by Veronica Winters.
Knowing a Pharaoh when you see one...
Creating a Freedom Seder for the Earth
By Rabbi Arthur Waskow / The Rag Blog / December 15, 2008

What do the Iraq War, the drowning of New Orleans, the collapse of Lehman Brothers, the great Australian drought, and the Senate's refusal to assist the auto industry all have in common?

They are all the products of arrogance, hard-heartedness, and the addiction of power-holders to their power, even when their misuse of it is ruining their own society. The job description of Pharaoh.

The most recent act of institutional pharaohs was the Senate's refusal to save the auto industry, even though the proposals for Federal action included strong measures to assure high-mileage, low-emission cars and even though the industry's collapse would threaten millions of American jobs and the probable onset of another Great Depression.

Or maybe we should say not "even though" but "Because"! That is, some of the Senators who voted No have been in the pockets of Big Oil and Gas for decades, are not anxious to create a low-petroleum auto industry, and are also delighted to shatter the decent wage structure of unionized Detroit.

For those senators, the sticking point was the United Auto Workers' insistence that the wage reductions they agreed to not go into effect till 2011. Perhaps the union was hoping that a new auto industry, with electric cars and many other innovations, could recreate an American market and save their union. But No, like any pharaoh the senators wanted to break any autonomous center where many people who as individuals have little power can gather to face those few who have a great deal. Just as Pharaoh wanted to turn independent farmers and shepherds into slaves.

Pharaoh's job description: Arrogance. Hardheartedness. Stubbornness. Addiction to power. Even if it ruins America.

In the biblical story of Pharaoh, he begins by hardening his own heart, and then God hardens his heart. What has happened to Pharaoh's "free will"? He has addicted himself. He has snorted the cocaine of absolute power and hardhearted arrogance so often that he can no longer choose freely, any more than a crack addict can. His own fate and that of his country are sealed when his own advisers come to him to schrei Gevalt: "Do you not see, you are destroying Egypt!" -- and he cannot stop. (Exod. 10:7)

What are the consequences of Pharaoh's arrogance? What we call the "Ten Plagues." Oppression of workers becomes oppression of the earth. The Plagues are all what we would today call "ecological disasters": The rivers, undrinkable. The crops, eaten by locusts. Climate disaster: the most destructive hailstorms in history. Mad cow disease. Dust storms so thick, so strong, that no one could see his hand before his face: a "darkness" so thick that you could touch it.

In our own day, the time has come to gather God's power in the people. The Chicago workers who took over the Republic Windows and Doors factory -- its owners had decided to shut down while they moved the jobs overseas – those workers were following in the steps of Moses, the organizer of Bricklayers Union Local One. And they won!

We who understand how the institutional pharaohs are bringing deadly Plagues upon the earth and our grandchildren must also organize, at every level.

One level: For the week beginning on Thanksgiving Day, Rabbi Phyllis Berman and I were in Sweden. With Rabbi Avraham Soetendorf of the Netherlands and Professor Hava Tirosh-Samuelson (who edited the Harvard University volume on Judaism and ecology), we brought Jewish wisdom to weave with many other spiritual teachings -- Buddhist, Russian Orthodix, Native American, Muslim, Catholic, Lutheran, Wiccan (brought by Starhawk -- the first time, she qupped, that an Archbishop has welcomed a witch) at the Interfaith Summit on the Climate Crisis called by the Archbishop of the Church of Sweden and opened by Sweden's Crown Princes. Our roots were "religious"; we worked to birth a fruitful "politics."

In another Shalom Report, I will share what happened during that week in Sweden. Meanwhile, another level:

This coming spring will be the 40th anniversary of the original Freedom Seder. The traditional Passover Seder celebrated the liberation of ancient israelites from ancient Egypt. The Freedom Seder (which I wrote) did something new: It celebrated the liberation struggles of Black America and other peoples alongside the liberation struggles of the Jewish people.

It was nationally published, was physically celebrated at a Black church in Washington DC on April 4, 1969 -- the first anniversary of the death of Martin Luther King -- and had a profound impact on the way in which American Jews have celebrated Passover ever since. – For it freed many many Jews to shape Seders to address the many issues of freedom in our own day.

So this spring, The Shalom Center is already working to create a 40th anniversary Freedom Seder that will focus on the Ten Plagues that the pharaohs of pur pwn time are bringing on the earth today, and match them with Ten Blessings that we ourselves can bring to heal our wounded planet.

Blessings of Green Jobs and Green Energy, blessings of workers' rights to resist environmental and economic disaster, blessings of thwarting the racism that has condemned millions of Africans to drought and death, blessings of peaceful transformation out of fossil fuels instead of war after war to control the reservoirs of the oil to which our economies have become addicted.

The Freedom Seder for the Earth; like the Freedom Seder 40 years ago, will be multireligious, multicultural, multiracial.

The Shalom Center has already brought together a working committee in Washington DC, in which Muslims and Christians have begun to work with a strong nucleus of Jews to plan the time, the place, the form of this Seder.

And we intend to stimulate the celebration of such Seders all across America.

On this, as well as on the Interfaith Summit in Sweden, we will be writing more. Meanwhile, if you are interested in having your community hold such a Seder, let us know.

Shalom, salaam, peace,

Arthur

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A Lesson From Canada (and Detroit) : Single Payer Health Care is Way to Go

'Canada pays LESS for health care per person than the US — with far better results in terms of general wellness of the population.'
By Tommie Sue Montgomery / The Rag Blog / December 13, 2008

See ‘If G.M. Were a Canadian Company It Wouldn't Be Asking for Help’ by Dean Baker, and ‘Obama and Daschle should opt for single-payer’ by Rose Ann DeMoro, Below.

I have no idea where you are on the health care issue but I can tell you that the first article is accurate, at least in so far as Canadian companies do NOT have the burden of health care costs. More important, Canada pays LESS for health care per person than the US — with far better results in terms of general wellness of the population. In fact, the US has a partial single-payer system: Medicare.

Living in Canada for the last 7.5 years, I can tell you that the single-payer system is the only rational way to go. This is NOT “socialized medicine.” We have our choice of doctors, including specialists; while there is often a waiting list — especially in high-population southern Ontario — for elective care, there is NEVER a wait for critical care.

