Chrysler's Back. Government Works. Fairies Aren't Real.

Categories: Schutze

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Wonderful story for an old Detroit homeboy in today's New York Times chronicling the incredible comeback and stunning success of Chrysler. Since emerging from bankruptcy and repaying all of its government loans, Chrysler Group LLC has leaped ahead of global competitors, according to the Times:

"On Thursday, Chrysler reported that it earned $473 million in the first quarter, more than quadruple its $116 million profit in the period a year earlier and topping its entire net income for 2011."

This, only three years after Obama bailed them out.

It's hard to imagine a more pointed or powerful endorsement of the auto bailouts or of the president's basic view of the country. Do you have to be from Detroit to get it? Certainly not, but it helps.

dart.jpg
The Dart returns. Be proud, America.
The Times story points to car design and engineering -- both look and performance, especially on gas mileage -- as big reasons people are snapping up Chrysler products again. If you're from there, you know in your heart it all goes back to the cars, and the cars go back to the people who make them.

In its best times, from the days before Henry Ford to the '60s and muscle cars, Detroit has always been about engineering and flash. The auto industry didn't emerge from the farm equipment sector. It came out of racing. Well into the 1920s Detroit car-makers were covered only in the sports sections of American newspapers. Cars were interesting because they were faster than bicycles.

The bailout put hope and heart back into an incredibly valuable national asset -- the women and men of the American car business. Now they're kicking ass again.

Economist/columnist Paul Krugman also has a piece in today's Times about what he calls the myth of the "Confidence Fairy." He's talking about the notion, dearly held by conservatives here and in Europe, that confidence will return to world economic systems if our nations will just cut back some more on government programs, allow more industries to die and put more people into poverty.

It was a core belief of Herbert Hoover, 31st president of the United States (1929-1933) , now remembered chiefly for adding "Great" to the name of the 1930s depression.

Krugman points out that this notion of success through punishment has been demonstrated again and again to be not merely a nonstarter but enormously destructive. And yet the devotees of austerity, whom he calls "the austerians," cling to it for reasons that can only be Jungian. Maybe they just like watching stuff die.

That's wrong. They're sick. We should celebrate life and exuberant productivity. Confidence comes from confidence, not punishment.

The proof is Chrysler. Obama's right. This is a great country. People here are tough, creative and hard-working. We need to get past the slander and believe in ourselves again.

I'm not a wide-eyed believer in all things governmental any more than you are, but anything government can do to help crank things up again is money in the bank for all of us.

Imported from Detroit. So cool. I'm going to put that on my business cards. No. I'm going to get a marker pen and write it on my forehead.

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RUSK NATIVE
RUSK NATIVE

I can't figure this one out....everyone that I see driving Chryslers in Dallas and Texas, especially 300s are all African Americans....almost NO others....except the Dodge muscle cars and pickup RAMS.....what is this about?

Edward Holman
Edward Holman

Taxing future wealth and income means it won't be (created).  It flies in the face of the base theorem, the Law of Self Interest.  And the Debt Wall that is rolling toward us darkens the skies.

scottindallas
scottindallas

Jim, you're wrong to say "Obama bailed [the auto industry] out."   That's wrong, it was Bush who did it.  You're also missing a bigger story.  The GOP is willing to let Obama take credit for the the bailout, and Obama is willing to take the credit.  But, truly, this tells us more about our political climate than whatever you wrote, which I may or may not read.

You're assuming that the man behind the curtain is as he seems.  You're assuming that the Kabuki theatre of "political debate" bears the faintest resemblance to reality.  Both parties are complicit, "they're not reading from a script, but they're acting their parts..."  to crib a line from the old Hardline intro.  The GOP should take their deserved credit, but that would be like when Hulk Hogan went evil. 

My argument that high top marginal tax rates encourage capital intensive development is obvious to many who understand accounting, yet, it's not part of the discussion.  Jim, you're sermonizing about shadows on the wall.

cp
cp

Hey, so... what the fuck does this have to do with Dallas?????

