General Motors should get bailout, too
Because of the financial crisis fallout, the bailouts keep coming. AIG got one, as did Citigroup. But General Motors, an auto maker teetering on the brink, is still waiting for one. Commentator Robert Reich asks: Why?
Robert Reich (Robert Reich)
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TEXT OF COMMENTARY
Scott Jagow: Because of the financial crisis fallout, the bailouts keep coming. AIG got one. Citigroup just got one. But the car makers are still waiting. Commentator Robert Reich asks: Why?
Robert Reich: Citigroup was once the biggest U.S. bank. General Motors was once the biggest auto maker in the world. Now, both are on the brink. Yet Citigroup got a $25 billion government rescue last weekend without anyone batting an eye. General Motors may not be rescued at all.
This makes no sense. Of course, it's important to avoid runs on banks by panicked depositors, as occurred in the 1930's. But the current run on Wall Street is coming from the banks' own creditors and investors, who are paid to take risks.
Citigroup had a market value of $274 billion at the end of 2006. Now, its value is about $21 billion. That's awful news for Citi's executives, shareholders, and creditors. But if Citi were to go into Chapter 11, it wouldn't be economic Armageddon. Mutual funds, pension funds, and deposits overseen by Citi would be safe; fund managers would move them to other banks.
In other words, Citigroup is not much different from General Motors. It's a company that once made lots of money but, through a series of management blunders, is now losing it big time.
Yet General Motors has a far greater impact on jobs and communities than Citigroup. Add parts suppliers and their employees, and the number of middle-class and blue-collar jobs dependent on GM is many multiples of Citi. And the potential social cost of GM's demise, or even major shrinkage, is much larger -- including entire communities whose infrastructure and housing may become nearly worthless.
Now, I'm not arguing GM should be given a blank check. Its creditors, shareholders, executives, and workers should have to make substantial sacrifices before taxpayers are expected to sacrifice as well.
I'm just suggesting government priorities are backwards right now. Wall Street is getting up to $700 billion of taxpayer money, and so far $500 of subsidized loans from the Fed, which are bailing out investors and creditors of every major bank, including Citi. But American jobs and communities are more endangered than ever.
Jagow: Robert Reich is a professor of public policy at the University of California, Berkeley. His latest book is "Supercapitalism."
Comments
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From Los Angeles, CA, 02/19/2009
Due to impending financial exigency, not just the financial institutions are in need of bailout but also the auto industry (Chrysler and General Motors). The task of determining when and how much of a cash advance to give to Chrysler and GM in the auto bailout will fall to Timothy Geithner, the Treasury Secretary. It has been said that allowing them to fall into bankruptcy is not off the table. Ford has insisted that it will survive, but only wants lines of credit available if needed, and unlike its Detroit based contemporaries, has not yet asked for a cash advance of any kind.
From USA, 12/04/2008
Give me the money, I'll spend it wastefully like a drunken sailor and then everyone gets their share.
Who doesn't love a good free loader?
From Wooster, OH, 12/03/2008
Charge a tarriff on tax on all foreign cars. Give revenue generated by tax to auto industry - 2 fold - more American cars will be sold. Cost will be more even. Give the tax dollar back to the auto industry.
From Wooster, OH, 12/03/2008
Charge a tarriff on tax on all foreign cars. Give revenue generated by tax to auto industry - 2 fold - more American cars will be sold. Cost will be more even. Give the tax dollar back to the auto industry.
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From Grapevine, TX, 11/27/2008
Very good and accurate commentary, Robert. And, it pains me to have to say this, but far above the quality of coverage on the auto industry in the rest of the stories on NPR lately.
After the treatment by the press and Congress, most of it insulting, and incorrect, then the bailout of Citi, I'm sure the auto company CEO's are ready to bite a tree. Add to that, the actual complicity of the government, the financial sector friends that Paulson bales out, and auto buying public in the failure of the Big Three and I'm sure that they are furious and shellshocked. There is plenty of blame to go around.
First, I will correct a misconception of former Sec. of Labor Robert Reich presented in the comments. He was not in favor of, nor did he support the deregulation legislation that M Garcia says he did. In fact, trying to find any support of deregulation of the financial industry in Mr Reich's background would be difficult.
Second, I will add that I am no fan of the way GM has run their business for a long time. As an industrial designer, I have been very critical of their design practices in the past. They have made too many different parts to do the same thing, rather than perfect one or two parts and standardize them. They have taken small engine and small car development seriously at times, then dropped the ball on good projects. I'm sure everyone can make a list of up and coming cars that they just let drop...
