What's Black And White And Completely Over?
December 14, 2008
There's been a mini-debate going on over the last weeks in adjoining space about whether the national government should revive (from the New Deal era) the Federal Writers Project, an element of the Works Progress Administration that lasted from 1935 until the war. The F.W.P. employed 6,000 writers--some good, some mediocre, some abysmally bad--on standards I do not know. I do know some of the work, that in local history, quite useful.
Why Bush Has To Save Detroit (for Now)
December 12, 2008
As of Friday night, it still appeared the Bush Administration was prepared to do what Senate Republicans wouldn't: Rescue the auto industry.
The (only?) Case Against Geithner (cont'd)
November 25, 2008
A TPM reader makes an interesting point that, while the CW holds that the Lehman bankruptcy is to blame for the financial meltdown, the AIG bailout could have been the real culprit: I have little idea how the writers of narrative journalism, like the NY Times' Andrew Ross Sorkin decide between Lehman and AIG, when both events occurred simultaneously, but I suspect they ask industry insiders. And, industry insiders have a strong interest in blaming the failure-to-bailout, since such blame is useful politically, in motivating future bailouts.
The (only?) Case Against Geithner
November 25, 2008
Andrew Ross Sorkin (whose uncle was my favorite high school teacher: Hey Sork!) offers the most--and, actually, the only--skeptical assessment of Timothy Geithner that I've seen: “We have only two things to say about Tim Geithner, who we do not know: A.I.G. and Lehman Brothers,” said Christopher Whalen of Institutional Risk Analytics. “Throw in the Bear Stearns/Maiden Lane fiasco for good measure,” he said. “All of these ‘rescues’ are a disaster for the taxpayer, for the financial markets and also for the Federal Reserve System as an organization.
Why "bankruptcy Sucks" For Gm
November 24, 2008
New York Times columnist Joe Nocera, who knows a thing or two about business, decided to interview some bankruptcy experts, in order to learn whether letting General Motor file for Chapter 11 was a good idea. Apparently the answer is "not really": ...bankruptcy is anything but a snap. It is a long, difficult, drawn-out process with no guarantee that a bankruptcy judge will go along with everything G.M. wants to do.
November 21, 2008
If you've been following the auto industry's crisis, then you've probably read or heard a lot about overpaid American autoworkers--in particular, the fact that the average hourly employee of the Big Three makes $70 per hour. That's an awful lot of money. Seventy dollars an hour in wages works out to almost $150,000 a year in gross income, if you assume a forty-hour work week. Is it any wonder the Big Three are in trouble?
A Kinder, Gentler Bankruptcy For Gm?
November 18, 2008
As a number of analysts have noted, the biggest reason a General Motors bankruptcy is so frightening is that it might not work out like the airline bankruptcies have. Remember, if General Motors were trying to reorganize itself under bankruptcy, it would have to come up with cash in order to buy parts. Thanks to the problems on Wall Street, that could be extremely difficult. That means GM could end up filing for bankruptcy under Chapter 7, rather than Chapter 11, and going through liquidation. The ripple effects could take down the rest of the auto industry or some significant portion of it.
Why And How To Bail Out Detroit (continued)
November 17, 2008
One reason nobody is excited about bailing out the auto industry is that it defies the free market. If the companies can't make it on their own, shouldn't the government just let them die? It's a reasonable argument. But today in the Washington Post, an economist with some pretty cood intellectual credentials--Jeffrey Sachs--makes the case for a bailout anyway. ...the automakers cannot turn to ordinary borrowing to tide them over until that happens because of the ravaged capital markets. The risk spreads of corporate bonds over U.S.
A Better Way To Bail Out Detroit?
November 12, 2008
I'm still skeptical about this push by both Barack Obama and Congress to fork over billions of dollars to ailing carmakers in Detroit (though, to be sure, James Surowiecki makes a compelling argument that letting GM go bankrupt right now could deal a devastating blow to consumer confidence and, with it, the broader economy). But Tom Evslin outlines an alternative bailout idea for the auto industry that might be worth considering: The US government should order a complete replacement for its vehicle fleet to be delivered over the next four years.
All In The Red
November 11, 2008
My screen has been almost all red throughout the day. It still is, although the Dow industrials index is mid-way between the high and low of the session. Do not look for quick relief. Not in a month...and maybe not in a year. There is no precise index of how awful the facts are. Just look at the headlines. Take this morning's news. 1. American Express will now be a bank. I thought it was a credit card company. Why will it become a bank? To be able to borrow more money from the feds and at lesser rates. AmEx just wrote off 6% of its credit card loans.