Posts Tagged ‘Bailout’

Since I was last here, the auto bailout has already gone down. It looks like the president will use some of the $700 billion to step in where Congress (or really the Senate GOP) didn’t.
While I don’t know if bailout or bankruptcy is the right solution for the Big Three, I do know that the GOP rationale for not bailing out the industry just doesn’t make sense. If you want wage restrictions for companies that get bailout money, why did you fight so hard against executive compensation rules for the financial companies that, you know, got us into this mess? Why weren’t across the board wage cuts part of the AIG bailout, even if we ignore the executive compensation issue? Heck, the US Government is in huge amounts of debt. Why doesn’t a congressperson introduce a bill to cut the salary of congress by the same amount as the proposed UAW cut?
I honestly don’t have a problem with the people who are saying “They should just go into bankruptcy, because the consequences won’t be that bad, and it’s better in the long-term.” Salon quotes the conservative blog “Hot Air”, who says about the same thing:

If they’re convinced that economic catastrophe is inevitable and don’t want to burn any more taxpayer money trying to deflect the asteroid, that’s fine. If, on the flip side, they think the consequences of letting the Big Three fail and losing a million jobs in this economic climate won’t be that bad, that’s fine too. Both are good reasons to oppose a bailout. But make the case. Explain to me why, in the middle of a global economic crisis, propping up a failing industry to save jobs at least until the crisis is over is a worse option than pulling the plug now.

Now we have fallout from the bailout failing. First off, Andrew Leonard from Salon, with an ironic little story. Bob Corker of Tennessee was the GOP’s lead on killing the bailout. Once the bailout died, GM announced that it’s shutting down most of its plants, including the one in Spring Hill, TN. Whoops.
Next, we have Rachel Maddow with a pretty eloquent little rant about the GOP’s new platform: reducing the wages of American Workers. I can imagine the bumper stickers now.
And finally, every action in congress has political consequences. As Andrew Leonard points out, the economies of Michigan and Ohio are already in serious trouble. If this causes a lot of layoffs and the state economies get worse, do you see them voting for republicans any time soon? I’d say it’s pretty unlikely. The GOP is starting to look more and more like a regional party…maybe they like it that way, because they sure don’t seem to be making many friends.

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Same as the Old Boss

As we wind down toward a holiday weekend, here are some links that I’ve found interesting in the past few days.

  • In the “Meet the new boss, same as the old boss” category, we have a few stories of prominent people looking at new roles. Bill Clinton? The next senator from New York? I’d say it’s unlikely, but possible. As pointed out, an interesting change of gender roles, where the husband gets appointed to fill out the wife’s term. Next, Chris Matthews may be looking at Arlen Specter’s seat (note that I skipped any of the obvious “Hardball” jokes there). Again, unlikely but possible. Finally, where does Dick Holbrooke fit? Special Envoy to the Middle East sounds good to me. (thanks to Flan for the Clinton link
  • Three(!) items on John Maynard Keynes too. First, Krugman letting us know that one of Keynes’s early essays is now available–this one before he had developed his general theory. Worth a read. Second, here is Keynes’s Open Letter to Roosevelt, as published in the NY Times in 1933. Again, this is before his General Theory (which he published in 1936), but it’s clear that he’s already developing many of the ideas–notably how expansion of government spending is so important to helping the national economy. Finally, an economist interpreting a letter to Roosevelt in 1938. Very interesting. Remember, this is now after his General Theory was published, and after some of the new deal spending had started to have an effect. 1938 was actually when Roosevelt listened to those who were calling for “restraint,” and the economy actually slowed its recovery.
  • A bonus historical article by John Kenneth Galbraith. When a recession hits, don’t panic. Good advice, methinks.
  • A few different people try to answer the question: “How much does creating a job cost?” First, Greg Mankiw calculates that $700 billion for 2.5 million jobs makes it $280,000/job. He says that sounds unreasonable. Over at Economist’s View, there’s a much deeper analysis of how much it actually costs to create a job. It’s pretty interesting to see the numbers actually get run and how government spending can actually affect things.
  • Three angry posts on the Citigroup bailout. Nobody really seems to like it. Krugman calls it an outrage. Economist’s View has quite the lineup of economists talking about how bad the whole thing is. Also, Economist’s View wrote a more general idea on designing a bank bailout that might work. Finally, Brad DeLong wonders in great deal about the whole structure of Citi.
  • If the Fed is confusing Krugman, how do the rest of us have a chance?
  • Brad DeLong is angry. Economics is really complicated, and if journalists who write about it don’t know what they’re talking about, it’s not helping the general public understand.
  • We’ll end today with a few foreign policy links. The middle east and Afghanistan get more of the press, but there are other places where the US has interests. Next, an argument that we need to get away from the left-right spectrum when talking about foreign policy.

Last but not least, from GraphJam (via Andrew Sullivan)

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