Charles, my stepson, who had a heart transplant last May, is our No. 1 example. He has never had to wait for anything. His care, at the Hospital for Sick Children in Toronto, has cost, over the last four years (since diagnosis) at least a million dollars. The entire family, put together, could not have paid this. Nor did we have to deal with insurance companies with the power to decide what care would be paid for. Decisions regarding care were made by his doctors. His anti-rejection drugs are also covered, with a deductible calculated on income. We have never seen a bill and never will.

Yes, we pay higher taxes and in Ontario we pay an additional $800/year “health tax.” But we see a doctor when we need one; we do not have to rely on emergency rooms for non-critical care; we get a physical once a year with all the tests the doc feels we need; eye exam every 2 years; and now that we’re over 65, we pay the first $100 for our prescriptions each year; the rest is covered. If I wanted to move back to the states (I don’t), I could not do so at this point because I could not afford the supplemental health insurance—and I am still quite healthy.

Below is an article and a call to action.

If G.M. Were a Canadian Company It Wouldn't Be Asking for Help
By Dean Baker / December 11, 2008

The Detroit automakers have made many mistaken business decisions that have been important factors contributing to their current crisis. However, they are not responsible for some of the factors that have brought them to the brink of bankruptcy.

Most obviously, they are not responsible for the collapse of the housing bubble and the subsequent loss of more than $15 trillion in housing and stock wealth. This falloff in wealth has sent consumption plummeting. The auto industry has been especially hard hit, with sales falling by more than 30 percent year over year in the last two months.

The Big Three are also not responsible for the broken U.S. health care system. If we paid the same amount for health care as Canada, G.M. would have accumulated an additional $22 billion in profits over the last decade.

That would be the savings if we assumed that General Motor's health care expenditures were reduced by roughly 48 percent to be in line with expenses in Canada. Of course, not all the savings in this counterfactual would have gone to profits. Some of it would have gone to workers in the form of higher wages or to consumers in the form of lower car prices.

On the other hand, G.M. is also picking up the tab for many spouses and dependent children. It would not have to pay these health care expenses in a Canadian type system. So the $22 billion figure is probably not a bad first approximation of the additional money that G.M. might have today if the United States had a more efficient health care system.

Even with these additional profits G.M. and the other domestic manufacturers would still face serious problems. They have made some bad choices in betting their future on SUVs and other low-mileage vehicles. They also have lagged foreign manufacturers in producing high quality, reliable cars.

But the real reason that Big Three are on their deathbeds right now is the economic crisis created by the Wall Street crew and their friends in Washington. It will be tragic if the people of the Michigan, Indiana, and Ohio are made to suffer through a depression because of the failed financial dealings of the Wall Street crew.

This situation is made even worse by virtue of the fact that most of the Wall Street executives who are directly responsible for this disaster are still quite wealthy, in large part because of the generosity of Congress and the Bush administration. While they demanded that the auto manufacturers produce plans for returning to profitability in exchange for providing loans, no similar conditions were imposed on Citigroup and the rest of the Wall Street gang.

As the autoworkers at the Big Three look at their last paychecks before an indeterminate period of unemployment, they should think about the portion deducted for income taxes. With this money, they have helped to ensure that Robert Rubin and other Wall Street types continue to enjoy pay packages in the millions or even tens of millions of dollars.

Happy Holidays!

[Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer ( www.conservativenannystate.org). He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues. You can find it at the American Prospect's website.]

Source / Talking Points Memo

Obama and Daschle should opt for single-payer
By Rose Ann DeMoro / December 11, 2008

Barack Obama needs to make good on his campaign pledge to reform health care. It is not enough to throw the issue off to former Senator Tom Daschle, Obama’s choice to head the Department of Health and Human Services.

Daschle says he wants to hear from us, the American people, on this issue. So we should oblige him.

Obama and Daschle have a choice: Rely on a private insurance-based plan that does little to mitigate the escalating health care crisis, or solve the problem once and for all and adopt universal, single-payer health care.

Many in Congress, the media, conservative think tanks and some advocacy groups — led by the Service Employees International Union and its business allies — are stumping for piecemeal changes.

Such a path would perpetuate the crisis and deal a cruel blow to the hopes of Americans for real reform. Those in Congress and liberal policy organizations who are embracing caution or promoting more insurance, not more care, are playing a risky game. It could jeopardize the health security of tens of millions of Americans and, in the process, fatally erode public support for the Obama administration.

Hardly a day passes without fresh signs of the health-care implosion.

Just days after the election, the New York Times reported a sharp increase in cost-shifting in employer-paid health plans, with more employers pushing high deductible plans that typically cost workers thousands of dollars in out-of-pocket payments.

Similarly, the Wall Street Journal reported a huge spike in health care premiums for small businesses, which prompted many to raise deductibles or cut coverage.

The consequences are chillingly apparent. In October, the Washington Post cited a study that found one-fourth of Americans are skipping doctors’ visits, and 10 percent could not take their child to the doctor because of cost.

That same month, USA Today reported that one in eight patients with advanced cancer turn down recommended treatment because of the bills.

America is falling embarrassingly behind.

A study by the Commonwealth Fund in November compared adults with chronic conditions, such as high blood pressure, diabetes, or heart disease, in seven major industrialized countries. A stunning 54 percent of the American respondents said they were likely to go without recommended care, compared to just 7 percent of chronically ill patients in the Netherlands. Over 40 percent of the Americans spent more than $1,000 on medical bills, compared to just 4 percent of British and 5 percent of French patients.

If we adopted a universal, single-payer system like these European countries, or if we simply expanded Medicare to all Americans, we would rectify this problem.

The need is urgent. Today 46 million Americans are without health care.

Millions more are at risk of losing it during this recession. And huge numbers of Americans with insurance can’t afford the cost hikes.

At some point, our government must stop subsidizing these private companies and start investing in the American people.

The time to do so is now.

The best way to get it done is to guarantee all Americans health care in a single-payer system.

Tell Obama and Daschle to support improved Medicare for all.

[Rose Ann DeMoro is executive director of the 85,000-member California Nurses Association/National Nurses Organizing Committee.]

