Maybe an anvil fell on her head?

Why did Justice Ruth Bader Ginsberg put a stop to the Chrysler bankruptcy filing process, albeit a temporary one? It's out of line with Obama's plans, and Ginsberg is notoriously liberal. Maybe an anvil fell on her head.

Or

Maybe there's a reason behind it. I can think of a couple of possible scenarios.

1) She's interested in justice and not liberal bias.

2) Democrats want the deal to fail but don't want the responsibility for crossing the UAW.

3) Democrats want the deal to pass but if it fails they want the to be able to dump the political fallout on the Republicans.

4) The pause is just to look good.

UPDATE: Looks like it's number 4. Arg. Apologies to Hugh Hewitt.

Trying to Dodge the Chrysler Debacle & Sotomayor

Call me an optimist. Hugh Hewitt wrote in his blog at Townhall today that he doesn't think there's backbone enough in the Supreme Court to block the Obamafication of the Chrysler deal to crank-shaft the secured creditors in favor of the UAW.

Hugh's a brilliant guy and makes great points. But I have to believe that based on the technical merits, the case, if taken before the Supreme Court could in fact be stopped. Not 'will be stopped', but 'could be stopped'. Justices Roberts, Alito, Thomas, and Scalia are solid originalists. Could Justice Kennedy be swayed not to vote with the liberal Justices? Possibly.

It doesn't mean anything to have a Supreme Court if they are swayed by political winds, or a press corps ready to savage them. They are supposed to be above politics and blind to anything but the proper interpretation of the laws of the land. They should not be swayed by feelings of political fear. Or empathy.

If you want to have a Supreme Court that falters or fails because they consider their own feelings, why have one at all?

Wait, what?

Otherwise you could just have vigilantes in the street running down a person of interest as described by police with respect to a criminal case, and beating him. Guilty? Maybe, but it doesn't matter. No courts are needed, never mind a Supreme Court.

Justice from the heart means an imperfect justice. It means bias will play a role in every decision. And if that's the case, those closer to the situation will 'feel' it more personally and keenly. No impartiality needed would inevitably lead to no court needed. Plain and simple.

Call me an optimist.

Politicizing the Automotive Bankruptcies

Uh oh. Chrysler's debtors are taking the bankruptcy proceedings to court on the basis that they were preferred creditors and they got less than the auto workers did, so they feel that it is an unfair bankruptcy. They feel the Executive branch of the federal government - the Obama administration - used undue influence to set the conditions of the managed bankruptcy in favor of those it favored.

It further politicizes the bankruptcy/bailout proceedings that President Obama politicized in the first place by trying to control the entire process. This is something that should not have been politicized in the first place. But now that it has been, there's no going half way.

It's a parallel to selectively releasing Guantanamo 'torture' information. The President wanted to release the bad details there but not the whole story. Withholding some of the truth is tantamount to lying. In the case of the Chrysler bankruptcy, there's no half way either. Since it's been politicized to benefit one group over another, there's no shame in the injured party trying to defend its interests in a court of law.

There are other aspects to this story now. For example, the Chrysler situation might serve as a test case for the GM situation. Obviously everyone involved has a vested interest in seeing specific outcomes. The outcome could indeed impact the eventual sale of Chrysler to Fiat.

But don't count on anything happening to derail this deal. While it's going to go to the supreme court, it's not going anywhere, despite the frequent split court. Why? The primary review will be managed by Justice Ginsberg, who doesn't need to bring it before the entire Supreme Court. She can decide on her own how to deal with this issue.

Ginsberg? This is going to go nowhere. Well, it was a nice try.

End Government Greed!

Yes, it's time for another call to get yourself out to a July 4th Tea Party. Why?

All too often, the Democrats and their socialist cohorts drone on and on about Wall Street greed, or corporate greed. It's class warfare distilled down to a blame game. Wall Street greed led to the need for a TARP bailout plan.

It's quite see-through if you bother to look, but most people won't bother. Blaming the other guy to get your vote is an age old political trick. Hitler had the Jews, the Democrats have the faceless corporations.

NOTICE I didn't compare Obama to Hitler, I just compared a tactic that Hitler used to something out of the Democratic playbook? But if this blog were reasonable well-read (which, unfortunately it isn't (yet)), I'd no doubt now be branded as shrill and a right-wing kook.

In any case corporations have every right (so far) to pursue and maximize their profits. It really shouldn't be called greed until it crosses the line into unethical behavior - cutting corners on safety, illegal activity, that sort of thing.

