December 2008

GM to Hire 500 in India

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Who says hypocrisy isn't in full swing on the hill?

Indian Newpapers are reporting GM to hire 500 new workers for their new India plant and look at the glow of GM hiring while in the United States GM goes begging to not declare immediate bankruptcy:

It may be laying off factory workers in its troubled home market US, but General Motors will be hiring new workers in India at its new plant at Talegaon in Maharashtra as the company expands .

"Recruitment is on at full swing in India and we plan to hire as many as 500 new workers for our Talegaon plant in the coming months," GM India president and MD Karl Slym told TOI.

GM India is a GM subsidiary and GM has already poured $8.1 Billion into India and China.

If GM falls, Toyota will Suffer

I find nothing more irritating than dealing with people who think that the collapse of GM isn't going to affect them. Even worse are the people who believe that they market will sort it out.

The biggest irony is that the Just in Time (JIT) production system employed by Toyota and the other transplants is extremely vulnerable to any supply disruption. And because GM and Toyota share a common supplier base, a collapse at GM would put workers at Toyota's North American operations out on the streets. Because a GM collapse would cut Toyota's supply chain.

The problem with Obama's Economics Team

Rotwang nails it:  

. . . the sensible leader collects some diversity of advice. There is no intellectual diversity in the Obama White House. The left brain of the party is missing. As smart as Obama is, he cannot personally supply the 'Team B' expertise he will need in economics, finance, and other matters not found in law school curricula.

Bush - "We Don't Want to Throw Good Money After Bad"

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One must really wonder why it is that AIG gets immediate money, $235 billion worth, no problem, no media reports on their doubling of their salaries and yet our current President says this on a $15 Billion dollar auto manufacturing industry bridge loan:

These are important companies, but on the other hand, we just don't want to put good money after bad

Rethugs block auto rescue - now we descend to Hell's very gate

Incredible. Watching a nation commit suicide. My nation. Our nation.

It now looks like Mitch McConnell and the Republicans in the Senate have decided that a new great depression is a trifling price to pay to get rid of the "barnacles" of organized labor. I am referring, of course, to South Carolina Senator Jim DeMint's comment during his inetrview with NPR yesterday, in which he said the auto makers were in trouble because they have "the barnacles of unionism wrapped around their necks."

As a DailyKos frontpager wrote,

Is this a capital goods depression?

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My intellectual mentor, the late Professor Seymour Melman of Columbia University, was very enamored of a small booklet written in 1935 called “The Chief Cause Of This And Other Depressions.” The author was Leonard P. Ayres, Vice President of the Cleveland Trust Company. This is the gist of what Ayres said, at least the way I interpret it:

A recession, or a long one, would benefit from a short-term stimulus, or if you consider two years to be medium-term, a medium-term stimulus. However, if this is a depression, you have a different animal.

The Melman/Ayres view of depressions is that they are partly or significantly caused by a collapse in the capital goods industries. That is, the machinery and such that is used to make other stuff loses their markets. When these industries start to collapse, the unemployment there causes a greater lack of demand among the consumer goods industries, starting a snowballing effect in the wider economy.

Housing and Recessions, Or, This Time it Isn't Different

In Friday's diary, Housing is Nowhere near Bottom, BUT ... I cited as I have several times previously a paper on housing cycles and recessions that was presented by Prof. Edward Leamer to the Federal Reserve at its Jackson Hole conference in 2007. The paper itself is an excellent, in-depth analysis and I highly recommend your reading it in full if you have an hour or so on your hands due to inclement weather, indolence, intellectual curiosity, or if you just generally have a pathetic life.

Unfortunately, many people are dismissing Leamer because even though the data in his paper led to a spot-on conclusion, namely:

The historical record strongly suggests that in 2003 and 2004 we poured the foundation for a recession in 2007 or 2008 led by a collapse in housing we are currently experiencing....

Report Says Banks to Slash Credit Card Limits by $2 Trillion

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No more charge it now when you don't got it?

Credit card companies may slash credit limits on credit cards by $2 trillion dollars.

Whitney, an analyst and managing director at Oppenheimer & Co. who predicted the current financial-services industry meltdown, now says credit-card issuers will eliminate more than $2 trillion in available credit over the next 18 months.

I'm not sure if they can lower credit limits when one has already used it, but for all of those who are losing their jobs and probably credit cards will be the last option, this is not good news.

Senator Chris Dodd Calls for GM CEO's Firing

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Off with His Head! That's what Senator Chris Dodd is now saying.

Senate Banking Committee Chairman Chris Dodd said General Motors Corp. Chief Executive Richard Wagoner should be replaced as a condition of federal aid and Chrysler LLC may have to merge to survive.

“You’ve got to consider new leadership,” Dodd said on CBS’s “Face the Nation.” Wagoner, he said, “has to move on.”

Asked if a change in leadership should be a condition of a bailout, Dodd who is helping to write the legislation, said, “I think it is going to have to be part of it.”

“Chrysler, is, I think, basically gone, probably ought to be merged,” Dodd said. Ford Motor Co. is the healthiest domestic automaker, he said.

Below is the Face the Nation video clip with Dodd.

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