Source / The Progressive

Thanks to Mercedes Lynn de Uriarte / The Rag Blog

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Bailout Bust : Southern Republicans Strike Out at Unions

Sen. Debbie Stabenow, D-Mich, left, listens to Sen. Sherrod Brown, D-Ohio, speaking about the Senate's rejection of an emergency $14 billion loan bailout for US auto companies, Thursday, Dec. 11, 2008, on Capitol Hill in Washington. Photo by Haraz N. Ghanbari / AP.

The Republican Party, now the Party of 'Southernism,' always aimed at killing the UAW in this 'bailout.' As low as the wages are that the UAW agreed to in their 2007 contract, they are not as low as the non-union wages paid by Toyota, Honda, Hyundai and Mercedes-Benz in their factories spread through the Old Confederacy, land of the 'right to work.'

By Thomas Cleaver / The Rag Blog / December 12, 2008

See 'From the front lines in the class war' by Steve Russell. and 'Auto bailout talks collapse as Senate deadlocks over wages' by Paul Kane, Below.

Republicans killed the auto bailout Thursday night when Democrats refused to agree to the Big Three automakers being required to achieve wage parity with Japanese car factories in the South by the end of the 2009.

Well, now we have the real deal, out on the table for all to see.

The Republican Party, now the Party of "Southernism," always aimed at killing the UAW in this "bailout." As low as the wages are that the UAW agreed to in their 2007 contract, they are not as low as the non-union wages paid by Toyota, Honda, Hyundai and Mercedes-Benz in their factories spread through the Old Confederacy, land of the "right to work."

The Southern Republicans who control the party now are terrified of the Employee Free Choice Act, which will be passed next year, and which would give the UAW a strong tool to break the back of the Southern reactionaries who have always dominated the Southern economy. Unionism might have brought the thing the old slaveocracy (however it's disguised itself in the past 140 years) has always, always feared: that the lower classes in the South might finally open their eyes and start acting in their own best economic interests, which would mean the end of Southernism. They're so afraid of this, they're willing to see the country fall apart, which is the course they have set us on.

From the front lines in the class war

So, last night after prime time, senate Repugs killed the Detroit bailout over....the guys on the line making too much money.

This is the most flagrant shell heaved at the working class since Reagan claimed the way to balance the budget was to make people who waited tables pay all the taxes due on their tips.

No, the Dems did not even come close to having the votes for cloture. But I, for one, would have loved the symbolism of a real live filibuster running over Christmas where the major issue is American workers making too much money!

The last blows of the negotiation, if I am correctly informed, was the Repugs demanding that the UAW take wage cuts immediately that are currently contracted to hit in 2010.

The UAW agreed provided they be given a seat on the GM board.

So you can see the union was hell bent on class warfare, eh?

Steve Russell / The Rag Blog / December 12, 2008

Auto bailout talks collapse as Senate deadlocks over wages
Without a deal, carmakers face bankruptcy threat
By Paul Kane / December 12, 2008

An eleventh-hour effort to salvage a proposed $14 billion rescue plan for the auto industry collapsed late last night as Republicans and Democrats failed to agree on the timing of deep wage cuts for union workers, killing the legislative plan and threatening America's carmakers with bankruptcy.

"We're not going to get to the finish line. That's just the way it is. There's too much difference between the two sides," Senate Majority Leader Harry M. Reid (D-Nev.) announced after 10 p.m., concluding a marathon negotiating session that ended in gridlock. Reid warned that financial markets could plummet when trading opens this morning.

"I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight," he said.

The legislation would have provided emergency loans to General Motors and Chrysler, which have said they face imminent collapse without federal help. The high-stakes talks broke down over when the wages of union workers would be slashed to the same level as those paid to nonunion workers at U.S. plants of foreign automakers such as Toyota and Honda.

Sen. Bob Corker (Tenn.), the lead GOP negotiator, said the sides were on the brink of a deal on the amendment he had offered. Representatives from the United Auto Workers -- who were present for most of the negotiations -- would not agree to a specific date, Corker said.

"We offered any day -- any day -- in 2009," Corker said.

Minutes after the talks failed, the Senate voted on the bailout measure that had been approved Wednesday by the House on a largely party-line vote, 237-170. In the Senate, the vote was 52-35, eight votes short of the 60 needed to override a Republican filibuster. Of those voting yes, 10 Republicans joined 42 Democrats.

"It's disappointing that Congress failed to act tonight," the White House said in a statement. "We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable."

GM said last night it was "deeply disappointed" that negotiations failed to produce an agreement. "We will assess all of our options to continue our restructuring and to obtain the means to weather the current economic crisis," the company said in a statement.

A Chrysler spokeswoman said the company would "continue to pursue a workable solution to help ensure [its] future viability."

The Senate closed out its legislative session for the year but will stay open for pro forma sessions until the next Congress begins Jan. 6. Reid and Senate Minority Leader Mitch McConnell (R.-Ky.) agreed that the auto rescue would not happen this year.

Stock markets in Asia tumbled on the news. Japan's benchmark Nikkei average fell more than 6 percent in midday trading, while stocks in Hong Kong slipped more than 7 percent.

Auto industry executives and lawmakers supportive of the industry have said they hope that the Federal Reserve might step in with a loan or that Treasury Secretary Henry M. Paulson Jr. might provide emergency funding from the government's financial rescue program. But Paulson and others in the Bush administration -- which had urged the Senate to pass the bailout measure approved by the House -- have argued that the rescue program is intended to stabilize the financial services industry and should not be used for other purposes.

"That is the only viable option available at this time," House Speaker Nancy Pelosi (D-Calif.) said in a statement after the Senate vote.

In discussions with the White House this week, congressional Democrats again raised the idea of funding the automaker bailout out of the rescue program. White House spokesman Tony Fratto said yesterday before the talks collapsed that the administration "has not engaged" lawmakers on the proposal.

The failed negotiations came despite a plea earlier in the day from President-elect Barack Obama for passage of the legislation to spare GM or Chrysler from having to file for bankruptcy protection, a prospect that has grown real enough for both firms to hire lawyers to deal with such a scenario. Chrysler acknowledged last week that it was working with Jones Day; last night, sources said GM had hired Weil, Gotshal & Manges, as well as turnaround veterans William Repko of Evercore Partners, Arthur Newman of Blackstone Group and Jay Alix.

It wasn't clear whether GM, in particular, could survive until January. If the industry can hang on that long, Reid said last night, the legislation would be revived next year -- when a Democratic majority in the Senate might be large enough to defeat any GOP filibuster attempts.

