just in time Paulson up live on CSPAN

am i understanding this correctly ?

re: Citigroup … if you give them $20Billion under an agreement in which they are responsible for the next $29Billion in losses and you (the FedGov) will assume liability for any losses over and above that, have you not just:

a: limited their future losses to $9Billion ?
b: incentivized them to divest themselves of their worst assets without regard to price ?
c: created an opportunity for third parties (insiders too ?) to purchase those ‘bad’ assets at prices so low that they then become potentially profitable (with the booked “losses” billed to the taxpayer?)

something sounds very wrong with this “rescue” until you remember that it’s the Bush Administration with H.R. Haldeman’s former aide from 1972/3 as the Secretary of the Treasury (who just happens also to be the former CEO of Goldman Sachs)

p.s. can you really “rescue” paper (now digital) “money” losses counted with 9 zeros by creating more digital money counted with 12 zeros ? (i guess we’re about to find out)

p.s.s. if Citigroup operates in 109 countries, why is their “rescue” only the US’ (taxpayers) burden ?

is this deal another “controlled demolition”? are they not “rolling out the red (ink?) carpet for future american oligarchs” ?

Schmidt is channeling; in his mind, the Big Three are emblematic of a certain rather large software company located in Redmond, Washington that’s a household name.

If we look at the Big Three from this perspective, Schmidt has a point that there needs to be a business model reset. That software company is suffering from a similar generational shift as well, and Schmidt’s comments fit more closely when one thinks in those terms.

But what Schmidt doesn’t understand is that there is NO Google Car. There is no rough equivalent in the marketplace that makes the existing automobile archaic. Transportation is not like software, in that there is a tangible product involved, and there’s no getting around the need for infrastructure to support the movement of humans.

At least until Sergey Brin and Larry Page and their cohort of engineers figure out how to beam us from one physical location to another.

Google Port?

“We absolutely have a manufacturing base, and that manufacturing base is a lot of new products that have yet to be invented here.” OK, Eric – help me out here, oh Wizard of Teh Google — what manufacturing base are you talking about? Where is it? And who is going to invent all of these ‘new products’ you are talking about? How about some discussion about investing some of this money that is being thrown at financial industry(and which frankly seems to be ending up as bonuses for these folks with THEIR failed economic models) in…swoon…PEOPLE? In education? We’re going to need a whole lot more technically educated and creative people to come up with these new products, wherever this manufacturing base is. I’d also like to ask that a certain amount of that money also be thrown at foreign language training at the K-12 level – it might be a good idea to get a base of Cantonese and Mandarin going (as well as some Farsi, Pashtu and Arabic). I’m just sayin’.

Good to see that Bush and Obama are on the same page when it comes to bailouts of rich bankers and opposed to loans for real workers. Meet the new boss, same as the old boss but with better PR skills.

There is a terrific panel discussion on DemocracyNow! that disects the Obama economic team. Be sure to listen or watch.

“Because this real cool future where we make only iPods or something, only better, doesn’t seem to include them.”

This post is the perfect time to quote John Prine:

“We are living in the future
I’ll tell you how I know
I read it in the paper
Fifteen years ago
We’re all driving rocket ships
And talking with our minds
And wearing turquoise jewelry
And standing in soup lines
We are standing in soup lines”

If Schmitt thinks the Big 2.5 are too big and unwieldy and we need smaller more nimble companies, then pray tell how on earth he justifies bailing out Citigroup and the rest of the giant banks? Surely they should be chopped into smaller more flexible bits as well.

I would also like someone to ask one of these clowns to explain to me why auto workers are required to bail out failed banks (via their tax dollars), but bankers are not required to bail out the auto industry with their tax dollars.

Thieving pinheads.

The Diane Reahm show on NPR has a discussion with Joseph Stiglitz. Said Obama’s economic advisors are good but points out many were involved with the decisions that put the U.S. in the hole that it’s currently in. He’s not sure if they have learned anything. Said the economy needs a lot of stimulus.

