The Rachel Maddow Show: Are the Banks to Blame for the Auto Industry Crisis?
By Heather Friday Dec 05, 2008 5:00pmRachel Maddow asks whether it is the automotive companies at fault, or if the crisis where buyers can't get credit are at fault for the current crisis the Big-3 is facing. Rachel discusses whether we need a bottom-up rather than top-down solution to the problem with Sen. Sherrod Brown since the banks still are just not lending money even after the huge infusion of cash the taxpayers gave them.
Login or Register to post comments.
[Deleted. Off topic. Take it to an Open Thread. Thank you. Site Monitor]
I don't understand, why congress doesn't just TELL the banking industry, "HEY! of the 700B we've secured for you, and the 350B we've already given you, give a loan for merely 34B to the Auto Industruy. THAT'S WHY WE GAVE YOU THE MONEY!" Then threaten to take back all the money, in cash or assets and have all the senior execs of the banks arrested for fraud if they don't start making with the loans.
Banks used to do stuff like that before Wall Street lost its mind.
The Bank Racketeers held figurative guns to their heads and said to Congress:
Congress gave them half of the money, plus the Federal Reserve is printing money and lending it by the truckloads.
The Bank Racketeers, seeing how well their scheme worked the first time still have the gun to their head. They want more money.
Why should they do anything, they don't have to lend anyone any money. Congress and the Fed just dole them out vast amounts WITH NO STRINGS ATTACHED.
The GAO says they cannot determine where the money went.
Here is Democracy Now Amy Goodman on that very subject.
This is the best Congress that Wall Street can buy. It is Racketeering on a scale never seen in the History of the World.
You think George Bush is a failure? Think again, this is plunder on a scale that would have made Ghengis Khan die from envy.
The car guys are in a totally different league.
It is the Federal Reserve that is/was to blame.
...whenever I play "follow the money" thats where I end up...same place where the dirty stuff started! Fed Reserve.
Of course it was the Fed that shipped off so much of our manufacturing base. Right.
This has absolutely nothing to do with people figuring they can live beyond their diminishing means. 110 MILLION Americans with bad credit ratings? Out of 300 million (and many of those remaining 190 million without a credit history)? Nope.
So I agree- it's the Fed. I'll throw in AIPAC and the Trilateral Commission...and the Ancient Order of the Bavarian Illuminati just for kicks. Because some evil force other than our own greed and stupidity MUST be behind this.
but also you are aware that for the most part, personal debt levels are chump change when compared to the trillions of dollars in derivatives that are floating around (as in there is nothing that backs them up at all in the realm of reality... assets).
We still don't make jack shit any longer! (And, btw, while a lot of people lost their asses in the derivatives market, a lot of people MADE MONEY- money that's still floating around out there).
Why do you think Citibank pushed so hard to get the Bankruptcy Bill passed a few years ago? They knew what was coming! They wanted to recoup on those bad loans they made. That bill passed in what- '04 or '05? Someone knew what lurked just around the corner.
Derivatives were just the end-game, allowing bankers to gamble on a huge scale to make back what they lost on all of the small gambles of extending credit to those who couldn't pay it back. 25 years ago I, as a college student, couldn't get a credit card unless my parents were rich. Now my kid, a freshman with no sense of money or value whatsoever gets credit card offers in the mail all the time!
All of us have played our parts in this. We really needed to buy that house, no matter that it was very over-valued. We needed to buy that satellite radio, or that new laptop, and we needed it NOW! And if we didn't have the $$, we mortgaged ourselves up to the gills, counting on the fact that we'd be able to repay, even though every fucking indicator told us that our economic futures were not going to be nearly as bright as we'd like to think.
And now the underlying suggestion is that Americans WOULD buy the cars if the banks would loan the money, and if the economy were better.
In other words, we were content with gluttonous consuming, but the economy went to shit. Americans would gladly return to gluttony, if only the economy were better. They would gladly "mortgage themselves to the gills" again for unnecessary cars, if only the bankers weren't so damn greedy.
One could make the point that Maddow is advocating the gluttonous consumerism.
A major factor for the economic crash is the speculation in the oil markets. Why isn't big oil helping the bail out -- they made the huge profits.
And when everything else came crashing down, so did it. Those people who lost their asses on Credit Default Swaps cashed out their oil futures for a half or a third of what they wished they'd make in the end.
