Economic News/Discussion

[Dutchcedar]

^^^ This may have been posted here before... it illustrates the difference in the amount of money donated to politicians from the UAW in regards to those who voted for or against the bailout.

http://www.opensecrets.org/news/2008...uto-bailo.html

[jimzinsocal]

Im still amazed with crap articles like this....as if the "market" knows "all".

http://money.cnn.com/2008/12/15/mark...york/index.htm


Earth to writer: Guess what? The "Market" is only concerned with Tuesday's ride.
Go sell your mother on the "wisdom" of the market.
Throw in the Brooklyn Bridge as a bonus.

[AMDScooter]

The LA Slimes laying it on pro-UAW thick with a healthy side order of Democrat.. what's that??

Auto Industry Campaign Donations

When Corporation A gives umpteen million dollars to Party X, the typical conclusion is that Party X is in the pocket of Corporation A. That is, so long as X = Republican.

Last week, the L.A. Times pondered in amazement that political campaign contributions from the Big 3 go predominantly to Republicans, and yet it is Republicans who killed their much needed bailout. No matter that the last part is false. The LAT just can't seem to grasp how it is that special interests aren't getting their money's worth:

By standing in the way of an auto industry bailout, GOP senators appear to have bitten the hand that fed them.

Over the last decade, General Motors has given $1.50 to Republican candidates for every $1 it has given to Democrats. That same pattern has been followed by Chrysler and Ford, which year after year have favored the right side of the aisle, sometimes by more than a 3-to-1 ratio in dollar terms.

Since 1990, the auto industry as a whole — including suppliers, dealers and manufacturers — has cut $100 million in checks to Republicans, compared with just $34 million to Democrats.

On Thursday night, the carmakers discovered just how little loyalty that investment strategy had bought them.

Efforts to get through even a watered-down version of the $14-billion aid package were stymied by Republican senators, many of whom contend that GM and Chrysler — the most troubled U.S. automakers — should simply go bankrupt.

You'd almost think that congressmen are supposed to vote how the monied interests direct them to. At least that what the LAT seems to think. Personally, I always thought it was a sign of integrity when politicians voted in a way that ran counter to the interests of their campaign coffers. But apparently that's not so.

All of which makes the numbers produced by the LAT to illustrate their point all the more interesting:



What many will notice first is that, for the most recent election cycle, the Big 3 gave mostly to Democrats. That shouldn't be surprising since businesses tend to give more money to those in power, or expected to be in power, rather than choosing one party and sticking with it.

The other striking data from the chart are the UAW contributions. Over the past four cycles, the UAW not only gave more money overall than the Big 3 combined, it filled the campaign coffers of the Democrats by an amazing (yet unsurprising) 99-1 margin. With that much political muscle, it's hard to understand how the unions can possibly be depicted as the weaker party when it comes to bargaining power. However, if you thought those lopsided campaign donations would raise any suspicions at the LAT, you'd be wrong:

This year, for the first time on record, Detroit's spending slightly favored Democrats. But since 2000, overall spending by the Big Three has steered 61% of contributions, or $7.2 million, to Republicans, according to Federal Election Commission data compiled by the Center for Responsible Politics.

Democrats, meanwhile, have looked to the United Auto Workers for support. Since 2000, the union has given $12.5 million to Democrats compared with only $94,540 to Republicans.

Got that? Almost twice as much money has gone to the Democrats, and yet it is the Republicans who are under scrutiny in this article because they didn't do what their political benefactors wanted them to.

"It's highly doubtful that political giving ever played a factor in an individual member's position," GM spokesman Greg Martin said.

But on Capitol Hill, the cold calculus of money is never too far from any issue.

A study released Thursday by the Center for Responsive Politics suggested that in the House of Representatives, where the bailout passed this week, there was a direct correlation between votes and campaign cash: Those who voted in favor of the plan received, on average, 8% more money from the auto industry than those who did not.

In the Senate, other forces may have been at play.

Some of the loudest opponents to helping Detroit were senators whose states are home to car factories of foreign brands, including Sen. Richard C. Shelby (D-Ala.), who has Mercedes, Hyundai and Honda plants in his state but no Big Three facilities.

At the eleventh hour, Sen. Bob Corker (R-Tenn.) put forth a bill that sought to wrest new concessions from the United Auto Workers as well as from corporate bondholders. He has received $234,860 from the auto industry throughout his career, but Tennessee is also home to several Nissan plants and the Japanese automaker's U.S. headquarters.

Notice the sentence I bolded above, and specifically note what you're not being told: i.e. just who those Representatives that voted for the bailout were. In order to further cloud the issue, "the auto industry" is named as the donor of campaign funds, without separating out the carmakers from the UAW. Obviously that is because far more Democrats voted for the bailout than Republicans, and Democrats receive far more money from the vaguely-named "auto industry" than Republicans do. Any such clarifications would ruin the narrative, however, that Republicans are mean, selfish, corruptible, and disloyal.

The question begged by the article, and yet never asked or explored, is how the UAW-backed Democrats have responded to the bailout. Over the past eight years their party has raked in over $12.5 Million from the union, and the Democrats have vociferously gone to bat for them on the bailout. While their loyalty to their benefactors may be beyond reproach, isn't their loyalty to the American people looking a bit strained? How does delivering exactly what the UAW wants, despite what the majority of the American people deem desirable, square with the commitment of Democratic congressmen to represent The People? Could there possibly be anything newsworthy to the fact that Ron Gettelfinger has basically used the Democrats like well-trained seals in a Congressional three-ringed circus in order to benefit his members, and regardless of what the consequences are for the Big 3, much less the American taxpayers?

