bailout | Fausta's Blog

April 12, 2011 By Fausta

GM: $84 billion later, they come up with a car whose steering wheel falls off VIDEO

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General Motors is recalling certain Chevrolet Cruze compact cars to make sure their steering wheels were put on tightly.

Chevy Recalls Cruze After A Steering Wheel Falls Off

it happened to at least one driver of a 2011 Chevrolet Cruze compact car last month, and General Motors Corp. is recalling 2,100 of the cars as a result.

While the recall affects a relatively small number of vehicles, it is an unpleasant development for Chevrolet, which has been riding high on the success of its new small car. Chevrolet sold 50,205 Cruzes through the end of March. That’s well short of the 76,821 units Toyota sold of the Cruze’s main rival, the Corolla, but it is ahead of the 37,379 Cobalts Chevy sold in the same period. The Cruze replaced the Cobalt and is supposed to be a departure from that uninspired model.

In documents filed with the National Highway Traffic Safety Administration, the car maker said it traced the problem with that particular car to a case in which the wrong wheel was put in a car and replaced later in the assembly process.

GM didn’t think of changing the production process to make sure the machine used to attach the steering wheel can accommodate only the correct one until after the wheel came off this vehicle. The WSJ post has over 700 comments, nearly all negative.

The Lonely Conservative quotes,

Recently GM’s Vice President of U.S. Sales Operations touted the Cruze saying: “Vehicles like the Chevrolet Cruze and Equinox put us in great position to benefit from consumer’s increasing desire for fuel-efficient vehicles.”

Fuel-efficient, but deadly, somewhat like those catalytic-converted Mexican trucks I was talking about today.

TLC has video of the car,

Unsafe at any speed, to use Nader’s words.

Via Memeorandum

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April 3, 2011 By Fausta

How Wachovia laundered $380 billion of Mexican drug money

The Guardian has a report,

Drugs trade
How a big US bank laundered billions from Mexico’s murderous drug gangs
As the violence spread, billions of dollars of cartel cash began to seep into the global financial system. But a special investigation by the Observer reveals how the increasingly frantic warnings of one London whistleblower were ignored

The authorities uncovered billions of dollars in wire transfers, traveller’s cheques and cash shipments through Mexican exchanges into Wachovia accounts. Wachovia was put under immediate investigation for failing to maintain an effective anti-money laundering programme. Of special significance was that the period concerned began in 2004, which coincided with the first escalation of violence along the US-Mexico border that ignited the current drugs war.

Criminal proceedings were brought against Wachovia, though not against any individual, but the case never came to court. In March 2010, Wachovia settled the biggest action brought under the US bank secrecy act, through the US district court in Miami. Now that the year’s “deferred prosecution” has expired, the bank is in effect in the clear. It paid federal authorities $110m in forfeiture, for allowing transactions later proved to be connected to drug smuggling, and incurred a $50m fine for failing to monitor cash used to ship 22 tons of cocaine.

More shocking, and more important, the bank was sanctioned for failing to apply the proper anti-laundering strictures to the transfer of $378.4bn – a sum equivalent to one-third of Mexico’s gross national product – into dollar accounts from so-called casas de cambio (CDCs) in Mexico, currency exchange houses with which the bank did business.

Go read the full article on the investigation and how the investigator was treated,

On 16 June Woods was told by Wachovia’s head of compliance that his latest SAR need not have been filed, that he had no legal requirement to investigate an overseas case and no right of access to documents held overseas from Britain, even if they were held by Wachovia.

Woods’s life went into freefall. He went to hospital with a prolapsed disc, reported sick and was told by the bank that he not done so in the appropriate manner, as directed by the employees’ handbook. He was off work for three weeks, returning in August 2007 to find a letter from the bank’s compliance managing director, which was unrelenting in its tone and words of warning.

The letter addressed itself to what the manager called “specific examples of your failure to perform at an acceptable standard”. Woods, on the edge of a breakdown, was put on sick leave by his GP; he was later given psychiatric treatment, enrolled on a stress management course and put on medication.

