More Narcissistic “Auto” “Reporting” from David Sanger

/31 Comments/in , /by

picture-69.pngAs I keep saying, the NYT is not an institution to quit while it’s behind. Exactly one week after David Sanger wrote a highly criticized article claiming the nationalization of auto companies would carry ominous risks that the forgotten (by Sanger) nationalization of much more expensive finance companies did not, he’s back, this time applying the lessons of the Middle East peace process to the auto negotiations.

As a sitting president and a president-elect maneuver over how to bail out Detroit – and ultimately how to convince the Big Three to radically change their ways — there may be some instructive lessons in the Middle East peace process.

The Middle East? At first blush it may seem a bit farfetched. But all complex, intractable negotiations – especially those involving ancient, entrenched interests in which sheer survival is at stake – share something in common.

Of course, Sanger’s masturbatory exercise is all premised on his assumption that he knows diddly shit about the auto industry. Which doesn’t seem to be the case. Consider Sanger’s inapt comparison of the absence of trust between the stakeholders in an auto negotiation and between the Israelis and Palestinians.

Again, there is no trust: the unions believe the companies are trying to break them, the retired think their pensions are under assault, the company executives don’t want lectures about prudence and planning for the future from a Congress that has run up trillions in deficits.

Um, no, David. If you haven’t noticed, the union and the companies have displayed a good deal of trust in recent past, as the last union contract shows. It crafted a way for manufacturers to take retiree healthcare off their books and bring wages into line with the transplants. That took a great deal of trust. If you need further proof, though, you might consider all those pictures of Ron Gettelfinger testifying with the CEOs of the Big 2.5 before Congress. Did you notice that the UAW and the Big 2.5 were on the same side of the table, in both a metaphorical and literal sense? The UAW knows well who is trying to break them. It’s not the Big 2.5, it’s the plantation caucus. 

Furthermore, it’s not so much that the Big 2.5 don’t want lectures from a Congress that has run up trillions (besides, I thought it was Bush and his unfunded Iraq War that did that?).I rather suspect the Big 2.5 were wondering why they were getting lectures from people–like Sanger–who had no fucking clue what the auto industry has been doing in the last two years, who had missed the UAW contract, the number of American models that match or exceed their Japanese competitors’ gas mileage, and reorganization efforts already underway.

You see, David, if you tried to negotiate peace in the Middle East–but had no clue who the parties were and who distrusted whom–you wouldn’t be very successful. And that seems to be one of your problems here. 

Then there’s the really funny problem with this comparison. I don’t dispute that Sanger is an expert on foreign affairs. Still. Why would you apply lessons from Middle East peace negotiations to the auto industry? Last I checked, efforts to establish peace between the Palestinians and Israel were even less successful than GM’s efforts to regain market share against Toyota.  So we want to replicate that failure in the auto industry?

Ultimately, though, this article is about David Sanger, not about any real plans to resolve the crisis in the auto industry. Witness Sanger’s "evidence" why a program subsidizing people to trade in clunkers for more efficient models might not work.

I tool around Washington in a 1996 mid-life crisis classic with six figures on the odometer, a dead radio and a Blue Book value that hovers below what the government would probably pay me to crush the thing into a small cube. It’s expensive to run, and more expensive to fix. But I love my clunker, and you can tell the czar I’m not giving it up.

David Sanger, someone who makes considerably more than the people who still own clunkers because they don’t have the ready cash to replace them, won’t trade in his "mid-life crisis classic." And that, apparently, is the standard of evidence the NYT is now adopting for its articles on the auto neogtiations. 

image_print
31 replies
  1. klynn says:

    If I didn’t know better, Sanger sounds like he is writing in code and just sent out to fellow spies a “when and where” on the takedown of the US…

    Middle East…mid-life…entrenched interests…

    The whole article has lots of fun language…

  2. AZ Matt says:

    Wonder what Sanger’s problem is? Does he want to be an elite? Hang with the fast crowd? Serious ass kissing.