Corker and Sen. Christopher J. Dodd (D-Conn.), chairman of the Banking Committee, had led negotiations all afternoon and into the evening trying rescue the faltering proposal.

"Nothing is agreed to until everything is agreed to," said Dodd, who appeared to be somewhat optimistic as he exited the negotiations after 8 p.m.

The negotiations were based on a plan advanced by Corker, the most junior member of the Banking Committee. His proposal sought to reduce the wages and benefits of union workers by requiring the automakers' total labor costs to be "on par" with Honda and Toyota.

The two sides agreed to most other issues, including those requiring automakers to reduce their debt obligations by at least two-thirds through an equity swap with bondholders. Payouts to workers who are laid off or temporarily furloughed would have been terminated.

Ford, unlike General Motors and Chrysler, has said it does not need bridge loans at this point and would not need to agree to those conditions.

But no agreement could be reached on the wage reductions. "It sounds like UAW blew up the deal," Sen. Jim DeMint (R-S.C.) said afterward.

The initial agreement in the House called for the government to issue the loans to GM and Chrysler as early as next week and for President Bush to immediately name a "car czar" to oversee the bailout. The companies would be required by March 31 to cut costs, restructure debt and obtain concessions from labor sufficient to report a positive net present value.

If the firms failed to make progress toward that goal, the agreement would have required the car czar to revoke the loans and develop a new plan that could have included the option of seeking Chapter 11 bankruptcy protection. If the companies had failed to agree on steps to guarantee their long-term survival, they would have been denied additional federal assistance.

Corker -- a freshman senator who a few years ago was mayor of Chattanooga -- was a strong opponent of the House plan to save the automakers.

He and other Republicans had revolted against the earlier plan because they thought it did not go far enough in forcing contracts on the UAW. GM officials have told Congress, for instance, that under the most recent contract, labor costs would be about $62 per hour in 2010 -- $30 per hour in wages and slightly more than that in benefits to current workers and retirees. That's about $14 per hour more than at Toyota's U.S. plants.

Some Republicans said they doubted that the automakers could remain viable and return to profitability. Others, frustrated with the Treasury's financial rescue program, were skeptical of approving another bailout.

The Corker plan was the last chance at passing any legislation for the auto industry, senators said.

"Absent that," said Sen. Jon Kyl (R-Ariz.), the minority whip, "nothing's going to pass."

[Washington Post staff writers Kendra Marr, David Cho and Steven Mufson contributed to this report.]

Source / Washington Post

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Sherman DeBrosse : Big Three Bailout a Must

UAW workers picket GMC plant. Photo by Spencer Platt / Getty Images.
An auto bridge loan is essential to reduce the pain of recession.
By Sherman DeBrosse / The Rag Blog / December 10, 2008

The U.S. economy is so fragile that the Congress must extend a bridge loan to the Big Three automakers. The loan should give the government part ownership in the industry and guarantee that cost-cutting and modernizing measures will be undertaken immediately. To do otherwise is to risk greatly deepening the recession and putting at least three million people out of work. That is a conservative number, when we consider the goods and services purchased by parts manufacturers and their employees. In a very fragile economy, the ripple effects of shutting down the domestic auto industry could be enormous and take years to repair.

Most Americans believe that the Big Three have made many poor decisions, but the matter of a bridge loan should be decided on the basis of whether this is a good time to punish Detroit. The important questions are: Is it safe to risk the collapse of the domestic automobile industry at this time? Is it in the interest of the United States to have a domestic auto industry? Does having a domestic automobile industry have anything to do with national security? (Hint -- think of World War II.) Is its existence key to our “industrial policy?” Some will say we have no industrial policy, but we have one that is clearly written into the tax code and other legislation.

The heads of the Big Three were foolish to come initially to Washington in private jets, and appear so ill-prepared to answer tough questions. These execs came to Washington expecting to be treated like the heads of AIG and CitiCorp -- few questions and an open checkbook. As far as we know, the financiers who received help were not grilled or asked for recovery plans.

As inept as they appeared, there is evidence that these huge firms had finally gotten on the track of improving their companies. They cannot be entirely blamed for the present crisis. It was a result of a recession that has been growing worse since October, 2007 and then a credit lockdown that came about as the financial system almost completely imploded. The financial crisis has driven auto sales down 60% in the United States. The European auto industry is also on the ropes and is about to receive over $50 billion in government bailouts.

Yes, they should have been making more efficient cars and fewer SUVs, but the customers wanted the SUVs. Even recently, SUV sales went up when gas prices declined. We cannot blame the Big Three for having short-sighted customers.

Many of the opponents of a bailout mention the industry’s failure to produce energy-efficient cars as proof that Detroit’s leadership simply come up with products that people want today. There is much merit to this argument, and we all recall what happened to the ill-fated electrical car in 1999. But the Republicans who raise this argument usually were not friendly to raising fuel efficiency standards in the past.

Richard Shelby of Alabama is their main spokesman. Some other Republicans, like Shelby, have an interest in seeing the Big Three go under because their states have invested millions in helping foreign auto producers set up shop here.

The unnoticed elephant in the room is Republican dislike of unions. Republicans often overlook recent UAW concessions and complain about wages and severance and retirement packages. The fact that more than 41 Republican senators have agreed to filibuster a bridge loan is rooted in ideology and dislike of unions. Now some of the Republicans say the UAW should shoulder more of the burden of health benefits for retired workers in return for equity in the companies. And of course, we are told that the UAW would have to accept wage cuts down to the level of workers in Japanese-owned plants here. Truth is that the UAW has already accepted a portion of the burden of retiree benefits and has made concessions that will bring wages to the level of employees in Japanese owned-plants. The UAW claims that its wages are already at the level of one of the Japanese manufacturers in the US.

We are hearing that there could be a compromise package offering considerably less that 20 billion -- just enough to get the companies to March, when the new administration will be able to help. No matter what the package engineered between the execs, White House, and Congressional leadership might be, it will be very difficult to head off a Republican filibuster. This might be the last chance to smite the UAW with a filibuster as we now know that it is legal to use funds from the $700 bailout package to rescue the nation's largest industry. The Obama administration can use that money without dumping on the UAW. Another option would be to use Federal Reserve funds for the bailout; that too is legal. Chairman Ben Bernanke has been absolutely silent on the subject. A FED bailout would move the matter out of the political arena. It would be a judgment made purely on the basis of economics.

