All Posts Tagged With: "bailout"

That would be the ailing, failing newspaper industry. Matt Welch writes:

Here’s a new holiday cocktail for you: Combine one part bailout seasoning with another part perennial journalistic self-pity, pour it out over the Christmas/New Year’s publishing interregnum and presto!—it’s time for patriotic men and women to get behind a government rescue of what was until very recently one of the most profitable sectors in the United States: The newspaper industry.

“We’re more worthy of a bailout than the jokers on Wall Street,” argued Kansas City Star columnist Jason Whitlock on Dec. 20. “You can’t have a democracy without us. If newspapers are dying, so is our system of government.”

Quite. Without < target=”_blank”a href=”http://www.kansascity.com/179/story/275496.html”>Whitlock in the trenches covering the Big 12 North conference, how is the Republic to survive?

Welch quite poignantly gets to the root of the newspaper “crisis” and challenges the lamenting of its journalists:

Blaming the customer is the second-to-last refuge of any crappy industry, business, or organization (the last refuge being asking for a handout on Capitol Hill). As my ex-L.A. Times colleague and current Reason magazine Contributing Editor Tim Cavanaugh has noted in our pages, the paper we both short-timed for was filled with people making jokes about whether we could just “fire our readers.” Over the recent holidays, an entire journalistic Festivus celebration of customer-blaming broke out over New Yorker finance columnist James Surowiecki’s lament that, “The real problem for newspapers…isn’t the Internet; it’s us. We want access to everything, we want it now, and we want it for free.” To extrapolate, if only us greedy human beings would realize that our very democracy was at stake, that we “are taking an active step in the formation of a country without a civic conscience,” then we’d damned well volunteer to pay an unnecessary premium to keep our finest journalists in permanent six figures. Sounds precisely as convincing as the argument that enlightened voters will surely agree to pay extra taxes so that political campaigns can be financed through “clean” money.

At the risk of alienating what few old newspaper pals of mine still have jobs, the industry they (and I!) so cherish, which has suffered mind-blowing valuation losses and several dozen rounds of downsizing both in personnel and column inches, is still bloated after all these years, with costs that no publisher would dream of incurring if he was starting a newspaper from scratch in 2009.

It’s an excellent column and worth the read.

“If Congress needs just three weeks to pass a Wall Street bailout, then we should be able to count on our leaders to pass Main Street relief with as much urgency.”

— Andy Stern

That’s not how much you get. That’s your share of the debt that the government’s racking up for this bailout alone. Bloomberg.com puts the bailout into perspective…

The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The pledges, amounting to half the value of everything produced in the nation last year, are intended to rescue the financial system after the credit markets seized up 15 months ago.

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The money that’s been pledged is equivalent to $24,000 for every man, woman and child in the country. It’s nine times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office figures. It could pay off more than half the country’s mortgages.

“It’s unprecedented,” said Bob Eisenbeis, chief monetary economist at Vineland, New Jersey-based Cumberland Advisors Inc. and an economist for the Atlanta Fed for 10 years until January. “The backlash has begun already. Congress is taking a lot of hits from their constituents because they got snookered on the TARP big time. There’s a lot of supposedly smart people who look to be totally incompetent and it’s all going to fall on the taxpayer.”

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(H/T: Sullivan)

Mike at Okiedoke has a bailout proposal that I can really get behind:

If we leave it to Congress, CEO’s and lobbyists, we will just get evermore bits of amended gobblity-goop that results in endless taxpayer debt to bolster bad business practices.

So here’s my one-size-fits-all, nationwide socialist, U.S. corporate bailout proposal:

1. Remove government subsidies, tax breaks and loopholes for business.
2. Institute basic national single-payer health insurance for workers and families.

The country is going deeper in debt anyway, so wouldn’t it be better to use it to help U.S. companies and give health care to Americans, than just give it to the same people who created the mess?
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Yes we can!

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Josh Marshall reports on the latest bailout outrage story:

We’re focusing today on Mack “MackDaddy” Whittle, longtime CEO of South Financial Group, who pushed up his retirement last month so he could cash out with a $18 million Golden Parachute just before sending his bank hat in hand to the Feds to get $347 million in choice Grade A Prime bailout money.

The debate over whether or not to bail out the Big Three is creating a divide between the North and the South:

Should taxpayers in Alabama be required to bail out automakers whose plants are concentrated in Northern states like Michigan and Ohio?

… Sen. Jeff Sessions, R- Ala., told reporters Wednesday, “I can not imagine a real justification for a worker in Alabama who does not have any health insurance at his company to be taxed to maintain a Cadillac health care plan for somebody in Detroit.”

Seems like a fair question, I suppose. But one might ask a similar question when it comes to federal aid to disaster-prone areas in the South:  Should homeowners in the North be taxed to rebuild homes in the South that are in areas known to suffer from periodic major natural disasters, like hurricanes, tornadoes or massive flooding?

