senator Dodd angered by republican desire to screw workers

Senator Christopher Dodd spoke to the press Friday afternoon about last night’s Republican shenanigans and made some very important points:

• Worker salaries make up a tiny fraction of the financial challenge facing the automakers.
• The UAW had already agreed to achieve “compatibility and comparability” by March—a major concession.
• We still have the opportunity to fix this and the obligation to try.
• It is “incredible” that the one demand put above all others by Republicans during this negotiation is that workers, who have already been hurt badly by the declining economy, should take another hit.

Indeed, it is absolutely incredible. As Sen. Dodd told NPR on Friday, there was a part of the minority that was “set on having this deal blow up.”

Dodd’s complexion in this video might be an indication of just how furious he is over this Republican stunt, or it might be the result of bad lighting or a camera that wasn’t white balanced—either way, selfish and cynical Senate Republicans have left us all seeing red.

(cross-posted on Firedoglake)

GM’s “no plan” more of a plan than Citi’s “plan”

Days after the Big Three automakers were sent home without any supper—told to come back after Thanksgiving with a “plan” that shows them to be deserving of $25 billion of taxpayer congressional Treasury largess—Super-sized financial institution Citibank was handed roughly that much cash in an attempt to prevent the bank’s complete collapse. (That is new money added to the estimated $25 billion Citi has already received under the Paulson TARP/injection/bailout extravaganza.)

But one of the big car manufacturers, General Motors, already seems to be ahead of Citibank as far as making plans for financial stability is concerned. GM’s Buick division announced that it has cancelled its five-year, $40 million endorsement deal with star golfer Tiger Woods, while Citibank has confirmed that its 20-year, $400 million deal for the naming rights to the new home of Major League Baseball’s New York Mets is still very much a “go.”

GM’s Chief Executive, Richard Wagoner, was lambasted for taking a private jet to last week’s congressional hearings (and that was bad form), but just a week earlier, the company had already decided to let go of two of its five private jets (all five are leased, not owned). General Motors has also made many other (arguably small) cuts in an effort to trim costs—from slashing worker uniform stipends and buying cheaper wipe-up towels, to trimming the size of test fleets and turning off escalators at corporate HQ after 7 p.m.

These cuts could fall under the “penny wise and pound foolish” category, but they stand in striking contrast to the kinds of cuts Citi has made:

At Citigroup, executives had announced more than 27,000 job cuts, including ones shed through the sale of the company’s Indian outsourcing operations and German banking franchise and prior layoffs. But the bank stepped up its efforts on Monday with plans to eliminate 17,000 workers in the coming months. It will also cut an additional 7,000 or so employees by divesting businesses in the future and could shed more jobs through attrition.

The job cuts would be in addition to about 23,000 layoffs already this year and leave the bank with about 300,000 employees, down from its peak of about 375,000 in the fourth quarter of 2008. And Citi executives said there could be more layoffs ahead as they moved forward with plans to reorganize the company next year.

Meanwhile, back at GM, failure to get a bridge loan this year could result in the direct loss of some 120,000 jobs—with an additional seven-and-a-half times as many spin-off jobs potentially lost as a ripple effect. That’s over a million jobs total from GM’s hardships—and that doesn’t figure in Ford or Chrysler.

Though the failure of another big financial institution is likely not in the country’s economic interests, either, based on recent history, it is hard to argue that Citi is more deserving of its backstop than America’s automakers.

(photo by me)

(cross-posted on The Seminal and capitoilette)

too late

Over the next two months, Mr. Paulson must impose some coherence and clarity on the bailout. Otherwise he will only fan anxieties and mistrust, which will undermine the effectiveness of his good decisions and amplify the fallout of his bad ones. With markets gyrating wildly, and the economy deteriorating rapidly, the nation needs clear leadership and a sound plan.

After spending the entire length of today’s lead editorial demonstrating just how badly Treasury Secretary Hank Paulson has handled the economic crisis and ensuing attempts at a “bailout,” the New York Times undermines its point with this half-hearted admonition. Honestly, if the Times editorial board knows of a good decision by Mr. Hanky, might they have shared it?