Sorry, but the economy has been driven by wishes, not reality, for a couple of decades now. We've almost all, too a single one of us, contributed in some way or another: paying more than we should for a movie ticket or a house, simply living beyond our means, if even just beyond. Better times were coming, we just knew it. The funny thing is that Greenspan nailed it when he applied the term "irrational exuberance" to the Japanese economy that had crashed in the '90's.
$2000 from Wells Fargo for a home improvement. So, I wonder, how did I get a loan if people are not getting loans?
maybe you are a corporate entity?....or a human resource?
for $20,000. Not from a bank,though. A credit union.
The major problem with the auto industry is exactly what you would expect in a credit crunch - the market for big ticket items (houses, cars, etc.) disappears because people can't get loans.
If the financial sector's bailout isn't creating access to credit, then what's the point? Now that big finance has it's trillions, they sit back and decide who is now "credit-worthy"? And the longer they wait, the less "credit worthy" we all become.
Finance cares little for the auto industry at this point because much of their money is out. But if they can break a union, wreck an industry, and pick up the scraps for pennies on the dollar down the road, why not? Isn't that a more attractive investment?
Recession can be great for bargain hunters with access to artificially scarce cash. And we've heavily financed a group of people who have already ridden the system into the dirt for their own benefit.
The Panic in the 1870s set the stage for the advent of "The Gilded Age" which could not have occurred without such a ready supply of cheap, desperate labor.
Recessions can be great for some. And the bigger the wreck, the bigger potential reward.
I think it's crappy rock music.
With the "rock" music we've been getting for the last 18 years, who the hell needs state of the art car stereo?
When one wants to place the blame on our current state of financial chaos, look no further than the scumbags that were and still are the problem.....
‘PONZI SCHEME’ AT CITI
By PAUL THARP
December 4, 2008
A new Citigroup scandal is engulfing Robert Rubin and his former disciple Chuck Prince for their roles in an alleged Ponzi-style scheme that’s now choking world banking.
Director Rubin and ousted CEO Prince - and their lieutenants over the past five years - are named in a federal lawsuit for an alleged complex cover-up of toxic securities that spread across the globe, wiping out trillions of dollars in their destructive paths.
Investor-plaintiffs in the suit accuse Citi management of overseeing the repackaging of unmarketable collateralized debt obligations (CDOs) that no one wanted - and then reselling them to Citi and hiding the poisonous exposure off the books in shell entities.
The lawsuit said that when the bottom fell out of the shaky assets in the past year, Citi’s stock collapsed, wiping out more than $122 billion of shareholder value.
However, Rubin and other top insiders were able to keep Citi shares afloat until they could cash out more than $150 million for themselves in “suspicious” stock sales “calculated to maximize the personal benefits from undisclosed inside information,” the lawsuit said.
The latest troubles for Rubin, Prince and others emerged in a 500-page investigation by Citigroup investors represented by law firm Kirby McInerney.
The probe was used to amend and add new details to a blanket investor lawsuit filed against Citigroup a year ago. The amended suit called the actions of Citi leaders “a quasi-Ponzi scheme” to hide troubles - and keep Citi stock afloat while insiders unloaded about 3 million shares between Jan. 1, 2004 and Feb. 22, 2008 for huge profits.
In addition to Citigroup, Rubin and Prince, the complaint names Vice Chairman Lewis Kaden, ex-CFO Sallie Krawcheck and her successor CFO Gary Crittenden.
Rubin cleared $30.6 million on his stock sales, while Prince got $26.5 million, former COO Robert Druskin got nearly $32 million and former Global Wealth Management unit chief Todd Thomson got $25.7 million, the suit said.
Or in today’s vernacular, a wire transfer. What was not there to begin with never really existed in the first place. Nothingness has no value.
Rather than a single hard commodity. Paper is as good as gold if we value it as such- what the hell good is gold accept for being shiny and kind of rare? Blue whales are pretty rare, too, but I don't hear anyone talking about moving to the "whale standard".
I've made the point before: Spain discovered the "New World" in 1492 and became filthy rich, mining all sorts of silver and gold- they were pulling currency outta holes in the ground. But when Spaniards brought that currency back to Europe and needed to buy things, they got charged much higher prices than they had previous to their "discovery". All of their gold and silver flowed to the producers in France, the Low Countries, England. Buy the middle of the 18th century Spain was a joke, because they still didn't produce anything.
Ever notice how many of the economic powerhouses in the world have just about zero in the way of natural resources. Japan, Germany, France, Taiwan etc. It's all about what you can produce not what you have. The gold standard idea is for idiots.