As someone who leaves in a disaster-prone area of the country that’s received federal aid in the past after major natural disasters, I certainly appreciate the assistance of the federal government to areas devastated and unable to cope with the huge financial toll of such a disaster. I certainly think we as a country have some duty to assist our fellow Americans who may be facing a monumental financial disaster resulting from the impending major collapse of one or more major manufacturing companies that have historically been a bedrock of the U.S. economy.

Do I think there should be a bailout of the Big Three? Not in the manner in which they want it — with few strings attached and without a major restructuring of their companies. I don’t know what the best answer is. I’m more inclined to favor a bailout package that protects the workers and let’s the companies face the consequences of their extremely poor management over the last couple of decades.

In any case, this debate has created some interesting arguments, bedfellows and dividing lines. But, rather than diligently working on some sort of solution, Congress once again defers it to another day, leaving the problem for the next Congress and the next administration to deal with. Hopefully it won’t be too late in this fragile economic climate to come up with some sort of fix before it creates an even greater problem in the larger economy.

When the three CEOs of the Big Three automakers showed up on Capitol Hill this week looking for government handouts, ABC News noted:

All three CEOs - Rick Wagoner of GM, Alan Mulally of Ford, and Robert Nardelli of Chrysler - exercised their perks Tuesday by flying in corporate jets to DC. Wagoner flew in GM’s $36 million luxury aircraft to tell members of Congress that the company is burning through cash, asking for $10-12 billion for GM alone.

… Wagoner’s private jet trip to Washington cost his ailing company an estimated $20,000 roundtrip. In comparison, seats on Northwest Airlines flight 2364 from Detroit to Washington were going online for $288 coach and $837 first class.

Rep. Gary Ackerman (D-NY), who sits on the House Financial Services Committee, said what everybody was (or should have been) thinking:

There’s a delicious irony of seeing private luxury jets flying into DC, and people coming off of them with tin cups in their hands, saying that they’re going to be trimming down and streamlining their businesses. It’s almost like seeing a guy show up at the soup kitchen in high hat and tuxedo. Kind makes you a little bit suspicious as to whether or not…we’ve seen the future. There’s a message there. Couldn’t you all have downgraded to first class or jet-pooled to get here? It would have at least sent the message that you do get it.

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Watch it:

Helen may be on to something. In an Op/Ed piece for The Guardian, Brian Beutler essentially says what Helen was saying: If the U.S. automakers need a $25 billion bailout, let those who profit most off the gas guzzlers the U.S. automakers have been building foot the bill for any rescue plan:

Here’s some data. According to the Bureau of Transportation Statistics (pdf), Americans drove about three trillion miles last year. To fuel all of that shuttling around, according to the Energy Information Administration, we purchased about 142 billion gallons of gasoline from retailers. A little bit of quick division and we find that, in 2007, the average vehicle mile was travelled with a fuel efficiency of 21 miles per gallon. Kind of pathetic.

At the same time, in 2007, the average gallon of gasoline ran about $2.80 – which is to say that Americans spent something like $400bn on gasoline last year alone. The EIA further reports that, in 2007, “distribution, marketing and retail dealer costs and profits in 2007 were 10% of the gasoline price”. Just for fun, let’s guess that “profits” accounted for 62.5% of that 10%. Well then: $400bn x .1 x .625 = (drumroll) $25bn! Let’s see …where have I heard that number before?

Overall, the oil industry collected $155bn in profits in 2007. That’s in no small part (about 16% if this math is right) thanks to a decades-long lobbying effort to keep vehicle fuel standards as low as possible, which, as collateral damage, has made the American fleet uncompetitive in an era of high oil prices. That, in turn, is one (a big one) of the many reasons the auto industry is sitting on the precipice of a major collapse. And if it needs $25bn to stay alive, I can think of one place where they can find that kind of money.

But, of course, Detroit hasn’t (and won’t) ask Big Oil to bail them out. They’ve asked taxpayers – or, more specifically, the interest-group-beholden men and women in the US Congress who supposedly represent the taxpayers. They’re the ones who will decide on the terms of an aid package. As they devise one, they should keep in mind the oil industry’s role in the auto industry’s woes.

Sounds like a good plan to me. Read the rest of the piece here.

Helen rants about the Big Three asking for government assistance:

So the oil companies are once again boasting record profits and yet the auto makers are asking for some government cheese.  Does anyone else see the irony here?  So I’ve got a little trickle down theory of my own.  As long as Detroit continues to make cars for the Gas-Capades let the oil companies bail them out.  It’s a  “robbing Peter to pay Paul” kind of thing except in this case Peter and Paul seem to be riding the short bus…  and it’s not to save on gas.

If you havent seen Margaret and Helen’s blog, you have to check it out. It’s quite entertaining.