Edward Holman
Edward Holman

So, to recap, the Obama Energy Department is loaning a foreign car company $3.5 billion so that it can pay the Treasury Department $7.6 billion even though American taxpayers spent $13 billion to save an American car company that is currently only worth $5 billion.

Edward Holman
Edward Holman

More than 220 former car dealers are pressing their case that the Obama administration violated the U.S. Constitution when the car makers terminated franchise agreements while in bankruptcy restructuring.  They are seeking compensatory damages ranging from $500,000 to more than $5 million apiece.  The plaintiffs say that the Obama administration violated what's known as the "takings" clause of the Fifth Amendment.  Leonard Bellavia, a partner at Bellavia Gentile & Associates LLP in Mineola, N.Y., who is representing 125 former Chrysler dealers, aims to show that terminating the dealership contracts was "a condition of receiving funds" from Treasury.  The dealers' lawyers are seeking government documents that they hope will show that auto makers had to eliminate some dealerships as a condition of receiving funds from the government's Troubled Asset Relief Program.  When the government decides to intervene in the economy and targets industries for whatever reasons, under the Fifth Amendment it must pay compensation for what it takes or destroys.

scottindallas
scottindallas

 The companies themselves wanted to do this.  There is no merit to this case, you'd know better if you stopped listening to such partisan crap.

Edward Holman
Edward Holman

NEW YORK (CNNMoney.com) -- Chrysler LLC will not repay U.S. taxpayers more than $7 billion in bailout money it received earlier this year and as part of its bankruptcy filing.  An Obama administration official confirmed Tuesday that Chrysler won't be repaying the loans.  http://tinyurl.com/csm4uf snip!well, Mr. Schutze?

Edward Holman
Edward Holman

"The company paid back its loans to the American and Canadian governments a year ago, although taxpayers took a $1.3 billion loss in the bankruptcy reorganization."  NY Times

todd
todd

I'm an all aobut me guy, so while the Chrysler story is great and all, I've been laid off from two jobs since B.O. took office.  I'm smart enough to know that's not all his fault, but you'll have to excuse me if I don't line up to suck him off just yet.    

Facebook User
Facebook User

Fiat got a great deal... Not sure this is an example of how government works. I think it is a story about how the bankruptcy system works.

Edward Holman
Edward Holman

Capitalism without bankruptcy is likeChristianity without hell.

DoubleOJoe
DoubleOJoe

The Dart returns?  Isn't that an Alfa Romeo Giulietta?  Why should Americans be proud of an Italian design, even if it's rebranded as a Chrysler?

Mc90dayWarren_T
Mc90dayWarren_T

This is a success.  As was the bailout.  The money was repaid not just in full but with interest and it saved an enormous corporation with thousands of jobs.  But it is the success of Fiat, not Chrysler. Chrysler was mismanaged by Americans for decades (don't even get me started on that ridiculous leveraged buyout by Cerberus Group to take it private).  And it was saved only after shedding the bloated contracts unions extorted out of automakers over decades.  Ford had good management, saw the light and fixed itself before things went to-hell-in-a-hand-basket.  GM's size saved it but time will tell if the rigid dinosaurs they have at the top will really be able to continuously adapt to the modern market.  Fiat was one if the worst run companies in the world but they too got their act together in a big way in 2004 with the appointment of chairman Luca di Montezemolo and CEO Sergio Marchionne.  Now it is their products and management that are turning Chrysler around.  The previous American management couldn't have run a successful lemonade stand.

scottindallas
scottindallas

Chrysler was fine.  It was Mercedes that nearly killed Chrysler.

gimme
gimme

Ok, people, I know you can read.  But let's all read it together, just once.

Jan 20, 2009, 1st Day of Obama Presidency: DOW=7949April 27, 2012, TODAY, Obama Presidency: DOW=13228

What do you NOT get?