But there does seem to be a greed that the class warfare experts don't want you to notice, and that's government greed. The small government/ limited government crowd is derided in the mainstream media, but they have reason to fear a bigger government. A bigger government has more power to come after your money and your freedom if they so choose.

For example, when Democrats are in power, they have a distinct tendency to raise taxes - and not just on the highest tax brackets, the lowest brackets too. They 're greedy to get and spend your money, their way.




That chart should be enough to raise the hair on the back of your neck. A top marginal rate of 92% and a bottom marginal rate of over 22%! But even if that's not enough to scare you because you figure the United States could never go there again, you still can see that there's a Democrat tendency to raise taxes on all brackets and a conservative tendency to lower taxes on higher brackets and hold the line or lower taxes on the bottom bracket. So the financial greed exists, but is much more pronounced when Democrats are in power.

The current government is also greedy to hoard power to themselves and their ilk. For example, the power brokering that seems to have gone on to ensure that Chrysler dealerships that got closed were the ones that supported the GOP and not the ones that supported the Democrats or more precisely, President Obama in 2008.

It's being dubbed dealergate, and it's really, really, scary.

Some detailed articles:

Hot Air
World Net Daily
The Truth About Cars
Libertarian Republican blog
I Hate The Media
NiceDeb blog

More will be written on this in the coming days. IF it turns out to be accurate, it's something that SHOULD blow the doors off the President's personal popularity. It likely won't but it should. He's looking to establish his own cabal of ruling class. He said doesn't want to run the auto industry - he's too busy. He didn't lie. What he didn't say was that he wanted to ensure that those in his camp were the ones running it. It should make you nervous about not only the automotive industry but also the banking industry. Obama doesn't just want the unions in his pocket, he wants the businesses too.

Can you say Al Capone?

UPDATE: Apparently the chart doesn't show too well. Anyone with skills on how to edit jpg files, please let me know so I can make it more visible.

Obama wants on Mt. Rushmore

I'm convinced of it now. President Obama sees himself as the next face on Mt. Rushmore. Critics of the President, myself included, have spent a lot of time looking at the minutia of the his Presidency but we've been myopic with respect to his master plan that's been going on right under our noses. Either we're looking at individual wrongs - bailouts, national security issues, corporate takeovers etc. - or we're looking at his methods of achieving those goals (divide and conquer strategies, juxtaposing his Presidential addresses with GOP in-fighting).

Obama's Big Dreams

Underlying everything he's doing is something bigger though. The far left used to claim President Bush was going to impose marshal law and declare himself President for life. They didn't seem to understand the Constitution, then nor do they now. On the right we know better - Obama will max out at eight years, or if we're lucky, only four. But President Obama understands that too. Hence his outlook is extended beyond his 8 year maximum window.

He gives great speeches and he's playing political games quite well, but it's all to serve a single goal. He wants to affect a tidal shift leftward for the country. He sees himself as the left's Ronald Reagan. Everyone on the right can see that his goal is to re-establish and expand socialism and governmentalism in America.

What is President Obama trying to achieve? A more liberal court, a more liberal and involved government, and a left leaning Democrat majority that he sees lasting for generations - with himself as it's founding father. He knows that a real legacy has to outlast his own term, by a long time. Reagan did that for conservatives and for the country. Had there been no Reagan, Clinton would not have even considered welfare reform. Reagan's greatness echoed beyond his terms. Obama seeks the same.

Another tactic - compartmentalization

Whether it's yet another clever tactic or the myopia of conservatives focused on single aspects of the President's moves, the things the President is doing, the issues are being effectively compartmentalized. Borrowing from Alinsky, President Obama is isolating not people but rather issues. By making each issue small and isolated, the bigger picture gets lost. We can't see the socialist forest for the liberal trees.

Motivation not the issue though

Whatever his aim, how he seeks achieve this is what we have rightly concerned ourselves with. We need to try to stop socialized health care. We need to investigate the federal domination of Chrysler's bankruptcy (more on that in a subsequent post). We need to keep the Tea Parties going and keep the pressure on. We need to fight tooth and nail on everything, because collectively they amount to the Sweden-ification of America. Say what you might about ABBA, Sweden was never an economic or military superpower, nor were they ever a paragon of individual liberty the way the U.S. Constitution is.

If however each incremental little thing is viewed as not worth major resistance, then each little step gets passed that much easier. The President charged out of the gate with big ticket items and look where it got him. Everyone is still in shock and awe from the massive stimulus bill and omnibus bill that together combine for over 1 trillion in spending. We're numb. So how big a deal is a Supreme Court Justice Sotomayor when it's just replacing a liberal with a liberal? It doesn't seem worth the effort.