Don’t these billionaire Internet wankers realize that the R&D, foundation work, implementation, and deployment of the Internet was fully financed by the government? Don’t these wankers know that the Apache web server was also government financed. That’s why its free. That’s why nearly every web server in the world is Apache or a derivative. And on and on, like that. They’re wealth is based on externalities and subsidies they never paid for. Bunch of pompous pricks prigs.

i don’t trust these people at all and the media just eat them up they are lying through their eye teeth remember the 9 billion dollars that disappearedthe day before bremmer got on that plane and left iraq and they will all be fat when they leave office

I saw the same interviews on Rachel Maddow, and had esentially the same reactions. However, it seems to me that Obama has indicated that he will support a loan to the auto makers on a number of occasions. I haven’t heard any mention of it, but in his press conference yesterday, he referred to a stimulus plan aimed at “creating and saving 2.5 million jobs.” Several times he has mentioned a vision of a Michigan-based auto industry as part of economic regeneration. Additionally, I took his more explicit reference yesterday to be more of a not for Congress’ rationalization for delaying an auto loan. But, that’s reading a lot of tea leaves.

You’re using the term “old industry” but the real growth is going to come from new industries and small businesses, which is where all the jobs in are created anyway.

What the hell does the first part of this sentence mean?
Is it just the exaggeration du jour or does he really believe that large industries don’t create any jobs anymore? Google is very large by many definitions, so have they stopped creating new jobs? May be that explains the news item that Google will be cutting contract jobs.
This is really sickening.

I wanted to share something funny my Pastor said on Sunday, but didn’t know where to say it.
She was talking about the Big Three each taking their corporate jets to the hearings last week. She asked, “Couldn’t they have jet pooled?”

REAL Class warfare folks.

If a company makes nothing except “products” like Credit Default Swaps, they are members of the Leisure Class so of course, they are pampered and protected. If a company makes something real like an automobile, they are members of the Industrial Class and as low-status actors, MUST be supervised like retarded children.

Thorstein Veblen had this all explained in 1899. Not surprisingly, he is still absolutely correct.

Stuff is insane:

http://www.bloomberg.com/apps/…..refer=home

Finally! Someone asking the questions that no one seems to want to touch.

The speed and depth of Citi’s bailout seems to solidify the notion that Wall Street’s tentacles are deeply rooted in Washington and this myopic fury to help their own out without any regard for the world around them is down right dangerous.

I scratched my head when I heard Schmitt tout the Citigroup deal, as I too remembered Krugman’s criticism of the lack of accountability. It struck me that Google’s good image was being exploited in order to rationalize what seems like a complete givaway.

Why is it that everyone is demanding that the automakers come up with a detailed business plan to turn around the industry before they will see a dime (which seems fair to me, by the way), but the financial sector gets billions, with few if any strings attached, to go on doing business as they see fit?

It can’t be that they have proven that they know how to manage money!

Industrial Workers of the World believed in one big union for working people, the leisure class excluded. A general strike would bring this bullshit to a halt and usher in a new economic paradigm.

Too many yuppie software types, this clown and Paulson, will spoil any
chance for Obama to achieve recovery. He must select a real Secretary
of Labor with some background in real manufacturing and working issues.

Right On!

You should know that Veblen got a government job during WW I. It lasted until he suggested that bringing in the harvest would be a simple matter IF folks would simply recognized the validity of the IWW.

Paulson’s newsconference revisted
http://www.youtube.com/watch?v=MKw6y2jNodM

Didn’t know that.

Thanks Jane.

digg

Jane Hamsher:

In line with this, here’s the Post’s “A Familiar Trio at Heart of Citi Bailout“, the trio being Paulson, Rubin and Geithner.

Bullseye. Thank you.

Excellent points.

I would also offer that Eric has huge anti-trust concerns. AFAIK, his only toughest competitor in most of google’s markets is the U.S. Department of Justice. So when someone from Obama’s team asks him to help sell this swindle, he’s only too happy. ymmv.

where the people are on Obama’s economic team who have any sense of what workers and blue collar people are experiencing in this economy right now.

i’m sure summers and geithner et al. will do the right thing. /s

Here’s another little tidbit to keep in mind.

Eric Schmidt, for better or worse, is not a student of business. He’s an engineer. He may teach at a business school, but he is an engineer.