  3. klynn says:

    It’s expensive to run, and more expensive to fix. But I love my clunker, and you can tell the czar I’m not giving it up.

    The only time he begins to identify with American industry…through metaphor…

  5. rapt says:

    You tend to forget that NYT has been proven beyond reasonable doubt to be a propaganda rag. It follows that its writers are propagandists. It/they should therefore be ignored rather than quoted; the constant quotes boost and maintain their power as “the paper of record” (even when coupled with critical comments).

    Personally, I have actively ignored just about all media for the past year or so and I find that it really helps to keep my head straight. Yes that position does cause conflict and disagreement.

  6. readerOfTeaLeaves says:

    I can follow why Sanger would use the MidEast as an analogy, but at this point I don’t see how any reporting on this problem with the auto industries could be complete without bringing in the element of CDS’s.

    If we’re watching this simply as a ‘death watch’ (will they live, or not?), then as near as I can figure out what we’re really missing is the more critical part of the puzzle — who gambled (via CDS swaps) that GM would go under? Why does Cerberus want GMAC without GM? Who holds the CDS’s, and how much are they ‘leveraged’ to gain when GM folds?

    Here’s hoping the NYT puts Sanger together with a reporter who really, really understands the whole CDS levels of weirdness. Because as BooRadley pointed out a thread or two ago, that seems to be where much of the action really lies.

  8. SparklestheIguana says:

    Every NYT article ultimately ends up being about…the reporter who wrote it. All the lifestyle and trend articles use as their evidence the reporter and three of their closest friends. It’s journalism as navelgazing. I guess I’m not surprised that the economic articles aren’t any different…

    • klynn says:

      That’s why I train the puppy on it…

      rOTL,

      Still catching up on this end… Regrets.

      You are correct on the CDS’s…

      • readerOfTeaLeaves says:

        Not to worry, I’m taking a break today ;-))
        I posed a question two threads back: are we seeing ‘financial arson’ — where the CDS owners have insured and ‘leveraged’ in the event of GM folding to such an extent that they need to see it fail? Are they so highly leveraged in CDS’s that they are ‘heavily invested’ in insuring its failure? Because that’s sure what it looks like — the UAW under this scenario being almost a bright, shiny object.

        Anyone know…?

      • readerOfTeaLeaves says:

        And masaccio’s Oxdown diary (cited at 12) points out:

        Here’s something Senator Corker and Senator Shelby and the rest of the union-busting crowd ought to consider: the bankruptcy of GM will trigger the credit default swaps naming GM as the reference entity. A bailout won’t, according to the Bank of America.

        So the CDS holders have the GOP balls in a vice, it appears.
        Things make more sense now.
        I’m losing optimism that Bush can pull off a bailout so it looks like this is one big Netroots project for whoever has skill, time, organizational ability (etc). [Which would not be Yours Truly, FWIW.]

  9. klynn says:

    I’m losing optimism that Bush can pull off a bailout so it looks like this is one big Netroots project for whoever has skill, time, organizational ability (etc). [Which would not be Yours Truly, FWIW.]

    That’s why I was suggesting doing something “big” this AM in the “Killing GM” post…But it needs a big name that workers & American citizens identify with…This concept needs more push…

  10. freepatriot says:

    maybe mr sanger should consider the alternatives

    I have a brand new Huffy, doesn’t cost much to drive, helps keep me in shape, allows me to absorb more of my neighborhood

    if mr sanger doesn’t want to join me in the ”Biker” crowd, he better pull his head out of his ass and start thinking about America’s economic health

    if the Auto industry in America dies, what else do we have left ???

    that mid-life crisis clunker ain’t going any place without gas, and if we ain’t got industry, who’s gonna sell us oil ???

    just keep destroying America’s economic power, mr sanger, and you’ll be riding a bike, just like me

    if there are any bikes available for sale when it happens …

    • readerOfTeaLeaves says:

      It’s not simply that the US economy will be hit. It’s that someone’s going to make sooooo much money out of that default, via the leveraged credit default swaps (CDS’s).