The GOP, taken aback by the floating Presidential approval ratings, have seemingly acquiesced to the nomination. Yes they'll ask the tough questions they say. And they will probably vote against her in decent numbers. But will they obstruct the process the way President Bush's nominees were obstructed? Will they try to force the Democrats to go for the nuclear option - a rule change the GOP considered themselves before backing down? I'm not convinced.

The point here is not to fight against Obama's legacy. The point is that the leftward shift of the country is no solution to the problems facing America. In fact his solutions will only exacerbate the problems. Obama talks about the problem coming from Medicare and Medicaid. Indeed they are problems. But the solution is not to ADD to the burden by socializing health care.

The real solutions are painful - those promised benefits are simply to expensive and must be made to go away. At best the government can hope to privatize these issues and hope that individuals look after their own futures. The yoke of socialism does not raise the bar for everyone, it lowers it and the achievers either leave or get dragged down to the lower levels. You end up with a second rate country and Americans deserve better than that if they can just pull their collective heads out of...well you get the picture.

Without a grassroots movement to stop this President, America could be dooming itself. I've always believed the country is bigger than just one man. The USA survived Clinton albeit under more favorable circumstances. There are two big strikes against the country at this point in time. Firstly a Democrat supermajority is pretty much in place. Secondly, with respect to the massive unfunded liabilities of Social Security, Medicare and Medicaid (and soon possibly health care aka Obama-care), the clock is running out really fast (and it's a clock strapped to an economic bomb). The leading age of the baby boomers set to retire is now at age 64. We are LESS THAN one year from the start of socialism's Armageddon.

If that happens, the only way that Obama could get on Mount Rushmore is if it gets sold to China to pay for it.

For the rest of America, there's no time to spare. If the GOP won't fight tooth and nail to do something about this, the Tea Parties will need to become a weekly event, and perhaps daily

Tick, tick, tick....

American Muscle

No matter what Toyota makes, American muscle is still more exciting. No matter what eco-friendly blandness the government tries to impose, these cars will still be more exciting than any hybrid, or electric car. Take that Ed Begley Jr.


Forget Chrysler - Save Dodge.




Chevy still rocks




And Ford too

Gangster Politics

Find a liberal - any liberal you know. Get them to read the articles below;

Gangster Politics on Chrysler

...Lauria represented one of the bondholder firms, Perella Weinberg, which initially rejected the Obama deal that would give the bondholders about 33 cents on the dollar for their secured debts while giving the United Auto Workers retirees about 50 cents on the dollar for their unsecured debts.

This, of course, is a violation of one of the basic principles of bankruptcy law, which is that secured creditors -- those who loaned money only on the contractual promise that if the debt was unpaid they'd get specific property back -- get paid off in full before unsecured creditors get anything. Perella Weinberg withdrew its objection to the settlement, but other bondholders did not, which triggered the bankruptcy filing.

After that came a denunciation of the objecting bondholders as "speculators" by Barack Obama in his press conference last Thursday. And then death threats to bondholders from parties unknown.

The White House denied that it strong-armed Perella Weinberg. The firm issued a statement saying it decided to accept the settlement, but it pointedly did not deny that it had been threatened by the White House. Which is to say, the threat worked.

Crisis abuse on Chrysler

The Obama plan to save Chrysler would have sold Chrysler's most valuable assets into a new company co-owned by the U. S. and Canadian governments, Fiat and the United Auto Workers (UAW) -- with the UAW getting the biggest piece, 55%.

The trouble was: those assets belonged to somebody else. They belonged to the company's bondholders, who had a legal first claim. Under the administration's plan, those senior-secured creditors would have received just 29¢ on the dollar.

For a failing company to shuffle assets so as to favor some creditors over others with a stronger claim is a very serious wrong, potentially even a crime. There's a sound economic reason for this rule of law: Bondholders accept lower returns in good times in exchange for greater security in bad times. Protecting bondholders in bad times ensures that future borrowers will be able to borrow in good times.

Lies, misdirection, and deception on the deficit

President Obama continues to distance himself from this "inherited" budget deficit. But the day he was inaugurated, the 2009 deficit was forecast at $1.2 trillion — meaning $600 billion has already been added during his four-month presidency (an amount that, by itself, would exceed all 2001-07 annual budget deficits). And should the president really be allowed to distance himself from the $1.2 trillion "inherited" portion of the deficit, given that as a senator he supported nearly all policies and bailouts that created it?

