Dear God, the Salt and Pepper shakers are -armed-.

Thanks. :) It doesn't make much better, but it's nice to vent it out I guess.

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tempest56.livejournal.com

Here's a view from inside the industry: The government botched it.

The problems themselves trace back to the government pushing on the bad morgages - but more importantly, they screwed up because most of the companies in question don't actually need that bailout money. Companies like AIG are taking it because, seriously - if the government offers you $100,000 a head with no oversight and almost no strings attached, you're an idiot if you don't take it. But the banks and insurance companies would have survived without it JUST fine. Even if the companies themselves had dropped, there's literally hundreds more who would have happily bought up the business and nobody in the real world would have suffered for it. The whole thing's a desperation move by the government to band-aid the economy. It's not really the fault of the companies - they got into trouble because they were given incentives to go there, and then the fed threw a huge pile of cash at them in a panic.

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*nods* That's makes sense, and is sadly unsurprising.

($100,000 a head...christ. That's not quite three times my annual income. I'd sure like $100,000 with no oversight, Mr. Congressman...)

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tempest56.livejournal.com

The $100k is just a guesstimate. But it's likely around that scale if not higher - 700 billion, even broken down, is enough to give every man, woman and child in NYC about $85,000. Like I said. I don't blame AIG or any of the banks. They'd have to be fools not to take the money.

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Yeah, even so. :)

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flaggerx.livejournal.com

Frankly, much of what you wrote is inaccurate. It is true that the Clinton Administration did encourage the mortgage industry to take on somewhat riskier loans, which benefitted minorities and people with less money. But nobody in the government told them to accept people without even a basic credit check, or even determining they had a job. Or then creating a series of financial instruments which amounted to speculation based on almost nothing in a reserve.

It is also false to say that those firms would have survived. When you build a business based on reserves whose value is mostly speculative, you build a house of cards. When the props underneath those devices were kicked out it should come as no surprise income suddenly plummeted as perceived assets returned to their real market value. The simple fact is that banks require reserves to base any loans on, and if they don't loan they don't make money. With reserves wiped out they lacked both the reserves and the confidence required to make the loans that lubricate our economy. Our government acted less to save them than to prevent a total economic shutdown while they spiralled downward into oblivion.

Want a new car? Can you pay cash? Then you need a loan. When almost no one can get one its no surprise the Big Three on their knees, that orders for tooling and parts are way down, and millions of ordinary people like us worry about unemployment.

The reason these recipients act they way they do is they are people well and truly used to privilege, and to doing what they want without any supervision. Its their habit to spend money on luxuries and huge bonuses they feel entitled to. Completely unused to accountability outside their class, they were surprised when people reacted negatively to their misuse of government funds.

I don't much like what happened and I have my doubts, but there is no doubt that we were in a crisis. In 1929 Herbert Hoover refused to act because it was right to let the people fail. It is not fair to expect people to get out their marshmallows and passively watch as the economy melts down.

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tempest56.livejournal.com

I disagree that it's quite so - particularly in what would have happened had there been no bailout. AIG, for example. If it folded, what would happen? The assets would have been bought up by other agencies. Yes, it would have been a blow to the system, but hardly irrecoverable. Much greater damage was done by the sheer panic that swept the market. No company folding would have had nearly as much impact as Wall Street freaking out had - the failure wasn't because companies were in trouble, it was because suddenly people's wallets became tighter than their assholes and nobody was willing to risk. Lack of confidence and fear of imagined doom was the cause more than anything else.

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The economy isn't "melting down", that's fear mongering and sensationalism by a complicit WH/Congress and Media to enraptured in "the campaign"(tm) to ask tough questions. On a GDP basis we need to get above the next 8 worst recessions (we're only above 2 out of the last 10 since WWII) before we can even begin talking about 'meltdown'.

Government interventionism caused confusion and panic, this was expressed most clearly in the markets tanking at each new announcement of program, policy, or plan. Seriously you could almost trade on a short everytime Bush or Paulson was going to get in front of a microphone. The government has no ability to stop a market hurricane by throwing dollars at it, the US consumers and corporate structure (all of us) earned this meltdown with our overconsumption and bubble mentalities of the 90's and the real estate bubble. It's payback time, and we gotta take our lumps, but it's not the end of the world by any far stretch of the imagination. Companies that are "failing" have been on the brink of failure, or been marginal at best, for a long time.

Tim C.

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It's not just the bad mortgages, but bad companies firing their risk managers so they can then take those bad mortgages and leverage them 30:1 or 25:1. But the rest of it I agree with (check out my journal for today's edition of "Dude we got TARPed!". By failing to let bad companies fail, the government is punishing good companies who got it right, and as you point out not everyone getting the money was indanger of failing (though I think AIG and GM need to go the way of Lehman Brothers.)

Tim C.