The nation does need clear leadership and a sound plan, but, to date, the nation has gotten neither. As pointed out in this very editorial, any “modest easing the bailout initially brought about in the credit markets is now being reversed over doubts about the Treasury’s stewardship of the plan.” Paulson’s actions have been reactive and woefully behind the curve; he lacks anything like a coherent strategy, and the moves he has taken seem less motivated by an interest in protecting wage-earning Americans than in protecting Paulson’s pals and ideological biases.

There is also zero transparency—something many econ-watchers consider of utmost importance to stabilizing credit markets. . . not to mention the stock market. Beyond the lack of oversight as to what the banks are doing with the billions in bailout cash that they have received (much will end up going to bonuses, balance sheets, and the buy-ups of competing banks), it has now been revealed that there was another $2 trillion (!) dispensed by the Fed that is completely opaque.

Paulson has refused to use any of the TARP cash to help homeowners facing foreclosure, even though that might slow the bleeding and even stimulate some local economies, and now he has also rejected using his precious kitty to help the auto industry. Though it’s true that an auto-industry bailout administered with a similar chaotic attitude and the same lack of rules and requirements would do little in the long run to fix systemic problems in this sector, deciding that Goldman Sachs was “too big to fail” but GM is not is as stupid as it is hypocritical.

Given that record, I have no need to extend the rhetorical lifeline the Times so generously offers. Clear leadership and a sound plan cannot come soon enough, and given the noted rapid deterioration of the economy and the number of Paulson’s remaining days, it probably won’t.


(cross-posted on capitoilette and The Seminal)

NYC subways: fare hikes, service cuts. . . is this the change we need?

Tell me you didn’t see this one coming. MTA Chief Elliot Sander announced this week that economic times being what they are, the Transit Authority’s deficit was going to balloon to $1.2 billion, and so service cuts and substantial fare hikes were now inevitable.

The MTA had already slated eight percent fare increases for next year; they now say they will need an additional 20% to make up shortfalls caused by increased fuel costs and decreasing property values (the MTA gets a good chunk of its budget from property and property-related taxes). If an increase like that is approved, the price of a single ride on a New York City subway or bus would climb above $2.50.

Capital improvements and service expansion are already lagging far behind the needs of a city expecting to grow to a size of 10 million in the next decade, but even if Sander gets all of his fare boost, service and improvements will still have to be cut back to trim the deficit.

The Metropolitan Transit Authority is hardly the only state agency facing a budget crisis as the Bush economy and the Wall Street meltdown send shockwaves through the New York economy. (For those of you not familiar with NYS politics—yes, the city’s transit system is run by the state. It was taken from the city during the 1970s fiscal crisis, and NYC never got it back.) Governor David Paterson, who has already negotiated state budget cuts, is demanding the legislature return for another round—and for that round, Paterson is proposing a 25% haircut.

Still, Paterson has made it clear: there will be no state tax increases.

What Paterson means by that, of course, is that he will not countenance a state income tax increase. The ousted Spitzer Administration had floated the idea of a “millionaires’ tax”—a surcharge on the highest of highest incomes to help New York meet its obligations—but Paterson, formerly a state representative from Harlem and once considered a liberal, has thrown that baby out with Eliot’s bathwater.

Of course, a 28% fare increase—more than a dollar extra for every roundtrip commute—would effectively (if not officially) be a tax increase. . . except this one would primarily affect the other end of the economic ladder.

To reiterate: For millionaires, who don’t take the subway all that much—no new taxes; for working class New Yorkers, who do use the subway daily to get to and from work—how does paying an extra $260 per year sound? (That’s per person—if there are kids that use the subways and busses to get to school, multiply accordingly.)

NYC is the economic engine of New York State. (And city residents already pay a disproportionate amount to fill state coffers—they pay out more than they get back in services and benefits.) The fuel for that engine is the city’s workforce—and that workforce relies in large part on public transportation to get to work. Without a functioning and affordable public transit system, New York City’s commerce—the state’s engine—would grind to a halt.

So why is it that all anyone can think of when times get tough is to cut service and raise fares? Why take one of the great advantages that New York has over most other American cities and hobble it? Is it that hard to think of anything else to do?

Let me give it a try. . .

First off, it is high time that control of the city’s mass transit system is returned to the city. For far too long, income from the total of state transit systems has gone disproportionately to commuter rail; subway and bus riders have effectively been subsidizing suburban rail commuters. That has to stop. I’m not saying that commuter rail isn’t important—it is vital—but the subway system is more vital to the workings of New York City, and it deserves the full benefit of its income.