They virtually dismantled the EV1 program, even destroying (most of) the cars, and selling the NiMh battery technology to Chevron, who has buried it. Looking at an EV1 brochure will tell you why though. The dealer network was terrified of the low maintenance the EV1 required. If this type of car became popular, service departments would lose business.
And they have slowed the introduction of the Volt under the guise of having to have an unproven lithium ion battery when a NiMh battery pack would easily power the car for the purpose they have intended. I have doubts that they actually intend on producing a "plug in" (IE series) hybrid. I fail to understand why they are having so much trouble with it. After all, GM has made diesel locomotives for many years using somewhat similar systems.
Having said that, it would be inappropriate to say that GM's problems are totally self inflicted. In fact, most of not only GM's but also the other domestic auto manufacturers problems are market driven.
It is really hard to say that they were not giving us the cars that many Americans wanted. For that matter, still want. Even in October, the best selling car in the US was not a Camry, Corolla, Civic or Accord. It was the Ford F150 pickup.It outsold the Toyota Camry in October 43,324 to 30,556. And throughout the year, despite dwindling profits and sales of all manufacturers, the Ford F150 has been a top seller.
And while most GM plants shutter during the holidays, the Arlington, Texas plant will be running full blast, with overtime. And what do they produce, full size SUV's.
In fact, while the Big Three have succeeded in making their plants so efficient that several of the fastest stamping, engine, transmission manufacturing and assembly plant are producing cars faster than their Japanese competitors. It is ironic that all the most efficient GM plants are the ones that will be closing over the extended holidays. And why, because the people that are going into buy a GM car are not buying many GM cars, they are still buying GM trucks, that is SUV's.
This is understandable. After all, the Big Three produced some pretty low quality products for most of the '80's - '90's. And the Japanese manufacturers (and now Hyundai) spent 20 years or more building trust in American car buyers. It will take a few more years of success, at least in the cars made, to bring significant buyers back from the Japanese brands. In the last ten years, the reliability and quality of American cars has risen to the point that they match the Japanese. The quality of American rear wheel drive vehicles did much better over the years, and people continued to trust them for those.
Very low fuel prices, dropping through the 1990's, encouraged all makers to produce heavier cars and trucks. The SUV market was bred from cheap gas. The market was so strong that Honda felt no need to produce Honda Civics that get 55 mpg anymore. They just didn't sell enough of them. The size of smaller models has grown to the point that a Toyota Corolla cannot be called a small car anymore. It even grew again for the new model, and that was after fuel prices started to rise. The Corolla is more roomy than mid-size cars of the '60's to '70's. Then even Honda started to produce SUV's. And Toyota, and Nissan produce several models that are at least as inefficient as the largest models from the domestics. In order to stay in the US market, they found that they had to compete with the Big Three on large cars and primarily, SUV's, and pickups.
But most people in the market for a pickup or SUV would still chose a Ford F150 or a Chevy Tahoe over a Toyota Tundra or a Nissan Armada. Sales of cars, particularly the most efficient models, were down at most companies until the gas prices started to rise.
Even the Toyota Prius did not sell well in the US until 2005. Yet more were sold in the US just in 2007 than in 2000-2006. And these figures were with a tax incentive up to $2000. Fortunately, Japan had a domestic car market that wanted fuel efficient cars due to high gas prices.
Therein lies a problem. All the other industrialized countries that manufacture autos have had much higher fuel prices than we have. Their home markets all support efficient cars. Ours hasn't. In addition, the Japanese market is not friendly to any foreign car sales. Gee, you might even say that the free market is limited for our domestic manufacturers in many foreign markets. Consequently, Ford and GM produce cars specialized to the European market in Europe. As much as I would like to have seen a European Ford Escort, or Focus in the US, it was unlikely due to projected sales volume and different regulations. It also would not have been a US made car. Ford brought the European Fiesta to the US during the second gas crisis. This was a nimble, quick (for the time) and fun little car that would remind one of a Mini in performance and handling. Sales were poor in the US.
As consumers, most of us have given the manufacturers little reason to give us the cars we now complain they wouldn't give us. In reality, the only reason the Japanese, Korean, and European makes have those cars in their line is because they sell OK here, but they sell well in their home markets. And they rarely bring their smallest cars into our market.
