Silver Lining

In keeping with the relentless FOX-bashing, comes this gem from PKrug:

Clearly, the Fox Business crew is having a very hard time. They bill themselves as being truly pro-business — not like those leftists at CNBC. But they aren’t really pro-business; they’re pro-Republican. They’d like you to believe that it’s the same thing; but there’s this awkward fact that markets have, you know, gone up under Obama.

And this isn’t just a phenomenon of the last few months. Look back at stock returns under recent presidents, which is easy using a clever gadget at Political Calculations. Taking real, dividend-inclusive annual returns on the S&P 500, I get:

Reagan: 10.08%
Bush I: 10.16%
Clinton: 14.35%
Bush II: minus 5.81%

Tax-hiking Democrats are supposed to be terrible for business[...] But the data just refuse to say that — and that’s even if we restrict ourselves to the stock market, never mind job creation, wages, poverty and all that.

So the whole idea of Fox Business is problematic. It’s Fox, which means that it’s basically an arm of the GOP; but that’s a terrible match for business coverage, because the economy just refuses to punish liberals and reward conservatives the way it’s supposed to.

Now, personally I could give a shit about rallies on Wall Street or what Krugman, Jim Kramer or President Obama have to say regarding economic recovery. I'll believe it when advertiser's dollars translate into the reversal of my pay cut, and I can stop worrying about the other shoe to drop. But, in the meantime, I enjoyed that post very much.

Never Was a Blog So Aptly Titled (since this one anyway...)

I had a hard time whittling down a good blockquote from the excellent content on Jim Kunstler's blog Clusterfuck Nation. Let's start with this:

The Great Wish across America is to resume the life of comfort-and-convenience that seemed so nirvana-like just a few short years ago, when the very constellations of the heavens might have been renamed after heroic Atlanta realtors and Connecticut hedge fund warriors, and the boomer portfolios groaned with earnings, and millions of graying corporate salary mules dreamed of their approaching retirement to a satori of golf and Viagra, and the interior decorators grew so rich installing granite countertops that they could buy their own houses in the East Hampton, and every microcephalic parking valet in Las Vegas qualified for a bucket full of Ninja mortgages, and Lloyd Blankfein could dream of divorcing his wife to marry his cappuccino machine.

The choices now are stark and the kind of life on offer by the future is rather austere. The job of the current president, and the people who work with him, is to manage an epic contraction -- let's say, to land a very large, loaded defect-ridden airplane that has both run out of fuel and suffered grievous mechanical breakdown... and to bring down that vehicle in an unfamiliar country filled with angry savages. Sadly, the new president and his co-pilots just want to keep the plane up there, circling. The president's viziers are working round-the-clock to come up with some way, some toggle-switch, that might turn off the laws of gravity (which are not unrelated to the laws of thermodynamics). But all they seem to be able to come up with are mumbled prayers that are pale imitations of the algorithms once concocted by the Wall Street engineers who designed the aircraft they're riding in.

And get more specific with this:

The president is playing with fire on all this. The old economy is not going to recover, and so far he has not used his rhetorical talents to articulate what the next economy is likely to be about. It is reasonable to wonder whether he even really has a clear sense of it -- and, based on the fatuous utterances of his economic mandarins like Larry Summers and Austan Goolsby, this team is really behind the curve.

There are plenty of things you can state about the economy past and future with some confidence right now:

-- Cheap energy is over and our wishes for alt.energy are currently inconsistent with reality, meaning we have to live differently.

-- We have to downscale and re-localize our major economic activities: food production, commerce and manufacturing, banking, schooling, etc.

-- We can't hope to have a stable money system unless we allow a workout of unpayable debt to proceed.

-- Even if we can do this, universal easy credit is a thing of the past. From now on, we have to save for the things we want and run our businesses and households on accounts receivable.

-- Major demographic shifts are inevitable as it becomes necessary to let go of suburbia and reactivate our derelict towns and smaller cities (and allow our giant metroplexes to contract).

