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Obama the Impotent | The New America Foundation
With the US Senate bogged down in the fight over reforming health care, American leaders have said that the senators might not move on climate legislation until 2010, well after the global climate change conference in Copenhagen in December. That drew a s
Don't Dismiss Taibbi : CJR
For all the clamor, criticism of what Taibbi’s actually written has been surprisingly weak. The best critics could offer was that Taibbi exaggerated Goldman’s particular role in this or that crisis and that financial crises are far too complex for this fr
Op-Ed Columnist - The Joy of Sachs - NYTimes.com
if financial firms made money by directing capital to its most productive uses, by developing innovative ways to spread and reduce risk. But can anyone, at this point, make those claims with a straight face? Financial firms, we now know, directed vast quantities of capital into the construction of unsellable houses and empty shopping malls. They increased risk rather than reducing it, and concentrated risk rather than spreading it. In effect, the industry was selling dangerous patent medicine to gullible consumers.
Op-Ed Columnist - The Joy of Sachs - NYTimes.com
if financial firms made money by directing capital to its most productive uses, by developing innovative ways to spread and reduce risk. But can anyone, at this point, make those claims with a straight face? Financial firms, we now know, directed vast qua
EzraKlein WHY OBAMA IS PISSED AT THE HEDGE FUNDS.
by showing its capability to be ruthless in the Chrysler negotiations, the administration might have just improved its bargaining position in the GM negotiations, as it is now harder for various stakeholders to predict exactly how risk averse the government will, or won't, be.
EzraKlein WHY OBAMA IS PISSED AT THE HEDGE FUNDS.
by showing its capability to be ruthless in the Chrysler negotiations, the administration might have just improved its bargaining position in the GM negotiations, as it is now harder for various stakeholders to predict exactly how risk averse the governme
Obama and the Government Can Save Detroit, If History Is Any Indicator | The New America Foundation
We should not let ideology blind us to the reality that direct government control of a central industry can work to everyone's benefit, especially if government itself is part of the problem, as it was with the railroads and still is for the automakers.
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That's the story of the old Penn Central Railroad, and it
provides very useful lessons for dealing with Detroit. The Penn Central was a colossus,
controlling most of the rail network throughout what was becoming America's Rust
Bowl. It was also a colossal mess beset by mounting competition from trucks,
prevented by government regulation from raising rates high enough to cover
costs, forced to run money-losing passenger trains, and stymied by politically
entrenched unions that extracted two days' pay for half a day's work. -
How did they do it? A funny thing happened once politicians
in Washington
found themselves owning a gigantic, money-losing enterprise. They started
listening hard to what Conrail and other railways were saying about the public
policies that were driving the industry toward ruin. This is a key to
understanding why the Conrail "bailout" worked so well, and to why
the bailout of Detroit
could as well.
What the Poor Can Teach the Rich at G-20 | The New America Foundation
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A healthy global financial system will depend on our global
leaders' ability to accept and indeed embrace this reality. The irony of course
is that Treasury Secretary Timothy Geithner's plan, if successful, will
probably erode local and regional banks (whether in the US or the
developing world) because it disproportionately subsidizes the irresponsible
players. With the huge government subsidies they have, big Wall Street banks
are now able to offer higher deposit rates and lower interest rates than are
local banks. The great danger is that these banks will eventually eat up global
market share and threaten the growth of players who have kept their hands
clean.
Andy Kessler Says Bear Raids by Short Sellers Saved Us Years of Poor Bank Earnings - WSJ.com
Live Blog: The Automakers Plead - The Lede Blog
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Christopher Dodd, the chairman of the committee, has made up his mind before hearing any witness. To turn down the automakers, he says, would be playing “Russian roulette” with the economy.
His argument depends in part on a claim that the financial institutions that got a lot more money have not done much with it. So if we can give all that to Citi, why not give a fraction of it to G.M.?
By that logic, if this bailout accomplishes little, it will be a good argument to bail out some other industry. Keep bailing until we get it right.
Richard Shelby, the ranking Republican, has also made up his mind. He is against an auto bailout.
He quotes from an S.&P. analyst who is bearish on the industry’s future, and suggests any bailout now will lead to a new one later.
The Crisis & What to Do About It - George Soros
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This remarkable sequence of events can be understood only if we abandon the prevailing theory of market behavior. As a way of explaining financial markets, I propose an alternative paradigm that differs from the current one in two respects. First, financial markets do not reflect prevailing conditions accurately; they provide a picture that is always biased or distorted in one way or another. Second, the distorted views held by market participants and expressed in market prices can, under certain circumstances, affect the so-called fundamentals that market prices are supposed to reflect. This two-way circular connection between market prices and the underlying reality I call reflexivity.
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Bubbles thus have two components: a trend that prevails in reality and a misconception relating to that trend. The simplest and most common example is to be found in real estate. The trend consists of an increased willingness to lend and a rise in prices. The misconception is that the value of the real estate is independent of the willingness to lend. That misconception encourages bankers to become more lax in their lending practices as prices rise and defaults on mortgage payments diminish. That is how real estate bubbles, including the recent housing bubble, are born. It is remarkable how the misconception continues to recur in various guises in spite of a long history of real estate bubbles bursting.
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'The Rachel Maddow Show' for Monday, November 24, 2008
transcript, interview with Eric Schmidt from Google
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To me, the question is: How do you create a new economy, one with a lot of jobs and a lot of invasion? And that is not going to occur in these large traditional industries. It's going to occur in small companies with new regulations that allow them to enter markets.
One of the discussions that's underway is, there's, obviously, going to be a huge stimulus package, is make sure that that money also goes to, for example, green technology and green energy. Make it possible for people, for example, to interconnect with the grid, which is very difficult to do right now.
With a little bit of work, some smart regulations, I think we can create the situation with a lot of new and very, very interesting new jobs created in America. And that's what we need.
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We absolutely have a manufacturing base and that manufacturing base is a lot of new products that are yet to be invented here. The fact of the matter is, it's better when you're inventing new things and also manufacture them next door, as you can change them very quickly and so forth and so on.
You're using the term "old industry," but the real growth is going to come from new industries and small businesses, which is where all the jobs are created in America anyway. So, we're always focused on these big companies, but, in fact, the action should be elsewhere.
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Op-Ed Contributor - Let Detroit Go Bankrupt - NYTimes.com
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You don’t have to look far for industries with unions that went down that road. Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th. This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture.
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It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.
Panic in Detroit -This is not your father's Oldsmobile we're rescuing
see Charlie Rose's interview with Bob Lutz.
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In normal times, with another company, that might be correct. But these are not normal times, just as GM is not any old company. Nor is the simple economic morality tale everybody repeats about the auto industry accurate. Detroit has come a long way since the days of wide lapels and disco. GM, Ford, and Chrysler are taking precisely the sorts of steps everybody says are necessary--or, at least, they were taking those steps until an unexpected trifecta of high gas prices, vanishing credit, and a deep recession hit. Rescuing the auto industry is not, as so many people suppose, a question of giving Detroit one extra shot at transformation. It's a question of giving Detroit a chance to finish a transformation that was already underway.
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best estimate is that between 1.5 and two million jobs would be lost. The price of addressing such human misery with unemployment benefits, Medicaid, and other services would be huge, making a $25 billion loan seem like a bargain-particularly if the companies pay it back, just as Chrysler did after its bailout in the 1980s.
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