Friday, December 5, 2008

A Second Chance For The Big Three's Second Chance

I had pegged the bailout of the auto industry as all but dead, but it seems that today's dismal job numbers with over half a million jobs lost in November alone has spurred both the GOP and Democrats into action on the Big Three automakers.
Efforts to provide emergency loans to struggling U.S. automakers gained momentum on Friday after a grim U.S. jobs report spurred talks between congressional leaders and the White House.

U.S. House Speaker Nancy Pelosi has dropped her insistence that the money come from the $700 billion financial bailout fund that the Bush administration had refused to use on automakers, said a congressional aide familiar with the discussions.

Another congressional source said Pelosi was open to the idea of tapping the existing $25 billion advanced energy technology loan fund to help auto companies - an idea the White House has promoted.

Such a move would likely build bipartisan support in Congress for a bill that could be signed into law by President George W. Bush.

So far, this is being spun as a victory for the GOP, but the reality is just a bit further down the article...
Congress and the White House are anxious to prevent the threatened near-term collapse of one or more of the Detroit Three - which directly employ 250,000 people.
Somebody in the White House has apparently told Bush that if his final month in office leads to the death of the American Car, well history is really, really not going to look kindly upon him. Not that history had any other place for him but dead last of 44, but apparently that's too much for even Bush to handle.

The fact of the matter is the effective unemployment rate, the rate that includes all the folks who have stopped looking for work, or are scraping by on part-time work, has now reached 12.5%. That means one in eight American workers don't have a full-time job right now, and since December 2007, America has lost 2.7 million jobs.

Neither side wants to take credit for losing millions more should the auto industry fold. In a matter of about 8 hours today, both Obama and Congress have swung into action and the White House has done a complete 180.

By next week, an auto industry bailout could be on Bush's desk.

What a difference a day makes.

Operation Big Payback

After I outlined the GOP plan for the next four years yesterday, the always dependably awesome Digby gives us specifics of how the GOP will execute that plan to make sure Obama Is Worse Than Bush Ever Was In All Things, starting with Bush appointed US Attorney Mary Beth Buchanan basically daring Obama to fire her.
When the US Attorney scandal broke, you'll recall that there was a lot of wingnut chatter saying that because Bill Clinton had asked for the resignations of all US Attorney's at the beginning of his term, Bush had a perfect right to fire US Attorneys who refused to do political dirty work. They set the stage for this at the time. It was entirely predictable that the new administration would be held to a completely new standard --- he would not be allowed to fire any US Attorney who had been appointed by Bush for any reason at all or risk being accused of using the Justice department for partisan gain. It's how they roll.

US Attorneys should be apolitical as much as possible. They most certainly should NOT be hyper political actors as this person was, working closely with a disgraced Attorney General and involved in the scandals. It's outrageous that anyone like her would even still be in the Justice Department today under Mukasey.

If she stays, she will be working against the Obama administration from within. There are probably many others like her at all levels, some burrowed very deeply. After all, the US Attorneys were fired for refusing to go along with political prosecutions or to make way for political friends. You have to wonder about those who weren't fired.
Keep in mind no matter what Obama does, the GOP will say he's Worse Than Bush(tm). The Village Idiots are already setting the public up for this. It's the battle cry for the next four years.

Count on it. The only way the GOP gets back into power this generation is to do everything they can to assure Obama is Worse Than Bush(tm). This means relentless opposition to anything and everything Obama does in an effort to politicize it and to compare it to Bush. There will not be any magical migration of GOP moderates to help Obama. The pressure the moderates will be under from the far right will be crushing. GOP moderates will play ball with a lockstep assault or they will be replaced in primaries by those who will in 2010 and 2012.

Obama must go down as the worst President in modern American history, replacing Bush and Nixon, or the GOP is done for a generation or more. They know this. They will regroup, redouble their efforts, and resume the assault.

The era of hyper-partisan politics is just beginning.

Zandar's Thought Of The Day

The same Village Idiot Happy Face economic experts who told us the Bush economy was the greatest story never told by the Evil Liberal Media are the same ones who have been saying the markets will hit bottom any time now and are the same ones saying after today's devastating job loss numbers that once again...the worst is over.

