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Monday: Who appointed the financial wizards as Gods anyway?

Greed is Good Gekko

"Greed is Good" Gekko

Automakers are on the frontpage of the NYTimes again today.  It looks like someone is trying to replace the finance giants smarting asses with a new whipping boy.  Who can feel much sympathy for the guys who ran Detroit?  They’ve known for at least 30 years that the oil would run out and that we would all have to switch over to more fuel efficient cars.   Back in the early eighties, they had even made some lame attempts to produce some of them.  But they were poorly designed, half-hearted attempts, as if someone was forcing them to eat spinach.  The Japanese killed them in the small car area and that, combined with an oil glut, caused the automakers to forget all about fuel efficiency.  They partied like it was 1999.

Of course, it is the union workers who have to pay for that.  Well, naturally.  It goes without saying.  Why does it go without saying that the unions must pay for the mistakes of the guys in the boardroom?  I don’t know.  It just is.

And now, bonddad at Huffington Post tells us we shouldn’t get down on the finance guys either.  They provide a valuable service:

But that does not mean that finance in and of itself is evil or that all people involved in this area of the economy are corrupt. I have often read the criticism that “The US doesn’t make things anymore” as if creating financial structures is somehow less valid than making a physical good. In fact, both activities are equally valid and should be treated as such. Individuals who prudently manage other’s money and take well-thought out risks provide a valuable service to the economy; they should not be publicly vilified because other members of their profession have made huge mistakes. In essence, there are good practitioners and bad practitioners in any profession; but the presence of bad practitioners does not nullify the contributions of the professions as a whole.

In addition, many finance people provided invaluable advice to their clients throughout this recession — advice which preserved their client’s money during an incredibly difficult time. Market watchers such as Barry Ritholtz, Mish Shedlock and Tim Iacona all provided invaluable advice to their clients and the public at large. Yet the criticism of finance groups all people in this industry together — or provides asterisks and caveats regarding industry professionals who are agreed with while still spilling a fair amount of bile at the industry as a whole. Throughout this recession I am often reminded of the public’s attitudes about criminal defense lawyers — a profession which is ridiculed and roundly criticized on a regular basis until you need one. Then you can bet your bottom dollar that you want Johhny Cochran at your side saying, “If the glove does not fit, you must acquit.” The point is broad brush strokes about any profession are inappropriate at best.

In short, Dr. Krugman’s analysis is wrong. Securitization has provided many benefits to the economy as a whole. It is not the sole problem with the current situation; we arrived at out present crisis because of a combination of numerous ill-thought out events and decisions. Finally, finance is not in and of itself bad and not all “wizards were frauds.” Securitization has been around a long enough time to indicate that properly done it does not pose a threat to the economy as a whole. The current mess is not solely caused by securitization, but instead a combination of many inter-related events.

In short, I respectfully disagree with Dr. Krugman’s analysis.

Is it true that the US doesn’t make things anymore?  Probably not.  Oh, sure, we don’t really make the world’s steel, appliances, furniture, textiles, computers and now, cars.  I think we can still give the world a run for the money in munitions, aircraft and pharmaceticals.  Agriculture is still pretty strong, though it’s mostly owned by big agribusiness.  But mostly, we have a lot of small businesses and the service industry.  Thank God we still have the finance industry.  It would never put out shoddy or poorly designed products like the auto industry.

Heck, didn’t we all gladly turn in our pension funds for cash-balance plans that we could manage ourselves?  And weren’t the finance wizards so very helpful in telling us how to set up our 401k’s that would steadily grow and grow and grow until we were 65?  And didn’t we listen to them when they told us that we didn’t put aside enough for our retirements and we should put more and more and more of our compensation into the stock market that, over many decades has shown only to increase in value?  Surely, they deserved all of the fees they wracked up whenever there was a transaction.  Surely, the work they did warranted the billions of dollars in bonuses.  It is very hard to skim money off the top of all those trillions of dollars of our hopes and dreams of adult communities on the golf course of our futures.

What I can’t understand is how they managed to appoint themselves Gods in the first place.  And was there a plan to first convince us to fork over our cash and then defraud us of the profits or did it just “happen”?  The rise in the financial genius class happened right about the time Reagan took office.  Reagan who preached “rugged individualism”, “voodoo economics” and the Laffer Curve. What we have 30 years later is a stratified society, a true class system, where the finance giants justify their existence in life as creating wealth, mostly for themselves.  What is their purpose in life really?  Who would be harmed if we got rid of the whole lot of them?

Let’s try that thought experiment.  Without the finance Gods handling our money we might still have pensions.  We might be making more money because the investor class wouldn’t be cheering for the increase in quarterly earnings that happen every time a company announces a layoff.  We might not have to have teleconferences at ridiculous hours with programmers in India.  People who need to get stuff done at work wouldn’t have to spend half of their time negotiating contracts with outsourcers, trying to get multiple contractors to handle what a single full time employee with benefits used to handle.  We might be making more fuel efficient cars if CEO’s had spent less time resisting the future, skimming the profits off the top, and more time encouraging the design of cars that would take advantage of that future.  But that would require hiring more designers and letting them design instead of figuring out how to make changes without incurring any additional expense.  They might have gotten good at car design, had they been allowed the creativity and money to do it.  We might have a Michigan that doesn’t resemble Blade Runner.  We could have dispensed with Six Sigma, “rank and yank” and other silly management theories that justified the MBA’s existence and wasted our precious time.  Workers everywhere could have been spared the biz speak jargon than made our ears bleed and meant that our pink slips were right around the corner.  We could have actually been rewarded for the work we did instead of being subjected to the stress of “what have you done for me lately?”.

That last question has been the focus of the finance giants for the last 30 years.  The finance industry has been focussed on their own bottom line with such intensity that producing anything of value has been an afterthought, just like the lives of the people who were affected by their machinations and securitization have been an afterthought.  And we can’t heal ourselves as a nation until we ask the finance giants “What have you done for me lately?” and impose the same performance based standards on them that they’ve forced on us for the last 30 years.