I’ve seen other companies who’ve also relied very heavily on engineers to make their numbers work, especially in companies with technical products. They can make a company squeal and yield profits.

But these are NOT bankers. And Schmidt is no banker.

Nor is Schmidt the kind of engineer who’d fully grok all the ins and outs of manufacturing hard goods.

I saw the Schmidt interview last night. I was wondering the same thing Jane was. I am sitting there going WTF?!?!?!?!? Are these guys really that clueless? Especially someone like Rendell.

I’ll believe Schmidt when Google is five people and a two room office again.

‘Clueless in Mountain View’, anyone?

Schmidt is absolutely correct, just not as far as the government or the American people are concerned. If we treat this as a game between firms, which benefit as long as they can avoid government scrutiny and taxes, while at the same time enjoy public goods (here bailout money), the winner is clearly risk-taker Citi. Has America really become this corrupt?

second democracy now! recommendation: Naomi Klein, Robert Kuttner and Michael Hudson Dissect Obama’s New Economic Team & Stimulus Plan

transcript should be posted soon.

Perhaps I am simply very ill-read, but did Congress approve the Citigroup bailout on Sunday? This doesn’t appear to be part of TARP, so wouldn’t Congress need to approve this bailout? In a true facist state, the loss of industry is placed squarely on the little guy’s back. Hello! We will be paying these bailouts off for generations (except for auto industry – those are loans). No matter who is running the country (speaking of which, what the heck is Obama thinking with these idiot same-old-boys-club picks for his economic team?) it will be bascially a facist state for the foreseeable future.
Thanks. Venting over.

btw – hugh posted a diary last night on the details of the citigroup deal.

I’ll bet that a loan for the auto industries comes through, but it may be in the new congress, when there is a larger Democratic majority, fewer Republicans to cry about any dearth of UAW concessions, and no chance of a veto.

All those racks of blades and other hard goods at the heart of all Google services were manufactured in China, I’ll be bound.

I hear you about the anti-trust risk, but Google has a knowledge-based product that relies heavily on open source technology.

At some point, a new Brin and/or Page can come along and kick Google back on their heels if they can offer users service they want.

The key here to Google’s sustained success will rely entirely on customer satisfaction, not just being an early mover into technology. Apple’s got the same challenge; it’s not enough to be cool, but to deliver cool with customer satisfaction.

This is the only place where I would listen more carefully to Schmidt; this is where proprietary software companies’ business models have failed, because they relied on ubiquity or lock-in and not on the enthrallment of customers.

And that’s why so many people are so willing to kill off the Big Three, in spite of the fact that they’ve improved their products while cutting costs — they didn’t win the hearts and minds of the American consumer.

And if Google stops winning hearts and minds, it too will be relegated to the has-been heap.

…continuing the wanker motif…

I keep asking simple/simplistic questions, because I’m…simple, I guess. What is the right thing? (I am not being snarky, selise, truly.)

And noting that the Prince had camels wandering in the background, and remembering S. Palin’s memorable turkeys dying in the background, I find myself wondering if this is a weapon of mass distraction. I suggest that the next time Obama speaks in public, it be against a background of outgoing Republicans duck-walking in repetitive circles, thereby continuing the critter theme.

The reason is simple:

The financial sector can’t come up with a reasonable biz model which is not gambling based and using enormous leverage to create “wealth”.

If they had to have a reality based biz model of lending and profit made on the spread in interest paid and charged… there would not be all the billions of “wealth” created. The shine would come off the financial sector and it would not be so glamorous. Gone would be the hedge funds, derivative and CDS and so forth. Gone would be the billions in compensation.

YOU CAN’T CREATE WEALTH FROM TRADING

That my friends is the flaw in the financial sector. There is no there there. They create NOTHING but have managed to pull the wool over everyone’s eyes, get their bits of cash to use as leverage for betting, telling ever John and Jane that they MUST invest for their own future.

LIES all of it.

Obama can save that 3 million jobs at a cost of $25 billion instantly by saving the auto industry. Is this rocket science?

It’s not to me, and I think he’s closer to being a rocket scientist than I am.