If the matter must be resolved in Congress, Democratic supporters of assistance will have to swallow steep wage and benefit cuts. If President-Elect Barack Obama is forced to specifically endorse a short-range plan that inflicts great pain on the workers, he has spent precious political capital and probably hurt himself with those workers. There are still many UAW folks who detest their leadership for previously making concessions that were absolutely unavoidable.

At the moment, 60% of the American public opposes any bail-out. Much of this is bail-out fatigue mixed with anti-union sentiment. Many who work for wages far below union scale resent other workers getting a bigger slice of the American dream, and many traditional Republicans simply cannot understand why any worker should want more than $15 an hour. Then there is the old argument about how best to reignite an economy. Most Democrats believe the depression of 1929 was caused by underconsumption, and think it best to put money in the hands of ordinary working families. On the other side, we are again reading arguments that all of FDR's public works accomplished little. The remedy is to place a still larger share of the money supply in the hands of people at the top of the economic pyramid because they will almost certainly hasten to use it to create new jobs. The former view is informed more by ideology -- economic theology -- than solid analysis.

The fact is that the financial system still needs a great deal of repair; that is why the banks and other credit institutions are not making loans. Many of them are leveraged over 100% and invested in toxic mortgage and other questionable assets. The recession got a lot worse as soon as it was clear that the financial system was cratering. Half a million jobs were lost in November alone, and experts just found that job losses in previous months were far worse than reported. If GM and Chrysler are forced into bankruptcy, unemployment will explode--this is all about the velocity of money. The fear and panic created by the loss of much of the domestic auto industry will send the real economy into an absolute tail spin. Ten percent of the domestic bond and preferred securities market is in the automobile industry. The collapse of much of the auto industry could create a situation on the markets that could take decades to repair.

All of this should boil down to what is best for millions of workers. It’s the old saw about economics being made for people and not visa versa.

Much will depend upon whether Republican senators are guided by pragmatism or ideology and economic theology. This week, we will know if a compromise is possible or if the FED will give all of us a way out of this dangerous situation. Much will depend on whether the GOP can keep in line 41 pro-filibuster Senators. Auto parts suppliers are in many states, and troubled dealerships are everywhere. Should the filibuster strip people of their incomes, it is hard to imagine Republicans not losing more than a few votes among people directly and indirectly tied to the automobile industry. It could even happen that people who see no connection between themselves and the industry will be hurt, and some of them might possibly figure out what happened to them.

If there is no relief, the Big Three would be well advised to take any steps necessary to curtail spending so that they can remain in place for federal assistance next January or February. The new Congress will have larger Democratic majorities, and passage of a suitable bail-out will be more feasible.

[Sherman DeBrosse, the pseudonym for a retired history professor, is a contributor to The Rag Blog and also blogs at Sherm Says and on DailyKos.]

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Here's a Plan : Nationalize General Motors

'The United States government should buy 51% of the GM stock and put a green Board of Directors in place.'
By Terry J. DuBose / The Rag Blog / December 8, 2008

See ‘Here’s a plan: Buy GM’ and ‘Nationalize GM’ by Dan Neil, Below.

Last Sunday I posted on DailyKos (and said to the Hippies of the Square Table), “Bailout the Automotive Industry? GM?” and added why I thought the United States government should buy 51% of the GM stock and put a green Board of Directors in place. Our local paper ran an editorial by Dan Neil of the Los Angeles Times that supported that same solution for GM.

He did not have the same reflection on the history of GM’s fight to destroy urban public rail transportation and killing the electric car that I have, but he comes to the same conclusion… nationalize GM.

Here’s a plan: Buy GM
By Dan Neil / December 7, 2008

LITTLE ROCK — At the moment, D.C. and Detroit are brooding on two equally unpleasant choices: Watch the American automakers auger in and take hundreds of thousands of jobs with them, or bail out these failed and incorrigible companies whose management so richly deserves whatever hell (flying coach?) awaits them.

Tops on the critics’ list of grievances is Detroit’s failure to anticipate the inevitable. Why didn’t these companies sufficiently invest in next-generation technology-fuel-efficient small cars, high-mileage hybrids, plug-ins and all-electric vehicles-that could help wean the U.S. off foreign oil and take the automobile out of the climate-change equation? As the auto executives again bring their begging bowl to Congress, a consensus is forming: No bailout unless Detroit buildsgreener cars.

From my perch, as someone who drives all of the Big Three’s North American product offerings, I think a lot of the anger is reflexive and misplaced. Detroit makes some amazing cars, and anyone who thinks otherwise should hold a Corvette ZR1 to his head and pull the trigger. The Ford F-150 pickup I drove last week flat-out humbles rivals from Toyota or Nissan. Considering that the domestic carmakers are shouldering titanic “legacy” costs -- it’s estimated that $2,000 in health care, pension and employee post-retirement benefits are baked into the price of every UAW-built vehicle -- just being competitive in any segment is a signal achievement.

Nonetheless, the question remains: What to do about the domestic automakers? My modest proposal: Nationalize GM...

Source / Los Angeles Times / Arkansas Online

The LA Times ran this editorial December 2nd.

Nationalize GM...
The federal government should buy GM. We can run it, then sell it at a profit once it recovers.
By Dan Neil / December 2, 2008

At the moment, D.C. and Detroit are brooding on a Morton's Fork: Watch the American automakers auger in and take hundreds of thousands of jobs with them, or bail out these failed and incorrigible companies whose management so richly deserves whatever hell (flying coach?) awaits them.

Tops on the critics' list of grievances is Detroit's failure to anticipate the inevitable. Why didn't these companies sufficiently invest in next-generation technology -- fuel-efficient small cars, high-mileage hybrids, plug-ins and all-electric vehicles -- that could help wean the U.S. off foreign oil and take the automobile out of the climate-change equation? As the auto executives again bring their begging bowl to Congress, a consensus is forming: No bailout unless Detroit builds greener cars.

