Cars vs. Cash

As countless people have pointed out, the auto and financial industries are simply too different to us a "one approach fits all" solution. Bush et al. let Lehman go under and the entire world financial system locked up overnight. In some ways you could say this was a credit to Bush and Paulson in that they at least were trying to stick with their principles, but history will likely record it as one of the worst decisions made during the crisis. It's sad, and it's unfair, and it's a lot of other things, but the fact is that we can shoehorn Chrysler with Fiat, can push GM towards Chapter 11 -- or some equally heavy-handed solution TBD -- and the world will go on. As Kevin noted a few months ago, there's about 25% worldwide overcapacity in automobile production so some companies have to fail or shrink significantly. Every country trying to prop up their domestic auto industry would be the 21st century version of "beggar thy neighbor." Mind you, I'm pretty sad GM and the Swedish government let my beloved Saab go under. So UAW members get shafted while NY City bankers have to sell their third home and cut back to one nanny. Necessary for now, but a good argument for seriously addressing compensation and a more distributory tax code once the crisis is past.

Personally, I'm tending to side with those who think this is a set-up for a doing the same thing in the finance industry the next time they come asking for money. It also will likely make other businesses/industries think twice before getting in the bailout line. I'm thinking this move was very carefully thought through. PS. the market isn't responding to the auto bailout news, the market is responding to rumblings that first quarter numbers (due over the course of the next few weeks) are going to be ugly. The market moves actually started on Friday, if you were paying attention. Only morons didn't see this for the suckers rally that it was.

Taxpayer and jrw above correctly describe the situation, Wall St. and Washington are so intertwined at this point, it's hard to differentiate. They go to the same schools , they take the same jobs, they are related to each other, not to speak of the money that goes from NYC to D.C. People in manufacturing, on the other hand, might as well as be from another planet. Obama will not take on the bankers in a way that threatens their lifestyles or statuses, you can bank on that.

g powell, Yeah, and the problem for the rest of us is that when an economy moves from raw materials through manufacturing and into finance the end may be near. There needs to be a balance, and our financial sector has gotten out of whack. Some people have been fooled into thinking their money can work for them. That works, but only in the short run. In the long run wealth flows to where the work is being done.

Tripp, Sorry to hear about your layoff from India Business Machines. My husband was laid off from the same company (research) in 2005 through a resource action (after 23-1/2 years). About 1-1/2 years before a bridge to pension benefits would have kicked in. What a zoo that company is. I'm sure you read the Alliance site for commiseration, right?

I guess he's the decider, huh.

Here is some of my perspective, but for those who don't know me, here is my background. I'm an Engineer by training, but found that work boring and switched to computer programming, where people were weird but not boring. I've been plugged into the net for years and years, mostly studying different topics, usually those that affect me. That is how I started watching finance and politics. By nature I dislike politics and would be perfectly happy not to get involved if I wasn't getting screwed. I started out as tending Republican, but the Republican party left me when they started courting the whacko authoritarian followers - specifically when Pat Buchanan and Pat Roberston declared that there was a cultural war in America against the 'Christians.' So on to my perspective. A healthy and ideal America would have raw materials (I count our agriculture in that mix), labor, manufacturing, and finance. At the moment a working financial market is the most critical thing to restore, for obvious reasons. BUT I think we need to make sure the culprits in this case are punished. Keep and help the banks, but punish the culpable executives themselves. We need to decouple the executives from the institutions. Seriously. I want a deck of cards with the bad fatcats pictures on it. I assert the culpable executives have done much more damage to the US and the world than bin Laden ever did. In terms of disruption and loss bin Laden is a piker compared to the CEOs and others, and yet nobody is addressing that! Don't let the CEOs get away with claiming that they themselves are the banks, and since we need banks we need the culpable CEOs. Obama inherited the initial $700 Billion bailout of Wall Street, and had nothing to do with it. I hope that future Obama action will punish the responsible executives while saving the banks. I want to see banks execs identified and appropriately punished. So what about the rest of us little guys? Populist anger will continue until the double-standard is addressed, but populist anger will be expressed as heated talks with one's friends and tut-tutting on the internet, which changes nothing. There will a revolution, of course, if the double standard is ignored and when things get worse, but that is still a long way off. People will need to start hurting, and start hurting bad before anything real happens. I mean like children starving in the US. In the meantime our youth are embracing the values of the hippie generation. Most youth claim to dislike hippies but are stating the exact same values - do what you love because you'll have no way to make money anyway. Corporations have lost all goodwill, but they really don't care, because when you have the power you have no reason to care. So if I was President I would address the double standard, punish the culpable individuals, and support the required institutions. Oh yeah, and a pony for everyone. Tripp

Tripp, same here. I'm an EE that took "early retirement" from HP almost 2 years ago. I wasn't ready to retire, but they offered money and a cashout from my pension. I figured it was better to leave with some money than get booted later with nothing. Turns out to have been a good bet, my old division recently took a 90% layoff. For years now, we have been masking the lack of real wage growth and employment opportunities by blowing bubble after bubble. The system is set up so that if you work an honest job, you are a chump. the only way to get ahead is by using leverage of some sort, be it a 0% down neg am loan, a 2X short ETF, or the state lottery. Honest work aint going to get it done. And that has got to get fixed. the blowhards in DC and NYC just figure if enough BigCos can get bailed out, we can get back to status quo ante. Not going to happen. The whole system, from Bejing to Baltimore, is set up so that US consumers take on more debt to buy stuff from overseas. And consumers are up to their eyeballs in debt, they aren't borrowing more until they can pay their bills and save a little. And that won't happen until work pays for the bottom 95%--the very folks the 1% on top insists on continuing screwing. So we are presently stuck. The toppies wont' take the slightest haircut on their wealth and privileges, but until they share, this economy isn't going anywhere. So it is likely to get worse before it gets better. If it gets better. I'm sure that people in 1780s France and 1920s Germany thought that "it can't happen here". We are not immune. As for contributing, yes I would like to. Nobody in corporate america is going to hire a 57YO engineer, no matter how good I am at what I do. My consulting business dried up and blew away. I used to say that I would like to do something more useful to the world than make machines to turn Douglas Firs into corporate memos (I worked in a printer division). Green energy? Who knows? Maybe something there. Best wishes