The president also talks of cutting the deficit in half from this bloated level. But even after the recession ends and the troops return home, he'd still run $1 trillion deficits — compared to President Bush's $162 billion pre-recession deficit. In other words, the structural budget deficit (which excludes the impacts of booms/recessions) would more than quintuple.

Polls suggest the public tolerates these large deficits because they erroneously believe them to be temporary. Conservatives need to emphasize that the president's agenda would use a temporary recession to create a permanent restructuring of Washington, with historic tax increases and permanent budget deficits to follow.

Anyone who pays the slightest bit of attention should be more than a little frightened, and less than a little enamored.

Buying a GM? Think first.

Are you in the market for a car? Would you buy GM right now knowing it is seemingly being run by Barack Obama? The government can't even get the post office right, imagine how badly they'll screw up a car company. Not to mention the fact that getting Rick Wagoner to step down as CEO of GM is heavy handed autocracy on the part of the Obama administration. That's not what America is about. America is about allowing businesses to decide their own fate, free of government interference. That would include providing bailouts, by the way.

Would you buy a GM knowing that it is still suffering under the weight of the crushing legacy costs of UAW pensions and a crippling competitive disadvantage of fully loaded wage rates that will still take time to address despite the re-negotiations?

Don't believe it? Blogging Stocks points out the reality;

For both GM and Chrysler to receive any more federal aid, it was mandated that wage parity had to be reached between the two companies and the U.S. operations of their foreign rivals. Instead of a $70/hour figure for compensation, insurance and fringe benefits, wages would have to approach the $50/hour level.

Indeed, Ford's latest contract with the UAW puts it close to the $50 level, even though Ford has not taken federal bailout money yet. So, it took the impending collapse of the U.S. auto industry for this change to come? If you don't think unions have power in U.S. industry, think again.

With UAW workers making $28/hour at all three U.S. automakers (just base wage), newer workers that are hired to replace retiring ones only make half that. Still, with benefits, foreign companies like Nissan and Hyundai's U.S. operations pay $30/hour and up -- and Ford or GM's entire workforces won't retire overnight. For unions, labor concessions are only the start. Welcome to the global stage, fellas.

And what about those legacy costs? Pensions and benefits for retirees? From the New York Times the following Ford graphic shows the before and after situation, but notice the 20% new workers required to get to that smaller cost. That means the new cost per hour of labor isn't instantaneous. Taking the pensions and retiree benefits off the books will help. But recovery around the corner is still a ways away for Ford and GM (and Chrysler too).

There's an interesting take on it at 538 that argues it isn't a liberal versus conservative issue, it's a today versus the past issue. That's true from the sense the root cause - the UAW and management in the past were willing to kick the can down the road. But the solution can be addressed in a free market way or a government interventionist way. That's where the discussion becomes contentious. What makes anyone think the government wouldn't also kick the problem down the road like it has with Medicare, Medicaid and Social Security liabilities? In fact by offering bailout money the government already has kicked the can down the road.

Back to my initial question - Are you in the market for a car? Would you buy GM right now knowing it is seemingly being run by Barack Obama?

Or would you buy a Ford? The company who did not take bailout money and negotiated the wages down anyway. The company that took steps to prevent a need for potentially filing for Chapter 11 bankruptcy. A company that's trying to be ahead of the curve on the problems the industry is facing.

Or would you buy a Toyota or Honda? As Americans have been doing ever increasing percentages over time. They make what is perceived to be better vehicles, because in the 70's American manufacturers produced a lot of junk. The way back for Ford, GM and yes Chrysler, is not only cutting uncompetitive practices and costs, it's also about rehabilitating their product and their image. They need people to want to buy their product, or even just to consider it as an option and have a reasonable shot at their business.

America is still a democracy. Just because there are no elections, doesn't mean that you can't vote. You can vote with your feet and you can vote with your wallet. And that seems to be what a lot of Americans and others worldwide are doing.

But that ignores that America is the land of the automobile. It ignores that Chevy is like apple pie. It ignores that America has smart engineers and good workers. Do you want to throw all that away because of mistakes that were made and corners that were cut 30 years ago? Or do you believe America can still make cars as well as anyone else? Do you believe that GM and Ford are salvagable?

Do you believe in buying American? Because you can vote with your feet that way too. If you hate government intervention you can still buy Ford. If you don't care but want American manufacturing not to continue dying a death by 1000 cuts, you can buy Ford or GM.

