Fools On Hill Put Bullet In The Heartbeat Of America; World Markets Tank

The last 7-10 days have given us multiple Congressional hearings, press conferences, statements by belligerent bloviating blowhards, outrage, fear and uncertainty in the public over the precarious state of the American auto industry. Last night it all culminated in a shameless show by Senate Republicans who decided to crater the world economy instead of agreeing to provide what, at least by current Washington standards, is a nominal loan to American automakers. Today the reality of their action, actually lack thereof, has already set in. From The Guardian:

Stockmarkets tumbled around the world after a $14bn (£10bn) bail-out package for the struggling US car industry collapsed last night.

The London market followed Asian shares into the red. The FTSE 100 index fell nearly 180 points in early trading, a drop of 4%, and later traded down 140 points at 4248.

Dow Jones futures were down more than 250 points, pointing to a fall on Wall Street when it opens later today. There could be more bad news for the US economy when official figures are released this afternoon, which are expected to show a sharp fall in retail sales in November.

The news triggered a sharp fall in share prices in Asia, with Japan’s Nikkei closing down 5.6% at 8235.87 while Hong Kong’s Hang Seng tumbled 5.5% to 14,758.39. Also hurting Asian markets were new figures showing Japanese consumer confidence falling to a record low, while India’s industrial output posted its first annual drop since 1995.

The only ray of hope in this morass of stupid was pointed out by Ian Welsh last night, namely the Bush White House may now have to lend the auto companies the money through TARP. Ian noted this from CNN Money:

Bush officials warned wavering GOP senators that if they didn’t support the legislation, the White House will likely be forced to tap the Wall Street bailout to lend them money, two Republican congressional officials told CNN earlier…

…One of the sources said the a White House official made clear to a GOP Senator that would be the worst option, because the loan could go to the auto companies with few or no requirements along with it.

That would certainly be the smart thing for Bush to do because it is not just General Motors, heretofore the Heartbeat of America, that is being killed, it may well be the worldwide auto industry. From Bloomberg:

GM plunged 28 percent in Germany, while Honda Motor Co. and Daimler AG sank more than 6 percent. The dollar fell to a 13-year low against the yen, while the cost of protecting corporate bonds against default soared. Metals and crude oil slumped.

Standard & Poor’s 500 Index futures sank 3.9 percent, indicating the benchmark for U.S. equities will extend yesterday’s 2.9 percent drop. Europe’s Dow Jones Stoxx 600 Index lost 3.3 percent, while the MSCI Asia Pacific Index fell 3.9 percent.

“It’s over with,” Senate Majority Leader Harry Reid said on the Senate floor in Washington last night. “I dread looking at Wall Street tomorrow. It’s not going to be a pleasant sight.”

No kidding Harry. Maybe you could have worked a little harder on getting your Democratic Senators, that didn’t bother to show up and vote, down to the floor. Oh, and for the biggest bloated fools of all on the hill, the Republican bus full of Bozos driven by Richard Shelby, Jim DeMint and Bob Corker, how do you like your handiwork now that your precious foreign manufacturers are tanking too? Just wait until the demise of parts suppliers really hammers them. Morons.

29 replies
  1. BlueStateRedHead says:

    I have not been this hopeless or angry since those days when the DoJ revealed its moral turpitude daily, from firings to wire tapping.

    Fold in the Drier and Madoff arrests (see fp NYT) where the uberrich become urber criminals, and I have decided that Republicans and rich are not like you and me.

    To make room for this much venality and cruelty,they have had to have part of their soul removed. where the moral imperative lies.

    And the entire New England is under flood watch.

    Anyone know of any good news for anyone today?

    • Mauimom says:

      And the entire New England is under flood watch.

      Anyone know of any good news for anyone today?

      Most of Hawaii is under flood watch as well.

  2. klynn says:

    bmaz, IANAL but in doing some reading I discovered that it is possible to file charges against someone for intent to do grievous bodily harm even if no weapon or contact to the body has occurred. Am I understanding this correctly?

    So, would voting against the auto bailout tanking the dollar, causing people to loose everything when there was the option to prevent loss thus,causing world-wide panic, be considered “intent to do grievous bodily harm?

    If there is a remote possibility, how could this be done on behalf of a large group of citizens? Should we all file separately?

    I know this sounds crazy…

    • bmaz says:

      Under certain circumstances, yes that is true. What would be the case here would constitute financial or psychological harm at best. Legislators are protected for their acts on the floor anyway. You can safely give this one up.

      • klynn says:

        I am not thinking about the voting act on the floor, I’m thinking about collusion outside of the vote. How could they be protected for that?

        • bmaz says:

          It is in relation to their legislative function, likely still covered; even if not, no prosecutor in the world is going to charge this. A complete non-starter.

          • klynn says:

            Sorry I am still asking questions. What about charging Corker with SEC violations through stock manipulation via false rumors?