-- We have to face the truth that our major social contracts cannot be met, namely the continuation of social security as we know it and probably all pension arrangements. We'll probably have to change household arrangements to make up for these losses.

-- Health care will have to go through a revolution more comprehensive than just changing how we pay for it. Like everything else, it will have to downscale, re-localize, and become more rigorous.

We're not going to rescue the banks. The collateral for their loans is no good and it will only lose more value. All those tract houses on the cul-de-sacs of America and scattered on the out-parcels of our tragically subdivided farming landscape will only lose value, one way or another, in the years ahead. Right now they're simply losing inflated cash value -- and that has been bad enough to sink the banks. In the months and years ahead, they'll lose their sheer usefulness as the distances once mitigated by cheap gasoline loom larger again, and the jobs vanish and incomes with them, and the supermarket shelves cease to groan with eighty-seven different varieties of flavored coffee creamers, and one-by-one the national chain stores shutter, and the theme parks, and the Nascar ovals, and the malls, and the colossal superfluous cretin-cargo of consumer nonsense that we've been daydreaming in gets blown away in a hurricane of change that we were not ready to believe in.

Sobering stuff. While I think he's a bit of a curmudgeonly pessimist, I think his forecast is closer to reality than you'll hear from a politician or the media. They're all too heavily invested in a return to the old system, and will refuse to recognize the failure of its return even if we revert to living in caves—"build that new kitchen with a cave equity loan!"

The most disappointing thing in all of this is that surely Obama is smart enough to know this—and it is even more certain that the country as a whole is too fucking dumb to handle the truth.

How I Roll...

You might recall that I was selling my car a few months back...Well, after weeks on craigslist and slowly lowering my asking price I finally sold it a month ago—and for the same price I cursed and mocked that guy for after all. It just took me another six weeks to accept that nobody's willing to pay for a nice car in Asheville—but they're perfectly willing to jack people up for any old diesels (to convert to bio) and for Subarus.

Seriously. Every third car in Asheville is a Subaru. New...from the 80s...it doesn't matter. It's the car in demand and they are completely overpriced. And of course my short list was Subarus or an old Saab 900. Well there are no Saabs south of Philadelphia apparently, and any Subie in my price range had serious problems: blown engines, sideswipe damage, missing glass, you name it—and these hippies still wanted $2,500!

Well, I'm the luckiest guy in town, because I found this mint little Impreza (and I DO mean MINT—check that paint job—like a pack of Orbitz!) for book value—$1,800! Turns out this woman needed to unload this car in a hurry and just asked what KBB.com told her to. Any other person in town would be demanding 3 grand. For real. It gets better—she ended up being a neighbor, and turned down more money from other buyers to sell to me at her asking price.

It's bare-bones: crank windows, no stereo (yet), but it's a 5-speed, in great shape, a blast to drive and I'm getting 26 mpg around town and 32 on the highway! Mrs F was mortified when I brought it home, but I'm smitten.

Behold the new Furymobile!



NOTE: It's not QUITE as obnoxious as my High Dynamic Range photography makes it look...but almost.

The Opposite of Curb Appeal

John at Sweet Juniper has another fantastic photographic piece on Detroit. He grabbed his camera and stitched together a panorama of "a street here where 60 out of 66 homes were vacant or abandoned on a single block."

Check it out.
[NOTE: click the picture to view the whole thing—
takes a minute or two to load]

What a waste. Half of those houses were once homes I'd've dreamed of—tons of 20s bungalows... I heard/read that people are going back into some areas in Detroit and "re-settling"—groups of friends and families getting together to buy up a whole block for pennies on the dollar and creating their own neighborhoods. If I lose my job in Asheville, that might be our best option! Who else wants in?

UPDATE: Found a link at BoingBoing: Artists buying cheap houses in Detroit

UPDATE 2: I remember now—Mrs F heard this NPR/Michigan Radio story. Sounds like it's a bit more in the gestational stage than I might have implied...