It’s time for a performance review.

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145 Responses

  1. It was the UAW’s fault that Detroit designed crappy small cars.

    But look at the bright side – all those too expensive to drive SUV’s will make nice shelters for the soon-to-be homeless.

    • Oh, really? Since when are designers union?

      BTW, dakinikat, give it up. There is obviously only one interpretation of that cartoon and it isn’t yours.

      • If the UAW hadn’t demanded so much money the Big 3 would have been able to afford better designers.

        • The UAW didn’t demand soooo much money. The average employee makes $54,000 a year. That’s far from exhorbiant when the median is $42,000.

          The whining starts when you start to include benefits and the idea that an individual who took care of a company and its bottom line for 30 years be entitled to benefits like health care and a pension(you know the traditional things that the financial industry convinced Americans it should give away to have a bright shiny chance at the roulette wheel otherwise known as the stock market.)

          The shame isn’t that these folks get decent pay and benefits. As far as I’m concerned the shame is that more Americans don’t have parity with them.

  2. “Monday: Who appointed the financial wizards as Gods anyway?”

    Well, I believed the “conventional wisdom” that said investing in the stock market would bring greater returns than annuities from pension plans. And that was the 80’s. My friend was more skeptical and although she invested, did so very conservatively. Who’s smiling now?

    What I find a great irony is that the “conventional wisdom” eight months ago was to have any money you planned to use in the next three to five years in cash. After October that changed to five to ten. Kind of messed up my planning.

    From quote:

    “The current mess is not solely caused by securitization, but instead a combination of many inter-related events.”

    I’d like the writer to give a full and complete accounting here – including those “few” bad eggs that messed up.

  3. Designing a financial “instrument” is like making actual products? Bondad himself admits that he’s just a highly paid part of the service industry. Meanwhile, Mish Shedlock, whom Bondad cites has been vociferously criticizing the bailouts and the fraud in the finance industry at his blog.


  4. OT from England:

    Clever children are saving themselves from being branded swots at school by dumbing down and deliberately falling behind, a study has shown.

    Schoolchildren regarded as boffins may be attacked and shunned by their peers, according to Becky Francis, professor of education at Roehampton University, who carried out a study of academically gifted 12- and 13-year-olds in nine state secondary schools.

    The study, to be published in the Sociological Review next year, shows how difficult it is for children, particularly boys, to be clever and popular. Boys risk being assaulted in some schools for being high-achievers. To conform and escape alienation, clever boys told researchers they may “try to fall behind” or “dumb down”.

    One boy told researchers: “It is harder to be popular and intelligent. If the subject comes naturally … then I think it makes it easier. But if the subject doesn’t come naturally, they work hard and other people see that and then you get the name-calling.” This may in part explain boys’ perceived underachievement, Francis said.

    Hmmm, I guess that could explain why I graduated at the bottom of my high school class.

    (When I say “bottom” I mean waaaaaay down there – 803/822)

    • myiq: That’s weird. I had almost exactly the same standing in a class just about the same size. But it didn’t make me popular….

    • Wow. You beat me. I was 202 out of 222. 36 straight F’s in Latin, followed by 1 D.

      • I can’t figure how anyone graduated lower than I did.

        My GPA was something like 1.69 which is D or D+

        • I see someone from the PUMA-obsessed blogstalkers linked here.

          Yes, moron, I graduated at the bottom of my high school class, but I also graduated Magna Cum Laude from college.

          So tell me “Steve,” did they have an honors list at the truck driving/bartending academy you attended?

          • They can’t help it. For many of these folk graduating high school or the hope of doing so in the future is the highlight of their life. Of course, when you consider memorizing the lines to Caddyshack as a crowning achievement it shouldn’t be that surprising.

            My husbad has a GED and is one of the brightest people I know. He had an aversion to homework. He found it cut into his social calendar. Alot of times when we are teenagers our priorities are skewed.

  5. Well, the latest is that Obama is telling GM that they are going to be forced into a partnership with Fiat of Italy.

    I completely agree that the automakers have been lax in changing their ways. But it burns me up that Obama is making a big show of “cracking down” on them, while letting the bankers get off scot free to continue their looting of our economy.

    I for one don’t think the American people are going to buy the “look over here, not over there!” distraction.

    • I guess the automakers didn’t pony up enough cash for Teh Precious’ campaign last year.

      Or maybe it’s cuz Michigan voted for Hillary?

      • Or just a variation on an old theme. Throwing them under the SUV.

      • But he got the votes…

      • Makes those Michigan delegates RBC “awarded” Obama look even more ridiculous, doesn’t it?
        Anyway, there’s one thing I notice: the Jr.jr factor. W also was shoveling tax money to Wall Street while telling the auto industry to make concessions (read UAW). It’s a good thing we’ve got “change” cuz the dollars are going to the fat cats

    • It looks like Obama is trying to shift the blame for the economic crisis away from bankers and onto the auto-makers. I don’t think the public will buy it. I hope not. From this story it looks like GM and Chrysler could go out of business. How is that going to help the job situation?


      Meanwhile, trillions will be poured into the investment banks and nothing is demanded in return?

      • For the irony of it see this article from the Chicago Tribune last October.

        Bill Clinton told the 750-person crowd in a high school gymnasium that Democratic presidential nominee Barack Obama has ideas for the economy that would help the United States recover from the economic meltdown and help the nation’s auto industry survive. Without an Obama win, he said, the economy would continue to falter.

        “We could lose the automobile industry, not just the Lordstown plant – the industry,” Clinton said, citing a Youngstown-area GM factory.

        He promised Obama would bring innovation and investment, saying the United States is two or three years away from being able to manufacture and export electric cars.