Second, how about some creative thinking?

New York City and State pay more in taxes to the federal government than either gets back—so it is in America’s best interest to keep the New York economy growing. So how about we integrate some of NYC’s financial problems into the national thinking on bailouts and stimulus?

If Washington is going to spend billions to bailout the auto industry, why not spend a couple billion to help out systems that are better for the economy and the environment than cars? Seriously, not only does the MTA itself provide good-paying jobs to thousands of New Yorkers, capital improvements would provide even more, and the service that the MTA provides increases the productivity of practically all city businesses. Backstopping automobile manufacturers will cost tens or hundreds of billions, and I can’t even begin to tell you how much of that will go to the credit divisions, or legacy costs, or executive compensation, or shareholder value. I can pretty much guarantee that one or two billion to the MTA will deliver much more bang for your buck.

Here’s another idea: The coming infrastructure bill. . . what says infrastructure more than subway and light rail? Why shouldn’t the New York congressional delegation insist that this promised investment in infrastructure pick up the tab for system upgrades and expansion? Let fares go to the day-to-day operating costs. For all the reasons cited above, I am pretty sure that few infrastructure investments will provide better ROI.

I got another: What say we reduce the burden of rising fuel costs by making the New York transit system one of the stars of the new green economy? Spur plug-in hybrid innovation by promising the best technology a crack at replacing all of NYC’s busses. Fund an initiative to find a self-sustaining way to generate all the electricity needed to run the subways. Yes, that’s dreaming big, but a) not that big, and b) isn’t that the change we need?

So there you go—in fifteen minutes, I just outlined three (or was that four?) possible alternatives to fare hikes and service cuts. And I am just doing this on my own, pro-bono. There are staffs of paid experts and consultants at the MTA’s and the government’s beck and call—where are their ideas?

Indeed, I’ll go a step further: where is the political leadership? Why is it that the best anyone can think of is to make the poor and working class suck it up, pay more, and make do with less? What makes that leadership? That’s the simpleton’s solution. That’s the coward’s way. Why should we reward that?

When I went to the polls here in Manhattan last week, I didn’t just vote for change at the federal level; I voted for my US Representative, and my state senator and assembly member, too. Two years from now, I’ll vote for all of them again, and a Senator. I expect them to be full participants in promoting the vision and the programs that were highlighted in the campaign of our president-elect. What better place to begin than right here at home?



(cross-posted on capitoilette, Daily Kos, and The Seminal)

Hank Paulson earns his nickname

Howdy-ho!

how cute. . .

Hank is going to let Bush pretend he’s still in charge. . . .

The Treasury Department, in its boldest move yet, is expected to announce a plan on Tuesday to invest up to $250 billion in banks, according to officials. The United States is also expected to guarantee new debt issued by banks for three years — a measure meant to encourage the banks to resume lending to one another and to customers, officials said.

And the Federal Deposit Insurance Corporation will offer an unlimited guarantee on bank deposits in accounts that do not bear interest — typically those of businesses — bringing the United States in line with several European countries, which have adopted such blanket guarantees.

. . . .

Treasury Secretary Henry M. Paulson Jr. outlined the plan to nine of the nation’s leading bankers at an afternoon meeting, officials said. He essentially told the participants that they would have to accept government investment for the good of the American financial system.

Of the $250 billion, which will come from the $700 billion bailout approved by Congress, half is to be injected into nine big banks, including Citigroup, Bank of America, Wells Fargo, Goldman Sachs and JPMorgan Chase, officials said. The other half is to go to smaller banks and thrifts. The investments will be structured so that the government can benefit from a rebound in the banks’ fortunes.

President Bush plans to announce the measures on Tuesday morning. . . .

Henry Paulson, who himself had to be dragged kicking and screaming to this equity injection plan, worked out the details in private with the biggest players on Monday. . . and then kept it on the QT so that Still President Bush could come out on Tuesday morning and make it seem like he had some role to play in all this.

He didn’t.

Truth is, Mr. Hanky didn’t much either. Democrats in Congress inserted the language (over Paulson’s objections) in the TARP bill that gave Treasury the authority to do this; Paulson then did nothing for ten days, until markets tanked, credit got tighter, and UK PM Gordon Brown got most of the Europe on board with a similar plan. Hank Paulson is just desperately trying to keep up.