      People bought ‘bets’ that GM wouldn’t default. Now where the hell would they get the money to BORROW from AIG and Citi so that they could then ‘leverage’ their “financial insurance contracts” (we’ll call those CDS’s) by placing bets that GM will fail.

      Well, damned if it doesn’t look like all that ‘bailout’ money — you know, the one that Paulson can’t account for to Congress — well, it looks like the BushBuddiez are all gambling on a last, big high before Obama enters office. Because who had money to lend for CDS’s? (And they maybe didn’t have money to lend because they’d already gone bust on a few sour deals, eh?).

      So they sucked up to The Big Teat of the Federal Treasury, where Paulson basically hinted back in Sept with his little 3-page ‘f*ck you’ to Congress that he’d be the sole overseer of the bailout, and no questions asked. Woopee!!!!

      Oh, man — you could not make this up! If this were a novel or a movie, I’d think, “No wayyyyyy.”
      Yet here we have — right before us — what appears to be:

      1. The UAW-union busters narrative, which appears to be a Bright, Shiny Object so that no one lifts the veil to see what lies beneath:
      2. The Wall Streeters taking bailout $$ in order to buy CDS’s, which are basically ‘gambling contracts’ on which they will make money ONLY if GM **defaults**.

      If it is bailed out, none of those CDS owners stands to make a dime.
      If it enters bankruptcy, on the other hand, the CDS owners — who appear to have been borrowing from the AIG and CIti bailout funds, which would explain why homeowners aren’t being bailed out — stand to make a killing.

      Oh, and so Corker, Shelby, McConnell, Bush, and Cheney (and Rove, et al) are basically willing to use the UAW-Union-Busting Narrative to shield the fact that they’ve loaned $$ — without the least bit of oversight! — the very interests that are rapidly buying ‘bets’ that GM will go bankrupt.

      Wow…
      You’re gonna need a HUGE catalog of new expletives and obscenities for me to choose from freep, because if I’m sussing this bullshit out correctly, we’re looking at incredible levels of addiction on Wall Street.

      This is like Wall Street on methamphetamine.
      While there’s one dark part of my cynical heart that kind of goes, ‘hey, clever scheme, assholes’, the bigger, better part of my heart has no language to describe my utter contempt, loathing, and revulsion for such despicable cowards.

      Honestly, these clowns have no balls at all.
      But this is one hell of an addictive, financially promiscous network we got goin’ on Wall Street, eh?

      Man, these guys make Elliot Spitzer look like a Cub Scout if I’m even half right.
      Or if I’m even 1/4 right.

      Whether Rahm’s in on this, I dunno. But if he financially or legally kneecapped a few of these ‘CDS addicts’, frankly it wouldn’t bother me in the teensiest.

      • readerOfTeaLeaves says:

        Sorry to confuse:

        The CDS buyers needed for the fed to put money in the banks and AIG so that they could borrow in order to buy their CDS’s.

        The investment houses and AIG must have lost money on earlier CDS payouts — and we all know that they did, because those subprimes were involved in CDS’s. So in order to get their money back, the CDS buyers needed a deal that they KNEW would pay off — but first, they needed a source of $$.

        Paulson, via the Fed bailout, was their funder.
        And the hint was broad, in the form of his “3 page f*ck you’ to Congress back in Sept, where he said that he wanted the money but he wasn’t about to tell Congress who was getting it, for what, or why.

        So these clowns belly up to the bailout money, buy CDS’s to leverage/gamble that the auto industry will go down.

        If the auto industry is bailed out, then the CDS owners can’t get their $$; they can only get their gambling winnings if the autos go into bankruptcy.

        If I’m even 1/5th correct, this is one hell of a cynical scam.
        I don’t know what drugs these guys are taking, but wow… what an addiction we’re watching play out. Wow.
        Breathtaking, really.