      • I completely agree. And is’nt anybody afraid of all the power this POTUS seems to have? Too bad we can’t fire him for incompetence! He is changing our country as we know it, and nobody is doing anything about it. WAKE UP PEOPLE!

      • I completely agree. And is’nt anybody afraid of all the power this POTUS seems to have? Too bad we can’t fire him for incompetence! He is changing our country as we know it, and nobody is doing anything about it. WAKE UP PEOPLE!

    • Actually Fiat and GM could make a pretty good partnership.

      • Laurie, I knew it yesterday when I heard “the governement ousted GM CEO”. The timing with the G20 was too obvious. The firing had to be either a peace offereing or a threat.

        10 hours later. Now I know it was a peace offering. This guy is selling us to the highest bidder the way he sold himself to the highest bidder. Nothing to it.

        Remember the selling of our port operations to Dubbai and how that went down. What does he thinks? That he is going to get away with this kind of unamerican behavior for ever?

        • My comment above is supposed to be in this spot. Sorry guys, but sometimes I feel like I am losing my mind with all the things going on in this country, and then I do stupid things. Again, I apologize.

      • I don’t give a shit if it would be good. That is irrelevant.

        Il Duce made the trains run on time, too. Didn’t give him the right to take over the railroads.

      • a lovely couple.hope they have a long and happy marriage…

    • I think that partnership with Fiat is the one involving Chrysler.

      • May be. I heard it in passing on the news.

      • It is Chrysler was given a 30 day ultimatum. GM has 60 days I’m guessing to find someone to partner with. evidently the banking industry is the only industry we will throw money at and keep people on for their “experience” in robbing folks.

      • sorry-Chrysler.

    • AMEN!!!!

  6. Reading this essay just got me infuriated all over again! Some things are just unforeseen but when a disaster of this epic proportion did not have to happen I want to tear the faces off those who took part in the design. Greedy monsters!!

  7. Mish Shedlock:

    This will be a “credit event” triggering payouts on credit default swap bets.

    I have reported before that GM has a $trillion or so in credit default swaps written on it (but my information on this is well over a year old). If banks stocks rally tomorrow (or even if they simply do not collapse), you will know that banks are fully hedged or on the right side of those swaps.

    However, given the swaps dwarf GM bonds, it is virtually guaranteed that someone is on the wrong side of them.

    Does that mean that taxpayer funds will be used to pay off the bets? Help, Dakinikat!

  8. You might want to dig deeper. This shit started in the 1970s, not the 1980s.

    • Actually it started earlier than that.

      It’s been going on forever.

      • IMO, the great unraveling began on November 22, 1963.

        • What happened on that date BB?

          • JFK was murdered in Dallas.

          • JFK was murdered in Dallas, TX.

          • Do you think it began with JFK’s assassination b/c of Johnson’s policies, or b/c the Kennedy cabinet men screwed Johnson? (I am inclined toward the latter). Nixon’s opening of China turned out to be the catalyst for a lot, I think, even if it wasn’t what he intended.

          • JFK tried to take power away from the federal reserve bank and reinstitute precious metal standards for paper money, using both gold and silver. I’m not saying that is the reason he was assassinated. He also tried to stand up to the CIA and the generals and planned to pull out of Vietnam. The point is no President has tried to push that hard against the institutional power structure since.

          • Sorry for the duplicate post. I thought the first one disappeared.

      • True, and I could have explained better. I was running out the door to a doctor’s appointment when I posted. Should have waited.

        That said, yes, those with resources and no moral quandaries about aggression and manipulation have been at this a long, long time. Thousands of years, in fact.

        What I meant when I said dig deeper, to the 70s, was that there were some very interesting “breakthroughs” in the world of finance in the 1970s, mostly coming from young boomer MBAs who were just beginning to wield some clout. The Nixon admin was littered with these types. They, along with their Wall Street cohorts and others in the financial world spent a fair amount of time in the 1970s prepping for the 1980s. It’s not like Reagan arrived on the scene and WHAMMO, everything changed.

        His election was part of a much larger trend that was already taking place. It’s a more-pie chasing scenario. Look at the 1960s–we’re talking 13-16% of total economy is market. We’re at at least 30% today. These fucks have gone chasing a bigger slice of the pie just as the pie was getting as big as it will ever get, with all the boomers dumped into the job market. And we will continue to pay as long as they seek to maintain that margin, which they think is perfectly reasonable. What they’ve done is obscene, immoral shit. In the old days (500 years ago), we’d defenestrate them, but alas, all our high windows are sealed to protect against just that scenario now.

  9. Funny how last year’s oil prices highlighted American carmakers’ deficiencies. And then Wall Street imploded. Good thing I’m not tinfoily, I might think it all had something to do with the making of a president.

  10. The GM CEO has been asked by the Obama regime to resign, but he’ll just be replaced by some other guy who doesn’t know squat about building cars or running an auto company who gets big bonuses for signing on. It’s the Alex Rodriguez phenomenon. You get them to pay you gazillions and it doesn’t really matter how you perform. Does anyone know how much this guy will be paid to leave? I bet it’s a lot!

    Why is Obama appointing auto CEOs? Isn’t anyone scared by this? Not that I like these guys…

    • I wish someone would pay me a bunch of money to quit a job.

      I’ll bet he won’t be living on an unemployment check.

    • I’m scared by it. And I’m very tin-foily.

    • Obama should not be appointing CEOs period. Yes, it is scary.

    • I don’t like them either, but here is the pattern that has emerged:

      1) Give a huge taxpayer bailout with no strings attached, no forethought, no insistence on an orderly bankruptcy, etc.
      DO NOT, whatever you do, hammer out any deals or concessions or conditions BEFORE dispersing the funds.

      2) Gin up public anger at the companies themselves

      3) Use that anger to come in and grab control of industries and markets in a draconian way, that never would have passed public muster had it been suggested on the front end, rather than the back end.

