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Paul Krugman appearing on Rachel Maddow told the straight unvarnished truth, urging Congress to overcome lame ducks’ "not our problem" mentality and confront the immediate need for a bridge loan to keep Detroit’s Big Three solvent until a more responsible Obama Administration takes office.
Krugman noted that even if it were okay to allow the companies to fail during good economic times, it made no sense to allow them to go belly up and put at risk 1 to 3 million jobs right in the midst of a severe recession. The effect, he added, would be like a huge reverse stimulus, dragging the economy down.
Commenting on Congress’ willingness to leave the decision to a stupid game of "chicken" with the White House, Krugman added, "We’re on the verge of an irreversible decision taken almost in a fit of absence of mind."
Of course, the auto execs’ flight to DC in their private jets added up to "stupid theatrics," but "that’s not the point." Would be lose 1 to 3 million jobs and their health benefits just to punish twelve senior exectives?
Krugman’s right. The Republicans and this White House are perfectly willing to devastate the economy and imperil millions as one last gift to a President Obama, especially if they think they can kill the auto workers union in the bargain.
As MSNBC explains, this is also "north versus south" again, in which Jeff Sessions argues that employees in Alabama who don’t have health insurance should not be asked to bail out those with health insurance in Michigan. But what that means is that those with insurance should be forced to fail so that everyone can not have health insurance. Brilliant logic, Jeff.
Update: Dean Baker lays out the argument.
85 Comments
If only the powers that be would actually listen to Krugman and you.
Rethuglian logic at work at it’s very best! We should never allow the public to forget just what the rethuglians are doing/have done to this country! Hopefully this will the be nail in their collective coffins if/when they let 3 million jobs be lost because they wouldn’t do anything to save them.
We must also make sure the public remembers that they were only to happy to Bail out their rich Bankers who caused this financial crises with all the deregulation that the rethuglians ripped out of the heart of the economy so no one could tell just what was being done to make more and more money for their rich benefactors. This is truly CLASS warfare! And they are playing the scorched earth card!
Sorry, but I would disagree. The Big Three are too sick to save and throwing taxpayer monet at them won’t help. Maybe leaner, more competitve companies can arise from their ashes.
I can’t believe this can’t wait till the next Congress convenes. The fact that GM management et al. are pushing the matter at the end of the lame duck session is an indicator of their motives, viz., to crush the auto workers union.
P.S., Congress should’ve waited till the new session to consider how to address the credit crunch, just as they should’ve done wrt the banking issues. But they did the exact same thing they did as far back as 2002 when they pushed through the AUMF, rushing through whatever the Bush government wanted, in this case a fat pile of cash for redeeming worthless securities. Congress has consistently failed to act in the best interest of the country even under the Democratic party leadership.
It’s just fine to throw money at financial institutions that gambled and lost insuring huge bonuses for the corpoate elites but heaven forbid they actually do something to help workers! Get a clue.
Congress’ inaction on this ( and Obama’s too) is incomprehensible to me. I guess they just HAD to protect their friends and their own investments with the stock market bailout. But I thought Obama wanted to get jobs growth going?
How in the H*LL is this going to help?…leaving a unionized industry to the tender mercies of BushCO?
I guess it really is a private club up there on the Hill. Screwed again.
You got that right. Nations, like individuals, have runs of luck. On the way up they can’t make a mistake. On the way down, they can’t get anything right. Hopefully the “crisis” has been overstated to get immediate action and the big 3 can survive until Obama gets in. It’s not only jobs that are at stake. Lots of debt goes down the tube which will make a lot of rich people poorer. That may be more persuasive in Congress than the fate of working stiffs.
I’ve been looking but can’t find a number but was wondering how many jobs have been lost or were/are at risk in the financial industry bailout compared to the number of jobs involved in the auto-industry?
For the auto-industry, we’re looking at 1-3 million jobs directly plus all the other jobs for suppliers and such plus all the related economic benefits that need a $25 – $50 billion bridge to survive.
This compared to bailing out the so-called financial sector for $700 billion plus the AIG bailout plus however much back door crap they’ve snuck through. How many jobs involved here? 100k? 200k?
What am I missing (other than the obvious – the Financial industry is best buds with Paulson, Bernanke, etc)?
this isn’t about a million jobs – as bad as that is, it’s about loosing all those jobs NOW. isn’t it really about pushing the economy into a depression?
One of my favorite comments from the NYT’s commentors on Rampell’s blog (NYT’s econ editor) on November 17th was, “You guys have Krugman writing for you but you settle for this twit who has no clue on the economic impact?”