Edward Holman
Edward Holman

QE1 and 2 was like crack cocaine to Wall Street.  Read what the guys and gals on the exchanges are saying.  Fatalism.  They all know what's going to happen if Bernanke doesn't do QE3.

Gojira is wading ashore. 

Jay
Jay

Politics notwithstanding, I see the current DOW Jones average as a reflection of the fact that the 10 year bond is yielding 1.9%, savings and money markets accounts are paying .25%. Money is flowing back in to stocks and mutual funds because there is a commodity and gold bubble, and there is no safe harbor that pays any reasonable return.

Observist
Observist

Maybe a gold bubble, but hardly a commodity bubble...

http://finance.yahoo.com/echar...^gspc+oil+gold;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

scottindallas
scottindallas

most commodities are high.  Oil first and foremost among them.

Mavdog
Mavdog

wall street moves in unison to earnings, and earnings are up. and up. and up.

they are up almost 20% from 2010.

that being said, the white house has very little to do with the performance of the Dow Jones average.

scottindallas
scottindallas

Wall st's moves and motivations aren't known to anyone.  But, one major factor is the free money the Fed was giving away in exchange for Toxic Loans.  

Disgusted
Disgusted

Here's what I don't get.  If he's doing such a good job as president why are gas prices higher, unemployment higher, and our national debt higher.  

Observist
Observist

The president has little or nothing to do with stock prices or gas prices.  The President's limited ability to do anything about unemployement or national debt must be implemented via congress, half of which would rather see the economy in the shitter than see Obama get re-elected.  (google Mitch McConnell top priority). 

All that aside, studies of banking crises have shown it takes, on average, 10 or more years to fully recover. 

http://www.dallasfed.org/asset... 

RTGolden
RTGolden

Good questions.  Why are gas prices higher?  Pres Obama has allowed more new drilling leases than Bush did.  I submit that gas companies are protecting their profits, knowing that unknowing voters usually take out frustrations with high commodity prices on the incumbent in an election year.

scottindallas
scottindallas

it's not the gas companies, it's the financiers and QE.

RTGolden
RTGolden

Sorry, pak, I'm only comparing apples to apples here:  Bush first term vs Obama first term.

Oh, and for full disclosure, I don't like either of them.  Not as people, not as politicians.

Mavdog
Mavdog

apparently those writers you cite didn't hear about the Deepwater Horizon, and the justifiable Administration reaction to that clamity of pushing the pause button on new drilling in the Gulf until a review of the wells could be completed.

The facts are that there are today 2x the number of wells being drilled in the Gulf than a year ago. These are being drilled with better supervision and safeguards so there is a less likely repeat of the disaster brought on by the Deepwater Horizon.

of course, there are those who would scream "drill baby drill", and another Deepwater could occur. Me, I'm thankful those voices are not in power and the environmental protection for the gulf is prioritized.

pak152
pak152

 "Pres Obama has allowed more new drilling leases than Bush did." really? citation please?

"According to the Institute for Energy Research (IER), the Obama Administration has been issuing BLM oil and gas leases at the lowest pace of any president in the last 30 years  – in fact at half the rate of the Clinton White House and 80% slower than in the Reagan era, dragging their feet to please the environmental lobby"http://mjperry.blogspot.com/20...

http://www.instituteforenergyr...

trannyntraining
trannyntraining

I say we let all companies that are going to fail, fail! Then, we go back to the "fur trade" standard(yeah, bitches! that's older than the gold one)....and get all Grizzly Adams and shit, up in here!

RTGolden
RTGolden

It's odd, reading these comments and the article. Pres. Bush was just as responsible for the bailout of the automobile industry as President Obama was.  He was also on watch when the conditions for needing the bailout happened.  Of course then you go back to Pres. Clinton and his dictates to Fannie and Freddie that anyone who wanted to be a homeowner, regardless of qualification (such as being able to afford their loans) should be underwritten.