From my perch, as someone who drives all of the Big Three's North American product offerings, I think a lot of the anger is reflexive and misplaced. Detroit makes some amazing cars, and anyone who thinks otherwise should hold a Corvette ZR1 to his head and pull the trigger. The Ford F-150 pickup I drove last week flat-out humbles rivals from Toyota or Nissan. Considering that the domestic carmakers are shouldering titanic "legacy" costs -- it's estimated that $2,000 in healthcare, pension and employee post-retirement benefits are baked into the price of every UAW-built vehicle -- just being competitive in any segment is a signal achievement.

Nonetheless, the question remains: What to do about the domestic automakers? My modest proposal: Nationalize GM.

To be clear, I mean that the federal government should buy GM; forget rathole loans or nonvoting equity shares. The company's stockholder value has been essentially wiped out. The company's enterprise value -- the lock, stock and forklift price -- is about $32 billion; its total debt is $45 billion. Let's make GM an offer.

If you feel the gall of free-market ideology rising, consider that the measures being bruited about as preconditions for a bailout -- firing GM's top management; forcing a bankruptcy-like renegotiation of contracts with the UAW, suppliers and dealers (it has too many); and creating a czar of product development to force the building of green cars -- are nationalization in all but name. I say embrace it. GM-USA.

Here are the benefits of nationalization:

GM's fundamental problem is that it's too big -- and expecting it to fix itself in exchange for a $10-billion to $15-billion loan (its share of the vaunted $25-billion bailout) or magically right-size in Chapter 11 is foolhardy. It would take too long, cost too much and bankruptcy, should it come, would send customers running for the hills. Time is of the essence. Congress, writing a GM law and using federal power to abrogate contracts, could achieve at least some of these goals at a stroke.

GM is full of talent and potential. The company spent $8.1 billion on research and development last year, second only to Toyota. Of all the carmakers, GM is closest to commercializing a full-size, four-door, plug-in electric vehicle, the Volt, due in the fourth quarter of 2010. The Volt should travel about 40 miles in all-electric mode before requiring the services of its onboard, gas-powered generator. Many owners could go weeks before they used any gasoline. This is precisely the sort of car that environmental and energy security advocates have been clamoring for.

GM's business is growing in other parts of the world; it's only the North American operations that are killing the company. This is a corporation that had $181 billion in revenue and sold 9.4 million vehicles in 2007. To put it another way: GM, though distressed, looks like a good investment. Also, the federal government can sell the company -- at a profit -- once it's righted and sailing forward again.

GM is competing with companies that are quasi-national now. If you consider the advantages the government of Japan has bestowed on Toyota, Nissan and Honda -- in terms of healthcare and retirement benefits for its employees -- the unevenness of the field is clear. The same goes for most European companies, and the rising rivals in China will enjoy similar state-subsidized advantages.

The government can afford long-term planning. Many of GM's strategic missteps -- such as betting large on trucks and SUVs and not investing early in hybrid technology -- were the result of willful shortsightedness at the board level, responding to a financial market in which shareholders look for the quick return. Putting Uncle Sam in charge would fundamentally enlarge the return-on-investment horizon.

We need government-sized automotive help anyway. This country should be putting millions of plug-in hybrid and electric vehicles on the road. As far as I can tell, without big subsidies, there is no way in the near term to build these vehicles and make a reasonable profit, due to the stubbornly high cost of advanced batteries. Besides, if GM were owned by the government, it wouldn't spend time and money litigating and lobbying against clean-air and safety rules

Why not pick up Ford and Chrysler too? If Chrysler goes south, it's too small to drag down the rest of the domestic auto industry. Ford, which has been pursuing its "Way Forward" cost-cutting plan for more than two years, will probably survive the moment without government assistance, though it's going to be close.

To be sure, the yard marks of democratic capitalism have moved under us in recent months. Last week, the feds announced that the government would take a $20-billion stake in Citigroup and guarantee hundreds of billions in risky assets, a move that would have seemed pure socialism had we not lived through the last few months. Have we not in effect nationalized the mortgage-loan industry?

I say, let's avoid the euphemisms and have the courage of our supercharged Keynesian convictions. By nationalizing GM, we can aim the company's astonishing resources at one of the biggest public-policy problems we have: oil. Restructured and refocused, GM could build green vehicles by the millions in a few years and still have the capacity to build gasoline- and diesel-powered pickups (which we'll still need) ... and maybe even some Corvettes on the side.

[Dan Neil is the automotive critic for the Los Angeles Times.]

Source / Los Angeles Times

Also see If GM Fails, Then What? by Tom Petruno and John O'Dell / Los Angeles Times / April 23, 2006

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Michael Moore : Saving the Big 3 for You and Me

'Congress must save the industrial infrastructure that these companies control and the jobs they create. And it must save the world from the internal combustion engine.'
By Michael Moore / December 3, 2008

I drive an American car. It's a Chrysler. That's not an endorsement. It's more like a cry for pity. And now for a decades-old story, retold ad infinitum by tens of millions of Americans, a third of whom have had to desert their country to simply find a damn way to get to work in something that won't break down:

My Chrysler is four years old. I bought it because of its smooth and comfortable ride. Daimler-Benz owned the company then and had the good grace to place the Chrysler chassis on a Mercedes axle and, man, was that a sweet ride!

When it would start.

More than a dozen times in these years, the car has simply died. Batteries have been replaced, but that wasn't the problem. My dad drives the same model. His car has died many times, too. Just won't start, for no reason at all.

A few weeks ago, I took my Chrysler in to the Chrysler dealer here in northern Michigan -- and the latest fixes cost me $1,400. The next day, the vehicle wouldn't start. When I got it going, the brake warning light came on. And on and on.

You might assume from this that I couldn't give a rat's ass about these miserably inept crapmobile makers down the road in Detroit city. But I do care. I care about the millions whose lives and livelihoods depend on these car companies. I care about the security and defense of this country because the world is running out of oil -- and when it runs out, the calamity and collapse that will take place will make the current recession/depression look like a Tommy Tune musical.

And I care about what happens with the Big 3 because they are more responsible than almost anyone for the destruction of our fragile atmosphere and the daily melting of our polar ice caps.

Congress must save the industrial infrastructure that these companies control and the jobs they create. And it must save the world from the internal combustion engine. This great, vast manufacturing network can redeem itself by building mass transit and electric/hybrid cars, and the kind of transportation we need for the 21st century.