      Voila! Hopenchangen!

      • It’s an excuse to take power away from those who may not have supported the administration and to give it to those who have, all while bi-passing other branches of government. Our checks and balances along with the rule of law are being thrown out the window, and we’re entrusting these companies to a Secretary of Treasury who couldn’t even figure out Turbo Tax (a practically idiot proof tax filing program).

        Yep, things are looking real good.

      • Excellent points.

    • Chimera – that was my first thought – since when does the preznit get to run a company?

      He might ask their BOD to make a change but this is so overt and unAmerican. 😕

  11. http://www.rollingstone.com/politics/story/26793903/the_big_takeover/1
    The opening line is “We’re f&%#ked.”

  12. I worked for an insurance company in asset management and pension services about 20 years ago, and one of the major reasons for the switch from defined benefit plans to defined contribution plans and 401(k)’s was to relieve employers of the costs and investment risks associated with the defined benefit plans (essentially, with the newer plans, the employee accepts all of the investment risk, and often pays many of the administrative costs).

    Defined benefit plans were expensive to maintain and the employer had to pay for actuaries to do periodic valuations, plus if the plan’s investments tanked, the employer would be on the hook for the unfunded liabilities. With 401(k)’s the employer isn’t on the hook if the market tanks, no additional contributions will be necessary, and the employee is the one left trying to figure out how to retire on insufficient funds.

    I don’t think people minded having the investment burden shifted so much until now. Many people who’ve watched their account balances increase pretty steadily over the past few decades, with a few dips and valleys, are now stunned by the dramatic decrease in wealth and the overall scope of the financial crisis.

    Although the 90’s were a relatively prosperous decade, for many it was an awful time to be an employee. Massive rounds of layoffs and decreasing benefits seemed to be all the rage. Experienced employees were let go, and new college graduates would be hired to do the jobs for less, with no kids and a desire to kick start their careers, they were often willing to put in extra hours for no additional compensation (plus, I’m sure they were less costly for health insurance purposes). Although the stock often immediately increased after layoffs, for months afterwards the individual departments hit by layoffs didn’t seem to operate efficiently as everyone scrambled to pick up the pieces dropped by those who were let go.

    Based on my experience, however, I was shocked to learn of the excessive risks taken on by some financial companies and insurers in this crisis, because I know these companies have a lot of market savvy and intelligent employees (actuaries, MBAs, financial experts) working for them (the risks of the housing bubble, insufficient underwriting, excessive market concentration shouldn’t have surprised any of them). Perhaps some of these companies truly just got too big to manage, short term gains were valued over long term stability, and/or compensation and bonus packages encouraged excessive risk taking (and perhaps a few bad apples willing to cook the books and manipulate information made it difficult for others to discern exactly what was going on).

    • Do you think they still have a lot of savvy employees, or were they all replaced by new college grads?

      The point being- how far did a new elite system of staying in one job just long enough to move into a new and better paying one (as epitomised by BO), while at the same time relying on half-baked “management theories” to talk the talk, take over?

      • I think a lot of unrecognized damage was done during the various rounds of layoffs, and the high priced consultants who came in to streamline departments were often laughable. I haven’t worked in the insurance industry for close to 10 years now, but have friends who still do.

        From my perspective, there’s no excuse for the level of risk some of these financial institutions took on. Much of the blame has to fall on upper level management/executives and complicit boards. In the race for short term gains, risk management seems to have taken a back seat. The tone and emphasis was most likely set from the top down.

  13. Morning RD. I have little sympathy for Detroit but I think you should take note that the cars you want Detroit to build are in fact sitting in droves on the show room floor as we write. With gas prices dropped by 50% the market for the fuel efficient is gone. Why not blame the failure of our system for not putting a flexible tax on fuels that will keep gas prices at a level that motivates the sales you want. I also think that it is pretty amazing the amount of money poured into the financial system which caused this economic mess; autos did not cause it. Autos simply are one result of it.

    • What about all the people who will lose their jobs when GM and Chrysler go under? And small businesses that will go under because the auto workers can no longer afford to patronize them?

      • There are many smaller auto part suppliers who are really hurting right now. These companies have laid off employees and may go out of business if things don’t turn around shortly. I can’t understand why our tax payer dollars are bailing out from the top …. these companies don’t need a line of credit as much as they need to be able to sell their product.

      • Apparently, they are “collateral damage”. Our goverance has reached the level of bad satire. I’m ready to jooine the people at A New Way Forward.

    • I disagree that the market for fuel efficient is gone and I disagree with pricing gas in a punitive manner without giving people affordable alternatives BEFORE increasing prices(particularly when people were encouraged by the very government to adopt this behavior through oil subsidies).

      • Amen! Many people I know would buy a Prius in a second, if it were affordable.

        I get really sick of the monied elites ragging on the lower classes for driving their cheap cars and shopping at Wal-Mart, and buying pesticide-laden produce, when many of them don’t have the luxury of making “political statements” with their purchases. They buy what’s cheap so their family can survive, period.

        Going green is something that many people can’t afford, and until it’s made affordable, no one has any right to sneer at the purchasing choices of the masses.

        • frankly, i lost interest in that when I found out the cost of the replacement battery, that’s insane!

          • Not only that, my bro-in-law, a pretty smart guy who’s been selling used cars for several years now for lack of better employment, can tell you that the batteries actually have a carbon footprint MUCH much larger than that of standard engines. The logistics of the shipping chain for the batteries, overseas and back and overseas and back again, are pretty stunning. In short, the whole thing is a boondoggle.

        • wmcb, I agree with you wholeheartedly. There is a significant, underlying socio-economic issue at play in the push to be environmentally responsible. When the choice is between a full grocery cart at PriceRite for $50 or 2 bags of organic food at Whole Foods for the same price, how many families can afford the latter, especially now.