  11. Redshift says:

    You see, David, if you tried to negotiate peace in the Middle East–but had no clue who the parties were and who distrusted whom–you wouldn’t be very successful. And that seems to be one of your problems here.

    Of course, that’s exactly the sort of ME negotiation we’ve had for the past eight years. Maybe Sanger was listening to Condi’s statement that Obama really ought to continue their approach to the Israeli/Palestinian situation and went into a fugue state…

  12. Bluetoe2 says:

    How much longer must the nation suffer that “old gray lady”, known as the NYTimes? From Jason Blair to Judith Miller to Tom Friedman to William Krystal to Adam Nagourney to David Sanger it just keeps getting worse and worse. Would some one put the old gray hag out of it’misery and spare the U.S. and the rest of the world anymore grief.

    • dakine01 says:

      In a case of damning them with faint praise, they are still better than the Murdoch/Wall Street Journal who has kept his promise to keep the Journal the same editorially but in so doing has trashed the formerly respected news side. Or the WaPo0 who masquerades as the Republican Talking Points Paper. Or the LA Times or Chicago Trib who are now being dumbed down by Sam Zell.

      Like I say, in comparison to its competition in other dead tree papers, the Times is still the leading light. Just no where near as bright as it once was but still brighter than it’s competition.

      • sunshine says:

        And the US allowed Murdoch to become a citizen just so he could rake all this havic on us with our tv & newspapers. Makes me want to throw up. Can someone resind his citizenship for security reasons? From wiki:

        On September 4, 1985, Murdoch became a naturalized citizen in order to satisfy the legal requirement that only US citizens were permitted to own American television stations.

        It worked so well for him in the USA that he has become a citizen in Turkey so he repeat it.

        Recently, Murdoch has bought out the Turkish TV channel, TGRT, which had been previously confiscated by the Turkish Board of Banking Regulations, TMSF. Newspapers report that Murdoch has bought TGRT in a partnership with the Turkish recording mogul Ahmet Ertegün, and Murdoch is alleged to have acquired Turkish citizenship in order to overcome the current prohibition against capital sales to foreigners.

  13. NMRon says:

    And they wonder why nobody buys their fucking rag. I’m thinking of getting a subscription so that I can cancel it.

  14. dcblogger says:

    Dear Google – Please buy the NYT and appoint Al Gore publisher so that we can end the Assault on Reason.

  17. Hugh says:

    You should start a contest for the most inane comparison to the auto bailout. My entry is that difficulties in finalizing the bailout deal is like that piece of basil that gets stuck in your teeth when you eat pizza. No matter what you do you can’t quite get it out.

  18. wigwam says:

    The UAW knows well who is trying to break them. It’s not the Big 2.5, it’s the plantation caucus.

    More specifically, it’s the Heritage Foundation, at whose behest Sanger write his bullshit.

  19. sunshine says:

    I really haven’t wrapped my head around all this diritives stuff but it seems GM was involved in them. This is a 2005 article.

    Credit Derivatives Led by Too Few Banks, Fitch Says (Update2)
    Nov. 18 (Bloomberg) — The $12.4 trillion market for credit derivatives is dominated by too few banks, making it vulnerable to a crisis if one of them fails to pay on contracts that insure creditors from companies defaulting, Fitch Ratings said.

    JPMorgan Chase & Co., Deutsche Bank AG, Goldman Sachs Group Inc. and Morgan Stanley are the most frequent traders in a market where the top 10 firms account for more than two-thirds of the debt-insurance contracts bought and sold, Fitch said in its Global Derivatives Survey for 2004 published today.

    Investors use so-called credit-default swaps to insure debt payments or bet on credit quality. Demand surged this week for swaps protecting payments by General Motors Corp. on concern the world’s largest automaker may use up most of its $19.2 billion in cash reserves in the event of a strike at Delphi Corp., its largest auto-parts supplier. Delphi defaulted on about $2 billion of bonds when it filed for bankruptcy on Oct. 8.

