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Sunday, November 16, 2008

GM / Ford

I was not surprised to hear this morning on the Sunday talk shows all of the talk about how the Republicans were blocking aid to GM and Ford. The Democrats control Congress and can pass anything that they want. If they are so hot to bail out the auto industry, they should pass such legislation an put it in front of George
Bush for signature. I doubt he would veto anything at this point. In any event, they can get things ready for January 21st when they can do whatever they want after their captive president takes office. One thing is certain, Obama will not veto anything that the congress passes.

By the way, it was nice to see the new bipartisan atmosphere that the Obama election has ushered in -- not.

Saturday, November 15, 2008

UAW is in favor of the workers?

In today's news, the head of the UAW says there will be no more concessions by the autoworkers. Brilliant! Maybe he should have said that there will be no more jobs for the auto workers.

Clearly, GM, Ford and Chrysler are in big trouble. The shareholders have already seen nerly their entire investments go down the tubes. For is worth about 4% of what it was a few years ago. GM is at its lowest level in 50 years. These folks do not have much more to lose. If the autoworkers file for bankruptcy, the labor contracts will be the first things to go. They will be able to renegotiate everything, and the creditors are unlikely to approve any deal that simply puts the big three back on course to business as usual. If the autoworkers are to preserve anything, they should negotiate now while there is still a chance of avoiding bankruptcy, not later after the debacle.

My suggestion is that the auto companies give the union equity in exchange for release of many of the most onerous provisions in the contract. For example, let the retirees pay for their own health insurance and let the company be able to lay off workers without paying them 95% of their wages for the remainder of the contract. Give the management back the flexibility to pare costs so as to become competative. Also, relax some of the work rules that drive labor and other costs up. Also, wages should be cut. At the same time, management salaries should be cut proportionately the same as any wage cut. If the workers take a 20% cut, so too should every manager. Indeed, for those making the big bucks, the cuts should be even higher. After all, it was these geniuses who got the companies where they are today. On second thought, maybe they should just be fired.

If the shareholders agreed to give 40% of their company to a fund that was owned by all the workers (labor and management proportionately) in exchange for a 25% cut in wages and salaries and reduction of benefits as well particularly for retirees, these companies might be able to survive. Otherwise, it is just the proverbial rearrangement of the deck chairs on the Titanic. No taxpayer money should go to bail out these companies until they put themselves on the right course to prosperity.

Thursday, November 13, 2008

Michael Steele

Tonight Michael Steele was on Hannity's show on FNC talking about why he is running for chair of the RNC. While I like Steele for his positions and his style, I wonder how effective he has been as chairman of GOPAC. I am not sure if he has shown much ability in that arena so that he would make a good national chairman for the RNC.

Still, it would be nice to have someone back in the chairman's position who made a good appearance on TV. We have not had a telegenic chair since Haley Barbour left.

Wednesday, November 12, 2008

What was the point of the debate?

When the bailout bill was passed in the middle of the election, it was debated as a measure to allow the feds to buy up questionable mortgage securities that were freezing the financial system by reason of their unknown values. Once the bill was passed, the Treasury quickly used on third of the total amount approved to invest in preferred stock of banks around the country to help them meet their capital requirements. Today, Paulson has announced that the Treasury will not be buying any of the mortgage securities which were the basis for the measure in the first place.

In short, the biggest expenditure in the history of the US was approved without any valid explanation of what was going to be done given to Congress or the American people. I realize that the situation is fluid and conditions have changed, but I still think that there is a need for someone to explain in detail to the public why this expenditure has changed to such a great extent.

Tuesday, November 11, 2008

Ford, GM and toyota

The issue of bailing out Ford and GM and Chrysler is one which shows clearly the effect of the banking bail out. It is hard to make the case that there should not be a bail out so the market can work once the governement has already jumped into the market in a big way to save the banks. There is no clear logical distinction between the banks and the car companies except this: the banks were not failing due to poor products, just poor market conditions. Since a big chunk of the poor market conditions was due to the products pushed by many of the banks, namely sub prime mortgages, this is a small difference in my opinion.

The better test as to whether or not to try to save the car companies is this: are these companies likely to survive on their own if the government gets them over the current crisis. The answer is much less than clear when considering the car companies as compared to the banks. GM has been slowly failing for the last quarter of a century. The first problem is that it gave too much to labor in a series of contracts which have basically pushed it to the brink of bankruptcy. It can only compete in good times, not bad. And there surely will be bad time again in the future. The second problem is that it has built products that relied on lower fuel prices which are not likely to return. Ford is in the same boat to a slightly lesser extent. I doubt if GM will survive even if it is bailed out. I would prefer, however, if the market made that determination.