The answers to those questions might make good news indeed, but don't count on reading anything of the sort in the LAT. They're still too busy scratching their heads over those disloyal Republicans.

Oh.. and about C-11....

Bankruptcy Doesn't Equal Death
The auto industry could use the process to get competitive.

....

This myth begins with the idea that GM, Ford and Chrysler are so huge that if they go belly-up, the livelihoods of a disproportionately large number of workers and suppliers would be affected. At once, the market for their services and products would close. Therefore, the argument concludes, government must prevent any such failures.

Nonsense.

Bankruptcy doesn't make assets -- such as factories, machines, contractual options to buy raw materials, workers' skills -- disappear. If markets still exist for products produced by these firms, Chapter 11 is the best way to discover this. Some workers might lose their jobs and some suppliers might lose their markets, but there would be no industry-wide collapse of the sort portrayed by the bailout's cheerleaders.

....

[smoked trout]

I'd agree on the bankruptcy stuff. However, UAW has no tangible assets, therefore if bankruptcy hits they have nothing. I expect them to be kicking and screaming until this saga plays out.

[Enmore]

A fair chunk of the proposed auto bail out will come from the Canadian government. They're ready to provide 20%, subject to Washington stumping up the rest. About 1 in 7 Canadian jobs are reliant on the auto industry is some way, especially in Ontario where there are several factories.

It seems there's a fair amount of opposition to it. Not only from tax payers, but from the hard pressed logging industry.


http://www.nationalpost.com/news/can...tml?id=1073285

[Dutchcedar]

...there are now something like three times as many GM retirees as GM employees as voting members of the UAW. Retiree benefits account for the lion's share of the difference between GM's labor costs and the labor costs of foreign automakers in the United States.

That jumped out while reading this piece by Michael Barone.

[Orangutan]

http://money.cnn.com/2008/12/16/news...ion=2008121610

NEW YORK (CNNMoney.com) -- Consumer prices - dragged down by plunging energy costs - fell by a staggering amount in November, the government reported Tuesday.

The Consumer Price Index, a key inflation reading, fell 1.7% last month, according to the Labor Department. That was much weaker than October's 1% drop and exceeded the 1.3% decline forecast by a consensus of economists surveyed by Briefing.com.

Prices fell by the greatest amount since the Department of Labor began publishing seasonally adjusted changes in February 1947.

[jevans64]

I usually just pay attention to the core CPI rate since energy prices have fallen by so much.

The Fed took this news and dropped the target rate to 0 - .25% and dropped the discount rate to .5%. The stock markets got a nice pop from that news.

Too bad I am unemployed. If I had a job, I would be re-financing.

[jimzinsocal]

^^lets hope things start turning around....the sooner the better.

[jimzinsocal]

http://www.dcexaminer.com/opinion/Wh...am_121608.html

[AeroSim]

^^lets hope things start turning around....the sooner the better.

My company just announced that it is going to tighten its belt and does not anticipate it will have to have corporate-wide layoffs. Of course, it is a conglomeration and this does not apply to the various segments; however, we are also not seeing a lot of change in our orders and revenue yet and it takes a while for that to wash down to us.

So take this to heart- some companies are going to attempt to toe the line because some also understand that layoffs can easily be a self-destructive act. Unemployed people tend not to pay for products with hard dollars.

While it may not be a cure or even permanent, it does slow the bleeding right now.

[Enmore]

Goldman Sachs workers net $2.6bn bonuses despite losses


Andrew Clark in New York

A multimillion-pound bonus pot will still be shared by workers at Goldman Sachs, which benefited from a US bank bail-out and yesterday posted its first loss since going public nine years ago.

The payout, worth around £55,000 per employee, was confirmed as the Wall Street bank blamed "extraordinarily difficult operating conditions" for a fourth-quarter loss of $2.12bn (£1.4bn). It still achieved a $2.32bn profit for the full year to November, although this was sharply lower than last year's $11.6bn.

A spokesman rejected reports that the bonuses could amount to as much as £4.3bn but said the pot totalled $2.6bn.

No, they haven't learnt a damn thing.


http://www.guardian.co.uk/business/2...cutivesalaries

[AeroSim]

^^^Small comfort for the 3200 souls GS laid-off- last month.

Of course, the average pay is about 400,000USD on a bad year.

Hope they invested it wisely

[AeroSim]

Looks like refis are taking off. The rates are cruising around 5%

http://www.marketwatch.com/news/stor...C%7D&dist=news

[Dutchcedar]

I'd love to hear some opinions on this from some of our macro-economic gurus.

http://tigerhawk.blogspot.com/2008/1...this-debt.html

Apparently, if we run the numbers a certain way, we're committed to spending as much as we own and that sounds more than dangerous.

A snip:

The foundation’s grim calculations are based on Sept. 30 consolidated federal statements, which showed that Americans’ total household net worth, diminished by falling stock prices and home equity, is $56.5 trillion. But rising costs for unfunded social programs like Medicare, Medicaid and Social Security increased to $56.4 trillion – and that was before the more recent stock market crash, $700 billion bank bailout, and monster federal deficits chalked up in October and November.