Screw Job

It's another deadline week, so posting will be sparse... I haven't had time to read the details of the GM bailout and forced Chrysler merge, but my gut reaction is...

"Bullshit."

Yes, viewed in a vacuum, I say the government gets to dictate terms when they bail you out. If that means, "fire your board," or "your shareholders get a haircut," that's fine. Don't take the money if you're not willing to abide.

But the fact that the auto companies—companies that nation-wide employ hundreds of thousands of people in good living-wage jobs manufacturing real, durable, tangible goods that contribute to the economy in myriad ways—are getting a trial by fire from the Obama team. Last I checked, the Big Three didn't blow through everyone else's savings (well, excepting Dodge Avenger owners) and drive themselves and the economy over a cliff with borderline-illegal high-stakes gambling. At least at the end of the year Detroit can point to several million cars as a result of their business.

Meanwhile, the greed cancer-infested financial sector that engaged in an unregulated spree of graft and thievery is getting comparatively soft, kid glove treatment and a bailout approach that seems hell-bent on preserving the previous, fatally flawed system and those who run it. Oh, and did I mention an exponentially higher price tag?

This double standard is fucking bullshit. Automakers get raked over the coals for how they flew into D.C. while Wall Street thieves walk away with taxpayer-funded bonuses totaling in the billions.

Someone explain to me how this doesn't sound exactly like something that would have happened under the previous administration.

UPDATE: Mike's spent some more time thinking/reading/writing about this...

UPDATE 2: And so has The Michigan Posse.

Reading Assignment: Get Mad

Matt Taibbi's The Big Takeover.

If yesterday's assignment was a punch in the gut—knocking the wind out of you while you contemplate how screwed we are—then Taibbi's article is like a drink in the face and a finger in the chest...

It's fucking go time.

The people on Wall Street should give thanks that New Yorkers have no reason to own pitchforks. This makes me want to abandon any pretense of a bailout or rescue and burn the whole fucking thing down and sort through the ashes—no matter the cost. I'm now of the opinion we have nothing to lose. We're going down either way, I want some bankers to land on. And Joe Cassano and Phil Gramm's heads on pikes.

Reading Assignment

The best (and worst*) thing I've read on the economic collapse and the failure to do anything about it that will actually work.

No Return to Normal

Why the economic crisis, and its solution,
are bigger than you think.

By James K. Galbraith

In short: There's a way out, but the way things are going now, we're fucked. This is worse than the Great Depression, because nobody is proposing anywhere close to a bold enough plan to fix the public sector and get things going, and there won't be WWII to carry it through. Even with all that working, it still took twenty years to rebuild the economy. These days, between the A.D.D.-media, the next-cycle-only politicians and the panic-or-party jackasses on Wall Street, that will never suffice. Even if Obama took the steps necessary (and nothing indicates he can or will), he will pay too heavy a price for it, control will change hands in 2012 0r even 2016, and any progress he starts will be immediately undone.

The only thing that will make me feel any comfort would be for Obama to fire his current crew of in-over-their-heads insiders and replace them with guys like Galbraith, Krugman Nouriel Roubini and Nassim Taleb, and let them get to some real work.

That doesn't seem likely.

Disembowelment

One could argue that Jon Stewart drove a nail in the coffin of Crossfire, or that Stephen Colbert held a long-overdue, uncomfortable mirror up to Bush and the D.C. press corps at that dinner a couple years back...but both of those occurred in the relative obscurity of unanticipated improvisation. No one saw them coming.

This Jon Stewart vs. Jim Cramer/CNBC thing has been 8 days in the making and has gone far beyond YouTube viral stages. It was above-the-fold on USA Today yesterday—don't even ask me if that furthers the irony here or not.

Anyway, last night was the showdown, and from everything I've read it didn't disappoint. I saw a few minutes "live" last night, and a clip on line, but I won't be able to sit and watch the whole interview until later. But that doesn't mean you can't...