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joriel.livejournal.com

THe exes may be acting badly, but the little people who work for those companies still have jobs. Don't forget the tons of people NOT invited to the parties are benefitting also.

And if we didn't give them a bailout, with the current job market, we'd have all those people on welfare now anyway. Because there isn't anything else out the anymore, all the jobs are full. :(

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This is true, but OTOH, I think there's a lot of ways these companies could have been absorbed/bought/reworked and even government assisted without the million dollar executive retreats and money disappearing into black holes.

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I'm not arguing that, just that it's not completely horrible. I hope it does save the jobs, it's getting desperate here. Toledo is the last refuge of a lot of my fellow Findlayins, and Toledo is collapsing. Jeep is laying off left and right. Our local factories/warehouses are on minimal staff. I have no idea how much longer I'll have my job with all the factories that went out of business here in this year alone, those were our clients. And there are no jobs here to replace it. I can't even flip burgers again, becuase they're not hiring they're full of factory workers and such who are desperate for income, not flighty teens who'll quit if you wait long enough.

Lima, the other commutable town, has been a corpse of a city for years. According to my dad, who was interested in Lima because of the train connection, taht was where all the big heavy machinery came from, and once that demand died down, the city turned into what it is now.

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joriel.livejournal.com

AH! My cookies were screwedup, the anon was me. :) *slaps her computer* I'd logged in, but didn't managed to stay that way with the screwy cookies thing. I think I'm overprotecting my computer, but the alternative is underprotection and viruses. :(

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Little people are just as much to blame in this crisis as wall street executives. This isn't an Enron or WorldCom scenario of a "few bad actors", everyone - and I do mean everyone shares some of the blame. Just no one wants to look in the mirror.

And not true on the job front either. When Lehman Brothers went into bankruptcy those employees retained their jobs as the North American unit was picked up by a British firm and an asian firm picked up the Southeast Asia unit. Circuit City employees are being hired by Best Buy and customer call centers.

Bottom line is that 93-94 out of every 100 people looking for work are either working or finding work. There's no need to exaggerate by saying "there are no jobs", I've gotten seven recruiting inquiries offers in the last three months, and no I don't work in collections. =)

Tim C.

From: (Anonymous)

Heh, they're no jobs in my area all anymore. The layoffs are creating an army on our local unemployment. It's not better in Toledo or Lima(Lima's been a corpse of a city for years though, that's not new) so no where for people to go. It's bad in Jersey where my family lives too, people getting laid off are NOT finding new jobs.

More and more are dissappearing, and new ones aren't being created as fast as they are going. Even our fast food joints aren't hiring because they are bloated with workers, you cant' even flip a burger here to keep some food on the table.

I think your bottom line is way too high. I'm not exxagerting, in my area and a lot of others they're out there 12 hours a day putting in applications, and getting nothing. And another one of our local companies about to layoff 235 more.

It may not be this desperate everywhere, but it is a growing situation around the country.

And of course you don't work in collections, they're dropping people two. Four of my friends lost thier jobs becuase the companies aren't bringing enough in to keep as much staff.

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joriel.livejournal.com

That was me, see above for the anon bit. *cranks on about cookies*

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So why don't you move out of your area? Why don't other people move out of that area? Come down to Atlanta - there's plenty of jobs down here. It used to be that people were flexible to move to where the work was.

If it's really been a corpse of a city why are people staying? There's an oversupply of workers in that locality versus the demand.

OR

Find a company that has no geography. IBM is hiring plenty and we have no locality requirement because almost all our workers telecommute from home. And we're hiring plenty, which by definition is in your area since we're hiring anyone from anywhere. There are many other telecommuting companies that aren't "based" in your city allowing you to enjoy the employment without having to move.

Either way there are solutions out there - but it's a matter of choice.

You could add to bzcharzer's list "Find a place where the economy is robust and diversified." Personally - I'd love to be able to stay in Seattle where I grew up and love to death. But I realized early on that Seattle was a binary economy driven by only 2 or 3 companies.

So I live in Atlanta now, which isn't the best city by any means but has a very robust diversified economy and weathers these storms much better.

Why should I have suffered at all to move to a new location - should I have stayed in Seattle then hope someone will bail me out for my choice to stay there?

I'm not trying to sound like a dick (though I probably am), but there are hard and easy choices to make throughout all points in life. And typically the easy choices have a short term gain traded for a long term pain. People need to start making very hard choices - and I'll do all I can to help them on that, but I don't think my taxpayer funds should go to support the right to work in a location that has no jobs, because if that was the case - I'd personally *love* to work out in the wilds of Montana.

Tim C.

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draconisgold.livejournal.com

No offense but I think Sam Kinison said it best when he described the starving people in Ethiopia.

The wonderful thing about America is YOU CAN MOVE TO WHERE THE JOBS ARE. :-)

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chaptal.livejournal.com

Oh and then there's: Send jobs overseas and shut down plants, leaving cities and towns decimated. Ask for twenty five billion dollars to keep making a crappy product.