        • Hammer, nail, bang! WMCB just summarized the Whole Foods Nation elitist mentality.

      • I think there is some truth to what you say about affordability. However, when the vehicles that people actually bought instead of the Prius are considered I think your argument fails. Most of those suvs, Hummers etc. were double the price on a P. The other thing I will note is that the Prius is incapable of doing what many want to do with their vehicles—tow a boat, climb a mountain. The other point I would make is that many Americans just flat out do not like small cars—they do not even fit in them any more.

        Toyota and Honda did not gain market share because they made smaller cars. They gained market share because they were making vehicles that you could drive for 200,000 miles and not have it fall apart on you (or even 50,000). As I remember those times, it was not smallness that took people to Japanese and Mercedes car dealers. It was quality and workmanship. It was also the failure of US manufacturers to retool, use more robotics etc. in the 80s.

        Please note that your statements that these fuel efficient cars are not selling flies in the face of market data that show this is exactly what is shifting auto sales today. Also note that Toyota, Honda, Mercedes are successful in their US plants. If GM goes under and Chrysler, I think you can bet the farm that Ford will be a survivor along with the others and that they will make cars profitably in the US. It is market consolidation and probably long over due.

        I still say that we will not have a strong market for the “hybrids” or electric cars until we have a national energy policy. There are many problems with the Prius and the Honda Insight and they are not competitive with a fossil fuel vehicle. Nor are people looking at the battery issues they create. I support fuel efficient alternatives but I think we have to look objectively at the science and the engineering behind these vehicles and our energy policy, or lack thereof.

        • There was a time when SUVs and Hummers recieved a tax break just as the Priuses and other enviornmentally sound cars are getting deductions now.


        • As far as the SUVs being just as expensive go, yes, some of them are. And yes, some people bought them because they didn’t care about fossil fuel consumption.

          But our government was offering a huge tax credit for anyone who would buy one. Ergo, they were often cheaper, despite sticker price.

          Your points are valid about the drawbacks of smaller cars as well. Who is the person most likely to be needing to haul things with their car? Rural folks, ranchers, farmers, people living on the buttfuck side of nowhere in some small town, who need to shop in bulk, and do all their own gardening, roof their own houses, fix their own plumbing. Who is more likely to need a car that can transport 4 of their own kids and 3 others to football practice or school? It’s not college students, and its not liberal urban DINKs. It’s blue-collar families.

          I am all in favor of moving away from gas-guzzlers. But there has been a lot of condemnation of those who drive them, without any honest look at WHY they do so.

          • We have a Dodge pickup that seats six. The Dodge is used when we travel as a family(we have 4 kids) and it doubles for when we need to make home improvements(drywall, flooring or any of the like will NOT fit in a Cobalt trunk). Otherwise my husband makes his 45 mile commute to and from work in our little Chevy Cobalt(say isn’t that made by the EVIL GM folk) which gets 37 mpg. We looked at Priuses they were $10,000 more expensive and with the maintenance costs the Cobalt struck us as a better choice. As for environmental, I walk to do alot of our shopping or take the bus and have canvas bags as well as a knapsack. I plant trees and shrubs(my hubby just bought me a dwarf meyer lemon.) My 6 family member doesn’t live in a Mcmansion, we instead chose a three bedroom mobile that we knew we could afford even if stuck on minimum wage. Our 3 boys share a bedroom. I try to teach my children to be good stewards and balance.

            Just because a person drives a large vehicle doesn’t mean there may not be a specific reason why they have chosen to do so or that they can’t make environmentally friendly decisions. I don’t like how folks are being demonized for their choices when for a long time the government was an enabler.

          • There are many families that literally could not transport themselves in a small vehicle. I’m not against smaller cars, and loved driving one while I was single, but there is a reason vans and SUVs became so popular (admittedly, some people driving vans/SUVs/trucks don’t need them, but many do).

    • “the market for the fuel efficient is gone” but sooner or later, gas prices are going to go ….. up, again.

      • They already have. We are at $2 a gallon here. The idea that people like to spend money on fuel when it could be utilized elsewhere doesn’t strike me as real. I think one of the reasons the smaller more fuel efficient cars aren’t being bought now is because people are worried about making major purchases when they have no idea if they will be employed next week. I don’t think SUVs and large vehicles are doing any better. I’d be interested if the poster had evidence besides anecdotal that says otherwise.

  14. OT– The man who shot and killed 8 elderly nursing home residents and a nurse and wounded a policeman probably did it because his estranged wife worked at the facility.

    Among the dead are Jerry Avent, a nurse at the center and seven Pinelake residents: Tessie Garner, 88; Lillian Dunn, 89; Jessie Musser, 88; Bessie Hendrick, 78; John Goldston, 78; Margaret Johnson, 89 and Louise Decker, 98.

    Unbelieveable! No one deserves to die like that, and no one should have to lose a parent or grandparent so violently and meaninglessly.

    • I wish it were unbelievable.

      Not a true corollary, I thought this guy got off fairly lightly:


      “Paulsen, 49, initially was charged with murder in his wife’s death and with leaving his 16-month-old son home alone.

      After more than six hours of testimony Friday, Hamilton Superior Court Judge Dan Pfleging accepted the plea deal prosecutors and Paulsen agreed to in December, and gave him the maximum of 26 years in prison. In the deal, Paulsen was charged with voluntary manslaughter, neglect of a dependent and moving a body from the scene of death.”

    • Alegre’s Corner has a post on how domestic violence is rising because of the recession. There are a lot of angry, laid off men just waiting to use women, children, and the elderly as scapegoats for their failure.

    • “domestic” violence increases during bad times. D@mn it, funding for social services would help people more than funding for bankers.

  15. The difference in treatment between the auto makers and the bankers has been marked from the start of this current round of theft.