Wells Fargo bought Wachovia for $25billion after Wells Fargo got its bailout money.

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March 1, 2011 By Fausta

How green was my sludge

Low-water toilets make sludge back up public sewer pipes, as the people of San Francisco are finding out,
Low-flow toilets cause a stink in SF

San Francisco’s big push for low-flow toilets has turned into a multimillion-dollar plumbing stink.

Skimping on toilet water has resulted in more sludge backing up inside the sewer pipes, said Tyrone Jue, spokesman for the city Public Utilities Commission. That has created a rotten-egg stench near AT&T Park and elsewhere, especially during the dry summer months.

The city has already spent $100 million over the past five years to upgrade its sewer system and sewage plants, in part to combat the odor problem.

What to do about the stinking mess? Bleach it!

Now officials are stocking up on a $14 million, three-year supply of highly concentrated sodium hypochlorite – better known as bleach – to act as an odor eater and to disinfect the city’s treated water before it’s dumped into the bay. It will also be used to sanitize drinking water.

That translates into 8.5 million pounds of bleach either being poured down city drains or into the drinking water supply every year.

In other green news, Consumer Reports doesn’t like the Volt,
Consumer Reports: GM’s Volt ‘doesn’t really make a lot of sense’

Champion believes a hybrid, such as the Toyota Prius, may make more sense for some trips.
“If you drive about 70 miles, a Prius will actually get you more miles per gallon than the Volt does,” Champion said.
But GM has noted that most Americans can avoid using gasoline for most regular commuting with the Volt, while its gasoline engine can allow the freedom to travel farther, if needed.
The magazine has put about 2,500 miles on its Volt. It paid $48,700, including a $5,000 markup by a Chevy dealer.
Champion noted the Volt is about twice as expensive as a Prius.

And that’s only for the sticker price. Don’t forget about the government bailout.

Moving right along the green path, CFL bulbs don’t compare to incandescent ones when it comes to brightness and quality of light, but you probably noticed that already.

Now I can’t wait for the reports a few years from now talking about what measures will be necessary to abate the high levels of mercury from discarded compact fluorescent bulbs.

‘Maybe we can get Too Big to Fail’ VIDEO

Via The Corner.

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July 27, 2010 By Fausta

It’s the government spending, stupid

Visit msnbc.com for breaking news, world news, and news about the economy

Here’s what happens when the interviewer is not paying attention to what the interviewee is saying:
Paul Ryan Schools Chris Matthews on Tax Hikes, Budgets and Economics 101

CHRIS MATTHEWS, HOST: Congressman Ryan, is there any tax role for reducing our $1.4 trillion to $1.7 trillion debt this year — deficit this year? Is there any role in tax increasing to help do that job?

REP. PAUL RYAN (R), WISCONSIN: I don`t think it`s a good idea, especially when we`re trying to come out of a jobless recovery in a slow- growth economy.

Look, we have got unemployment at almost 10 percent. The last thing we should be doing is raising taxes on the economy. Look, the worst thing for deficit reduction is a slow economy. You hit small businesses with these kinds of tax rate increases and you will slow down the economy further.

Look, 75 percent of those who will get hit with these higher tax rates are successful small businesses. Tens of millions of our jobs come from these small businesses. Now, if you try to blame these tax cuts and the wars for all of our fiscal problems, the numbers just don`t add up.

At best, 14 percent of the evaporation of the surplus came from these tax cuts. It all came from other circumstances: spending, economic growth declining, 9/11, all these other things.

MATTHEWS: Yes.

RYAN: So, I think what Joe earlier said is right, which is these taxes will go up. And I think that`s a mistake. And I think it`s going to hurt the economy.

MATTHEWS: Well, let me ask you one question as a follow-up.

It seems to me every Republican that goes on “Meet the Press” lately is asked, where will you cut? They say nothing. They will not mention any cuts.

