UPDATED INTRO: Since Krugman's still in Sweden getting his Nobel, I'm practically panicked about where to look for a sound analysis.
Okay, I'm leaving up my previous post, which features a fake ad mocking the Big 3 bailout, for posterity's sake, but it certainly appears that the failure of the bailout package could mean nasty, nasty ripple effects for the economy as a whole, with the large auto parts supplier industry getting hit first. Yikes.
Right off the bat, markets worldwide are falling rapidly because of the failure. So far today, the Dow's down about 80 points.
Now, people are asking about next steps. The White House is saying that it may use some of the Wall Street bailout package to help Detroit.
People are also looking at why the bailout failed. Basically, some financially conservative hardliners, on both sides of the aisle, voted it down because they wanted to see a quick reduction of wages and benefits to the level of non-union car factories in the "right to work" South. As Kevin Drum points out, it really came down to timing. Detroit and the UAW agreed to the cuts, but DeMint and Co. wanted them to hit 18 months sooner.
TNR is drawing comparisons to, you guessed it, the Depression. Their point is that the economy was nudged to a complete failure by incremental blows landed by ideologists.
2 comments:
for some reason this just now came up on my screen. anyway, good summary here, dave. i definitely haven't been keeping up on the real news all week (the blago thing has just fascinated me). i can't imagine that the unions aren't going to regret such a rigid stance.
the ny times has a good editorial on this and point out the following weaknesses to the bill. all policies with which i would be completely on board:
The bill has big weaknesses. Most importantly, it fails to demand that top executives of any car company receiving taxpayer money step down. These companies need new managers who are not wedded to Detroit’s failed strategies. And the bill doesn’t set any conditions to ensure automakers invest in fuel-efficient vehicles. Any long-term plan must make sure the automakers don’t simply keep making gas-guzzling trucks and sport-utility vehicles, whose popularity — unfortunately — has recovered as gas prices have declined
one other thing I heard/read: the UAW was among those big unions who campaigned, hard, for Dems and against repubs. And so for many republican legislators they think they are giving the auto industry a sort of comeuppance.
When, in fact, they are giving their working class constits a big F-you, as the economy will continue to struggle mightily for those at the bottom.
Post a Comment