Do you believe the worst is over?

You willing to bet your job on that?

The Ten Percent Solution

To go along with the worst lob losses since the year before I was born, we now have news that one in ten Americans are at least one month behind on their mortgage payments.
A record one in 10 American homeowners with a mortgage were either at least a month behind on their payments or in foreclosure at the end of September as the source of housing market pressure shifted to the crumbling U.S. economy.

The Mortgage Bankers Association said Friday the percentage of loans at least a month overdue or in foreclosure was up from 9.2 percent in the April-June quarter, and up from 7.3 percent a year earlier.

Distress in the home loan market started about two years ago as increasing numbers of adjustable-rate loans reset to higher interest rates. But the latest wave of delinquencies is coming from the surge in unemployment.

And things are only going to get worse. Even if the housing market hits bottom...who is going to have the down payment and the creditworthiness to get a mortgage, a car loan, or any other major bank loan?

Banks are sitting on hundreds of billions, and they aren't loaning it out. The real problem isn't even the housing collapse anymore, but the collapse of the American middle class economy. With no middle class conusmers to consume, and no manufacturing base to rebuild a middle class, America's economic woes could very well last for a very, very long time.

Snow Job

Economists are predicting November was the worst job loss month in 26 years, an estimated 335,000 jobs went bye bye, the educated guess is unemployment at 6.8%. The real numbers will be out at 8:30.

I'm expecting them to be significantly worse.

[UPDATE] "Significantly worse" indeed. A staggering 533,000 jobs lost in November to a 6.7% unemployment rate, the worst single month since 1974. The newly revised numbers for September and October mean a heart-stopping one-and-a-quarter million jobs lost in the last three months alone.

Almost 2 million jobs now lost in 2008. December's numbers will certainly put us over that mark. The pain is just beginning, folks. No bottom is visible. 2009 could actually be worse.

The Big Three's Last Shot

Today the CEOs of the Big Three automakers go before the House to plead their case one last time, but the reality is Democrats don't have the votes in either chamber of Congress to pass anything.
With time fast running out, Congress and the Bush administration will wrestle again today over whether to lend $34 billion to Detroit automakers, even after senators heard grim warnings that their failure could cost 2.5 million jobs and the liquidation of three iconic U.S. companies: General Motors, Ford Motor Co. and Chrysler Corp.

Mark Zandi, chief economist at Moody's, told the Senate Banking Committee on Thursday that even the $34 billion that the executives of the three companies pleaded for would hardly be enough. Detroit eventually would need $75 billion to $125 billion to avoid almost certain liquidation over the next two years.

Still, Zandi told senators that the automakers' failure would be "so damaging to the economy, you don't have the choice."

Bailout fatigue among the public and lawmakers is blocking the money in Congress. Lacking votes in both chambers, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid are preparing to blame the Bush administration for letting Detroit go under. Reid said Treasury Secretary Henry Paulson could "with the stroke of a pen" save the automakers by tapping the $700 billion financial rescue Congress passed in October.

Michigan Democratic Sen. Carl Levin saw in Thursday's testimony a new path to do just that.

Ford and GM executives pointed to an estimate by J.P. Morgan that the automakers' failure could trigger $1 trillion in losses to the banking system. Levin described that scary figure as key to persuading Paulson to allow automakers access to the $700 billion.

But President Bush said in an interview with NBC News, "No matter how important the autos are to our economy, we don't want to put good money after bad. In other words, we want to make sure that the plan they develop is one that ensures their long-term viability for the sake of the taxpayer."
It's pretty clear that the bailout is just not going to pass. It's even clearer that GOP lawmakers in states outside the Big Three's home of Michigan, Ohio Pennsylvania and Indiana have no interest in saving GM, Ford and Chrysler when their own states plan to benefit from foreign automakers having plants in those states outside the Rust Belt. And it's even more clear that the President will simply veto anything that comes down the pike.

The GOP is bound and determined to kill the Big Three in order to kill the UAW, plain and simple. Obama could step in at this point and promise something in January, but that may be too late.

We'll see.


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