(CROSSTALK)

RYAN: Chris…

MATTHEWS: No, I have had Congressman Pence on, who won`t say any cuts.

(CROSSTALK)

MATTHEWS: So, you won`t cut — you won`t raise taxes and you won`t cut spending.

RYAN: Chris…

MATTHEWS: So, in other words, all this bitching about the deficit doesn`t mean squat, because you won`t do either, raise taxes or reduce spending.

RYAN: Let me answer it, then.

MATTHEWS: Neither one.

RYAN: This year, Congress isn`t even doing a budget, but, last year, when we did a budget, I brought a budget to the floor that specifically cut $4.8 trillion of spending out of the budget and paid for all of these tax cuts and debt reduction. Two months ago, we put out $1.3 trillion in very specifically listed and enumerated spending cuts. So, I can go on with you on cuts. I can show you all the kinds of cuts.

Good answer, right? Here was Matthews’ astonishingly addle-minded response:

MATTHEWS: But that`s one-three hundredth (ph) of the deficit. That`s 0.3 of 1 percent you`ve talked about.

One-three hundredth of the deficit? $1.3 TRILLION?

The lesson continued:

RYAN: Four-point-eight trillion dollars is not .3 of 1 percent of the deficit.

MATTHEWS: OK, 4.8 trillion. OK.

RYAN: And 1.3 trillion is not peanuts.

MATTHEWS: OK.

RYAN: It`s nothing to sneeze at.

MATTHEWS: OK. Let me go.

(CROSSTALK)

RYAN: Two things –

From here it became obvious what Matthews was up to. He’s not interested in balancing the budget. He’s certainly not interested in cutting spending.

What he’s interested in is getting Republicans to say what programs they want cut so that Democrats can use that against them in the upcoming elections.

Ryan saw through the charade:

MATTHEWS: I just don`t see — I just don`t see any program cuts. You`re talking in general terms, but let me tell you this: the major Republicans that come on television will not cut Social Security, Medicare, and Medicaid. They won`t cut the military. They can`t cut debt servicing. They won`t — they won`t get rid of a major cost of government.

They`ll talk about, you know, let`s freeze discretionary spending or discretionary and domestic in some sort of generalized way. But they won`t get rid of government. They seem to like government. In fact, they love to talk against it.

RYAN: Go to Americanroadmap.org and you will see a very comprehensive piece of legislation that the CBO has scored that`s actually paying off the debt –

Indeed, this Roadmap was released last week, but I digress:

MATTHEWS: OK.

RYAN: — with specific reforms to the entitlements you mentioned.

MATTHEWS: Name a major piece of the 1.4 trillion to 1.7 trillion. No, just take –

RYAN: OK.

MATTHEWS: — just take a chunk out that 1.4 trillion by getting rid of a big program or good expenditure that people now watching can understand.

Straightforward question. Now watch Ryan give a straightforward answer that Matthews will summarily brush aside like a fly in front of the camera:

RYAN: I would rescind the unspent stimulus funds. I would rescind all the TARP funds that aren`t spent. I would do a federal hiring freeze and pay freeze for the rest of the year. And I would go back and cut discretionary spending back to `08 levels and freeze that spending going forward.

Now, you and I can get into a debate about Keynesian economics, whether it worked or didn`t. I don`t think it did. We increased domestic discretionary last year by 84 percent. I don`t think we should continue to build that kind of a base. Let`s go back and cut discretionary spending back to `08 levels.

MATTHEWS: OK.

RYAN: Rescind stimulus, rescind TARP and do a federal hiring and pay freeze. Those are just a few ideas that add up to $1.3 trillion right there.

Now, let’s understand that at the beginning of this segment, Matthews asked Ryan how he plans on reducing our $1.4 to $1.7 trillion deficit. The Congressman just gave cuts to eliminate $1.3 trillion, and Matthews dismissed it totally:

MATTHEWS: OK. Congressman Crowley, I still don`t see any cuts in entitlements there. But go ahead.