Our current economic fiasco has a trail of blame and commendation going back to before the Great Depression.  Presidents of both parties, Congresses of both parties have presided over our economy and only one thing has remained constant: Politicians prosper.  Doesn't matter what the economy is doing, the rich getting richer and the poor getting poorer is a sideshow.  Until we get viable third party politics going in this country, the problems wont get fixed.  No democrat and no republican is going to vote to spill the gravy out of the train.  And the train dont stop on Main street.

Mike
Mike

The Bush administration was really bending over backwards not to tie the hands of the new President. They did not believe in the auto bail outs, but understood it was a political issue, and it would be unfair to completely remove an option for the new administration since all negative impacts would happen after inaugaration. To my knowledge, no one in the Bush Administration has claimed any credit for the auto bail outs while they do claim credit for the financial TARP.

scottindallas
scottindallas

 Bush himself has, but it's funny that the truth (again) doesn't matter when the rhetoric starts flying.

scottindallas
scottindallas

 No, Bush did claim it.  Seriously, get better news sources.  Yours are too politicized.  Fact check this this with Ed Wallace on Saturday morning on 570 am 8-1. 

Mike
Mike

He only said he would do it again if in the same position, leaving office for a new President from a different party. He pointedly included that it is wrong to make a decision, even it that decision conflicts with your philosophy, that leaves your successor no options and no time to respond. He did not state that he would have followed the same path as President Obama if he was continuing to hold office. That would be a comment about actions by his successor and he has avoided any statement in that area.

Montemalone
Montemalone

A third party would be a good start, but a fourth and fifth is needed as well.Coalitions are the only way we're gonna sort the wheat from the chaff, instead of the current threat of a filibuster without having to do it to stop Senate business.

Disgusted
Disgusted

And yet we keep sending the same clowns back the Washington.  Shame on us.

RTGolden
RTGolden

I don't.  I haven't voted for either a Republican or Democrat since 1996. (For national office, there is a dismal lack of alternative party choices in state and local elections)

Jay
Jay

Yes, president Bush initiated the auto bail-out, and he personally initiated the Medicare prescription drug plan which slagged an additional unfunded trillion dollars to the deficit. President Bush was not a fiscal conservative. But these labels, and yes, I'm as guilty as anyone of tossing them around, are essentially meaningless. Whether my pocket was picked by a liberal or a conservative, my pocket is still picked.

RTGolden
RTGolden

That was kind of my point.

Mavdog
Mavdog

could you show where "Pres. Clinton and his dictates to Fannie and Freddie that anyone who wanted to be a homeowner, regardless of qualification (such as being able to afford their loans) should be underwritten"?

here's a hint: you are not going to find anything in the CRA that mandates any lender to not follow normal underwriting standards in extending credit to a borrower.

good luck!

RTGolden
RTGolden

http://www.nytimes.com/1999/09...

Mav, I'm not trying to put the blame squarely on Pres. Clinton's shoulders, but neither will I shift the burden that is his to another's shoulders.  President Clinton, seeing the success of Grameen Bank in Asia (makes market-rate loans to low income collectives, high payback rate), tried to initiate similar measures in Arkansas as Governor and got caught up in the S&L mess, indirectly.  His goal was to extend the American Dream to all Americans, a noble gesture.  However, his administration did put pressure on Fannie and Freddie to ease (relax is the term most articles use) qualification standards in order to increase availability of loans to lower to middle income borrowers.  Countrywide (CSC) saw huge opportunity in packaging sub-prime loans into reinvestment packages to be sold to other banks to help them meet CRA requirements.

It was a case of trying to do too much good in too short a time, without putting into place adequate regulation and oversight mixed with predatory lending and financial ignorance that led to the housing bubble and the subsequent subprime crisis.

If it's any consolation to you, Pres. Reagan shares a good chunk of the blame for this as well, as a similar concept was part of his trickle down economy.

scottindallas
scottindallas

Also, the zero down loans were not gov't backed loans, those were all from the banks themselves.  Fannie and Freddy were late to the MBS game.  They had sold MBS's for years, but it was the private lenders that innovated this.  