Krugman gets it clearly…Right now, this is “disaster dominoes”. Who in their right mind plays that game? I only have one answer. Traitors.
There are too many talking twits smiling and stating, oh this is no big issue.
No big issue my arse.
The dems again fold in the face of opposition. The repugs won even in losing. The idea of a pre-packaged bankruptcy is the way some want to crush the unions. Tiding the car companies over the remainder of the year and moving according to Barney Frank’s outline would be much more likely to save the unions; bankruptcy would allow the auto companies to reopen all of their contracts including the ones with the unions. harry reid quietly folded the dem tent when the repugs stomped their feet and threatened to hold their collective breath. What a joke it is to look at the results of the 2006 & 2008 elections. Where is Barack Obama on the auto help question? Obama was quick to back joLIE (pressure from AIPAC?), but not helping keep workers working.
if the dems don’t try to get a bill passed (even if it fails) then they will also own the fallout.
Republics hope that by destroying the economy, voters will blame the Democrats and Obama. That way, Republics will rise again without even having to change a thing.
Thanks Scarecrow.
digg
They will temporarily appear to fix the problem with the pending announcement of globalist operative, Timothy Geithner, as Treasury Secretary, but that rally will be sold into…and then it’s lights out:
Autos stacked up at Port of Long Beach:
http://www.nytimes.com/2008/11…..38;emc=rss
http://existentialistcowboy.bl…..great.html
http://www.cnbc.com/id/27719011
http://www.globalresearch.ca/i…..;aid=11001
Michel Chossudovsky, Ellen Brown and others explain what’s really going on. It’s not pretty or what Wall Street wants investors to know. That markets are heavily manipulated. Speculation drives them up and down, and very visible (insider) hands profit hugely in either direction.
Chossodovsky: “With foreknowledge and inside information, a collapse in market values constitutes a lucrative and money-spinning opportunity, for a select category of powerful speculators who have the ability to manipulate the market in the appropriate direction at the appropriate price” – and he explains the various ways how.
Brown on the “Plunge Protection Team (PPT): it’s “the group set up under President Reagan to maintain market ’stability (profitable instability also) by manipulating markets behind the scenes.”
http://en.wikipedia.org/wiki/W…..al_Markets
In other words, financial markets are rigged. “Free” ones don’t exist except in the mind’s eye of the innocent. They represent no collective wisdom other than the speculators who manipulate it for profit.
Brown: “In a rigged pseudo-capitalist economy, investors are easily separated from their money because they expect the market to follow ‘free market principles’ based on ’supply and demand.’ They are seduced into ‘pump and dump schemes” and fleeced.
In today’s market climate, trusting in Adam Smith’s “invisible hand” is a very hazardous exercise. Brown again: “The market today is indeed controlled by an invisible hand, but it is not necessarily serving the interests of small investors.”
so why are the dems letting them?
Another point of concern, 80% of US industry is within 500 miles of Ohio. Ohio is a logistics gateway. You get the dominoes tumbling in Ohio, Mich and Indiana, the ripples end up hitting most of the US, quickly. That includes the South.
What will happen to the retail industry? IT industry. Housing industry? Construction industry? When the $$$ are gone or pinched beyond measure? And like the financial industry can take on more failed debt. Someone please name a sector that will be fine…I have not found one yet.
The more I research this, the worse the picture becomes.
My understanding is that all that is needed is a bridge loan, that it constitutes 4 percent of teh 700 billion. Any lack of understanding of the issues is clarified by looking at the people who are lobbying to let the big 3 crash. Richard Shelby, Zack Wamp, any other southern smug asshole who isn’t busy trying to get Saxby Chambliss reelected are the spokespeople for the economic Darwinist position. It may not be passed, and Bush may veto it, but I don’t know why Democrats don’t pass an emergency bill place on record the fact that Bush and the Republicans are responsible for the demise.
That is a mystery.
FWIW, comments from an online discussion at the Milwaukee Journal Sentinel. It’s running almost 100% against providing any help. Readers have no clue that without help, the jobs and capital are going to China via Alabama.
As the leader of his party, Obama better kick some butt quickly.
For the competitive among you, here is a civics test.
http://www.americanciviclitera…../quiz.aspx
This is an argument I have heard (all logic aside). There are so many persons with nonunion jobs, no health insurance etc., that they feel resentful when they hear of the “plenty” autoworkers receive. It’s kind of hard to explain to the resentful, that they may be getting the short end of the stick.
yesterday, iirc, sachs said there would bet unemployment at 15-20% in the midwest if GM was allowed to fail.