Meanwhile, Hank’s old pals at Goldman Sachs have cut a deal with New York state to headquarter their newly configured full-service bank in New York City. So, they get more from the federal government, and a state tax break, too.

How cute.


(cross-posted on The Seminal and capitoilette. . . where you will also find something about a nasty "typo" on some New York ballots. . . .)

Hank, if you’re reading this. . .

It seems like the Treasury Secretary, after yelling “Fire!” in a crowded theater, is now watching everyone stampede out (trampling many on the way), and waiting until the fire gets big enough to justify his earlier histrionics.

And, really, if you’re reading this, Mr. Paulson, you’ve got some ‘splainin’ to do. . . .

bailout homework

Adam Davidson, who reports on matters financial for NPR’s Planet Money and PRI’s This American Life tends to describe the credit hysteria of recent months in more dire terms than I would use (again, it’s not that I don’t think there are big problems with our economy, it’s just that I just don’t think that the way the problem has been framed promotes solutions that benefit the majority). However, oddly enough (or maybe this isn’t odd at all), Davidson also sees reason for some hope based on language he believes made its way into the final bailout, er, um, excuse me, rescue bill that passed the House and was signed into law by President Bush on Friday.

Continued on capitoilette. . . .

who you gonna call?

From today’s NYT:

In a hastily convened meeting in the conference room of the House speaker, Nancy Pelosi, the two men presented, in the starkest terms imaginable, the outline of the $700 billion plan to Congressional leaders. “If we don’t do this,” Mr. Bernanke said, according to several participants, “we may not have an economy on Monday.”

I don’t know about you, but I find this paragraph outrageous. Ben Bernanke’s hysterical proclamation—or threat, depending on how you read it—is in quotes, and it seems to have multiple sources confirming it, so I have to believe the Chairman of the Federal Reserve actually said this—and that just blows me away!

This is the man we have entrusted with setting US monetary policy, with keeping a hand on the rudder, with backstopping our entire economy, and the best he can offer at a time of “crisis”—a crisis that any casual observer could have seen coming at least a year ago—is essentially a slightly more serious rendition of the "Dogs and Cats" speech from Ghost Busters.

Honestly, if I’m Pelosi, I consider throwing him out of my offices and telling to come back with his resignation. (I know, Pelosi can’t fire the Fed Chair—but you get my drift, right?) This is a shock doctrine holdup, plain and simple, and if you didn’t suspect it before, this scene makes it imminently obvious now.

That any competent person in Bernanke’s position wouldn’t have started conversations before it got to this point, and that he wouldn’t have come in with multiple options, well in advance of a drop-dead date, is completely unconscionable. That the Speaker, the Senate Majority Leader, the chairs of both houses’ Banking Committees, and, most of all, the President of the United States hasn’t come out and said as much is unacceptable.

And, worst of all, of course, is that the President, the Senate, and, soon, I expect, the House are all set to reward this pathetic performance.

I think all of America has been slimed.


(cross-posted on The Seminal)

country club first

By now most of you know about McCain’s call to suspend the campaign, as well as Friday’s debate, in order to concentrate on fixing the Bush-McCain-Gramm financial crisis. That’s supposed to make him look all presidential, above the fray, putting, as they love to belabor, “country first.”

But the timing of this—and the timeline of McCain’s Wednesday behavior—tells quite a different story.

The day started with Team Obama contacting the McCain campaign to draft a joint statement detailing what both presidential candidates could agree upon moving forward on this week’s bailout debate. While Obama’s people were waiting for a response, however, McCain was exercising his leadership skills by taking a private meeting with Lady Lynn Forester de Rothschild, the superrich international financier who once supported the campaign of Sen. Hillary Clinton, but recently tried to make a big deal of her switch to McCain because she believed that Barack Obama was. . . wait for it. . . “elitist.”

So, to recap: Obama takes the lead by trying to hammer out a joint statement, McCain leaves Obama hanging while he rubs elbows with a rich backer, and then McCain announces he is “suspending” his campaign.

The Obama folks are still waiting on McCain to get back to them about the statement.


