“Bailout Fatigue”: Automakers’ Treatment May Extend To Other Industries

In punting on a $14 billion rescue plan for the US auto industry, the US Senate has signaled that the struggle over who gets federal help – and who is left to take their lumps in the marketplace – is likely to be an acute and ongoing issue for lawmakers into the next Congress.

The auto bailout now falls to the Bush administration, at least for the moment. The White House said Friday it may tap part of the $700 billion meant to buttress the shaky financial-services sector for the purpose of saving any of Detroit’s Big Three from collapse. At time of writing, the administration was deciding what mechanism to use to help the industry.

By Gail Russell Chaddock
Christian Science Monitor

 
General Motors workers file out of the General Motors Assembly Plant in Arlington, Texas, during shift change Friday, Dec. 12, 2008. Festering animosity between the United Auto Workers and southern Senators who torpedoed the auto industry bailout bill erupted into full-fledged name calling Friday as union officials accused the lawmakers of trying to break the union on behalf of foreign automakers.(AP Photo/Tom Pennington)

Regardless, this month’s fight in the lame-duck Congress over the auto bailout is a cautionary tale for how lawmakers are likely to deal with future calls for help. Lesson No. 1 is that swift congressional action based on the premise that an industry is too big to fail – or that job losses in the absence of a government bailout would be cataclysmic for the economy – cannot be counted on.

It’s an argument that worked for the financial-services industry, which in early October extracted from Congress as much as $700 billion in government funds to save it from ruin tied to mortgage-related debt. But the way the Treasury Department has allocated the first $350 billion in the Troubled Asset Relief Program (TARP) has led to buyers’ remorse among many lawmakers – and appears to be making them more reticent to dole out dollars to ailing industries.

Read the rest:
http://news.yahoo.com/s/csm/2008
1215/ts_csm/awhyone

Juggernaut of U.S. Industrial Might Now “Rust Belt,” For Good Or Bad?

From the 1940s and the industrialization of World War II, a vast expanse of America became the the “induatrial hearland,” much of which was centered upon the factories that made the  automobile and other vehicles.

Iron ore came from Duluth, Minnesota via the Graet Lakes to Cleveland, and then passed by rail to Pittsburgh.  Akron made rubber for tires and Detroit was the centerpiece of it all, the automobile factory of the world.

I grew up in that industrial Midwest, watching the ore ships pass through the lakes and waiting for the local railroad, the “Nickle Plate,” to pass.  I left the Midwest in the 1970s and pretty much forgot about the industrial hearland until my return in the 1990s.

To my surprise, the industrial heartland had become the “Rust belt.”

Today, Detroit is a troubled ghost town.

Early tank production at the Army Tank Arsenal, Detroit.
Photo courtesy Albert Kahn Associates

Today, nations with lower labor costs, less interest in human rights and little concern for full coverage healthcare have passed the industrial U.S. by.

And as we read about “saving the Big three Automobile Makers” I am not sure how I feel.  But I do know that a nation without industrial might is often lost before long.

China can make our lawn furniture and Japan and Germany can make our cars.  But what do we in America make that is affordable enough and desireable enough to appeal to both American buyers and the world community at large?  We export “culture” in the form of movies, music and DVDs.  Plus we export computer know-how and software.  But where is the beef?

I my view, and this is certainly an unfinished thought, we can not be an American Superpower for long without one facet of that superpower: the ability to out design and outbuild others who would gladly produce more for less and sell it to a consumer nation.

John E. Carey
Peace and Freedom

U.S. Consumer Spending is Two-Thirds of Economy

By Annie Baxter, Minnesota Public Radio

More than two-thirds of the nation’s Gross Domestic Product derives from everyday stuff like dining out, buying a new shirt or visiting the dentist. About 14 percent stems from private investment, for instance companies purchasing new machinery or building new factories. And the rest comes from government spending on things like bridge building, schools, and defense.

You can find varying notions about whether the mix is right or not.

“A lot of analysts would argue we need to increase the amount of investment spending.”

“Government spending is not, unless done wisely, the answer.”

And some notions are a little more “out there” than others…

New GDP numbers show that more than two-thirds of the U.S. economy is made up of consumer spending. (Justin Sullivan/Getty Images)

Read the rest:
http://minnesota.publicradio.org/display/web/200
8/10/29/gdp_numbers_consumer_spending/

Related:
Get the Feeling Russia and China Are Slicing Up The World and the U.S. Will Be Left Out?