Or you can not care and buy what's best for you and/or your family. That's the American way, and the way of Adam Smith's Invisible Hand.

Those decisions are your own. It may not be a simple call. Weighing what's good for America long term versus what's good for yourself immediately isn't easy to measure. Consider though, that what's good for America long term should be good for Americans long term too. I wouldn't presume to tell you what's best for your own personal situation. That would make me a liberal. I'm just saying an informed decision is always better than a rash one.

Chrysler couldn't Dodge bankruptcy

It's interesting that Obama was once again trying work both sides of the aisle, and in multiple ways. In the issue of a Chrysler bailout, Obama was looking for the car company to make drastic changes in order to avoid bankruptcy. That included concessions from the auto workers - one of his solid constituencies. He's trying to come across as the saviour of the common man but he's demanding they reduce their income to save the company. Not that that's a bad thing, but he's not championing them the way they he's claiming to when he brags about his tax cuts for Americans. He's pushing people into a lower tax bracket but taxing them less.

In a similar vein, he's pushing a green agenda including changes to the automotive industry - something that shouldn't be foisted on the car companies while they are in their possible death throes. He's throwing the drowning man a lead life preserver.

And in the third and most interesting instance of working both sides of the aisle is how he's treating the creditors of Chrysler. The financial institution bailouts on one hand, is subjecting creditors to stress tests. He's accused them of mismanagement and greed. Yet he's said that the institutions are necessary for America's financial health. In the case of Chrysler, they had to declare bankruptcy because the lenders would not bend on getting back such a low return on their lending - they were holding out for a smaller loss. The creditors weren't banks - they were steel companies, parts suppliers, and other manufacturers and suppliers related to automotive manufacturing. Are these companies being greedy or just trying to keep their own heads above water? The latter.

So why push them to bail out a failed company when it just moves the pain from one pile to another? Because it looks like the President is trying to help the little guy - auto workers. People probably assume the creditors are banks. Nobody likes the banks much right now. So he helps the UAW and earns some modest respect from those who opposed TARP (I doubt it). He's playing both sides of the aisle politically. Except the truth is that he's really only helping the most visible little guy. Who is going to clamor for a rescue of Flex-N-Gate Corporation? Nobody in significant numbers.

Chrysler couldn't hack it. Too bad. Dodge made some cool NASCAR cars. The company will emerge out the other end with Fiat ownership. The jobs will be there, but in a nostalgic way, a little piece of Americana will get dropped along the way. Let's hope GM fares a little better.

And on the plus side, perhaps this frees up resources that could be more efficiently used elsewhere in the economy. If you're feeling like this is too much of a travesty, I urge you to check out this.

Why America Is In Trouble

Today on the Drudge Report page there are two headlines that contrast the technological progress in the United States versus that of Japan. It was not that long ago that Japan, rather than China was seen as the challenge to American economic preeminence. While China has surged and Japan had faltered, the Japanese continue their efforts untiringly to advance technology. China is busy working on infrastructure but is quickly coming to a point where it can challenge anyone for economic supremacy. Meanwhile, the United States is preoccupied with health care and debt, and Presidential appointments.

It's not just under the current administration that America has taken it's eyes off the ball. In Salt Lake City, a new airline security whole body scanner has been rolled out in a pilot program. That's impressive, and useful. But how many thousands of units are going to be required worldwide? Even if you think beyond the scope of airport security and think about night clubs, police stations etc., it is still limited in usability, and it's likely to stay price-prohibitive for some time. While impressive and useful, it's a limited market technology. Even if that market grows, it pales in comparison to the other Drudge Report item.

Honda has connected brain thoughts with a robot! How impressive is that?

TOKYO (AP) - Opening a car trunk or controlling a home air conditioner could become just a wish away with Honda's new technology that connects thoughts inside a brain with robotics.

Honda Motor Co. (HMC) has developed a way to read patterns of electric currents on a person's scalp as well as changes in cerebral blood flow when a person thinks about four simple movements - moving the right hand, moving the left hand, running and eating.

Honda succeeded in analyzing such thought patterns, and then relaying them as wireless commands for Asimo, its human-shaped robot.

In a video shown Tuesday at Tokyo headquarters, a person wearing a helmet sat still but thought about moving his right hand - a thought that was picked up by cords attached to his head inside the helmet. After several seconds, Asimo, programmed to respond to brain signals, lifted its right arm.