I saw that when you posted yesterday. We should all head over and start linking to all the posts here by Marcy, Jane, Ian, Stirling, Scarecrow and the other Oxdowns too.
A little education might help.
Thanks.
Ask yourself or ask a Republican, this will the stock market go up or down if we have a bailout? Then ask will the stock market go up or down if the big three go under?
Then ask who will pay the taxes the big three used to pay because until bankruptcy is settled and that would take at least a few months assuming it goes quick but until then no tax revenue.
In fact all those workers will be on unemployment until bankruptcy is settled, assuming that all the jobs stay in America but what ate the odds of that?
Shareholders will have a huge loss to offset any taxes they might have paid.
Banks holding the big three’s debt will be arguing over crumbs.
And if the Unions are broken do not expect the auto workers to spend or pay taxes like they used to.
Many Red states that normally get more money from the federal government than they pay in with taxes will have to make up the short fall.
Sure in China and Mexico those jobs won’t stay here after bankruptcy.
The race to the bottom continues.
Cesspool can wait. Friend just wrote this:
Congress behavior can best be described as the art of scoring points for one party over the other. What’s in it for them, above all. I mean LBJ escalated a war from bad to worse simply because he always had one eye on the Republicans. It ain’t right!
This is about 1-2+ million auto maker jobs, and another 1 million support/supplier jobs to the industry, PLUS the lost health insurance bennies, PLUS all the businesses in the communities affected such as restaurants, supermarkets, retail stores,PLUS the tax revenues lost.
And this could all happen in a very short time span.There are no other industries to even begin to absorb all these unemployed people
Some of the comments about “eh, let ‘em fail” seems quite unrealistic to me.
This would result in the 2nd Great (much worse)Depression.This is real. This is now.
Evidently WashingtonDC(both parties or is it just one party with two factions?)is heading for the cliffs of Shock and Awe because that idea worked out so well in Iraq they want to try it more here in the HomeLand.
WashingtonDC really needs a reality check. Krugman is one of the smartest yet down to earth guys in American political/economic media today. Yet the hallmark of WashingtonDC is to go with stupid–not smart.
WashingtonDC has declared war on America. Shock and Awe baby.
Yeah and Christmas is coming up lots of retail stores will go under unless we get a deal before Christmas because the auto workers worried about jobs and pensions won’t be buying anything.
How many retired auto workers are collecting pensions that they might lose if the big three go under anyone have any numbers maybe another million?
Will the tax payers have to cover that?
Bush wants a free trade agreement with Columbia that bad? Death squads do not matter to him? Hmmm millions of jobs vs the benefit of free trade with Columbia nope it does not even come close.
That’s a nice one. Thanks.
Thanksgiving day sales will be way off this year unless their is a deal.
I thought a few of the Qs were really bogus, but overall was fun.
Good morning all. Our friend, economist Dean Baker has another excellent post on the auto bridge loan, over at Oxdown. Be sure to drop by.
Over-Housed
Over-Carred
Over-Leveraged
Over-Consumed
GAME OVER
Talking head on cnbc points out that every other country that the U.S. auto industry competes against subsidizes its own auto industry. Shame on me for not remembering that.
It’s also what Emptywheel mentioned earlier this week.
28 out of 33 – 84%
Yeah, there was a definite spin to some of those questions.
(snark)
25 billion for the big 3? No Farckin’ Way! 25 Billion for NASCAR? You Betcha!
I thought the ones based on history and government were pretty good. I’m guessing you’re thinking the ones on econmmics are a little hokey.
OT: Wow, my wife was just looking at this bit of video of the G20 greetings from Huffpo. It’s really striking. It almost (I say almost) makes you feel sorry for Bush, until you recall that he’s warranted this treatment in the name of the United States.
Brave of you to post. I got 31/33, 93%. The two qs I missed had to do with specifics of which is where in declaration of independence or constitution & what is in which amendment in bill of rights. Must admit I’ve never been too careful about those details, thinking I can easily look them up if I need to (didn’t cheat while taking the test). I guess I should really have more of the details in my head.
NASCAR’s declining attendance said to worsen in 09 Season and they’re expecting as many as 1000 Team layoffs in the 3 leagues
linky
shoulda never let that cursed Chimp attend any of their events – heckuva job Brian !
I think part of this is tinged in racism. The reluctance to rescue Motown is made easier to understand when one considers the response to the Big Easy’s tragedy.
Truly though, if a bailout is to pass, I believe there has to be a public relations exercise. The fact that the auto workers are reported to make a middle class wage breeds resentment. I see people become angry at the auto workers and the unions, rather than questioning whether their own wages/salaries and benefits are substandard compared with what might be. There are those who really don’t question the rising economic disparity. “The big picture” explanations don’t cut it for a lot of people. It doesn’t cut through displaced resentment. I am saying this not because I don’t support a bail out. I am saying this as a worry I have.