And Congress must do all this by NOT giving GM, Ford and Chrysler the $34 billion they are asking for in "loans" (a few days ago they only wanted $25 billion; that's how stupid they are -- they don't even know how much they really need to make this month's payroll. If you or I tried to get a loan from the bank this way, not only would we be thrown out on our ear, the bank would place us on some sort of credit rating blacklist).

Two weeks ago, the CEOs of the Big 3 were tarred and feathered before a Congressional committee who sneered at them in a way far different than when the heads of the financial industry showed up two months earlier. At that time, the politicians tripped over each other in their swoon for Wall Street and its Ponzi schemers who had concocted Byzantine ways to bet other people's money on unregulated credit default swaps, known in the common vernacular as unicorns and fairies.

But the Detroit boys were from the Midwest, the Rust (yuk!) Belt, where they made real things that consumers needed and could touch and buy, and that continually recycled money into the economy (shocking!), produced unions that created the middle class, and fixed my teeth for free when I was ten.

For all of that, the auto heads had to sit there in November and be ridiculed about how they traveled to D.C. Yes, they flew on their corporate jets, just like the bankers and Wall Street thieves did in October. But, hey, THAT was OK! They're the Masters of the Universe! Nothing but the best chariots for Big Finance as they set about to loot our nation's treasury.

Of course, the auto magnates used be the Masters who ruled the world. They were the pulsating hub that all other industries -- steel, oil, cement contractors -- served. Fifty-five years ago, the president of GM sat on that same Capitol Hill and bluntly told Congress, what's good for General Motors is good for the country. Because, you see, in their minds, GM WAS the country.

What a long, sad fall from grace we witnessed on November 19th when the three blind mice had their knuckles slapped and then were sent back home to write an essay called, "Why You Should Give Me Billions of Dollars of Free Cash." They were also asked if they would work for a dollar a year. Take that! What a big, brave Congress they are! Requesting indentured servitude from (still) three of the most powerful men in the world. This from a spineless body that won't dare stand up to a disgraced president nor turn down a single funding request for a war that neither they nor the American public support. Amazing.

Let me just state the obvious: Every single dollar Congress gives these three companies will be flushed right down the toilet. There is nothing the management teams of the Big 3 are going to do to convince people to go out during a recession and buy their big, gas-guzzling, inferior products. Just forget it. And, as sure as I am that the Ford family-owned Detroit Lions are not going to the Super Bowl -- ever -- I can guarantee you, after they burn through this $34 billion, they'll be back for another $34 billion next summer.

So what to do? Members of Congress, here's what I propose:

1. Transporting Americans is and should be one of the most important functions our government must address. And because we are facing a massive economic, energy and environmental crisis, the new president and Congress must do what Franklin Roosevelt did when he was faced with a crisis (and ordered the auto industry to stop building cars and instead build tanks and planes): The Big 3 are, from this point forward, to build only cars that are not primarily dependent on oil and, more importantly to build trains, buses, subways and light rail (a corresponding public works project across the country will build the rail lines and tracks). This will not only save jobs, but create millions of new ones.

2. You could buy ALL the common shares of stock in General Motors for less than $3 billion. Why should we give GM $18 billion or $25 billion or anything? Take the money and buy the company! (You're going to demand collateral anyway if you give them the "loan," and because we know they will default on that loan, you're going to own the company in the end as it is. So why wait? Just buy them out now.)

3. None of us want government officials running a car company, but there are some very smart transportation geniuses who could be hired to do this. We need a Marshall Plan to switch us off oil-dependent vehicles and get us into the 21st century.

This proposal is not radical or rocket science. It just takes one of the smartest people ever to run for the presidency to pull it off. What I'm proposing has worked before. The national rail system was in shambles in the '70s. The government took it over. A decade later it was turning a profit, so the government returned it to private/public hands, and got a couple billion dollars put back in the treasury.

This proposal will save our industrial infrastructure -- and millions of jobs. More importantly, it will create millions more. It literally could pull us out of this recession.

In contrast, yesterday General Motors presented its restructuring proposal to Congress. They promised, if Congress gave them $18 billion now, they would, in turn, eliminate around 20,000 jobs. You read that right. We give them billions so they can throw more Americans out of work. That's been their Big Idea for the last 30 years -- layoff thousands in order to protect profits. But no one ever stopped to ask this question: If you throw everyone out of work, who's going to have the money to go out and buy a car?

These idiots don't deserve a dime. Fire all of them, and take over the industry for the good of the workers, the country and the planet.

What's good for General Motors IS good for the country. Once the country is calling the shots.

P.S. I will be on Keith Olbermann tonight (8pm/10pm/midnight ET, Wednesday, Dec. 3) to discuss this further on MSNBC.

This story is also posted on Michael Moore's websute.

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Cauldron Bubble : Witch's Mix of Socialism and Capitalism

'Our goal is to grow the commons and regulate capitalism, not abolish it.'
By David P. Hamilton / The Rag Blog / November 25, 2008

From Friedman to Fidel, all agree.

No one seriously argues against some form of mixed economy, some combination of public/private sectors. Hence, the traditional argument between socialism and capitalism, framed as the conflict of opposites in which only one can survive, is arcane and obscuring.

Our goal is to grow the commons and regulate capitalism, not abolish it. Single payer universal health care would move the line between public and private considerably in favor of the commons. Another way to move the line would be partial government ownership of major elements of the economy, a common feature of European socialist government policy.

General Motors could be bought at this moment for under $10 billion. So what sense does it make to loan them $20 billion to stay afloat with just a few strings attached? The government should just buy controlling interest in it and convert its factories to the production of high speed trains, electric cars, wind turbines and other environmental products. Failing corporations could be bailed out of bankruptcy only by selling large chunks of their voting stock cheap to the government and having true representatives of the public and unions on their boards of directors.

In any period of revolutionary change, the most important factors are the objective conditions. The Russian Revolution happened as poorly equipped and badly led Russian armies where being massacred by invading Germans, their highly stratified economy was collapsing and the Tzar was being advised by a mad cleric. The subjective factors, e.g., the Bolshevik Party, were just those able to successfully surf the wave.

We are currently in the early stages of the most cataclysmic and punishing changes in the objective conditions that we have experienced in our lifetimes. The American model of laissez faire capitalism is belly up and the world financial system is in serious crisis. The environmental crisis is probably even worse as the climate necessary to sustain human life is rapidly deteriorating.