And why is this being done in Japan and not America? Could you imagine if Chrysler were working on this? Honda has efficiently built automobiles, boat motors, lawn mowers, motor cycles, ATVs, power generators, jet skis, jet aircraft, lawnmowers, pumps, snow blowers, farm tillers and gardening power tools, engines (Honda is the world’s largest manufacturer of engines), and now robots and brain connectivity with robots. Chrysler can't even keep it's car line up in business and from personal experience, their products are not always all that dependable.

Why the discrepancy? Because at Honda, or any Japanese company, there exists a focus not shared by many American companies. Chrysler has outsourced much of it's production.

Plastech, Delphi, American Axle– these are just three of the U.S. parts suppliers already in bankruptcy, with fully 25 percent of other major domestic parts makers teetering on the edge of Chapter 11. The domestics are operating on the assumption that the faster they outsource their parts production overseas, the better. Speaking to Automotive News [sub] analyst John Casesa warns that Chrysler's new purchasing czar John Campi's rush to confront domestic suppliers (Plastech) and seek low cost foreign replacements may not be such a good idea– especially when seen in historical context.

Overseas. The bane of America in a world of globalization.

Tangent warning: Is free trade a good thing? Yes. Is it a good thing when combined with an non-level playing field - cheaper foreign labor? Less so, but still yes. Is it a good thing with uneven tariffs and borders to free flow of goods on one side but not the other? No. These are things that need to be considered with every trade agreement, along with dispute resolution mechanisms that have some teeth. End Tangent warning.

Foreign governments appear to be more inclined to incentivize companies to invest in R&D. Consequently, or coincidentally, foreign companies are less pressured to furnish quarterly results and are more able to focus on long, long term objectives. Honda has a research institute. Does GM?

Things in American manufacturing have become too fragmented and too short term focused. Honda is not over-diversified because 99% of everything in their product suite comes down to one core product - engines. And engines are critical to all of manufacturing, and transportation and just about everything in the industrialized world. Chrysler is cars, and their focus is lurching from partnership, to bailout to partnership. When you've lost your way that badly, you reach out to anyone that can save you. But it doesn't help long term. It keeps you alive, but does not help you thrive.

What helps you thrive is understanding the company vision. And not some stupid marketing mantra version of a vision that involves doing no harm to the environment and loving people and eating healthy snacks. Honda's vision: Striving to be a company society wants to exist, through creating new value, globalization and commitment for the future.

Society doesn't seem to be too concerned about whether Chrysler exists. Why? They aren't creating new value. Honda's version of globalization is about selling worldwide. Chrysler's version is sourcing parts worldwide. When you build a Franken-car (Frankenstein, not Al Franken), how can you be certain that there are synergies built into the interactivity of your product?

Honda is ruthlessly focused on it's research and development, with three key factors driving it's direction; product durability, product reliability and product performance.

This is why America is in trouble. If you take the Honda approach and compare it to the flailing about of Chrysler it's no surprise which company is outperforming the other. The economic environment in the United States is conducive to this dichotomy.

1. Cheaper products mean off-shoring suppliers and jobs. Unions help foster this climate and cannot be allowed to exert the influence that contributes to this continued problem.
2. The incessant consumer demand for goods drives the balance of trade deficits higher as more products are imported and even domestic products contain significant off-shored inputs.
3. The government does not create massive tailored incentives for domestic R&D that would generate an economic stimulus and also provide jobs now. Tax policy is a massively misused vehicle when it focuses on dollar amounts instead of where credits can be applied and leveraged by smart entrepreneurs.
4. The Wall Street view of immediate profits has turned long term thinking into short term thinking, thereby hobbling vision and creativity in America.
5. The idea that an economy can be a service economy and move beyond manufacturing is a pipe dream. In order to thrive, a country has to make things. It has to sell them. You will never offset an automobile dollar deficit with consulting fees and Disney movies being shown in South Korea. The math isn't there. At least not yet.

What the American government needs to do is step back from the dollar printing press and address these issues in a way that re-releases American entrepreneurs to take advantage of the fixed playing field. GM may never again be 50% of the world car sales, but there's no reason it can't be a thriving business with a relentless drive to be the best and a company that society wants to exist. No reason that is, unless it's run by the government.

Automotive temperatutre check - Feb 23, 2009

How do things look for General Motors/Chrysler/Ford right now? Here's a look at what they could be planning for 2009.



Is GM getting any better at quality? Apparently so if you ask GM. They do appear to have made great strides but only time will tell.



And are they getting greener? Wait, who cares? Not me - I care about their economic viability. I will not get sidetracked by discussions about polar ice caps melting. What should be asked, is what is the industry outlook for 2009?