(h/t Gem Spa)



Just Breaking: Still President Bush has now weighed in with a McCain bailout plan (that would be a plan to bailout Sen. McCain, not any actual plan to fix the crisis that could have been authored by the Arizona blowhard), inviting both presidential candidates to the a White House powwow with other congressional leaders on Thursday. Obama has already accepted.


And Now Breaking: The two campaigns have finally released that “Joint Statement.” When I find the text, I will post a link.

The American people are facing a moment of economic crisis. No matter how this began, we all have a responsibility to work through it and restore confidence in our economy. The jobs, savings, and prosperity of the American people are at stake.



“Now is a time to come together – Democrats and Republicans – in a spirit of cooperation for the sake of the American people. The plan that has been submitted to Congress by the Bush Administration is flawed, but the effort to protect the American economy must not fail.



This is a time to rise above politics for the good of the country. We cannot risk an economic catastrophe. Now is our chance to come together to prove that Washington is once again capable of leading this country.

But, Obama wanted to say more. . . . Quoting the official Obama-Biden blog:

Speaking for himself, Senator Obama outlined the following principles that he calls on Senator McCain to support:

I believe that several core principles should guide this legislation.

First, there must be oversight. We should not hand over a blank check to the discretion of one man. We support an independent, bipartisan board to ensure accountability and complete transparency.

Second, we need to protect taxpayers. There should be a path for taxpayers to recover their money, and to turn a profit if Wall Street prospers.

Third, no Wall Street executive should profit from taxpayer dollars. This plan cannot be a welfare program for CEOs whose greed and irresponsibility has contributed to this crisis.

Fourth, we must help families who are struggling to stay in their homes. We cannot bail out Wall Street without helping millions of families facing foreclosure on Main Street.

Fifth, we both agree that this financial rescue package should move on its own without any earmarks or other measures. We have different views about the need for other action, but this must be a clean bill.

This is a time to rise above politics for the good of the country. We cannot risk an economic catastrophe. This is not a Democratic problem or a Republican problem – this is an American problem. Now, we must find an American solution.

To me, this reads as if the first paragraph was hammered out pretty easily, early in the day—it’s really hard to disagree with much there—but Sen. Obama wanted to go further, and was waiting for feedback from McCain. After a day of waiting while McCain suspended his campaign by talking to a wealthy campaign contributor, and later to CBS anchor Katie Couric, and then holing up in New York with his soul running mate, with events moving forward, the Obama team decided to just agree to release what they had and reiterate the additional points, the ones that the Illinois Democrat has been stressing all week.




(cross-posted on The Seminal)

MORE on Wednesday's campaign antics now up on capitoilette. . . .

damn yankees: Steinbrenner. . . and Paulson!

Who would of thought that the connection between the end of Yankee Stadium and the end of capitalism as we know it was anything more than metaphorical?

I was surprised, too.

McCain attacks ally once floated as his possible vp

Attempts to eat his own; winds up putting foot in mouth.

Republican presidential wannabe John McCain, desperate to find his footing on the US economic crisis, chose to attack Securities and Exchange Commission Chairman Christopher Cox in a speech in Cedar Rapids, IA, today.

“The primary regulator of Wall Street, the Securities and Exchange Commission, kept in place trading rules that let speculators and hedge funds turn our markets into a casino,” McCain said.

“The chairman of the SEC serves at the appointment of the president and in my view, has betrayed the public's trust. If I were president today, I would fire him.”

McCain has been trying to find a way to distance himself from the Bush-era deregulation that he has consistently supported, and Cox was likely seen as the low hanging fruit—problem is, he’s not low-hanging enough. As ABC News has noted (h/t Sam Stein), “while the president nominates and the Senate confirms the SEC chair, a commissioner of an independent regulatory commission cannot be removed by the president.”

But that’s not the only absurd angle on McCain’s latest attempt to dance away from his record as a supporter of the system that has created the current economic crisis. McCain was part of the Senate that unanimously confirmed Cox in 2005, and the Arizona senator has said little about Cox since. And, as noted today by Senator Chuck Schumer (D-NY), McCain has actually been to the right of Cox on regulatory issues.