We have a sort of "gold standard" in the banking industry. Leveraging. 37 imaginary dollars are backed by 1 real dollar. This is stupid. one dollar in the bank should be 50 cents that can be loaned out. That way the amount of "credit dollars" in circulation would be about 1.5% of what it is today. Not many would be able to get a loan, but those assholes that just make money off of money would be out of business.
Actually Spain lost all their assets because they wasted all their money and effort trying to prevent Northern Europe from breaking off the Catholic Church.
It had little to do with production, since the low Countries, and England had most of their might based around their banking systems.
Plus they were basically following the 2 century rule of European empire longevity. The Netherlands, France, and England followed similar time limits. And it seems, we may be hell bent in following the same course of self destruction trying to finance an empire...
That is what people don't understand. Economics is no fun:(
Printing more money causes inflation, A lack of capital in that system likewise causes deflation. Right now the government is trying to stop deflation, like that in the great depression. THIS IS NOT THE SECOND GREAT DEPRESSION. There was no "run on the banks" (although there was a run on the stockmarket).
MY ADVICE TO ANYONE STILL IN THE STOCK MARKET IS TO SELL NOW!!!!
That way you can ensure that when the stocks rebound you will have locked in your losses.
We should do away with the monetary system. That was the main reason for the collapse of Russia, if they could have properly prepared and allocated resources to individuals as seen fit by the government there wouldn't have been the unpredictable nature of the market--ie. no starvation while there was an excess of other materials. Micromanaging prices from a central government is not the answer because there will invariably be a black market and overconsumption. The only way to solve this is by strictly allocating resources to the individual-ration coupons should not be used! This would cause another form of monetary system to arrise through the use of food or gasoline vouchers, much like cigarettes in prison. Goods and services will be delivered to the individual, with strick oversight by the government. Goods and services will not be allowed to become currency--trading goods will not be allowed.
CAPITALISM IS DEAD . . . and the mule of capitalism, the market, should follow if there is to be a freee and just world.
what came first, high gas prices and skyrocketing health care costs - or - people not being able to pay their mortgage ??
surely, msgop can't blame their advertisers, now can they ??
(oh, and who let banks act like investment/insurance/brokerage houses ?? who rewrote the bankruptcy laws ?? hint: they get elected every once and a while)
I recall very clearly the discussions around the banks' wanting to rewrite bankruptcy law and how it would throw more people into long term debt crises. Sure, bankruptcy is not a fix-all, but changing our consumerist culture is not done by strangling one group to benefit another. And frankly, all I've heard for the last twenty damn years is how buying and buying and borrowing and borrowing is some patriotic duty of every red blooded American -- it drives the economy. Remember Georgie's command to all and asunder to continue to buy when the oil prices went out of control? Did he talk about changing American habits, investing in new technologies, saving? No.
Everyone wants to be a millionaire and if they can't by god, they are gonna look like one, because being middle class or god forbid, just getting by isn't good enough. Either pretend you have what you really can't afford by putting it on credit, or just steal, cheat and lie everyway you can. Nothing matters but looking like 'something'.
I really hate what we're going through, but frankly, I can't wait to see the end of that part of our culture or at least see it lose popularity. This country has lost its moral compass and Congress's out of control financial orgasm before the bankers illustrates this.
What no one is talking about is the dirty shit they pulled on people with their "deferred interest rates." People got loans at super-low interest rates but what they didn't know was those interest rates wouldn't stay low forever. Not only that but those interest rates weren't actually those interest rates. The higher rates were always in effect. The homeowners would eventually have to make up the difference. The lenders put it off until the loans and their deferred rates were due in one, lump sum which was usually too high for most people to pay. Then people defaulted and those mortages became toxic.
In short, it was the lenders dirty, rotten scumbag tricks that caused this shit. And now they're being punished by having the government give them hundreds of billions of dollars.
I say if they're company needs a bailout, the CEO's should have to give up all but $100,000 of their monetary assets, sell all but one of their homes, all but two of their cars and get their salaried cut to around $40,000 a year. Otherwise, fuck off!!
1.Health care costs. Congress has been unable to show the will to face-up to the issue because of the power of the health insurance and pharmaceutical industries. Health care is a major problem not only for the auto industry, but the airline and steel industries as well as businesses of all size. The failure of Congress to face up to single payer health care is now a major threat to the American economy.