Actually, I think they buy heavily from Sun Microsystems. Where does Sun make their products? I’m pretty sure there’s a video out there from University of Washington that will outline their data farm composition.

debs is dead at moa has a different take:

Whitney maintains that the auto industry will be bailed out alright but not until the big two have been chapter 11′d and the unions broken along with worker’s entitlements:

So why would GMAC want to become a bank holding company if General Motors is headed for the chopping block? Could it be that the government is working out a secret deal with management to put the company through Chapter 11 (reorganization) just so it can crush the union and eliminate their pension and health care benefits in one fell swoop?

You bet. Car workers will be reduced to slave wages just like they are in sunny Alabama where sharecropping has moved indoors. And–no surprise–the Democrats are right on board with this labor-busting charade. The auto industry isn’t going to be shut down. That’s just more fear-mongering like the blather about martial law and WMD. Detroit is going to be transformed into a workers gulag; Siberia on Lake Michigan, which is why Paulson is withholding the $25 billion. It’s plain old class warfare.

The ultimate sellout by the dems. Those of us who live in nations where a ‘leftist’ party finally won government during the great depression where government then introduced the safety nets and Keynsian economics and a more friendly attitude towards labour unions; are probably unaware of the horrors introduced by the likes of Ramsay McDonald as a labour PM in England when the depression hit.

I guess we’ll have to wait and see. From what I know, that would be stupid, but it’s not my guess that it will happen that way.

Media Cuts its Own Throat with Hostility to Helping Big 3
Ian’s up

I agree the Citigroup deal is pretty awful. Taxpayers should have gotten ownership much as they did with AIG. The top management should have been sacked and investors like Alwaleed largely wiped out. What we are seeing is the taxpayer being ripped off and the money given to the inept clowns who caused the meltdown through their stupidity and greed.

As for Eric Schmidt, what we see yet again à la Warren Buffett is that these captains of the markets who really know their corner of it don’t understand the economy as a whole, at all. Manufacturing accounts for less than 10% of the nation’s jobs. So manufacturing is not going to get us out of this slump. But manufacturing jobs are important because they are a bellwether not just for the number of jobs out there but their quality.

I keep asking simple/simplistic questions, because I’m…simple, I guess. What is the right thing?

i don’t think you or your question is simple. imo not enough people are asking these questions, i’m glad you are and i hope by reasoning together we can find some answers.

here’s what i’m pretty sure of – more of the same: more deregulation, more opaque self dealing bailouts are not the right thing. in other words, doing more of what got us into this mess seems to me completely stupid and wrong headed. even if we don’t have all the answers why not try a bunch of stuff and see what works?

From my admittedly primitive understanding of economics, it seems to me that confidence does play a more critical role in regard to the banking industry and may necessitate acts as much based on art as science, than is the case with a heavy industry. In that case, there is some rational to require some sort of plan, rather than just “whatever it takes” to restore confidence. The banking crooks sort of have a gun on us with the unknowns about immediate chain reaction into a depression.

I’m not sure about Sun equipment. They say 12% is outsourced to China,

Spotlight on China

Sun, like many other companies, is outsourcing more of its manufacturing to suppliers. All of our current contract manufacturers have facilities in China. China is home to approximately 12% of our total manufacturing facilities worldwide.

We are acutely aware of widespread accounts of labor law violations in China and global pressure both on China and on companies doing business in China to improve conditions for Chinese workers.

The components are mostly manufactured in the Pacific Rim and China. Not here, at any rate. Schmitt probably isn’t aware of the implications of that fact for this country. We’ve been outsourcing mass-produced electronics to Japan for donkey years.

Thanks for this. I am convinced I run a mile wide and a quarter-inch deep. My not-knowing is legendary, but the difference at this point in my life is that I feel as though I need to ask until I understand. No small task for the rest of you! *g*

The retirees’ benefits are already off the books in a VEBA. The only thing left is the balance of payments owed by the Big Three to these VEBA’s.

The wage structure agreed to during last year’s contract negotiations includes entry-level wages in the area of $12-$15 an hour — not that much above food service wages.