Mavdog
Mavdog

that does not make sense. CRA loans are both geographic and income qualified. where do you get this idea?

BTW Bear, Stearns pioneered the CMBS bundles.

RTGolden
RTGolden

Countrywide, the firm that seized on the idea for packaging high risk instruments for sale to larger banks, did so at first by bundling higher risk mortgages that qualified as CRA loans.  They then sold those instruments to larger banks so they could meet their CRA requirements.

Mavdog
Mavdog

It seems that you are confused on the difference in CRA mandates and the phrase "subprime".

CRA is geo-based to get banks too lend in all communities in which they have branches, specifically low income communities. Banks are required to show they are lending where they have those branches, not just opening a branch to take in deposits. The phrase was "redlining", and the CRA was encated to stop the practice. Loans made to satisfy the CRA mandate are not inherently subprime, in fact they are not only residential loans but commercial loans as well.

"Subprime" details the credit risk of the borrower. These boroowers can reside anywhere, in low, middle and upper income areas. The primary writer of subprime loans that were a major factor in the mortgage crisis were lenders who were not banks, or subject to the provisions of the CRA.

The mortgage meltdown was not caused or precipitated by the CRA, it was a function of an industry (wall street) that saw huge profit in securitizing loans, and failed to properly analyze the composition of those securities. The unregulated lenders were at fault, the firms who packaged the securities were at fault, and the agencies entrusted in examining these bundles of loans were at fault.

The CRA on the otherhand ws not at fault.

JS
JS

In 1995 the Clinton admin let Fannie Mae and Freddie MAC get affordable-housing credit for buying subprime securities that included loans to low-income borrowers. This supported the scheme to provide loans to borrowers that did not qualify for conventional loans. The whole system was set up to allow borrowers that would otherwise not qualify for loans to get them.

scottindallas
scottindallas

you're an idiot.  Listen to Ed Wallace, or the economist, Mike in East Texas on Charley Jones show on Sunday nights.   You can listen to that anytime.  You know nothing about oil.  We have supplies that were last seen when gas was $1/gal.  The N. Dakota is bringing Natural Gas, not much crude.  The crude is coming from Canadian oil sands in Alberta, and has indeed lowered the spot price of crude in the N. Midwest by $40-50/barrel.  Demand is down 6% and has been, it's only coming down now, cause Obama's threatened to address the problem, and the game is up, there is no more storage capacity and demand is way, way off.  War with Iran is looking less likely and Libya is back to it's previous out put.  

pak152
pak152

 "They were not forced!" LOL BWAHAHAHAHAHA  you must be a comedian. who said the government offfered the loans? not me. guess you didn't read about Armendariz looking to crucify a few companies. same thing happened to the banks back in the 80s and 90sthere is no speculation in the oil markets, apparently you are not aware of how the market does work. have you noticed that the gas prices are coming down? if there were manipulation shouldn't they be rising instead? or is it because demand is down and more crude oil (Texas and North Dakota) is entering the market.

suggest you expand your base of knowledge

TTFN

scottindallas
scottindallas

They were not forced!  The gov't never offered those loans, the private or conventional market did.  Those were always non-conforming loans, the go'vt would have no part of those.  Again, the bankers have better lobbyists and spokespeople with a fawning media to echo their every word.  In fact, these very bankers literally pay the reporters salaries.  Do you deny that speculation is rigging the oil markets too?  The same people, bankers, have overwhelmed the media's take on these stories. 