Amazing how widely R economic death & destruction has spread.
Did she have any kind of resolution?
This is great, we are going to rush to another bad bailout decision. This bailout is meant for one purpose…to help the UAW. If the big three get this money, things will not change, they will continue to hemorrhage money at a billion +/mo. This is delaying the inevitable. Let them restructure now, re-write the contracts, and minimize the job loss through the restructure. Business will continue during this time, it’s that simple. If they continue to wait, then the big three will truly go away with the three + million jobs.
Please use this site GM has put up to tell your senators and congressman to act now and get the $25 billion loan released.
http://www.capitolconnect.com/…..fault.aspx
Good points. The economy is so bad that it’s become a dog eat dog world. Too bad the worse off workers don’t turn on the rich.
Also agree that the macroeconomic implications are not understood by regular folks. That IS supposed to be one of the reasons we have leaders.
Roubini’s up (with others) on cnbc.
This is not a bailout – this is a LOAN. We made money on the old Chrysler loan. This should prove no different.
As in all fiscal issues the Democratic leadership, not just a commentator who has no definitive clout when it comes to enacting legislation, will have to come to the American people and in dollars and cents explain why doing x, y, or z is to our benefit. Otherwise, the popular notions of conservatism that have been implanted in our collective consciousness for the past thirty years and which have so spectacularly delivered us into the Okeedokie “freemarket” swamp where we currently find ourselves up to our chins. The problem with the Democratic Senate and Congress is that Pelosi and Reed as leaders don’t appear to have much more cred than W. And part of the reason for that is an ongoing inability to prioritze or have courage in facing up to–of all people–George W. Bush; and the reason for that may well be that many like doing business the same way the Republicans like doing it–identity politics, personal gain. If Obama cannot communicate these issues with clarity and specificity and get the Democratic legislators to raise their game, then all this wonderful feeling and work that went into the past election cycle will, while being inifintely better than what we have had for the past 8, fall far short of what needs to be done and once again turn the reins of the nation back over to the mind numbing incompetence of the right.
See post 54, from a republican
I wonder if the AIG execs flew to their meetings in corporate jets.
morning pups, thanks Scarecrow
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Jane’s up
Waxman Victory Means Huge Blow To Blue Dogs
Well what I think is that many do understand the big picture. Still that doesn’t cut through resentment and doubt. Like one person said to me that he/she understood this and that, but didn’t think that (paraphrase):”GM et al could sustain such highly paid workers under such economic conditions. No company could. It’s just not feasible.”
But companies can sustain executive salaries?
Heh. Typical. CNBC gave Roubini a little air time, then host said: I know you’ve been right, but let’s hear from those who haven’t. (She didn’t actually say that, she just stopped Roubini & switched to another guest.)
It is now. If they go bankrupt in a year, what does that money become…gone? Pull the bandaid off now and fix the problem.
The other thing that makes this a really bad idea, is congress is going to tell them how to use this money, specifically how to build their care. If it is truly a loan, who cares how they spend it.
Well do you expect them to take the bus with the proletarians?
Let’s move upstairs & come back to that later. It’s surely discouraging that ordinary folks don’t think current standards of living of ordinary folks can be sustained.
Hey you have to go read the link in my diary. The link to AnnS does justice to the current Bureau of Labor and Statistics and what they will look like after no auto bailout. It. Is. Beyond. Reason. Everyone should go and read her comment.
I also have someone commenting over on the diary now who gave some great insight to Paulson.
Advocates of a loan point out that “bankruptcy” for an auto company is different that airlines or other corporations. Who will invest $20K to 30$K in buying something from a company in bankruptcy. How much would any warranty be worth? Will parts and repairs be available? Additionally, they point out that unions have already agreed to new split contracts in which new workers make $14 per hour and the union pays what had been the company’s part of health costs. It really seems just more of Ross Perot’s giant sucking sound. Maybe we can get the garment industry restarted if U.S. workers come in on the same terms as the women in the Marshall Islands.
should read:
Bureau of Labor and Statistics unemployment figures and what they will look like without an auto bailout.
I suppose it is nice that Krugman has come out on something we have been writing about for days and days. He’s been wrong about oil speculation and the bailout but he is right on this even if he is repeating what has been said here for a while.
thanks! was away posting a diary for today’s hearing info.
i was surprised by how calm he was in this interview. almost like one of the Very Serious People.