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On the upside, at least the bailout of the auto companies will probably fail.

My car loan's through GMAC. If they fold, do I have to keep making payments...?

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I would have a hard time calling that an upside.

When the auto companies saying "Us failing is really REALLY bad for the NATIONAL economy" aren't really blowing smoke up everyone's ass.

For one, the state of Michigan will pretty much fail. And I don't mean like it is now. Michigan relies on two things, mostly. Auto and Tourism. Tourism is hardly enough to keep the place going. Everything else that's here, was here because there was money to be had due to the auto industry.

And when you chain out how much is effected by the auto industry, it goes a long ways out from the big mitten. What happens to all the cars on the road that are domestic? Who's going to service them? Where are you going to get parts from. Have fun buying a new vehicle because the cost to fix or maintain your car just skyrocketed. And can the foreign service industry absorb all the employees nationwide who's jbos are based around domestic service, parts, parts delivery and what not? Not likely.

Are the auto companies blameless? Hardly. But them failing isn't just about the handful of execs that are going to crash and burn. It's not about one or two huge buildings of people. Thousands and thousands of people will not have a job, and several companies likely won't be able to shift what they do to something new in time to not go under.

And if GMAC folded, I'd say yes. They still A) Owe people money and B) own the car you drive until it's paid. So yea, they'll need everything they can get. :P

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There's a bit of sarcasm there, but you are mostly right. However, at the same time, can you make an honest argument that Ford/GM/Chrystler have been doing a good job of responding to all this? The big 3 MADE this bed, it's just that we're all going to be forced to lie in it.

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chaptal.livejournal.com

Unfortunately, it's everyone's bed. This is not a small business on route 40 that's dying. This is a business that effects all of route 40.

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No. No one can make a good arguement. But your last statement sums it up perfectly. They made the bed, and we all have to lie in it. But really, it's out choice as to if we throw broken glass and nails on top of the mattress first or not.

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Personally, if we're going to throw $25B out - why not give it to the auto company who hasn't laid off a single employee yet - and indeed never has? Toyota.

Seriously - why not give the funds to those who will use it most efficiently to produce the most value.

Autoworkers have not looked to their own interests long term, and have enjoyed the vital lie told to them by car companies, their own unions, and the federal government that they are a protected class of worker with more rights than the rest of us. I call bullcrap. Citibank and Circuit City in total have laid off more people in the last month than work at GM.

Tim C.

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Well, for one Toyota isn't a US company. While their closing would have an effect, it's not anything near what would happen if three US auto companies closed shop.

Thing is, this sadly isn't a situation about getting the best product for your government loan dollar.

It's about what kind of ripple effect will happen if those three companies don't survive.

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The ripple effect is entirely overblown. Toyota isn't a US company, but it's actually opening plants in the US (as is Honda) and hiring more workers. GM's domestic sales may be hitting wind, but the international picture is much brighter. Cars, as a commodity, are not going to go away for the emerging markets anytime soon - there's value in the good parts of the supply chain, even in some of the components of GM - and that's why we have bankruptcies process, so better companies can find the value and bring the assets back into productive use than the one that obviously can't.

Tim C.

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And heck as I've said before elsewhere if you take the $25B and divide it bewteen the 250-300k likely impacted workers who may actually lose jobs in the Big 3 and supply chain, that's like $175-$200k of "retraining/relocation" assistance for each and every one of them. I'd much rather help workers post bankruptcy, for those who might lose their jobs, then perpetuate a bad model and throw $25B into a bonfire which will consume it entotal with nothing to show in the next 3 months.

Tim C.

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draconisgold.livejournal.com

The thing about Americans (at least most of them) is that they will find or make a way to survive. If the automakers die SOMEONE will come up with an idea of a new industry to replace it. Too many keep looking to the government to save them when the government is what got them here to begin with.

NO MORE BIG GOVERNMENT!!!

Stop expecting the government to fix things. Please give me one example of something the government "fixed" that didn't become a bigger problem.

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The problem is, that which this people know how to do and adapt to, is build and manufacture things. And we as a country don't build and manufacture a whole lot of things anymore. We pay other people to do so. And I don't see a sudden shift back to building and manufacturing things here just because we have the people available. Hell, we've HAD the people available for years but they're still not doing a whole lot. I guess my view is different because I'm constantly bombarded with the horror stories of companies in the industry of building parts, tools, and what not for the auto industry having to cut down to like..25 to 50 percent their work force just to keep those left busy for a full 8 hours.

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draconisgold.livejournal.com

I have one word for you ... plastics! Oh wait, I mean UNIONS.

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flaggerx.livejournal.com

Yes. Someone will buy your loan during the bankruptcy proceedings.

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And you might be proactive and take the opportunity to renegotiate terms, if you have that ability.

Tim C.

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