    “Risk concentration remains high,” said Ian Linnell at Fitch in London. “In the event that there was a major default, for instance General Motors, and then one of the major dealers also defaulted, the market would be in major trouble.”

    Credit-default swaps are the fastest growing part of the $270 trillion derivatives market, based on the so-called notional value of the debts that underlie the contracts, according to the Bank for International Settlements. The default swaps market worldwide jumped 60 percent to $10.2 trillion in the first half of 2005, the BIS said in a report yesterday.

    Fed

    The growth is so rapid that the New York Federal Reserve in September summoned 14 of the biggest banks in the market, for failing to keep pace in processing the transactions, causing a backlog that threatened the stability of the banking system.

    “The probability of a major dealer defaulting is extremely low, but as the market continues to grow, the issue is being ramped up all the time,” Linnell said.

    In a credit-default swap, the buyer pays an annual premium to guard against a borrower’s failing to pay its debts. In the event of default, the buyer gets paid the full amount insured, and hands over defaulted loans or bonds to the swap seller. Swap prices typically decline when creditworthiness improves, and rise when it worsens.

    A derivative is a financial obligation whose value is derived from such underlying assets as debt and equity, commodities and currencies.

    GM was among the five companies most frequently included in credit-derivatives contracts in 2004, along with Ford Motor Co., France Telecom SA, DaimlerChrysler AG and Deutsche Telekom AG, Fitch said. Investors bought more contracts protecting payments from Korea, Italy and Russia than any other governments.

    GM

    Traders of GM credit-default swaps last week demanded upfront payments in addition to annual premiums to protect debt payments by the Detroit-based company. By doing so, the market relegated GM to the same status that Delphi and Delta Air Lines Inc. had just before those companies defaulted.

    The annual cost of insuring $10 million of GM debt for five years using default swaps rose to a record of $2.35 million upfront plus $500,000 a year, compared with an annual premium of about $1 million early last week, according to Deutsche Bank prices. The debt-insurance contracts changed hands at about $260,000 at the start of this year, according to Bloomberg data.

    Newcomers

    Several money managers traded credit derivatives for the first time this year, reducing the dominance of banks in the market, said Marcus Schueler, Deutsche Bank’s head of integrated credit derivatives marketing in London, and Richard Stuart- Reckling, product manager for credit derivatives in Europe at Morgan Stanley, at a conference in London today.

    “The investor base is far deeper and broader than it ever was,” said Stuart-Reckling.

    Pacific Investment Management Co., manager of the world’s largest bond fund, in April and May sold “several billion dollars” of insurance against defaults on bonds issued by GM and Ford, Mark Kiesel, an executive vice president who runs Pimco’s investment-grade bond trading, said July 27. The strategy was new to Pimco, which had never used credit-default swaps to take a “significant” position in corporate bonds, Kiesel said at the time.

    “This year has seen huge strides in the number of investors involved” in credit derivatives, said Daniel Berman, head of JPMorgan’s credit product management team in London, at the same conference today.

    Fitch’s survey of 120 banks and financial institutions showed that banks are typically net buyers of debt insurance because they can use default swaps to reduce the risk of corporate loans.

    Banks used credit derivatives to transfer a record $427 billion of credit risk from their balance sheets to other counterparties in 2004, up from $260 billion a year earlier, Fitch said.

    To contact the reporter on this story: Hamish Risk in London [email protected] .

    Last Updated: November 18, 2005 10:07 EST
    http://www.bloomberg.com/apps/…..world_news

    • readerOfTeaLeaves says:

      Maybe one of the bright minds around here can confirm that this:

      Banks used credit derivatives to transfer a record $427 billion of credit risk from their balance sheets to other counterparties in 2004, up from $260 billion a year earlier, Fitch said.

      is code for ‘they took the losses off the books to make the bank accounts look better. Easy to do, when CDS’s are not regulated.

      And Paulson is proud to preside over this scale of economic venalty, eh?
      Wow.

Comments are closed.