2. The credit freeze. This has made getting loans to purchase cars more difficult and has resulted in a massive drop in automobile purchases. The U.S. auto market fell 14.8% through the first 10 months of 2008 and sales in October plunged 31.9%. Why? The lack of available credit for potential car buyers. And, on the other end, the industry cannot get loans to cover the dramatic loss in car sales.
3.Corporate structure that is top heavy with over-paid managers, VPs, and CEOs. US car manufacturers have three times the management bureaucracy that European and Asian car companies have. The CEO of Volkswagen's full annual compensation package is EUR 5.2 million. The CEO of Ford's is $36 million.
4.Money that should have been spent developing new, efficient vehicles was spent on fighting safety and efficiency legislation. Congress did not have the political will to demand energy efficiency, indeed they provided a tax credit for SUV purchases, and the auto industry lobbied to prevent such standards.
5. The skyrocketing price of OIL - shocked the entire economy, but hit the auto industry first and hardest.
Unemployment just hit the same levels we last saw during the Arab oil embargo of the 70s.
All this could have been avoided -- except for Republicans, oil companies, and their media...
Jimmy Carter, "The President's Proposed Energy Policy." 18 April 1977
http://www.pbs.org/wgbh/amex/carter/filmmore/...
At the very beginning of this crisis, before most people were even aware or it, banks began taking large capital injections from the Fed, intended to reinforce their capital base. Instead, they used it (with ever greater leverage) to create the commodities bubble. Their hope was to make back in commodities the money they were losing in mortgages. What they didn't realize was that the sudden rise in the price of oil and other materials would grind the world economy to a halt. Even as real demand for oil was falling, MARKET demand for oil was driving the price ever higher. The result should have been obvious to them. Makes you wonder, doesn't it?
This financial implosion has cleared squawk of loan bargains and other Wall Street products that have enabled America to feel falsely wealthy for the last 28 years. Loans are for people who cannot afford things. That's it. You want to go go to college but don't have enough stingy gov't grants or family money? Get a highly profitable for Wall Street student loan. Want a car but don't have enough cash? Don't buy a used one, but buy finance yourself into a new one. Too much credit card debt? Equity loans to make it easier to sustain your lifestyle. Reagan's group orchestrated this middle class dance with Wall Street 28 years ago. It is politically gainful if you make constituents "feel" wealthy. Now we are seeing that the short term gains (Republican controlled Washington for 28 years) hasn't been worth the long term pains. Paulson was perfectly placed to grab the last remaining bucks for the fat cats that started this mess. If Americans hadn't fooled themselves into taking the bait of false wealth, we'd insist the gov't provide or guide us into having higher education grants, more fuel efficient domestic cars, and higher savings.
Some of us had to go into debt at some point in our lives, just to make ends meet.
As a grad student, I accrued a little bit of debt in luxuries such as: text books, cup of noodles, and the yearly visit to my family. Since the salary provided to me for the "privilege" of working endless hours earning a PhD, barely covered rent.
Although, I am sure there are plenty of assholes who lived beyond their means. I am willing to say, that the average person goes into debt simply to make ends meet.
Some of you may think that a roof over someone's head is a luxury, how compassionate of you. I tend to be of the opinion that it is a necessity.
When you look at salaries, they have not only remained stagnant for the past few decades. But when adjusted for inflation, it turns out that we are getting paid less than a few decades for the same work. Therefore, it is clear that a lot of people had to go into debt, simply to maintain their lifestyles and necessities.
If people had decent salaries, there would be no need to go into debt, would it? But it is sooooo much easier to get on the high horse and blame the victims.
Some of us were not born with a trust fund, and thus we had to go into debt... just to get a chance to get a career going. I guess that may be a "luxury" for some of you.
Housing should be a right, not a luxury. A person should be able to sue for breach of civil liberties if they can't afford a place to stay.
Ronald Reagan must be having a galatic orgasm! This is all his dreams come true, the little guy has no money and is a bad credit risk while the fatcat criminals are given almost a trillion dollars that they will then keep for themselves.
At least the welfar mom is in the streets now, right Ronny?
It piss's me off how the Republicans can create this disaster and then stand around and say that it's all the Demcrats fault. And there are enough ignorant Americans who will gladly repeat this nonsense because they never learned to think for themselves.
Pay off the balance of all consumer credit card bills as of, say end of Sept. or Oct.
Consider it taxable income.
How much more "credit worthy" do you think we'd suddenly become?
Login or Register to post comments.