Hysteria over a $15 Billion Loan, But Not $285 Billion in Takeovers?
Man, the NYT’s pathetically bad reporting on the auto bridge loan continues.
David Sanger writes a story purporting to be news that presents a loan to the auto industry–with conditions–as a crisis of capitalism of epic proportions.
But what Mr. Obama went on to describe was a long-term bailout that would be conditioned on federal oversight. It could mean that the government would mandate, or at least heavily influence, what kind of cars companies make, what mileage and environmental standards they must meet and what large investments they are permitted to make — to recreate an industry that Mr. Obama said “actually works, that actually functions.”
It all sounds perilously close to a word that no one in Mr. Obama’s camp wants to be caught uttering: nationalization.
Not since Harry Truman seized America’s steel mills in 1952 rather than allow a strike to imperil the conduct of the Korean War has Washington toyed with nationalization, or its functional equivalent, on this kind of scale. Mr. Obama may be thinking what Mr. Truman told his staff: “The president has the power to keep the country from going to hell.” (The Supreme Court thought differently and forced Mr. Truman to relinquish control.)
The fact that there is so little protest in the air now — certainly less than Mr. Truman heard — reflects the desperation of the moment. But it is a strategy fraught with risks.
The first, of course, is the one the president-elect himself highlighted. Government’s record as a corporate manager is miserable, which is why the world has been on a three-decade-long privatization kick, turning national railroads, national airlines and national defense industries into private companies.
The second risk is that if the effort fails, and the American car companies collapse or are auctioned off in pieces to foreign competitors, taxpayers may lose the billions about to be spent.
And the third risk — one barely discussed so far — is that in trying to save the nation’s carmakers, the United States is violating at least the spirit of what it has preached around the world for two decades. The United States has demanded that nations treat American companies on their soil the same way they treat their home-grown industries, a concept called “national treatment.” [my emphasis]
"Not since Truman," Sanger writes, "has Washington toyed with nationalization."
"Not since Truman," that is, so long as you ignore the very recent nationalizations of AIG, Fannie, and Freddie.
Sanger uttered not one peep when the US effectively nationalized AIG–he was off writing about things that normally come up on his beat, nukes in Iran, North Korea, and Pakistan. Likewise, he was silent when we took over Fannie and Freddie. Again, at that point he was happy to focus on North Korea. Yet between AIG, Fannie, and Freddie, we spent $285 billion, in a first installment (and more since), and took a much greater stake in the companies.
We started nationalizing companies three months ago, David Sanger, and you seemed perfectly content with all that.
The sheer hypocrisy of the villagers–with their willingness to suspend all rules of capitalism for their friends in finance, followed quickly by hysteria when flyover country gets a tiny taste of that same treatment–has been on vivid display a lot of late. But Sanger, presenting this kind of willful blindness as news is a really lovely example.
Thanks Marcy – another great post.
The hypocrisy of this part of the unfolding monster disaster continues to befuddle my mind.
“Sanger uttered not one peep when the US effectively nationalized AIG”
I keep wondering why Pelosi and the “bailout, rescue, investment, recovery” congressional team never demanded the “restructuring” of Wall Street when they wrote a check for 700 Billion? No demands that certain folks resign or give up their planes. Did not hear the term “restructure” once during the Wall Street bailout hearings
Come on equal treatment and demands should be made of all of the rich white
male fat cats who are walking away with the American taxpayers money.
*alleged “nukes in Iran”
willful blindness. Ah, yes it is.
What’s missing from the Proposed Government Bailout Plan is A Greater Unifying Vision – one that puts into Context a Discernable, Coherent Path out of Troubled Times for All of US.
Bush isn’t going to provide it – it’s beyond him – he’s totally befuddled and out of gas.
The Vision to get US out of this mess has to come from Obama. It may be impolite for him to Take the Wheel on the Economy before the Inauguration, but it’s Needed Now.
These Auto Companies are US. They are thousands and thousands of Americans that Look Just Like US. We aren’t Saving Corporations, We’re soft-landing People during these Hard Times – in their Jobs.
So, let’s change Our View of what’s going on – We’re not fighting the Republicans anymore – their Politics of Division have been Repudiated by Our Election of Obama and This Failure They Gave US – more of the Same will only send US completely Off the Cliff.
Now, We need to Rally Everyone to the Task At Hand – Saving Jobs, Saving People and Saving the Republic – in a responsible, sensible way with maximum compassion.
Knifing each other on the Playground while the Homes in Our Neighborhoods burn down in Raging Foreclosure is Not Right.
There’s no time to Waste – We need de facto President Obama to Ring the Bell that Brings US All to the Fire, and Organizes Getting It Under Control.
In all honesty, the Bush Administration – in the Face of a National Crisis that Only Obama Can Solve – should Resign for the Good of the Nation. And, if it becomes Obvious that Bush is being an Obstructionist, he should be Promptly Impeached.