But another misconception is that our domestic manufacturers either don't make anything but 11 mpg gas guzzling behemoths. And don't make hybrids. Despite the fact that GM, Ford and Chrysler make many fuel efficient car and trucks, I've seen and heard the people say that it had to be made by X Japanese manufacturer. Oh brother, it is as if many writers and commentators either don't drive, live in a cave, would never dream of even looking at a domestic car, or have not even watched TV in two years.
As far as hybrids go, Ford has Ford Escape Hybrid that gets an impressive 34 mpg, beating anything in its class. While the chassis was designed by Mazda, Ford designed and manufactures the drivetrain. Ford is coming out with the Fusion Hybrid, taking the drivetrain design much further by being powerful enough to provide a top speed of 47 mph, using the battery/ electric motor alone. It is projected at 39-40 mpg, but I suspect this car will be capable of far better than that an efficient driver.
Then there is the very sophisticated that is first going into the biggest GM SUV's. This revolutionary two mode hybrid allows a Tahoe hybrid to get at least 20 mpg on both the City/Highway EPA cycle. The Chrysler hybrids, when they appear, will be two mode hybrids using this same system. This system, using two electric motors in the transmission, was a joint venture between GM, BMW, and the former Daimler/Chrysler. None of these companies had an advanced hybrid system, and wanted to develop a more impressive and more efficient system than the Prius. It is completely unrelated to any other designs.
All these US hybrids use NiMh batteries, drivetrains, and electronics manufactured and designed in the US.
In gas engined domestic cars that compete favorably against foreign makes there is the Pontiac G3 (27, 34 mpg), Chevrolet Aveo (27, 34 mpg) Pontiac G5 and Chevrolet Cobalt (25, 37 mpg), Ford Focus (24, 35 mpg), Saturn Astra (24, 32 mpg), Pontiac G6, Saturn Aura, and Chevrolet Malibu (22, 33 mpg), and Chevrolet HHR (22, 32 mpg).
All of these cars get better mileage than a four cylinder Toyota Camry (21, 31 mpg), and the Cobalt and Ford Focus get about the same mileage as the Toyota Corolla (26, 35 mpg). The Chevrolet Impala is also the second most efficiently produced car in North America, rolling off the lines in only 15.18 hours. (The most efficiently produced car in the US is now the Jeep Wrangler at only a little over 13 hours build time.)
Manufacturing at the Big Three's plants has changed dramatically over the past ten years.
In overall efficiency, Chrysler and Toyota now tie in production speed. The total time they take on average to produce a car, including all stamping, engine, transmission and assembly operations is a tie at 30.37 hours. Honda, GM, Nissan, and Ford are all close behind at less than 3.5 hours difference.
And labor and compensation rates have narrowed considerably. In fact, contrary to out of date arguments by people like Mitt Romney, the gap on labor cost to build a US car at GM is fairly low and will be dropping even more in 2009-2010.
The highest current GM labor and benefit packages today cost $69 an hour. This includes wages of current workers at $29.78 an hour. this cost will drop to $62 an hour in 2010 with a shift of pension benefits to an UAW trust fund. These costs include providing health care to 432,000 GM retirees.
According to Toyota, hourly wages run $30 per hour. Estimates on total compensation run from $48 to $53 per hour. However, Toyota's labor cost will continue to go up as they have workers retire in the US. Since the newest GM plants are actually more efficient than the newest Toyota plants, the labor cost difference per car is generally around $300-400 per car currently. The older SUV plants, such as the Arlington plant take longer, but produce a more expensive, more profitable ( in normal times) vehicle. At worst, there may be $900 difference at these plants, but that is at the old labor rates, and before the UAW takes over pension plan for retirees.
But new employees at GM are receiving a rather low $14 per hour. At Ford, this new UAW contract pays only $13 per hour. And there are no benefits. This does not sound like a path to good labor relations. But it will leave the Big Three more than competitive. Unfortunately, this will also result in workers that could never afford to buy any of the cars they make. Long ago, Henry Ford found this was bad for labor relations. This race for the bottom would be bad for employees, and really should be unnecessary. Western European and Japanese auto workers make more than US auto workers and are now about the same efficiency.
Not even Hyundai paid assembly line workers that little when they opened their plant in the US. They initially paid $15.50 an hour, but have reportedly raised wages to $22 an hour, plus benefits. However, workers in Korea make $22 an hour, plus benefits, and a bonus every year equal to 3 months wages. Oh, and Hyundai workers in Korea get full retirement at 59 year old!