    The financial people got billions over a weekend and the auto makers had to cry in DC for for some time while the press ginned up the ” they flew to Wash.DC in private jets!” phony outrage….what? Did the bankers come to DC on a turnip truck? I missed that. Many times they were not required to show up at all for many, many times the loot.

    I think Barry & co are so much harder on the auto makers because they supposedly make something …a no no ….and have yucky things like health care and ugh! pensions on thier books. Any time JR jr has to deal with people’s pensions etc, he gets all righteous about personal responsibility and stuff. When it’s about a bonus, well his hands are tied!

    I say this current round of theft because I’m remembering the saving and loan round back in the 80’s. The fat cats stole a shit load with bad loans for a few years and the Government finally stopped them and cleaned it up .

    Sounds familiar….however this time the upper crust bought the Government and in such a sexual greed frenzy, they can’t stop long enough for someone to clean it up….and stopped the person who was the most willing , most able to clean it up from taking the office she won .

    It all makes me wonder if bringing the house down is what they want ….if so, they are doing a hell of a job.

    Funny how both Tim’s Dad and Barry’s Mom
    worked for the Ford Foundation ( doing Lord knows what. ) and now thier sons are telling Ford what to do.
    It’s a small world

    • Actually, Ford has not taken any bail out money. They took out a line of credit, before things became more difficult. They have some competitive cars on the market.

  16. Who will be the one person to start putting an end to the obama take over of our country?

    • Unfortunately, there won’t be a lot of options in 2012. It’s either Obama or a Republican. If ONLY the Democratic Party would have the guts to step in and nominate someone competent for 2012. Hillary, Al, Wesley…are any of you out there?? Please consider!

  17. So, the BBC World Service reports bluntly this morning. …that even union leaders are uneasy about Obama yanking the head of GM who has 30 years of experience in the industry…everyone worried whom Obama annoints…

    And the sudden “tough love” requirements basically mean that Chrysler will join with Fiat

    Obama on the road to controlling everything…including the banks….

    But China has its own moves…American Lassies writes…

    China, the Treasury, and Real Estate (As in the New World Trade Center); Cross-Pollination:The New America Foundation/Council of Foreign Relations


  18. Financial wizards? Rather Aprentice Sorcerers. There is nothing that inteligent about those guys. The little smart they had they put it to find loopholes and circumvene the law and use their new found influence to change the law in their favor.

    They are not that smart. They never thought long term and EVERY new techniques they invented is now failing, one after the other in a domino effect.

    In my view, they are grown up teenagers who lack fundamental compass of basic values. The are mecreants whose patriotism needs to be questioned. They are criminal procedures of treason which I would see very well apply to them.

    Oh, but wait… Let’s send them to confirmation in front of Congress instead for treasury department positions… BECAUSE THEY ARE SO SPECIAL,,,

  19. Excellent post RD. I loved this bit:

    We could have dispensed with Six Sigma, “rank and yank” and other silly management theories that justified the MBA’s existence and wasted our precious time. Workers everywhere could have been spared the biz speak jargon than made our ears bleed and meant that our pink slips were right around the corner. We could have actually been rewarded for the work we did instead of being subjected to the stress of “what have you done for me lately?”.

    I Hate those time and motion people.

  20. Two of the major successes of the oligarchy who are bringing this country down have been:

    1) Convincing Republican voters that what Wall Street was doing was actually “free-market competition” when actually it was the furthest thing from it.

    2) Convincing Democratic voters that it was always those evil Republicans in bed with the thieves, not them.

    Hopefully people on both sides of the aisle are waking up to The Big Scam.

    • Very well put.

      • A poster on NQ put it this way:

        what in effect is happening though is the enablers are “herding” us. Ever watch “Rawhide”? We as a people are being “driven” by the enablers of the oligarchy. Driven either left or right as need be by the media, driven against one another by class, age, belief by government policies, when in reality we are all in this together… just one big herd.

    • WTF? Big auto must do “restructure” plans. But Teh One decided the plans didn’t go far enough (no details are given). So Teh One decides he’s going to take over.

      What about “restructuring” the banks? As in nationalize???

      OK, OK, I was expecting some logic from Teh Mess…. ain’tgonnahappen.

  21. W2 telegraphed his attitude about the automakers on “60 Minutes.” If bailing out Detroit were popular he’d walk the money to Michigan in a wheel barrow. He is a chameleon with nothing at the core. He bends over for his big money backers on Wall Street while teeling Main Street to suck it up, just like his predecessor W1. His economic policies are starting to resemble a third rate porno…”Black Bush Gone Wild!” Ok, truth is I have been waiting to use that line, but I think it is apropos.

    • I totally agree Ron4Hills! We have government by popular opinion poll of the day. And the last polls told O that people did not want any more bailouts; they wanted stiff terms. O stepping into autos and all over them is hitting the markets hard this am and there is a huge sell off. They see this administration as erratic, unpredictable and very willing to take over private business. I bet Mullaly at Ford is loving this. He is going to look like a star. I think I may buy some F stock.

      • He could care less about opinion polls just like his predecessor. He just wants the narrative to look like he cares. It’s slight of hand though The majority didn’t want bankbailouts either. You’ll notice those went through anyway.

  22. What the hell was Tiny Tim Treasurer saying when he said this?

    “When we get through this, people are going to care less about what they make, more about what they do. What they achieve is what they make,”

    Well, how about a good decision mr. tim i cant get enough of taxpayers money, can i have more?

    I agree with Cinie, construction worker arent out of work because they built poor energy effiecient homes.
    Obama definitely loves telling the big guys what to do doesnt he. He loves it! Nobody is doing anything to stop this idiotic president with purple lips. I want the government out of everyone’s business period.

    • “care less about what they make” = make less money. That is, us rank and file workers.