Matthews is just not paying attention. Must be that tingle up his leg acting up again.

Here’s the link to American Roadmap.org.

If you’re wondering what your tax bill will look like next year, go do the worksheet at the 2011 Income Tax Calculator.

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July 19, 2010 By Fausta

How about the jobs killed or prevented?

First, Ed’s post:
TARP audit claims Obama admin destroyed “tens of thousands” of jobs in dealer closures

Last year, while the Obama administration seized two of the nation’s three main domestic auto manufacturers, it also shut down thousands of dealerships across the country, supposedly to stabilize GM and Chrysler. A new report from Neil Barofsky, the Inspector General of the TARP program, calls into question that decision. In a sharp rebuke to the White House, Barofsky says that the action needlessly cost tens of thousands of jobs and extended an already-disastrous downturn in employment:

President Obama’s auto task force pressed General Motors and Chrysler to close scores of dealerships without adequately considering the jobs that would be lost or having a firm idea of the cost savings that would be achieved, an audit of the process has concluded.

The report by Neil M. Barofsky, the special inspector general for the Troubled Asset Relief Program of the Treasury Department, said both carmakers needed to shut down some underperforming dealerships. But it questioned whether the cuts should have been made so quickly, particularly during a recession. The report, released on Sunday, estimated that tens of thousands of jobs were lost as a result.

“It is not at all clear that the greatly accelerated pace of the dealership closings during one of the most severe economic downturns in our nation’s history was either necessary for the sake of the companies’ economic survival or prudent for the sake of the nation’s economic recovery,” the report said.

Moe Lane gives you

The short version? Having the government do your restructuring for you isn’t necessarily the brightest thing in the world. Particularly when there’s a variety of conflicting objectives. At least, if what you’re trying to do is actually create a better version of your company; if your goal is to use government fiat to streamline the operations of your newly government-owned automobile manufacturer it apparently works out just fine.

It’s all about incompetence; you mean to tell me that having two guys in charge whose entire automotive industry was driving a car, and being a union negotiator, wouldn’t work? Who’d have thunk it!

Speaking of jobs, Caroline Baum notes that Obama Omits Jobs Killed or Thwarted from Tally

“If the administration wants to take credit for ‘jobs created or saved,’ it should also accept responsibility for ’jobs destroyed or prevented,’” said Bill Dunkelberg, chief economist at the National Federation of Independent Business.

That would mean accepting responsibility, which they are not about to do.

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July 15, 2010 By Fausta

Senate passes finance bill

Senate Passes Sweeping Finance Overhaul

The bill, which Mr. Obama expects to sign into law next week, marks a sea change for the financial-services industry. Mammoth financial firms such as J.P. Morgan Chase & Co., Goldman Sachs Group Inc. and Bank of America Corp. face major changes to almost every part of their businesses, from debit cards to derivatives trading and the ability to invest in hedge funds.

Not only will they face new leverage and capital requirements, but also regulators with broad new authority to curb or outlaw risky behavior. The changes are in store despite Wall Street’s aggressive efforts over the last year to water down or derail the bill.

The measure, once implemented, will touch all areas of the financial markets, affecting how consumers obtain credit cards and mortgages, dictating how the government dismantles failing financial firms and directing federal regulators’ focus on potential flashpoints in the economy.

The legislation will radically alter the way regulators work to assess and respond to potential flashpoints in the economy. The Federal Reserve will be empowered to supervise the largest and most complex financial firms, working in tandem with a new Financial Stability Oversight Council made up of financial regulators that will have the ability to act aggressively against potential risks.

