I just want to make sure I understand this: GM gets American tax dollars to keep it afloat by shifting jobs overseas. And the president is going along with this? Does anyone else see a problem here?
Tag: economy
Chrysler’s raw deal
We are about to feel the real effects of the debate over the future of the American auto industry. Chrysler announced yesterday that it is closing about a quarter of its dealerships including 30 in New Jersey (which includes the Belle Mead Garage on Route 206 in Montgomery and Coleman Chrysler-Jeep on Route 130 in East Windsor). General Motors is expected to begin closing dealerships, as well.
Chrysler said it will eliminate 789 dealers — or one-fourth of its 3,200 franchises nationwide — early next month so it can focus more on high-volume stores. The cuts are likely to be devastating in communities where car dealers are the biggest small business in town, with thousands of jobs and millions of dollars in tax revenue on the line.
“Businesses will close, and in many cases, given the state of the real estate market, you will have boarded-up commercial structures,” said Jim Appleton, president of the New Jersey Coalition of Automotive Retailers. “New Jersey’s members of Congress did not vote for the auto bailout because they have a soft spot for Detroit. It’s because they have a soft spot for the 36,000 people who are employed at New Jersey dealerships.”
Dealers were told yesterday morning whether they would remain in the Chrysler fold or be terminated June 9. Chrysler vice chairman Jim Press called the cuts “difficult” and said the terminated dealers have no right of appeal. Car dealers are normally protected by state franchise laws, although such protections are usually superseded by federal bankruptcy law.
“This is a difficult day for us and not a day anybody can be prepared for,” Press told reporters during a conference call. “There are no winners and losers today.”
I haven’t seen any job-loss estimates tied to the 30 dealership, but you have to assume that several thousand will be looking for work — salesmen, business-office personnel, mechanics, etc.
And there will be ancillary impacts: vacant buildings, lost revenue for neighboring businesses (restaurants, etc.), lost tax revenue for communities.
Connecting the dots
David Sirota connects the Panama free-trade pact to the president’s announced crack down on tax havens, pointing out that Panama is one of the bigger violators of tax-haven transparency rules around.
Sorry, but pretending to be for cracking down on tax havens while pushing a trade deal that rewards one of the biggest tax havens – and codifies that tax haven’s laws into our international trade system – insults the public’s intelligence.
Can you spare a dime — at exorbitant rates?
From Blue Jersey: Senator Menendez has asked the Department of the Treasury to “restrict credit card companies that receive taxpayer dollars from imposing unilateral interest rate increases and other consumer-unfriendly practices.”
Read the letter here.
Credit cards have always been the last refuge for banks and other lenders, the mechanism they can use to generate revenue when other streams have dried up. Revolving balances — the money you keep on your card — is a huge moneymaker, as FRONTLINE showed a few years ago, thanks to the elimination of “a critical restriction: the limit on the interest rate a lender can charge a borrower.”
Deregulation, coupled with a revolution in technology that enables the almost real-time tracking of personal financial information and the emergence of nationwide banking, has facilitated the widening availability of credit cards across the economic spectrum. But for some, the cost of credit is often far greater than it appears.
According to Harvard Law Professor Elizabeth Warren, the credit card companies are misleading consumers and making up their own rules. “These guys have figured out the best way to compete is to put a smiley face in your commercials, a low introductory rate, and hire a team of MBAs to lay traps in the fine print,” Warren tells FRONTLINE.
The fine print includes rate hikes that can be applied not only to future balances, but to existing balances, shifting due dates and unilaterally set late fees. The result is a tremendous hardship on people who have come to rely on their plastic.
Add to this the restrictions placed on bankruptcy under Clinton and you can see just how venal the system we have is.
So, kudos to Sen. Menendez, but let’s not view this as anything more than a minor correction — maybe a first step toward leveling the playing fields.
In defense of pitchforks
Bill Moyers and Michael Winship, writing on Salon.com, offer an eloquent critique of Barack Obama’s efforts on behalf of the American financial system, efforts that have been characterized by a obeisance to Wall Street and the folks who got us into this mess in the first place.
Consider Lawrence Summers, director of the National Economic Council and the president’s chief economic adviser. As Moyers and Winship point out, Summers has earned a lot of money over the years from the firms at the root of the mess, which could explain the meandering and ineffective way in which the president has addressed the crisis in the financial markets (as opposed to his aggressive — though not aggressive enough — approach on the economy as a while). Summers, they write,
was intoxicated by the exotic witches’ brew of derivatives and other financial legerdemain that got us into such a fine mess in the first place. Yet here he is, serving as gatekeeper of the information and analysis going to President Obama on the current collapse.
We have to wonder, when the president asks, “Larry, who did this to us?” is Summers going to name names of old friends and benefactors? Knowing he most likely will be looking for his old desk back once he leaves the White House, is he going to be tough on the very system of lucrative largesse that he helped create in his earlier incarnation as a deregulating treasury secretary? (“Larry?” “Yes, Mr. President?” “Who the hell recommended repealing the Glass-Steagall Act back in the ’90s and opened the floodgates to all this greed?” “Uh, excuse me, Mr. President, I think Bob Rubin’s calling me.”)
That imaginary conversation came to mind last week as we watched President Obama’s joint press conference with British Prime Minister Gordon Brown. When a reporter asked Obama who’s to blame for the financial crisis, our usually eloquent and knowledgeable president responded with a rambling and ineffectual answer. With Larry Summers guarding his in box, it’s hardly surprising he’s not getting the whole story.
Summers, of course, is only part of the problem. There is the ineffectual Timothy Geithner running Treasury, as well, meaning that far too many of the players involved in the creation of the financial house of cards — dating back to the Clinton administration and its role in the deregulation of the industry — are still in place, trying to balance the desire to right the economy with a bias toward protecting their own.
Geithner, at least, is salvagable. I can’t say the same for Summers, who should be dispatched from service and replaced as quickly as possible. It’s not like better, more progressive alternatives aren’t out there. Obama could — should — turn to anyone on this list: Joseph Stiglitz, Paul Krugman, Dean Baker, Sheila Bair, Robert Reich, Leo Hindery, etc. There also are reporters like William Greider at The nation and Gretchen Morgenstern at The New York Times who’s take on the financial collapse is much more in line with the pitchfork-wielding public.
Coddling the bankers is bad policy and bad politics.
Hank Kalet 