Obama’s administration is, therefore, likely to be much more “socialist” than you would expect, growing the commons, because that’s their only logical choice given the objective conditions. For example, how can an American auto company, which is required to contribute to its employee’s health care insurance costs, possibly for life ($1500 per car at Chrysler), compete with an auto company in a country that has government funded universal health care? Hence, we have to have government funded universal health care in order to have a competitive auto industry.

As Mike Davis points out in his article, “Note to Obama: 'Futurama' Has to Wait Its Turn,” posted on The Rag Blog on Nov. 22, “Of the larger rich, industrial countries, only the United States has yet to build a single mile of what constitutes the new global standard of transportation,” high speed rail. That too, has to be done. And the only checkbook in town big enough to do it is the government.

So have high expectations and keep demanding real change. But Obama meeting those demands will be more a function of his responding to drastic conditions in order that we might mutually survive.

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Bailout : Idiots in Detroit Can't Even Get an Electric Car Right

Electric Edsel? GM unveils the Volt.
'At this point, since the Democrats in Congress and the White House are congenitally incapable of imagining a state-owned or partially state-owned enterprise, it would be better to just let GM go under.'
By Dave Lindorff / November 24, 2008

It’s a safe bet that within the next several months, Congress will vote to bail out General Motors. It will be a colossal boondoggle involving, probably, upwards of $50 billion when it’s through, and it will fail in the end.

The reason is before our eyes. This bloated megacorporation is being run by idiots.

For years, as it became evident to everyone that oil prices were going to soar because demand has been exceeding both production and supply and will continue to do so, it has been obvious that to succeed, a car company had to offer well-made cars that could demonstrate high gas mileage. GM, perhaps more than any other company, ignored that reality and has been paying the price, watching its share of the car market wither.

Now the company, worth about what Starbucks used to be worth, its stock now down to where it was in the depths of the Great Depression, has bet the farm on a new car, the Volt, which it promises will, two years from now, be able to go all of 40 miles purely on electric power. It will have a motor too, and not a small one, but rather one the size of what you get in a typical conventional Honda Civic—1.4 ltr. That motor wouldn’t drive the car; rather it would keep charging the Volt’s huge lithium-ion battery so the car could keep going for a few hundred miles.

Wow.

The management wizards at GM obviously don’t do much driving. If they did, and found themselves in typical commuter traffic, they’d see that maybe 90% of the cars, or more, have only one person in them. Occasionally, they’d see a passenger. On a typical 45-minute trip from the burbs into Philadelphia at rush hour, I can count the number of cars I see with three or more people in them on my fingers.

So why is GM making the Volt as a full-sized four or five-passenger car? That’s not where the market for an electric car is. What is needed is a two-seater little car.

Because GM is trying to make an electric family car, they’ve made something so big that, if they are lucky, they’ll be able to get it to 40 miles on electric drive only, but at a cost in excess of $40,000 and perhaps much higher, which will put it out of almost everyone’s reach. The car is destined to be a bust.

And yet, because President-elect Obama will want to win Michigan next election, and because Congressional Democrats don’t want to be seen as ignoring the fate of GM’s workers, GM will be bailed out and the Volt will be funded right through to its introduction and subsequent disaster in the market.

I’m not opposed to the idea of government support of industry, but that support has to involve government input or even control over decision-making.

Maybe GM wouldn’t make much profit on a little electric commuter car, but a little two-seater electric commuter car would have a huge impact on reducing the output of hydrocarbons into the atmosphere, particularly if efforts were made to increase solar and wind-generated electricity. A small electric commuter car would also massively reduce the amount of oil the US imports, making a major contribution to reducing the nation’s trade deficit. Those are results that justify a bailout.

Making an overpriced electric family car is not.

At this point, since the Democrats in Congress and the White House are congenitally incapable of imagining a state-owned or partially state-owned enterprise, it would be better to just let GM go under, and maybe Ford too, if it comes to that (another stupid company). The pieces could be sold off, and allowed to sink and swim on their own. Maybe one of those smaller, more entrepreneurial fragments would see the wisdom of developing what the public really needs.

The truth is that the entrepreneurs over at Tesla, a star-up in California, have already made that car—a high-performance two-seater commuter car that can go 200 miles on a charge and that doesn’t need an auxiliary engine. Their problem is that small size and too little capital have forced them to pimp it up into a high-priced luxury show-off item for rich people costing $100,000. If they were to team up with a GM spin-off—say Saturn—they could make a stripped-down version of that baby and crank out 100,000 of them to start at a price ordinary people could afford.

Meanwhile, regarding those poor autoworkers, they have a legitimate complaint. While Republicans like to blame the auto industry’s problems on them, saying they have demanded too much pay, and too much in healthcare benefits, it’s not their fault that GM and Ford executives have been stupid and greedy and short-sighted (besides, the high wages and benefits that the United Auto Workers won over decades of bitter struggle helped to set standards that raised the wages of all workers across the nation). But let’s do the math. There are about 125,000 unionized hourly workers at the two companies. For a lousy $8.7 billion, every one of those people could receive a $70,000 buyout from Congress. Double that if you want to give them two years to adjust and find new work at an electric car plant or something else. That would cost $17 billion, or less than half of what the doomed bailout of GM is going to end up costing.

And of course, with the rest of us suffering from the massive mismanagement of the nation’s economy by its corporate leaders and their puppets in Washington, there’s no reason why our tax dollars should be subsidizing those particular workers tat that high a level. After all, companies are failing and will be failing all over the place, without such largesse. Besides, if the bailout goes ahead, all it will do is delay the time these workers will be out on the street anyhow.

The point is, however, there are more cost-effective ways to help out workers in failing businesses than to have the government simply subsidize the continued operation of enterprises that have been destroyed by management. In truth, all the talk in congress and in the Obama camp about rescuing jobs is just a cover for bailouts that are really aimed at rescuing managers and investors, not workers.

[Dave Lindorff is a Philadelphia-based journalist and columnist. His latest book is “The Case for Impeachment” (St. Martin’s Press, 2006 and now available in paperback edition.) His work is available at www.thiscantbehappening.net. ]

Source / counterpunch

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