Not great. Hence the plans to trim down, and the possible talk about bankruptcy protection options.

Conservatism losing steam?

When you get articles in the NR like this one, it makes you wonder if conservatism is a lost cause. Granted Clifford May is a writer for the New York Times, and I'm not familiar with his work, so maybe he's a flaming liberal. But if that's the case, why is National Review running the opinion?

I recommend reading the whole article, however here's two snippets that caught my attention;

You can decrease volatility by reducing demand — by making people “change their lifestyles,” a euphemism for making people poorer. A better way to decrease volatility is by increasing supply.

You can do that by drilling more, for example, in Alaska and in coastal waters. But face two facts: (1) most Democrats oppose drilling and Democrats decisively won the last election; and (2) exploiting finite and limited domestic oil resources does not get us closer to a
long-range solution.

And this;

An added bonus: Alcohol fuels have environmental benefits compared with
gasoline. And wouldn’t you rather be buying your fuel from hard-working farmers,
rather than indolent sheiks, terrorist-sponsoring mullahs, and tin-pot tyrants.

As you probably know, in the U.S. today, alcohol fuel is mostly being made from
corn. As you may not know, the price of corn has fallen almost as far and fast
as that of oil in recent months. Those who claimed that using some corn to make
ethanol was causing higher food prices were either misinformed (any number of
journalists) or lying (those paid to protect oil’s monopoly). The facts are that when corn prices rise, farmers — generally rational folk — plant more corn on
previously fallow land, and put in the additional effort to produce more corn
per acre. So the impact on food prices is negligible.

Further, growing corn is just one way to transform the sun’s energy into liquid fuel. The Brazilians make ethanol from sugarcane and use that in their FFVs — many of which are
manufactured by General Motors and Ford. Dozens of other tropical, third-world
countries could produce sugar-based ethanol — if there were sufficient demand.

Another kind of alcohol fuel, methanol, can be made from crop waste or wood waste, municipal garbage, coal, natural gas and many other substances.

What gets me about this article beside the National Review losing it's mind and printing liberal tripe? Specifically the article assumes a number of erroneous positions.

1. Clifford May buys into the whole global warming agenda. Let's assume for a minute that global warming/climate change is not pure fallacy. He gets into the argument about corn farmers. Yeah, they'd produce more fuel but (a) it ignores the amount of corn they'd need to grow (b) it glosses over the fact that given the limited supply of land, and the limited supply of farmers, that scarcity DOES indeed create a rise in prices - for corn AND the alternative crops that could have otherwise been grown. This is no small point. Crop rises had risen significantly during the oil run-up.

2. The article discounts or ignores short term benefit of drilling. A lot of new oil can be brought on line in less than the 7 years Democrats were spouting as fact. [I'll need to re-locate my sources on that]. Regardless of alternative ways to generate electrical power being developed - wind, solar, or even nuclear, an interim solution to ameliorate the price spikes that we've seen occur. Not to mention that a very significant portion of American oil does in fact come from Canada and Mexico (See here for full details).

“Unfriendly” nations are not our primary source of oil. Only 44% of U.S. oil imports are from members of OPEC, the international oil cartel that is dominated by Middle East producers. Canada and Mexico are the two largest single sources for imported oil in 2007. (Editors note: through 6/08, Mexico has dropped to #3, though this changes seasonally and may revert in 2nd half of year) .

3. Lastly and to me most significantly, he wants government to mandate certain things as a part of the bailout. It doesn't matter what those mandates are, they are wrong. They are lending money, either they will or they won't. Are we to believe that the government, via legislative fiat can make the Big 3 be better companies? Don't the car companies know the car business better than the government? You could argue not, but you'd be wrong. The car companies know what's wrong. That they may not have the stomach to make the required changes is another issue.

But the point is governments DO NOT have the stomach to require the real change, they do not have the understanding to see what is really necessary either. If they did, they'd force Chapter 11 on the car companies. A CAR CZAR? Are you kidding me? Is that supposed to be like a Drug Czar? That worked well :-p

This is socialism!! This is a 5 year plans. And NR is publishing this idea and/or buying into it???
The Big 3 - decades ago made tactical mistakes re: contracts and dealers and strategic mistakes re: product and quality and value proposition of their products. Now they should be saved from their past, but Chapter 11 bankruptcy is the only way to do that. Congress wants plans but any realistic plan involves streamlining dealerships/dealer networks, curtailing the insanity of the UAW and killing unprofitable and brands that can't be salvaged. Congress wouldn't accept that. So its not in the plans. Ergo the plans won't work long term.