Frankly, Hyundai gets a better deal in the US, than in Korea. And so far, probably due to those rising wages, there have been no strikes. Hyundai in Korea has a lot of problems with strikes.
On top of that, Hyundai's take 35.1 hours to assemble, longer than any of the Big Three, yet Hyundai still makes a profit.
So maybe blaming the assembly labor is unfair.
As far as producing the wrong product goes, considerable portions of the American car buying public wanted the SUV's and trucks that the US automakers specialized in. While their problems are somewhat self-inflicted, most of their problems relate the the fact that the US has the lowest gas prices of the western countries that produce cars. Every other country used high gas taxes to promote conservation, and pay for infrastructure. In the 1990's, when gas taxes could have been raised to keep regular gasoline at about $2 a gallon, the free traders would have not allowed that. If they had been raised, then the recent gas shock would not have been so traumatic, since the gas taxes could have been slowly reduced, then allowed gasoline to stay at $3 a gallon during this drop, somewhat evening out the bumps. It may have also reduced the desirability of very large SUV's and given US automakers an ability to develop more efficient vehicles.
CAFE standards should have also been raised to keep in line with world standards. That would have given an even playing field in regulation for all automakers. Then maybe the US makers would have been producing more cars similar to European or Japanese cars.
Between that $4 gas and the financial crisis, all auto companies are hurting.
Even Toyota's sales are projected to be down over 20% this year.
As far as Chapter 11 goes, the argument has been that it works OK for airlines. Auto manufacturers are not airlines. Buyers of cars have to be confident that the manufacturer is going to be around many years later for warranty work, service and parts. All an airline passenger has to worry about is whether the ticket will be good, and will the blasted plane stay in the air. Auto companies have longer term concerns. Bankruptcy doesn't inspire confidence.
GM going bankrupt would wipe out millions of jobs in the US, not to mention around the world. GM and Ford both produce cars in many countries.
In addition, they actually are producing many good products, with many more on the way, though perception is lagging due to the constant battering they take, seemingly from people who either don't drive, or who have little knowledge of cars, or car repair.
Scott Kilgore
From Dallas, TX, 11/26/2008
Lets make the Car companies compete for the money --- place the money in 3 tiers --- the company to come forward with the most innovative/best plan to fix their company wins the top money--- This way we are not just giving them money we are making them better.
From sunnyvale, CA, 11/26/2008
The bank bail out is something we are trying to fix due to the deregulation which Mr.Reich was part of! Also the regulation that makes it impossible now for a citizen to declare bankrupcy on his credit cards. Yes! we need to bail out the fools in Detroit that have use the dumb consumer for years. Next year..
It never comes. We have been promised more fuel efficient cars for years, what do we get suburbans with gas dicount coupons. Same goes for Ford, they manufacture great efficient cars in europe why not in the US? because they have been in the pocket of the oil co. and their interest in Mazda, suzuki.. well. Now they are going to show how much they need these by promoting a drive to washington. In Cadillac limos? or Hummers? 11 mpg
let them fly it is cheaper and saves natural resource. Then fire them for lack of management and foresight. Of course without their prenegotiated gold parachute.
Save the jobs but place people who know how to manage a company vs their state and pay then no more than 5 times the hourly worker and all bonuses are based on earning 5yrs downstream.
From DC, 11/26/2008
I have my own answer to why car makers are still waiting: they are heavily unionized.
From Chicago, IL, 11/26/2008
Glad to see you have flipped back to be a voice of reason regarding this topic.
From Frederick, MA, 11/26/2008
I agree with Robert. Lend GM the money to get on its feet and save the jobs.
From Dallas, TX, 11/26/2008
I am sure others have noticed by now that the discussion about bailing out our Big 3 auto firms reliably ends up with GM being the focus of attention. I think there is something to be said about this.
It has always been my opinion that GM is the embodiment of poor management, lack of vision and a stubborn proclivity to rely on excuses in the face of adversity. The public apprehension towards bailing out the Big 3 seems to be a manifestation of the same sentiment.
What I find unfortunate is that Ford, while equally responsible for its current situation, has been more responsive to the realities of the marketplace and yet seems to be getting dragged down with GM’s bad reputation. Ford has brought in a new CEO, it has been in the process of painful but necessary steps to restructure and it has quickly begun to adapt. If any of these firms should be bailed out it should be Ford. GM should be forced to restructure under Chapter 11.