            • bmaz says:

              You have evidence he personally profited? Or that he intentionally did it for the direct benefit of someone close to him? No. This is a screwed up mess, but there is nothing that is directly criminal. Without a heck of a lot more, this is just silly.

  3. BooRadley says:

    I assume Bernanke and lurch Paulson are trying to give junior a crash course in credit default swaps. AFAIK, if GM goes, all the CDS’ have to be reset, and that sets off a whole new, deeper, phase of insolvency liquidity crises requiring even more deleveraging.

    • masaccio says:

      I’ve been thinking about the GM credit default swap issue. The DTCC and the ISDA both say that the sellers of swaps on GM have all posted collateral for their obligations. Oddly, this contributes to the credit crunch, because all of that collateral is stuck in the vault and cannot be used for any lending or other productive purchase. If GM goes into bankruptcy, then the money is paid out, and the winners can start using it.

      Unfortunately, that money and a bunch more will probably be needed as collateral for the many auto-related entities against which they have sold protection, and a lot of others as well. As the economy sinks, more and more money will be tied up as collateral for these bets, and less and less will be available for lending to whatever is left of our productive industry.

  4. plunger says:

    Watch for a massive head fake in the markets today. They’ll let it drop on bad news until the price level and/or hour of their choosing (President’s Working Group), and then come out with the “Bush To The Rescue” program, courtesy of “The Reality Creation Architect,” Karl Rove, and force a massive short squeeze – fleecing all speculators in both directions, to the enrichment of those who know the script in advance.

    The Plunge Protection Team won’t even try to be subtle today. Behold the “Visible Hand.”

    Whipsaw by design…they’ve been doing it all the way down.

  5. JimWhite says:

    I just ran across a great piece from Center for American Progress with some good info on the auto industry:

    Furthermore, as Ron Gettelfinger pointed out last week, labor costs only make up 8 to 10 percent of the total cost of producing a vehicle; the other 90 percent goes toward research and development, parts, advertising, marketing, and management overhead. This statistic is likely shocking to those conservatives clamoring for more lay-offs, pay cuts, and benefit reductions. If anything it should illustrate that reducing labor costs is not a panacea to the industry’s troubles.

    According to the latest data from the 2008 Harbour Report, which is an annual study of manufacturing efficiency, 9 out of the 10 most efficient auto assembly plants in North America are union plants, represented by either the UAW or the Canadian Auto Workers, or CAW. Thus, conservative assumptions about union inefficiency are inaccurate. Not to say that there aren’t ways of improving the organization and effectiveness of the UAW, but to claim unequivocally as conservatives do that unions inherently destroy a company’s prospects for profitability is simply false.


    Executive compensation is perhaps a more meaningful barometer of demonstrated priorities and cost structures of the Big Three relative to their Japanese competitors. According to data from 2006, the top three executives at the Big Three earned $26.5 million in salary and bonuses while in the same year, the top 37 executives at Toyota earned a combined $21.6 million (in 2006, Toyota’s top executive Hiroshi Okuda earned only $903,000).

    ‘nuf said. Apologies if someone already linked to this from Dec. 9.

    • plunger says:

      Yeah, the labor cost issue is a red herring. No one wants to admit that the auto executives and oil executive colluded to ensure that the marketing campaign promoting “HEMI” coincided with the absolute peak in prices at the pump.

      At the highest levels, the banks and the oil industry are both controlled by the same individuals (The Crown, Queen Beatrix, Rothchilds, Rockefellers, etc.). When the dollar was set free from its backing by gold, what they didn’t tell you is that the commodity that they chose to backstop it with is oil. They understood how much more money a select few could make if they ensured control of the PetroDollar – in concert with suppressing the value (on paper) of gold.

      This is a the grand chessboard, and the game is being played by a few powerful actors who don’t give a damn about anyone but themselves. They’ve convinced themselves that their actions are beneficial to planet earth.

      Aaron Russo laid it all out (on your tube).

  6. dakine01 says:

    I’m still wondering WTF the Republicans are doing thinking their job description entails suppressing the wages of US workers. They’re trying to break the unions and push the union wages down to the same level as the non-union auto workers in their states. Shouldn’t they be doing the exact opposite? Working to RAISE the wages for the non-union workers in their state subsidized auto plants to the same level as that of the union worker?

    • Professor Foland says:

      I think it’s even worse than you put it. Toyota workers’ wages right now must be pulled up somewhat by the fact that the UAW is powerful in Detroit. Without the UAW, those wages in Alabama would surely be lower.

      Take away the UAW, and it’s not only Detroit’s auto workers that get hurt.

    • MsAnnaNOLA says:

      The Republicans believe so strongly in their own ideology that they are blind to what is going on. They drank their own milkshake.

      Fundamentally they don’t really understand what is going on. The facts on the ground conflict with their worldview and they can’t wrap their heads around it.

      If only McCain had been more conservative…

      If only we could get rid of unions then all the auto industry would thrive etc.