Similarly, the CEO don't seem to have the stomach for bankruptcy protection. Maybe it's a not-on-my-watch view they are taking. Punt it to the next CEO. sounds like Congress on Medicare liabilities. Tough measures are needed. It seems Ford might have been best prepared but this needs to be an all or nothing gambit. All in, or fold up your hands gentleman. To put it another way, picture the auto industry as a hospital patient in need of a new kidney. You face the choice of getting a replacement kidney or keeping the patient on dialysis forever. Dialysis is an option in an emergency but it is an imperfect solution. It doesn't work as well as a real kidney. Similarly, the bailout doesn't solve the underlying problem - it keeps the 'patient' alive, but it is not an ideal, long term solution. Eventually the problems will resurface for the auto industry. Would a bailout every 10 years be suitable for you?

Back to Clifford May's point - an electric hybrid or alternative is a better long term solution than reliance on imports. But it's longer term. Fixing this by Wednesday is not in the cards. Having an all-electric-vehicle-America by 2012 isn't realistic either. So why not take that $15 billion (+++ eventually) bailout money and sink it into an independent battery research foundation to be shared amongst the Big 3? Let GM, Ford and Chrysler restructure under Chapter 11, and then come back with access to this shared battery technology. The firm could start out life as a GSE and once it is producing be spun off as a private enterprise. Then the firm could sell licensing to the Big 3 or be bought out by them. In either case, the profits could be used to repay the government funding.

Let's see; No tax burden, competitive salaries with Japanese automakers, streamlined operations for the Big 3, battery technology when it becomes available, and best of all NO SOCIALISM.

Who loses in that scenario? Maybe the UAW workers. But barring repeated future bailouts those jobs are lost long term anyway. Better $40 per hour than $0 per hour. Maybe mother earth loses out by getting more CO2 pollution, but you know what? That's going to happen anyways. When battery technology becomes economically viable it will be used. That's the free market at work. Doing it before then is simply a variation of social engineering and an aberration from efficiency, and logic.

Auto Industry bailout saga continues

This is such basic stuff!

An enterprise system, is a profit and loss system, and the loss part may
be even more important than the profit part. The crucial difference is in what
ventures are continued and which are abandoned. The crucial requirement for
maintaining growth and progress is that successful experiments be continued and
unsuccessful experiments be terminated.

--Milton Freidman

So if GM, Ford and Chrysler are failed experiments, should they not be discontinued? At least in their current form. It could be argued that at a $45/hour all in labor cost, the variables of the experiment have changed and the experiment can be retried. With the permission of the almighty UAW, and their puppetry in the Democratic party, I'd like to suggest that the experiment has indeed failed. If it hasn't yet, wait a few weeks and call me.

Luckily, there is the Chapter 11 mechanism that allows for a restructuring. Yes details would have to be worked out. But no, confidence would not be lost. The airline industry offers examples of restructuring without a commensurate loss of consumer confidence. And the red herring of subsidiary jobs being lost doesn't fly either. People will still drive. People will still need tires, oil filters, windshield, wiper blades, etc. The market is going to contract and people will need less cars and less parts and services if there are less cars on the road. But there won't be. There may be less American made cars (temporarily). But people will still have to use and buy cars. And if a smaller percentage of those parts come from American suppliers (again, temporarily during the restructuring) then so be it.

The pain is coming no matter what. But propping up a failed experiment so that you can do the same thing again in 7 years is the epitome of foolish action. The only thing worse is giving Barney Frank oversight of the whole mess. Alternatively, we can bite the bullet, pay the piper, whatever you want to call it. But what it means, what it requires is that real change be forced on those who have caused and ignored the problem. I'm not without sympathy. I'd hate to see Chevy or Ford disappear forever. I'd hate for millions to lose their jobs permanently. But that's not how it would turn out.

All that said, people opposed to the bailout have lost site of the scope of the issue. The automotive industry cost is a mere pittance. My last tally puts the automotive bailout at $34 billion. That's about $113 per American. The banking bailout passed by Congress is $700 billion, or about $2,333 per American. And the total commitment has risen to over $7 trillion, or 23,333 per man, woman and child in the country (legally). Perspective is everything. Crap sandwich does not do the whole rotting mess justice.

But just because the cost of a Big 3 bailout is a drop in the bucket, doesn't mean we shouldn't still try to do the right thing - let it be fixed rather than be kept on life support without the chance of healing itself.