What many do not seem to understand is that allowing GM to fail could be a blessing in disguise. With the anticipated growth of the alternative energy industry (wind, solar, etc...) we will need workers to man these jobs. Where will they come from??? Look at the unemployment rate as it stands in the midst of a considerable economic downturn – 6.5%.
Let’s look past the trees for a moment and see the forest. The next decade will see baby boomers leaving the job market en masse – creating an industry that caters to them in the process. Energy will be an ever increasingly important industry that will require imagination, talent and huge amounts of capital. There is opportunity on the horizon, but we need to recognize it and prepare ourselves for it. Americans have always shown their ability to take a bad situation and thrive on it. Let’s keep that tradition alive.
From Chandler, AZ, 11/26/2008
Instead of bailing out companies that badly mismanaged their business, bailout states, like Arizona. According to this article: http://asunews.asu.edu/20081110_Hoffmanreport we only need $1 billion to save 20,000 job. The jobs saved are not for employees going to luxury resorts on a retreat; they are not for flying around in private jets; they are not over-priced union labor. They are for probation officers in Mesa, city workers in Phoenix, faculty and staff at all the state's universities, a majority of whom earn far less than the carpenter for the automotive industry interviewed by NPR.
From MI, 11/26/2008
THANK YOU ROBERT!!!
Finally a voice of reason to counter the ignorant, self-serving hypocrites in Washington.
Sure the Detroit 3 have issues. But so does Citigroup, and big ones too. According to J. Richard Findlay, head of the Centre for Corporate & Public Governance, as stated to the New York Post: "Citigroup's board of directors increasingly resembles a first-class sleeping car on a train wreck that just keeps happening. Almost whatever it does, it is too slow and too late. It can take months for Citigroup's directors to clue into what others in the real world have known for some time."
How come we haven't see Citigroup CEO Vikram S. Pandit getting grilled in front of Congress for bad management decisions, marketing risky financial instruments, and failing to anticipate dramatic shifts in the market?
At this point it should be all about jobs. If Obama is concerned about the middle class as he claims to be, here's his chance. It's ironic that Bush will extend unemployemnt benefits but won't lift a finger to save manufacturing jobs.
From Detroit, MI, 11/26/2008
Back in the days when the Big 3 were making money, a Detroit driver would occasionally see a bumper sticker that was in vogue at the time "The one with the most toys wins!", referring to both boats and cars...
I can imagine the Middle East version of that now: "The one with the most US Bank Treasuries Wins"? - To me the endorsement of US blank checks to the Banks is more evidence that the "Darwinian" theory of enterprise is still in play: Step in only to protect the interests of those with extreme wealth, e.g. the "Winners of the game." However, we keep forgeting that the theory only seems to work well in a theoretical world where the entire global economy has no government influence.
From bloomfield hills, MI, 11/26/2008
I believe the misdirected backlash against the American autos is pure political posturing that holds American manufacturers to an unreasonable performance standard that allows both the democratic and republican parties to wash their hands of any real responsibility for the economic crisis we’re currently facing. If we want American manufacturers to be competitive globally then maybe our government can do something about the unfair cost differentials (namely pension and healthcare obligations that the almighty European, Korean and Japanese car giants don’t have to worry about thanks to their own government subsidies.) If we want to actually help our national manufacturers we could recognize that “buying American” does not mean leasing a Mercedes made in Alabama, and “being green” does not mean buying a 2900 pound Toyota Prius that has to be shipped from Japan thus leaving a much larger carbon footprint than buying a Ford , GM or Chrysler product made locally. Of course we know this industry needs to do better, but it can’t shoulder the weight of every misstep, misdeed and failed U.S. economic policy in recent history!
I want someone in Washington to tell me to my face that this issue is not important enough for the government to step in at this time. I am sure I’m not the only one, I am just one face of the many that make up the American automotive industry.
From Fort Worth, TX, 11/26/2008
Who deserves a bailout? This citizen thinks the parachutes are doled out to only those industries in which the government has forced its meaty blundering paws, the ones in which legal rulings were made upon business standards. Banks and lending groups? The government told them they had to be nice, treat everyone the same, and do business with risky morons. Result? They figured out how to make dealing with morons lucrative. Unfortunately, it all backfired. But the government throws them a billion dollar bone because it knows it had a role in the whole thing.
Major car companies like GM? No bailout. And rightly so. Stop pandering to the unions and get your business back in shape. Jobs are lost when expenses exceed revenue. This is the way it works. When people stop coming to your donut shop and you can’t afford to pay the busboy, he gets canned. Those soon-to-be unemployed auto-workers? Send ‘em to Texas. Northeasterners LOVE to relocate to this right-to-work state. And we can put them to good use in our public schools.