There’s Really Important Work to be done – We can get through this coming Depression with style and grace, much better than the last time, if We Pull Together as a Team behind a Great Coach with a Winning Game Plan.
Where’s the guy We hand the whistle to?
There’s a sense in which Citigroup, with a market cap of $46BB, is now majority-nationalized given the $25BB TARP investment.
I haven’t done the numbers for the other 8, but they are all at least partially nationalized.
The way I see it, in the financial sector the gummint has ownership but not control. What they want in the auto industry is control but not ownership. By avoiding simultaneous ownership and control, they think they haven’t nationalized.
Nader’s take on the bailout
http://www.democracynow.org/20…..ers_return
RALPH NADER: Well, Juan, first of all, it needs to be made clear that the workers and the UAW have given up far more than what the government subsidy will come down to in dollars, if what the auto companies are asking for is accepted by Congress. They gave up huge—billions of dollars in 2007, and they’re giving up more in 2008.
And what this whole debate is lacking is any concept of numbers. For example, if this is a $34 billion so-called bailout, what is it really? Well, it’s subsidized loans, or maybe they’ll turn it into loan guarantees. And depending on what the government gets in return, that is a fraction of what—as Amy said, of what Citibank and the financial industries have gotten in New York.
The reason why there’s so much focus on the auto companies is not just its role in the American economy, but it’s public, and there are congressional hearings, where the wave of the gigantic bailout after bailout of Wall Street occurred largely on weekends in secret meetings between the Federal Reserve, the Treasury Department, and the goliaths on Wall Street. And these were sweetheart deals. Citibank got a huge sweetheart deal with very, very little reciprocity.
Now, if the Congress is going to move to save the domestic auto industry, they’re going to do it as taxpayers, as shareholders, as creditors, and they will drive a hard bargain. And as a result, the taxpayer can get preferred shares, they can get warrants, so that if the companies recover, the taxpayer gets not just the money back, but a huge surplus. I mean, Ford Motor Company stock now is around $2.60. If Ford modestly recovers, it could go to $20. And, of course, those Treasury warrants and preferred shares would come out very, very handsomely, as they did in the Chrysler bailout when Iacocca turned it around in 1980 and ’81.
FITZ!
Being a Villager apparently means typing up corporate or GOP press releases and releasing them under your own name. Actually looking back at things like history, even very recent history, is verboten if it contradicts today’s propaganda offering.
OK, maybe this is unfair, but if Harvard’s Malcolm Salter advised Ford and GM up until a few years ago, why should his comments carry much weight? If government has such a paucity of brains, I wonder who in academia and in the private sector have the “tremendous insight needed to fix the industry” so that government doesn’t have to step in? Him?
A lot of this debate strikes me as the usual all-or-nothing argument movement conservatives so love to present when they want to stall any solutions.
They’ve employed this with great success on health care reform, arguing that, if we allow ANY government intervention in health care, the country quickly will turn to socialized medicine and all medical innovation will stop because there no longer will be an incentive to develop new drugs and procedures. Of cousre, it’s a lot harder for them to make the argument now that we have sunk hundreds of billions into our financial sector.
Thanks, mtw. I read this article earlier today and was scratching my head about it. Lots of opinion here passed off as news. I guess it was billed as “news analysis” so they think they can get away with it.
for Christy
Obama had been scheduled to meet with the Chicago FBI Tuesday morning before proceeding to a meeting with Vice President Al Gore, but that meeting was suddenly canceled, according to a pool report. It’s unclear whether the meeting or its cancellation was related to the governor’s arrest.
http://rawstory.com/news/2008/….._1209.html
Remove the Car Czar requirement from the bridge loan bill and POOF, you get free market capitalism. Free the Auto Industry from Federal Intervention!
free market capitalism works for the banks until they have screwed things so bad, they need a huge bailout… at that point a national or social answer is found.. the private corps continue to get any profits, while the nation can suffer all the losses… interesting form of free market capitalism at work, lol… whatever anyone does, make sure to not mention anything about socialism!!! using that word is akin to swearing in the worst sort of way.. doesn’t matter that is what the usa is involved in at this point..
Great thread! I’ll only add one thing.
“The media are incompetent” is not really true. They have shown themselves to be extremely skilled at deflecting attention away from things like this. On-air personalities mention it and move right along, with no discussion.
The people that run the media companies are not going to rat out their friends in the financial industry.
They protect their own. Unless unions are involved. That’s when the class aspect of this comes out into the sunlight. That’s why we see the auto industry bailout (a fraction of the AIG bailout) being so roundly criticized and nitpicked, while the financial industry is simply handed more cash to use as it sees fit.
Like paying retention bonuses to keep the guys who ran the business into the dirt.