Comments on: Jon Stewart: Give the Auto Industry Money; Paul Krugman: US Auto Industry Doomed

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By: DLS

DLS — Mon, 08 Dec 2008 21:53:02 +0000

The only half-serious argument for bailing out Detroit (or a Penn Central "American Leyland" or "Amcars" GM-Chrysler combination and equitable treatment of Ford -- no telling yet about legal action by the healthy auto makers in response to this deliberate anti-trust violation and market rigging by the federal government) is that the economy, particularly in manufacturing-concentrated areas, could be much worse and even have a nation-wide economic effect for the worse if the companies failed, which otherwise would not be questioned (except by those who don't understand or don't care about the moral as well as economic issues raised by the bailout of the failed companies).

It's obvious and has been obvious for decades that the companies' business-labor model has long been a failure, and the companies have lost market share decade by decade.

Nobody reasonable expects a bailout to work miracles. And look at the results so far with the vote-buying effort by the Dems at mortgage rewriting (which also has the half-serious argument in its support that its absence would make things arguably worse):

"Many troubled homeowners are quickly falling behind again on their mortgage payments after their loan is modified, new data from the Office of the Comptroller of the Currency show."

http://online.wsj.com/article/SB122875409101488...

"more than a third of mortgages modified in the first half of the year were in default within three months; more than half were in default within six months ..."

http://www.businessweek.com/election/2008/blog/...

"Some 53% of borrowers with loans modified in the first three months of 2008 and 51% of those with loans modified in the second quarter could not keep up with payments within six months ..."

http://money.cnn.com/2008/12/08/news/economy/mo...

By: DLS

DLS — Mon, 08 Dec 2008 21:40:27 +0000

"to employ incorrect grammar to explain his bad thinking"

He probably behaved childishly if he actually spoke, too, saying "um" and smacking his lips, as I heard him do on one of NPR's talk shows recently.

* * *

"6 months ago they were fine and they will be ok when the economy bounces back "

They were not fine six months ago, and they were not fine six or twenty-six years ago.

By: skylights

skylights — Mon, 08 Dec 2008 07:56:28 +0000

My my, so quick to judge. Krugman corrects the record:

http://krugman.blogs.nytimes.com/2008/12/08/me-...

By: EEllis

EEllis — Mon, 08 Dec 2008 07:55:19 +0000

Sweeping statements are imprecise and misleading. Ford is having trouble because of the credit crunch, their own falling stock and consumers not wanting to buy any cars. 6 months ago they were fine and they will be ok when the economy bounces back GM and Chrysler were already in trouble even before the slump. It's absurd to think that Toyota could build cars in the US but American companies can't. People do buy American cars just look at the Jeep line from Chrysler or the Fiesta from Ford.

By: SimonDodd

SimonDodd — Mon, 08 Dec 2008 06:21:09 +0000

I don't see any serious argument for bailing out Detroit – and none was provided in Brasch's column, which approached the point of parody (how can one write of “a tangible product that is important to all Americans” when the companies are failing precisely because Americans have no interest in their tangible product?). There were arguments for and against bailing out the financial industry, but one can't seriously compare the collateral effects for the wider economy of not doing so with the collateral effects of refusing to bail out Detroit. We already have a process in place to deal with companies in the mess that the big three find themselves in: Chapter 11. To paraphrase Yes (or rather, to say the same thing they did in different words, come to think of it): “all we are saying is give failure a chance.”

By: daveinboca

daveinboca — Mon, 08 Dec 2008 06:20:44 +0000

Leave it to the economic illiterate Krugman to employ incorrect grammar to explain his bad thinking:
“It will do so because of the geographical forces that [me] and my colleagues have discussed,” It's “that I and my colleagues have discussed” and Krugman's shoddy thinking matches his shoddy grammar. The Nobel has become a laughingstock ever since Arafat got the Prize for “Peace” and Gore for “GWHoax.”