From Fort Worth, TX, 11/26/2008
The answer is simple. Citi gets money under TARP mandate. At that time no one asked for a concrete plan and gave a blank check to Paulson whose interest was the financial institutions - being a product of that. Even the presidential candidates did not ask for a plan. But, now when Barack Obama even says that automakers did not have a plan (an about face) - that does not instill much confidence and hope for a bailout. One needs to look at the red and blue dots on the US maps based on latest election results to figure out why there is a clamoring for a 'plan' at this time. Ultimately, the money will be given because of labor and union interests - it is just some posturing.
From Houston, TX, 11/26/2008
Well, why not bail out GM? Perhaps because GM management has totally lost touch with its customers, and the average GM worker earns more than the average taxpayer Professor Reich expects to finance the bailout.
So perhaps a million jobs might be lost if GM goes under. Well, in the 1980s about a million jobs were lost in the oil industry, and I don't recall Robert Reich pleading for a bailout. Perhaps his problem was that most of those who lost jobs then tended to vote Republican rather than Democrat. However, even when so many jobs were lost, the national economy survived. Houston, the epicenter of the job losses, survived. In fact, Houston today is in better shape than most major cities in the country.
So even if GM goes under, the country can survive. Maybe even Detroit can survive. Twenty years ago there was a joke going the rounds in Houston:
"What do you call a geologist these days?"
"Waiter!"
So perhaps next year we might be able to have a new version:
"What do they call an auto worker in Detroit?"
"Waiter!"
From Jacksonville, FL, 11/26/2008
A bail out wouldn't solve GM's problems it would let them continue to use the same failed model they are using now. It's like giving a skip row alcoholic money to go buy liquor. If we want to help the workers who are dependent on the big three, then lets invest in training them in new industries.
From Austin, TX, 11/26/2008
Robert Reich is a cynical apparatchik. He and his bi-partisan ilk know better.
At the root of the current problems lie two questions. a) How do some people get to make huge heavily leveraged bets and b)How they get to make these bets with your and my money?
The answers to these questions leads to a fundamental reexamination of our financial system and the role of our government in economic matters.
It might lead one to argue against the TARP and other bailouts at the risk of massive pain because on the hope that a fairer, simpler financial system could have emerged from the ashes.
That would have been an anathema to the current bi-partisan big government politics of today.
So the TARP. It was ushered in under the assumption that our western financial world was about to collapse if we didn't do it. By pretty much the same people who are now making arguments that if Citi shareholders are helped, why not GM constituencies, why not credit card and mortgage holders, why not homebuilders?
The why not is quite simple. The government doesn't, can't produce jobs that are produce wealth. It can only take someone's wealth and give it to others. In case of the bailouts, it is printing money out of thin air, borrowing it as it were from future generations at the pain of massive inflation.
Ask this questions, if the government had access to $2-3T to do all these and if were good to do, why doesn't it do these things as a matter of course? Well actually it does - but now that the flood gates are all blown apart, lets get ready for the deluge.
The simple answer to Reich's question is that while arguably there is some benefit to me to use my money to keep the financial markets lubricated, we see no such advantage to keeping alive the jobs of union leaders and management of capital destroying enterprises.
From Austin, TX, 11/26/2008
The main difference between the Auto industry and Citibank is that the Auto Industry does not buy treasuries.
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In the days immediately preceding the Citibank bailout (Friday and Saturday) Treasury officials trecked to the Middle East to Visit the Saudis, Kuwait, and the United Arab Emirates. The stated purpose was to make sure there would be buyers for the next auction.
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This week Citibank as well foreign nationals will be at the window to purchase the product which will keep everyone solvent.
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This is not to suggest that Detroit does not need help. The bank rescues are about the week to week solvency of the US Government which is the entity that is 'too big to fail.'
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Thanks. I do enjoy Mr Reich's commentaries.
From West Halifax, VT, 11/26/2008
Finally, someone is getting to the crux of the matter. The Bush administration - our consumption based economy, appears to only look at consumption and credit. If we have no jobs, then what's the sense in going further into debt? Why not try a trickle up economy. Why a debt ridden economy? If Americans actually saved their money instead of spending, we'd be in quite a fix.
From Detroit, 11/26/2008
Brilliant article Robert! You see, that's the trouble with common sense, it's not very common.
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