I think the argument is really about busting the unions, not about the monies; it’s about selling what’s left of the Big Three to the only entities that can still afford to buy them, like Chinese manufacturers as emptywheel pointed out last week.

This would all be a lot clearer if the UAW did a better job of PR, which as Jane pointed out yesterday has done a crappy job. But that’s one of the long-term challenges that the UAW and other unions have faced: they continue to bring knives to gunfights. They are in a war of propaganda for the continued right to organize — their very existence — and they cannot muster equal or better PR to protect themselves let alone win the propaganda war.

Yes, I understood that before I asked the question where does Sun make their content.

The Chinese make electronics, but they still don’t make all of them.

Rather like automobiles.

A revisitation of Veblen WRT the current situation would make a great Oxdown diary.

I think the argument is really about busting the unions, not about the monies;

class war for the sake of class war?.

It’s about money at a scale beyond puny people like us.

It’s about removing impediments to shifting transnational power.

Union members are legal obstacles, not even to be elevated to the concept of class, mere fungibles.

If you prove to be right, I will edge closer to your critical view of Obama. I was a member of the UAW while working at a G.M. warehouse in college, had been a member of PATCO but was in FAA management at the timeof the strike, and had a father who was in on the foundation of the International Typographical Union. I’m a strong believer in unions, and simply don’t believe Obama is anti-union at this point.

I saw this interview last night and also had the same reaction as Rachel and many here – what is Eric Schmidt talking about? But then I remembered that he lives in the Silicon Valley Bubble World.

The bubble of Venture Capital and Overpriced Stock and therefore Government by the Stock Market is “It.” That is all they understand. To them Green Technology is just more new IPOs – and not about inventing the technology, and then manufacturing that technology – to actually work for better Climate control.

Guys like him don’t care about Manufacturing and Jobs like that – “that stuff is so old-school.”

if you’re right, and i have no reason to think you’re not, then things are worse than i thought. as per usual

I’m a strong believer in unions, and simply don’t believe Obama is anti-union at this point.

well, let’s just both hope you are right. *g*

There are a couple of announcements that Obama should make:
1. There will be new rules for recipients of bailout aid after Jan. 20th. So if you take bailout aid now, don’t plan on coming back for more, unless you are prepared to accept very different rules including modification of the terms of your current aid package.
2. Don’t even think about bidding on the new oil and mineral leases that the present administration is rushing to implement before my administration comes into office unless you are prepared to shoulder legal expenses that will dwarf any potential profit on the subject lease.

Single payer universal health coverage and card check should be a priori conditions to further bailouts. Universal health care would do wonders for troubled industrial industries, not just autos, and card check would go a long way to levelling the playing field for blue states vis-a-vis the “right to work” sun-belt.

it seems to me that confidence does play a more critical role in regard to the banking industry and may necessitate acts as much based on art as science, than is the case with a heavy industry.

No, it’s just easier to use smoke and mirrors in the banking context. Most people feel they have some understanding of the auto industry but few feel that way about finance. The Fed says “loan facility” or the Treasury “TARP” and people run for the hills. But the truth is that Paulson and Bernanke simply haven’t addressed any of the underlying issues of the financial meltdown. Financial markets know this. It’s why it takes such huge amounts of money to move them at all and why such changes are so transient. Just today the Fed announced another program to free up credit, you know the problem that the original Paulson bailout and a couple of other programs since were supposed to have dealt with.

I think emptywheel is right; based on what I know from family members who work in the auto industry and in Tier I-III suppliers, there’s every reason to believe that the Chinese would buy some portion of the Big Three in a heartbeat were they to go to bankruptcy. I cannot think of a compelling reason why a bankruptcy court wouldn’t entertain this as an option, save for CFIUS review.

And CFIUS review might not work any better than it did with the sale of sea ports to Dubai. Particularly since PRC owns as much of us as Dubai/Saud do.

Which brings us to the Citi bailout — we just bailed out a Saudi prince and sovereign wealth funds. Maybe somebody didn’t want gas prices to go any higher and compel the torches and pitchforks to be brought to bear before January 20?