Canada had stricter controls over their financial industry, we threw them all away in the commodities futures modernization trading act.  That's why there weren't the same problems in Canada.  As to ARM's, what gov't agency offers those?  NONE.  Dude, you're intelligent, you've got lousy sources.  Check out Ed Wallace at www.insideautomotive.com and his radio show on 570 KLIF on Saturday mornings from 8-1. 

pak152
pak152

 you're confusing two different things the property appraisal and the qualifications for a loan. Banks were forced to reduce  the qualifications for a loan (good credit risk, down payment, etc) in order to expand home ownership to a group that couldn't afford the mortgage payments. ARMs were but one means by which individuals could get a mortgage based upon their dodgy credit ratings and low income. In addition you had individuals who got loans who were financially illiterate. The vast majority of these people could not make even a 1% down payment. Canada didn't have this problem with real estate because the government did not loosen the standardstoo bad that you have (to use your words) fallen for partisan bs and not fact and reality

scottindallas
scottindallas

 PAK, that is BS.  Gov't loans, FHA and conventional loans had more stringent appraisal guidelines, and weren't the zero down loans that the private lenders were free to extend.  It certainly wasn't the gov't that was pushing ARMs.  And, if those ARM's were what we imagine them to be, they'd be the greatest loans currently.  But, they were fraudulent contracts, that didn't stay pegged to the market cost of money.  AGain, ARM's should be good if they were what they are reported to be.   It's clear that these instruments failed the truth in lending requirement.  You're, again, falling for partisan bs, and not fact and reality.

Mavdog
Mavdog

RT the comment was in regard to the publication itself not being very thoughtful (they tend to toe the party line), no intention to speak to this nation's intelligence. sorry if the joke was not well explained/stated.

RTGolden
RTGolden

You really expect anyone to take you seriously or respond to your comments when you choose to insult the entire nation?  American thinkers are a contradiction in terms.  How arrogant and rude.  I may not agree with all of your positions on every subject, but my thoughts, ideas, research are every bit as credible as yours.

Mavdog
Mavdog

the "American Thinker" is in itself a contradiction in the term...

It's interesting to see the attempted association of the "subprime mortgage" and the CRA. Apparently those who make the association assume that all lower income borrowers are poor credit risks. After all, "subprime" has absolutely NO connection with the borrower's income, it is a category of loan that describes the credit history\risk of the borrower.

Newsflash: Subprime loans were predominately exurban in location, CRA is a focus on urban areas. The vast majority of defaulted mortgages in recent history are not in urban cores where the CRA is focused, they are in suburban growth areas of the country. In fact, mortgage lenders such as Countrywide were not even included in CRA guidelines.

No, it wasn't politicians who went out with no money down mortgages, or writing mortgages with no evidence of the borrower's income. It wasn't politicians who were creating a conduit of moving those likely to default mortgages off the lender's books and into bundled securities that were sold by Wall Street to unknowing buyers, and it wasn't politicians who were pressuring the rating agencies such as S&P to give inflated ratings to the CMBS sold by Wall Street.

It wasn't polticians, nor the CRA, it was just good ole fashioned greed.

pak152
pak152

 mav  - mortgage lenders were forced to abandon the underwriting tools that they had used for years to evaluate mortgage applicants

"Kurtz concludes, "Urged on by ACORN, congressional Democrats and the Clinton administration helped push tolerance for high-risk loans through every sector of the banking system -- far beyond the sort of banks originally subject to the CRA. So it was the efforts of ACORN and its Democratic allies that first spread the subprime virus from the CRA to Fannie and Freddie and thence to the entire financial system. Soon, Democratic politicians and regulators actually began to take pride in lowered credit standards as a sign of ‘fairness' -- and the contagion spread.""http://www.americanthinker.com...

"Rewind to 1994. While everyone was worried about Clinton socializing health care, he was busy socializing mortgages. To boost minority homeownership, Clinton toughened anti-redlining rules and launched a federal assault on mortgage underwriting standards.He enlisted no fewer than 10 federal regulatory agencies to crack down on prudent lenders. He named his anti-bank SWAT team the Interagency Task Force on Fair Lending."http://news.investors.com/arti...

Mavdog
Mavdog

unless your position is that all low income borrowers are not qualified, or that all loans to low income borrowers did not meet standard underwriting criteria, then there was no "scheme".

The mortgage crisis was a product of lax underwriting by the lenders, and a failure of the rating agencies to appropriately examine the loans these lenders were piling into the portfolios inside the CMBS their clients, the Wall Street firms, were peddling.

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