Derek Thompson lists 7 Reasons to Be Skeptical About Financial Reform

1. The Bill Has Lobbyists’ Finger Prints All Over It.
2. The Bill Doesn’t Deal With Fannie, Freddie, Credit Runs, or Leverage.
3. Community Banks Are Afraid FinReg Will Hurt Them, Too.
4. Financial Reform Won’t Protect Taxpayers From a Future Bailout.
5. A Derivatives Loophole Could Cost Main Street $1 Trillion.
6. Can You Trust a Bill That Requires 79 Years of Cumulative Studies?
7. We Failed to Kill ‘Too Big to Fail.’ In Fact, We Might Have Made It Stronger.

Read Derek’s post, and add one more item to the list: the Community Reinvestment Act is still law.

And, Republicans Scott Brown of Massachusetts, Olympia Snowe and Susan Collins, both of Maine, gave the Dems the needed 60 votes. Thanks a lot, guys. You should have allowed the Dems to own it.

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July 2, 2010 By Fausta

We’re looking like France, and it’s not good

Frank Donatelli say We’re looking like France,

President Barack Obama’s Democrats have set out to alter fundamentally the nature of the U.S. political system. The changes they’ve wrought will not be easily undone.

Obama has sought to remake America into a social democracy — like Germany or France — with a larger public sector, expanded entitlements, stronger labor unions and a changed political structure. He’s doing quite well so far.

Size of government. Are we really still a government of limited powers at the federal level? It’s hard to make that case.

The feds are running auto companies. They fired the General Motors board of directors and forced Chrysler bondholders into a settlement far less attractive than that given the United Auto Workers, strong allies of Obama.

The Bush administration devised the Troubled Asset Relief Program, but the Obama administration has extended it once already, and Treasury Secretary Timothy Geithner has proposed keeping the $700 billion open as a line of credit to fund expanded government programs.

Obama’s stimulus plan, combined with his amended 2009 budget and his 2010 and 2011 spending plans, have pushed annual deficits to more than $1 trillion per year.

Entitlement expansion. Obamacare has passed and is lurking in our federal and states’ budget futures. When the program is fully operational in 2014, federal spending for health care is expected to rise sharply. Many businesses could drop their coverage and force workers into the public “exchanges” created by the legislation. Millions more could be eligible for federal subsidies.

All of these are bad for the economy.

How bad is the economy? “A complete disaster,” says Howard Davidowitz:

Davidowitz contends that the President’s spending, including the health-care bill, is creating massive deficits that will take the U.S. years to dig itself out of. “He is Mr. Mass Destruction,” Davidowitz says of Obama. “I mean he is a human destroyer. This guy has spent his way into oblivion and we don’t have a budget. He is surrounded by a bunch of complete incompetents, led by himself. ”

Housing Gloom

As far as the actual economy goes, Davidowitz’s chief concern is the strained state of the housing market, from which the bad news continues to pour in. According to Davidowitz, Americans are facing an $8 trillion negative wealth effect from the bursting of the housing bubble.

“We’re talking about some serious money here,” Davidowitz exclaims. “I mean this is a complete disaster and that’s why we are going to have a double dip. We’re guaranteed a double dip in housing.”

Small Businesses and Unemployment

Davidowitz says that the job market is also in ruins, noting for every new job there are six applicants. As a result of the intense competition for positions, employers can offer lower wages. Young people entering the work force today can expect to make less money in their lifetime than previous generations.

Considering the majority of new jobs are created by small businesses, Davidowitz argues that new regulations governing loans to small businesses are only making matters worse — both for the entrepreneurs and the millions of people out of work.

“We have this insane new regulation,” Davidowitz says. “Community banks will not even be able to fill out the forms. They’ll pack up and quit. They’re already underwater. Commercial real estate is still terrible.”

The Future a Massive Struggle

Asked whether he thought the U.S. would experience another Great Depression, Davidowitz said the coming years will look more like Japan today vs. the U.S. in the 1930s.

People will be making and spending less money and the nation as a whole will be dealing with the consequences of the deficit, he says. “We are in a struggle, day by day it’s ugly. At the core, when we look at our debt, we are going to have to deal with it.”

It’s not going to get better any time soon, either.

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