  23. Bush put the former managing director of Lehman Bros in-charge of the US Pension Benefit Guaranty Corporation. Guess how that worked out…

    “WASHINGTON – Just months before the start of last year’s stock market collapse, the federal agency that insures the retirement funds of 44 million Americans departed from its conservative investment strategy and decided to put much of its $64 billion insurance fund into stocks.
    Nonetheless, analysts expressed concern that large portions of the trust fund might have been lost at a time when many private pension plans are suffering major losses. The guarantee fund would be the only way to cover the plans if their companies go into bankruptcy.


    • Well that’s just great, PBGC is gonna need a bailout now too. Not bad enough that my husband’s steel worker pension(along with millions of others) was descimated and taken over. Now we gotta pay for it too. Wheeeee!

    • And this is the federal agency charged with evaluating the soundness of current company pensions.

  24. If the AIG-FP division guys (as well as all of those other lizards at Merrill, BoA, Citi etc) had to be retained with big bucks to unscrew what they screwed up, why isn’t old Wagoner at GM needed to undo his mess? The rationales and justifications from this administration for Wall St are looking more preposterous every minute.

  25. My personal opinion on AIG is that it was bailed out ecause defaulting on foreign investment banks like Bitians would have meant a stronger push to move from the dollar as the standard.

  26. The new whipping boy strategy is definitely in place. Tabloids are at it too in NYC

  27. An investment banker, John Slater, begs to differ on securitization with Bonddad at Huffington Post:

    The net impact of all the securitization and borrowing was to monetize future cash flows in order to make them spendable and investable in the present. This fueled a boom that has now clearly proven to be false.

    In the current era (as opposed to the Great Depression) on the other hand, leverage is the cause, not the result, of the economic crisis. We spent our future productive output and must now go through an extended period where we produce more than we consume. Until we wake up to this reality and develop economic theories, governmental policies and private actions to support the necessary era of capital formation and debt reduction, we are doomed to live in an era of privation where the focus remains on redistributing a shrinking pie rather than growing our way out of the problem.

    He also says this in the comments section that is surprising coming from someone on the board of an investment bank:

    The market has been trying hard to correct the excesses described in my article, but the powers in DC and New York have devoted Trillions of Dollars of our money to keep the market from working. I don’t believe in Darwinian capitalism; the country long ago decided to provide a safety net for its citizens.

    What’s different this time is that the power structure has decided to provide a safety net to the major financial interests who are presumably smart enough to make their own decisions and to take the consequences when they are wrong. Bondholders of Citibank, AIG, et. al. have no legitimate claim to federal protection and subsidy, but all of the bailout plans seem calculated to protect them.

  28. http://detnews.com/article/20090330/OPINION01/903300317/1008/Editorial++Rick+Wagoner+s+ousting+had+more+to+do+with+politics+than+his+ability+to+revive+GM

    “Wagoner wasn’t perfect. He was too slow in beginning the makeover of General Motors — though for the record, he got it underway well before the industry needed a federal rescue.

    He wasn’t aggressive enough about cost cutting, perhaps, and was reluctant to declare the death match with the United Auto Workers union that some in Congress demand.

    But he knew about building cars and trucks, and had put a plan in place to do so profitably once again. The next GM chief will have to take over that blueprint mid-stream and sail it through. The departure of the popular Wagoner will also be another hit to employee morale.”

  29. http://money.cnn.com/2009/03/30/markets/thebuzz/index.htm?source=yahoo_quote

    “NEW YORK (CNNMoney.com) — Let’s get this straight. If you are a CEO of a bank that’s losing gobs of money, the government will bail you out repeatedly and let you keep your job.

    But if you’re Rick Wagoner, the CEO of General Motors (GM, Fortune 500), you are forced to fall on your sword, or piston as the case may be. And that’s after you have had to spend months trying to prove that you have a viable business plan.

    No doubt about it, there seems to be a strange double-standard going on.”

  30. One of the advantages of being a blogger is you don’t have to put up with people insulting you and telling lies about you on your blog.

    Another advantage is you always can get the last word.

    • Myiq,

      Who is insulting folk and telling lies? If you want the last word most folk here are accomadating enough to give it to you.

      You sound like you need a hug and a break fromthe spam filter. 😉

  31. http://www.geithnerwatch.com/2009/03/tim-geithner-fires-rick-wagoner-still.html

    Wow, didn’t know there was a Geithner watch blog. It does offer some harsh analysis.

    “The busting of unions and the impending death of retirees (I hate to be harsh but dead retirees don’t collect pensions) will help the Big 3 get into better shape financially, but Detroit also needs smart, new people. Given how awful the job market is, they just might be able to do it – “

  32. See, you just can’t fool ACTUAL Democrats, can you RD?

    Nope. It just so happens we remember the last 30 years of stuff. Like, yes, those cars could have been designed and everybody knew it.
    Still, I hate to see a fool only interested in his own popularity try and dictate things — to everyone else — don’t you?

    Oh, those performance reviews — who came up with those, anyway?
    Because — even the best workers were never actually allowed to do anything innovative were they? Because some middle manger of which there were DOZENS — because they were “on salary” and not paid overtime…was dictating, and, trying to make it easy on themselves, no?


    Ah, freedom from all that……….!
    nothing like it!


  33. http://abcnews.go.com/Blotter/story?id=7208201&page=1

    “Rich Wagoner will leave his post as CEO of bailed-out General Motors with a $20 million retirement package, the company’s financial filings show.

    Although the Treasury Department has barred GM from paying severance to Wagoner or any other senior executive, Wagoner is eligible to collect millions in retirement benefits from his former employer, according to the documents reviewed by ABC News.”

    • Isn’t that nice that the company can afford a 20 million dollar severance even as it is called “unviable”.

      Abso-friggin-lutely astounding.

      I don’t begrudge a guy who spent 32 years at the head of a company severance but geez 20 million seems like overkill when you are telling retirees that they will have to take a hike on their portion of contractual obligation.