How simpatico are Chris Cox and Johnny-Mac? Well, it was only this spring that Cox was considered one of the frontrunners for the Vice Presidential slot on the Republican ticket. Here’s Quin Hillyer writing for the uber-conservative American Spectator:

Chris Cox: The best choice [for VP], bar none. This thoughtful and reform-minded chairman of the Securities and Exchange Commission made his name for 16 years as the brainiest and perhaps most principled Reaganite conservative in Congress, as well as one of the best on TV. In a brilliant column two weeks ago at this site, Lisa Fabrizio laid out the full argument in Cox's favor. Other columnists have also written that he would make a good Veep choice, among them Lisa Schiffren of National Review Online, Jack Kelly of the Pittsburgh Post-Gazette, Tom Bevan of Real Clear Politics, and the reviewer for Exurbanleague.com, which is the top-ranked conservative blog in McCain's home state of Arizona. Ditto for an article yesterday in the Financial Times and a column yesterday by John Gizzi of Human Events.

Cox is well thought of by just about every conservative columnist around, and respected by the David Broder institutionalists for his brains, diligence, and decency. He could probably help at least a little in Minnesota, where he grew up, and of course he is a favorite of the Californians he represented in Congress. Of great significance, perhaps, McCain himself was asked two Fridays ago at a bloggers' briefing which states he thought he might be able to move from the Democratic to the Republican column, and his first answer, the one he focused most on, was California. And McCain is sure to appreciate Cox's grit in coming back from a horrendous off-road vehicle accident three decades ago that left him partially paralyzed for a while.

Two days ago, McCain proposed “a 9-11 style commission” to look into the causes of our economic crisis—I believe that was the same day that John Boy boasted that as chair of the Senate Commerce Committee, he oversaw every aspect of the US economy (heckuva job, Johnny, btw). Today, the senator says that after he becomes president—in four months—he will fire a regulator he helped confirm (even though he can’t actually fire him and, as is being reported, Cox will likely step down at the end of the Bush Administration, anyway). The economic ship is taking on water and listing heavily, and McCain is still rearranging the deckchairs. Sad enough on its face, but infuriating (and the height of dishonesty, really) when you realize that John McCain was not only one of the builders of this boat, he helped drive it headlong into the iceberg.


(cross-posted on The Seminal)



More economic news and musings today over on capitoilette.

calling all economists: suppose you could solve the gas crisis. . .

I am sick and tired of trying to argue about the price of gas within the frame of whether or not more offshore drilling is going to have an effect now, seven years from now, twelve years from now, or ever—that is just fucking lame. That is the Republican game plan, pure and simple, and we should be smarter than to play on their turf.

Further, a return to “cheap” gasoline may not be desirable. The increased consumption will force the price up, not to mention drive up pollution and greenhouse emissions and again undercut moves toward alternative energy options.

All that said, real people are feeling real pain every time they have to gas up—so what’s our answer? (And don’t you even start with trying to explain the windfall profits tax, it’s not only a political non-starter, and bloody hard to define, it probably doesn’t solve the immediate problem.)

I don’t claim to have all the answers—however, if you read what I have to say over on capitoilette, you might think that I do. . . claim, that is, claim to have the answers. . . . I don’t, really, but I give it the old college try, so go, read already. . . .

(And, if you are an economist or have similar skills, please help me with the numbers—I would appreciate your input.)

sign of the tim€s

Taken yesterday on Prince Street. . . in SoHo. . . in New York City. . . in the United States.

Pretty much says all you need to know about our economy.

And New York City.


Update: OK, I am going to say a little more. I didn’t plan this, but word just out this morning: The US dollar has dropped 41% when compared with that euro up there:

When President George W. Bush went to his first Group of Eight summit in 2001, a dominant issue was the dollar -- the strong dollar, that is. The U.S. currency was on a record-setting streak, and the free-marketeering president wasn't going to stand in the way.

On the eve of Bush's last G-8 appearance, the dollar's gyrations are again in the crossfire. This time, it is a weak currency, upended by slumping growth, a housing recession and record gas prices, that is gnawing away at the world economy.

The dollar's 41 percent drop against the euro during Bush's term writes the economic epitaph of an administration that set out to restore American preeminence. Instead, Bush heads to Japan next week for his final international summit with diminished leverage as Russian and Chinese influence grows.

Also, we have now officially entered bear-market territory, according to the WSJ.

An economy in the crapper—signed, sealed, and delivered by George W. Bush.



(cross-posted on The Seminal and Daily Kos)