Thanks for this! Great info!
I got 28/33.
The scary thing was scores Americans received, I thought.
My favorite answer was the government doesn’t help anybody (or something like that).
How exactly are the Bog Three so sick? Even Toyota is in trouble. If not for the severe shrinking of the economy, the Big Three would still be competitive, just don’t buy into the media BS suggesting otherwise. Remember this all about killing organized labor and leaving a Democratic President that much deeper in the hole.
Just retired autoworker here. Quite familiar with the extent of employment supported by BIG 3. This has to boil down to the Right wanting to cripple the economy and thwart any gains to be made by Dems. I would suggest that Dems allow current $25 billion approved to be spent instead on bridge loan to buy time. After January, pass more robust package and start the ball rolling to rebuild.
30 out of 33.
Be sure to see this overview page about the survey too.
One of the more striking results was the following:
In view of recent performances, why does this not surprise me?
The Chrysler bailout of 1997 was effective because that company was willing to completely reinvent its wheels. It did this with a solid leader named Lee Iacocca and that was money well spent. Watching the Senate panel quizzing these three CEO’s I didn’t hear any suggestions or hint of restructuring and becoming competitive. Nor, did I hear any one of them list the reasons for their decline. I didn’t hear any of our pompous Senators ask relevant question either. They were all more than happy to give away taxpayer funds. It is estimated the 25 billion will only last through the middle of next year. This money will be used for operating expenses. When it runs out the CEO’s will be back on their knees giving the same politicians virtual oral for Billions more. The politicians want to give away this money to support their base or in other words the union. It would be better to let them fail and restructure. If the government wants to do something they can guarantee the auto warranties for the buyer. The big three will continue to have problems until they restructure and stand up to the UAW and hopefully break them. The average UAW workers hourly rate is $70 when all the benefits are added in. A like worker working for Toyota at a US plant is about $45. That’s a decent rate that many workers in the US would love to have. The big three have other problems such as poor management and lack of vision. Without breaking the UAW none of this will matter. That would be change you can believe in.
the message is clear handout to Wall Stree but the blue collar folks can take a dive
To put this in perspective…we are spending $12 billion/month in a gopher-hole called Iraq. That’s not a loan…it’s money that we’ll never get back, to fight a foe that didn’t exist in that country until we invaded. Much of that cash has been embezzled and now sits in the foreign accounts of Iraqi Ministers, corrupt military officials, and the cronies of the Bush Administration.
There were no “strings attached” which benefitted the American people at all…no COLA standards, no limitations of executive salaries, no shares in the corporations, and practically no administrative oversight on how the money was to be spent…nada.
So two months in Iraq = the bailout LOAN for a major US industry that employs millions of Americans? The Republicans have kept us in Iraq for seven years now…and want a bottomless, perpetual stay…yet they oppose helping American industry, workers, and our economy? Are these guys covert moles for Osama bin Laden, or something? Just what am I not seeing here?
shit. I’ve learned quickly that if krugman says one thing, congress is likely to do the opposite. shit.
Here’s a thought…Dump the current spoiled brat execs at the big three, leave them with only last years salary, force them to take all of their top execs with them…and retool the companies with Blue collar talent that is already employed there. Rebuild these companies from the working mans perspective if you will, with realistic working man salaries, which in turn should bring the cost of these automobiles down to something affordable by the average working man, which in turn bolsters sales and stimulates the economy…Otherwise let them fail…to bad too sad….
You hit the nail on the head.
Oh, and by the way, Bin Laden was successful. Look at the US economy today. By scaring everyone on 9/11, Bush has been able to stay in office for eight years on the “fear” card and in the process “run” the US and it’s economy right into the ground.
In response to cinnamonape @ 80 (show text
Get over Iraq. It had to happen sooner or later. Remember the Democrat congress and Senate voted for it. Were they that naive or did they change their opinion when it was politically necessary? We have won that conflict but fear not Bambi Obama has plenty of time to insure a defeat to a war we already one.
Again, the only way to save the US auto companies is to break the back of the UAW. Hopefully, the top auto executives will do this after they receive the bailout.
25 billion will only stop the bleed, and they will still go down! These top guns came to congress in personal jets at the cost of $20,000, and one ownes 3 personal comp.jets at the cost of $36 million each at the price of 3,8000 a hour. Now does that sound like leaders that could manage to pull these company’s out of a tail spin. There greed is beyond the pale. There pay is millions per year for their employeement!It should be chapter 11 for them, and a new beginning with new idea’s and direction! But don’t bail them out to fail another day on the tax payers back! These people will be out of a job today or down the road if it’s going to happen!