      If your ideology tells you that the rich can keep getting richer and richer while the middle and lower classes fall deep into debt is a sustainable economy in the long run, even in the face of massive evidence to the contrary where do you go from there?

      The bottom line of our economy is very simple, these two factors are not compatable with a strong economy:

      1. The economy is based on 70% consumer expenditures.


  7. radiofreewill says:

    This will get fixed. All that remains to be seen is whether Bush will reluctantly sling some TARP Funds at it, or will it be Obama that brokers an Auto Loan Package on the side.

    But, it does signal, imvho, the Definitive End of National Gooper Influence – the Ideological Fever of Hate As a Policy Guide has Finally Broken.

    These days, teetering on the edge of a Depression, the Name of the Game is Jobs.

    Obama and the Dems really Get It. The Goopers not so much.

    Detroit didn’t Pay-To-Play with Bush like Wall Street did – so, he’s Okay with snuffing Them out to Make an Ideological Point – at the Cost of Our Entire Economy – Just Like Iraq.

    The Republican Senators, for their part, couldn’t Engineer a Compromise with a Slam Dunk Compromise Opportunity – they very easily could have nestled their influence into this package and Saved Jobs – but, they couldn’t pull it off.

    So, that’s it. Lame Duck President. Lame Duck Goopers in the Senate and House.


    And, Obama didn’t even have to come in to the game…

    Bush and the Republicans Will Own Their Failures.

    Imvho, their Very First Act of Taking Responsibility should be Making TARP Funds available to the Auto Industry by the End of the Day.

  8. plunger says:

    Bernie “Madeoff” with $50 billion?

    I’m betting the entire thing was a mirage. He created statements with the appearance that he was trading stock in the prior month, but he was just holding onto (spending) the cash being pumped in and generating reports and statements that made it appear he’d invested it wisely each month.

    As his results (on paper) became legendary, more billionaires forked over their accounts to him.

    Imagine the unwitting fraud that occurred when individuals used those numbers to submit their financial statements to borrow money – assuming that the “returns” demonstrated on paper actually existed.

    Now where do you suppose this guy learned to think like this? He ran the NASDAQ MARKET.

    I’ve been claiming for the past several years that the entire market is the exact same type of ponzi scheme. The actual “money has been stolen. There is no market. It’s all just a mirage.

    Some of the richest people you know, might not be.

  9. MsAnnaNOLA says:

    I messed up my post at 17…dangers of typing while not looking at the screen.

    2. The middle class has declining real wages while the top 20 percent earns half of the income and increases their share over time.

    Fundamentally incompatable. This is not rocket science, this is common sense. These two are incompatable with a strong economy. This is how we got to where we are.

    Workers have given it their all by working more and more. As shareholders they have made little because the executives squandered it all for the most part. The ruling class has no ethics to the companies they run nor to the workers that they run into the ground.

    Well as Tanta would say we are all subprime now. How long is the world going to keep making loans to us? The price is going to get steeper. How long can we afford it?

  10. Leen says:

    Yesterday Corker said that this would not pass due to three words. Were those three words “lower their wages”. Was this the complete hangup? That the auto workers would not give a date to “lower their wages”

    Too bad Corker did not say to the auto workers look we will lower our wages if you folks will lower yours..

  11. Gerald says:

    Several points:

    First some, especially on Firedoglake, seem happy thinking that Bush will have to ”back off” his refusal to give TARP money. They think that is a sure thing because the White House threatened the Senate Republicans with it, but that is probably just rhetoric.
    Since when has Bush done anything that seemed logical or sensible? I wouldn’t bank on it.
    The only people that still like him is his 25% hardcore base, and my guess is that most of them are against the bailout.
    Bush isn’t going to win over the people at Firedoglake or many others of the 75% that hate him, so why should he risk the 25% true believers that he knows are with him.

    Second, all the Democrats + Independents (58 my last count) needed was 2 Republican votes and it seemed that they had 10 or so. So where is the introspection? ”Look to your own house” my mother used to say.

  12. Gerald says:


    the 3 words were ”a date certain.”

    He and Mitch wanted the UAW to give a near term date on changing their wage scale rather than waiting until their current contract expires in 2011.

  13. Gerald says:

    And one last word, and I will be quiet.

    I am truly disappointed that a deal wasn’t struck, but to go negative on everyone at this time is I think self defeating. There will be more than enough time for that later if all good efforts finally fail.

    I think everyone that wants a deal before bankruptcy including all the blogs should implore ”very politely” and ”sincerely” that Bush, and Mitch, and Corker, and others save the Auto Industry and save America’s industrial base.

    There are times when being a ”bitch” is self defeating.

    • Leen says:

      Dmac just posted this

      msnbc just announced that gm is going to cut production by 250,000 vehicles, will temporarily ‘close/shut down’ 21 plants. (’close/shut down’ not sure which words she used..and they didn’t say which vehicles’ production will be cut back.)

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