I only heard two people yesterday, Mike Barnicle and Steve McMahon – say it like it is. The refusal to give a loan to the Auto Industry – is Class Warfare.

Someone finally asked why No One is saying NO to bailout Citigroup where those workers make a lot more than a line guy for an Auto manufacturer. Thank you Steve McMahon!!!

Saw this piece – this guy sucks. Maybe pulling stuff out of his butt works when he is boss.

And what was the deal? 50 billion, garuntee on 306 billion …. for a 7 billion stake in stock.

That and they keep bonuses and all that and keep spending 400million to name Met Stadium.

Buy hey – marketing pays if it can get you 50 billion and a free ride on .3 trillion in mistakes. BONUS TIME!

Schmidt is a Globatron. Independently wealthy by any standard other than Bill Gates’, the “manufacturing” he envisions, the products that power his business and make what he sells useable around the globe, are largely made in China. The technology, for now, may lie elsewhere, in the US, or in some Caribbean or European tax haven. But like Olympic pairs skating, the two can never be far apart for long.

Manufacturing is a web of activities. It is actually making a product, of course. It is also the design of that manufacturing process, its machines, software, people, and how they work together to turn materials into products people can and will buy. It encompasses continuing modifications to that system, constant tweaking of product and component materials and design. That, then, involves sourcing and cost information, which leads to distribution and marketing.

The most successful manufacturers, including Japanese car companies, understand how interrelated such things are. Cut out manufacturing from a company’s skill set, and you completely alter business ecology. Outsource it poorly and you alter it more completely and irreversibly. For those not having the Wal-Mart’s sumo wrestler’s leverage, that can be fatal to productivity and profitability.

The US economy is outsourcing manufacturing in a mad, lemming-like rush to outsource apparent cost, damn the consequences. It is outsourcing much of it to China: its prime supplier, its prime creditor, its prime economic competitor, its budding military competitor. That will permanently alter, lower, our leverage, our ability to compete and to sustain our standard of living. Except, that is, for Globatrons like Schmitt. He doesn’t need a country, he fantasizes, only a place to put his money.

Great coment.

China manufactures components for weapons the U.S. uses to blow up things and kill people. The main U.S. exports are hubris and death.

It might be useful to take a look at the European experience in propping up declining industries, of which the steel and coal complex was the most important, and automobiles second. The picture is mixed. From a purely dollars and sense standpoint it didn’t work; but from a human standpoint is probably was better than the alternative, which was to let them fail. We saw how this worked in Poland in the early 1990s.

With the coming Depression, there are going to be fewer cars sold no matter what. There’s nothing that can be done about it. It would be nice if Detroit could get into the tram business, which has a future if the government decides to subsideize urban transit systems. Schmidt is analytically right, but heartless or at best thoughtless. The people losing their jobs need something more than a hand-out. They need new jobs, which don’t grow on trees.

Maybe somebody didn’t want gas prices to go any higher and compel the torches and pitchforks to be brought to bear before January 20?

Gasoline prices aren’t going higher for reasons that are beyond the control of the Saudis. Speculative money has dried up and the worldwide recession is decreasing demand relative to supply. Oil producers are in a classic bind. They need to pump as much as they can to keep the cash flows on which their economies depend going but doing so at this point further depresses prices.

That might actually pay a corporate karmic debt, if the auto industry got into mass transit.

There’s enough money out there to force price into the next part of the doubled demand curve — wouldn’t have to boost it to $4/gallon as speculators did in July. The pain would be felt deeply if they pushed it only a dollar.

And the entire supply line only needs one or two production disruptions to punctuate the point.

“Globatrons like Schmitt. He doesn’t need a country, he fantasizes, only a place to put his money.”

Great Comment. I wish I heard more people talking about the “Hyper-Outsourcing” of not just Manufacturing Jobs, but All types of Jobs that left the US in the last 10 years.

The main US export is dollars (either paper or electronic)

Job Banks need to go

http://www.thetruthaboutcars.c…..most-gone/

Can you tell me what qualifies any of the authors at TheTruthAboutCars to say anything about the UAW and job banks?

As far as I can tell, it’s more anti-union bullsh*t.