My guess is that the government will bail out GM and that it will fail down the road.

Monday, November 10, 2008

Here comes the fun

Now that the Obama administration is getting closer, we are being treated on a daily basis to what I call the disaster of the day. Today's disaster is the idea that John Kerry is the front runner for the job of secretary of state. This position is probably the third most important one in the cabinet after treasury and defense (in view of the economy and the war). It is one position where the identity of the secretary actually matters. It would be terrible to put a smug, self-important, bombastic fool in the office. It would be even worse to put Kerry in as Secretary of State where he would, no doubt, try to run his own foreign policy with as little direction as possible from Obama. Obama's lacks knowledge on foreign policy, but, at least, he may learn to do the right thing. We already know that Kerry will never act in America's national interests.

The best hope is that the latest rumors are just efforts made to mollify Kerry that he is being considered seriously, before he is bypassed in favor of some other luminary.

On the bright side, at least no one suggested bring back Madeline Albright.

Friday, November 7, 2008

Time for coperation

With the Obama administration getting organized, it is time for Americans to work together. Just like the Democrats worked together with President Bush. Indeed, I remember that day.

Wednesday, November 5, 2008

President Obama

I certainly did not want to ever see Obama as president, but he won the election and he now deserves the cooperation of all of us. I would remind everyone, however, of the Democrats definition of patriotism: disagreeing with what the government wants to do. I think there will be a great many patriots in the next few years.

Monday, November 3, 2008

The 2012 Election campaign starts

Since tomorrow is election day, I thought it was time to take the first crack at the 2012 Presidential campaign. In truth, I am surprised that it has not been up and running already. Each time a new presidential election comes around, it starts earlier than the previous time. There are more polls. There are more stories about the mechanics of the campaign. Less is said about issues. In fact, for the most part, nothing is said about issues. Accordingly, it seems to me that we should start writing about the race between Bobby Jindal and Hillary Clinton as if it were going to be decided tomorrow. Each one will be running as the person who can rescue America from four years of Obama. In the end, the winner will be ..............

Sunday, November 2, 2008

The polls: McCain is pulling close or falling further behind.

Sunday's national polls once again are all over the lot. Nine polls are reported on Real Clear politics. They run the gamut from a 2% lead by Obama to one with a double digit lead for Obama. There are 9 polls with 7 different results. Only in two cases do polls agree. Again, with two days left until the election, one would think that the polls would cluster around the likely result. Instead, they continue to get further apart. The only realistic conclusion is that there is something more at work here than statistical variation. Indeed, the likelihood that these polls are varying as they do just due to statistical variation is infinitesimal.

It is true that some of the polls use a different bias in their samples. Those which have drunk the Obama cool ade and decided that hordes of young or new voters will appear at the polls have weighted their results to reflect those groups. Others have use a more conventional analysis. Still, this is not enough to explain the major variations in the results. We do not see two groups of clustered results, rather, the results do not cluster.

I cannot wait to see what actually happens on Tuesday and then watch as the pollsters explain how they were right all along.

Saturday, November 1, 2008

And then again maybe not

Following up the Zogby announcement of McCain leading for Friday in its polling, gallup has released its tracking polls showing a 10 point Obama lead. Once again, these two polls cannot both be correct. More results come from Rasmussen who says that the difference is 5% and from TIPP which gives Obama a 4.5% lead. Needless to say, three days before the election, one would hope that the polls would agree.

The amazing thing to me is that the polls are not even close. A ten point lead for Obama and a one point lead for McCain are not capabale of being conformed statistically. The four polling organizations in question plus Hotline (Obama plus 7) and Battleground (Obama plus 4) are all over the map. Nevertheless, they are respected polling organizations. We are not even including the pollsters whose bias is consistent like CBS (which usually seems to have Obama leading by 5 or 10% more than everyone else).

We can throw out Zogby and Gallup as outliers and stick to the 4-7% spread of the remaining four, but that seems wrong to me. There is no reason to assume that either Gallup or Zogby is in error. Obviously, one of them is, but who knows which one.

One thing this dilemma with the polls makes clear: even the exit polls on Tuesday will be far from perfect. We all remember how Kerry won last time according to the early exit polls. We will just have to wait for the actual election results to come in.