Free Enterprise is for Suckers

Bloomberg, which is suing under Federal Freedom of Information Act, reported that the Federal Reserve made its $2 trillion in emergency loans under 11 different programs, eight of which were created in the past 15 months. (meaning handouts that up to now have been SECRET). Bloomberg asked a federal court in New York to require the Federal Reserve to disclose the identity of the banks that borrowed money through certain financing mechanisms, and to disclose what assets they pledged against those loans.

Tell me about the crooked UAW again.

The Treasury Department also made a little-noticed change to tax policy that experts say could save banks that merge with other banks as much as $140 billion in taxes. One of the biggest beneficiaries of the change would be Wells Fargo & Co., which is absorbing Wachovia Corp. in a deal spurred by the Federal Deposit Insurance Corp.'s concerns about Wachovia's solvency.

Fuck GM, let the markets work.

If the estimated savings from the new tax breaks are included, the assistance would climb to $2.46 trillion. That total does not include other measures not focused directly on banks, such as Treasury Department's $200 billion in support for Fannie Mae and Freddie Mac, and the Federal Housing Administration's $300 billion HOPE for Homeowners program. Go here for the entire entry from Bailout Sleuth.

It's Free Enterprise for us suckers but state capitalism for the "good guys."

AND NOW FOR SOMETHING COMPLETELY DIFFERENT. Some very bright people are commenting on articles and writing them too. Their views should be taken seriously because they really know their shit. Something called VEBA is mentioned a lot. VEBA is a different way to pay for and receive medical care. The savings to corporations is substantial and its implementation in the UAW contract is working.

“GM’s current labor costs are $73.26 per hour” and “The cost is $25 to $30 per hour more than the labor costs of Asian rivals such as Toyota and Honda that have plants in the U.S. The creation of the VEBA could eliminate as much as one-half to two-thirds of the gap virtually overnight.” Per Auto Insider.

To be wild and crazy, take the $30/hr difference, (between foreign and domestic expenses) cut it in half (because the VEBA was agreed to), and you have $15/hr * $34 Hr/car = $510/car max. Not thousands. Are people actually expecting that breaking the UAW or moving a plant south would suddenly turn a $23k car into a $19k car? As much as the UAW has made my life difficult at times, some honesty is due in the discussion.

Another point:

Part of the problem has been that only US consumers will buy US autos. As Jeremy Clarkson, presenter of UK car programme "Top Gear" put it in reviewing a new Cadillac model, "I don't know what it is, you can't put your finger on it, but it just feels cheap" Anyone who has ever owned a German or Japanese car understands this would never go back again.

Go Here to a BBC site called Top Gear, a site many believe to be the best auto site going. A comment about a recent WSJ article on the car biz:

Unfortunately for the Wall St. Journal the cost structure of labor at both foreign owned and domestic owned auto manufacturers is a very well studied issue, and the reality is clear: the cost structures are very, very similar. The difference is that japanese management regards their job as making the company successful, while american management regards their jobs as making themselves rich. And, oddly enough, they are extremely good at their jobs.

This is the most serious economic question right now. Of course they don't deserve a bail out. But if we look at the police lineup of investment criminals who we are "rescuing" can we honestly say that people who earn their money honestly, play by the rules, and are good citizens shouldn't get help? For a simply stated rebuttal to my argument, go here. Starting with: Ford, for example, made as much as $18,000 profit on every Excursion SUV, while losing money on its Focus compact car. The exact formula used by the old Las Vegas when they gave away the hotel rooms to get people to the gambling casino. That formula was easily replaced and a new Las Vegas was created, one with roughly 100,000 more jobs.