      • Especially when they plan to gut the union members’ benefits! Somehow there always seems to be large bucks for executives and they are said to have “earned” them wi=hile the union members are referred to as “entitlements” or “benefits”,

  34. it is official- Sec Def Gates DADT is off the table Obama just has to break this promise to gays…sorry you should have voted for hillary.

    • How any gay person could not have seen the obvious homophobia emanating in waves off of that man, I will never understand.

    • No surprise for anyone paying attention.

    • Isn’t that interesting. Especially since their excuse is that they are too busy with other prioritys. I thought Obama wasn’t having a problem handling so much. All it takes is a signiture. Hope to hear my gay brethren waking up from their comas soon.

  35. Harry Reid is emailing and begging me for money yet again. I replied thusly:

    You can keep your HopenChangen, thanks. Dear Leader Obama is horrifying me and the rest of the country on a daily basis.

    Americans are onto the scam perpetrated on us by the Democratic Party, and are not going to let you get away with it just because the Republicans are worse.

    At this point I’d take a Republican over the fraud in the Whitehouse and his enablers, any day – and that is saying something for a liberal, Bush-hater extraordinaire such as myself. Congratulations – you helped lie and scheme and arm-twist delegates until you managed to get a Democrat as president who is making even GW look good in comparison, and that is quite a feat.

    Want some support, Harry? Tell it to your enforcer thugs who tried to intimidate and steal the caucuses in Nevada and other states. Get Obama’s hateful juvenile “army” to come help you out now, if you are not already under the bus. I think you’ll find their attention span is short, and you’ll get no help from the old-school Democratic faithful, whom you and Donna Brazile and Axelrod and Rahm decided the party didn’t need anymore.

    We’re onto you, Harry – the whole stinking lot of you, all scrambling like mad to sell our country down the river in order to protect your paymasters and prop up that empty suit that YOU elected president.

  36. New thread up

  37. Simply brilliant, riverdaughter.

  38. What were we thinking? Of course we shold have handed over the FICA money to them so they could have assured our retirement of luxury too. All the young folk were for it. That money was just going to waste in Al Gore’s lockbox. Good thing it was broken into anyway so they could mix that money into the debt that those same kids will be staring at for years up to their own retirements.Maybe by then, Mechelle will have taught all of them to grow a patio garden or if they are lucky enough to be living in the wilderness somewhere they can just forage for berries and protein filled bugs. They have only your best interest at heart. Just look at the Toll Brothers. They build luxury homes and they’ve recently seen an uptick in sales since the bailout money/bonus’ have been rewarded. Its working. At least for some – the suits. I just know that my son the plumber will get some work outta them when their new houses spring a leak in the next decade or two.

  39. I wonder if anybody has heard from Obama’s sweetheart, Michael Moore. I have respect for him or did until he jumped on the hopey/changey bandwagon. His advocacy for the UAW has been the driving force behind the majority of his work. (Does he have a website?) I did read one thing about the CEO of GM though. Seems he planned to cut 100s of white collar jobs as a const cutting measure. Maybe that is why he was sacked. They have a lifestyle to maintain. The workers should already know how to get by on scraps.

  40. I found Michael Moore’s site. He headlines: UAN workers – “Blood from a stone”.

  41. I can’t believe it. Michael Moore is on FOX in the next few minutes. I must be psychic or something. My husband, yes husband, just ran out here to tell me. He’s freakin cause I had just brought him up while ranting after reading RD’s comments a minute ago. Please thank my Mike for tolerating me. I told him I’d be done after the elction but refuse to shut up.

  42. RD: you hit this one out of the park. This is the crux of the problem and until we stop this crap, our economy is a joke.

    Let’s try that thought experiment. Without the finance Gods handling our money we might still have pensions. We might be making more money because the investor class wouldn’t be cheering for the increase in quarterly earnings that happen every time a company announces a layoff. We might not have to have teleconferences at ridiculous hours with programmers in India. People who need to get stuff done at work wouldn’t have to spend half of their time negotiating contracts with outsourcers, trying to get multiple contractors to handle what a single full time employee with benefits used to handle. We might be making more fuel efficient cars if CEO’s had spent less time resisting the future, skimming the profits off the top, and more time encouraging the design of cars that would take advantage of that future. But that would require hiring more designers and letting them design instead of figuring out how to make changes without incurring any additional expense. They might have gotten good at car design, had they been allowed the creativity and money to do it. We might have a Michigan that doesn’t resemble Blade Runner. We could have dispensed with Six Sigma, “rank and yank” and other silly management theories that justified the MBA’s existence and wasted our precious time. Workers everywhere could have been spared the biz speak jargon than made our ears bleed and meant that our pink slips were right around the corner. We could have actually been rewarded for the work we did instead of being subjected to the stress of “what have you done for me lately?”.

  43. It took 40 years for Japan to eat our auto industry’s lunch while they arrogantly slept. After WWII a guy named W. Edwards Deming was bucting their chops, reminding America that if they weren’t careful and didn’t focus more on quality, they might not be the industrial/manufacturing King of the World forever. He was laughed at and they gave him money to go over to Japan and “help them out”. Help them out, he did. They worshipped him. To the Japanese, Taguchi, Quality Function Deployment, Six Sigma and Statistical Process Control weren’t buzz words. They lived it. The Japanese model of management was horizontal not vertical. Their idea of “team” was a rowing team, ours was a football team.

    Then AFTER Japan ate our lunch, everybody acted like it was sudden. American manufacturers, including the Not So Big Three Any Longer, invited Deming here to “Fix us up”. Of course, they only wanted him around for a couple of weeks, and considering he was already in his 90s, he laughed at them. They listened to him four decades too late. So they adopted all the buzz words with nothing behind any of it but museum. They still didn’t Get It. And if they didn’t get it twenty years ago, they aren’t going to Get It now. It’s over. They will limp along and limp along but they will never admit that they have something to LEARN from Japanese auto manufacterers that are producing autos right here under their noses.

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