NOTE: Unedited and NSFW. Part One:

The Daily Show With Jon StewartM - Th 11p / 10c

Jim Cramer Unedited Interview Pt. 1

Daily Show Full Episodes
Important Things w/ Demetri Martin

Political Humor
Jim Cramer

Part Two.
Part Three.

"Thank You, Sir. May I Have Another?

The Daily Show With Jon StewartM - Th 11p / 10c

In Cramer We Trust

Daily Show Full Episodes
Important Things With Demetri Martin

Political Humor
Economic Crisis

Messing with Rush Limbaugh gets you some blowback...Messing with Jon Stewart gets you blown away.

If you need further proof that Jim Cramer indeed has no idea when, if ever, to cut his losses—he agreed to appear with Stewart on TDS tonite. I saw a few minutes live...as soon as the video's avalable, I'll post it.

Comment of the Day

Just Some Fuckhead (yes, really his name) in a thread at Balloon Juice:

All my friends and family who have been investing in their 401Ks dutifully for the last xx years have pretty much nothing to show for it. Meanwhile, I eschewed retirement savings and instead focused on buying a bunch of cool shit.

Grasshoppers: 1
Ants: 0

Sabotage

Yesterday, steves questioned whether I really thought the Republican party was actively trying to sabotage the President's plans, regardless of the wider implications—meaning "screw the country to stage a comeback."

Perhaps this will convince him...Andrew Sullivan:

THE GOP HAS DECLARED WAR ON OBAMA

This much is now clear. Their clear and open intent is to do all they can, however they can, to sabotage the new administration (and the economy to boot). They want failure. Even now. Even after the last eight years. Even in a recession as steeply dangerous as this one. There are legitimate debates to be had; and then there is the cynicism and surrealism of total political war. We now should have even less doubt about what kind of people they are. And the mountain of partisan vitriol Obama will have to climb every day of the next four or eight years.

Sullivan's referring to this:

It's hard not to think that Gregg's withdrawal, with the grumbling about the census and the stimulus, was not timed to cause the most damage possible to the Obama administration. Releasing the statement just as Obama took the stage in Peoria was clearly designed to undermine the President's event. The fact he scheduled a presser only seems to confirm it. The classy exit would have been to wait til tomorrow afternoon to quietly bow out. Basically Gregg decided not just to politely decline, but rather to blow shit up and burn the bridge behind him. Do not think this portends good things for the wider political climate.

Lecture Hall

Paul Krugman is again a must-read. Obamaphiles still might not be happy with what the Professor is reciting, but he's right, and it needs to be said. And passed on...

• Obama blew it on the stimulus plan by empowering the Republicans, who just want to screw the country over in hopes of a comeback.

• This should be the perfect time to push universal health care.

• Obama's bank plan is (probably) also for shit.

UPDATE: You want a lecture? I'm giving one in the comments...

Not Getting It

Can somebody sit Obama down and make him watch this CNBC segment? And then have him shitcan Geithner and everyone else and hire these guys?

And by "these guys" I don't mean the roundtable of wisecracking retards asking for stock tips. I mean the two smartest financial guys on the face of the planet. The two guys who had this shit figured out years ago. The two guys nobody seems to be listening to.

Josh Marshall summed it up perfectly:

These two guys are talking about a deep structural crisis in the world economy. And these CNBC yahoos can't stop asking for stock tips. Really surreal. [...] This is a seminal piece of video. You have to see it. I'm not sure I've seen anything that captures -- albeit unintentionally -- the vast disconnect over what is happening today in the US economy.

[h/t Angelos]

My Big Three Bailout Plan

Yeah, that's right. I'm laying out my plan to save the industry, but first, I've got some shit to get off my chest...

I've been mulling over a massive critique of the American auto companies for a while now...Ever since I went to the (Detroit) North American International Auto Show a couple years ago and watched as GM countered the onslaught of the Prius, hybrid Hondas and other kick-ass imports with the big unveiling of their updated GMT900 line of full-size trucks and SUVs (Silverados, Tahoe, Yukons, Suburban, etc.)

One year later, Dodge brought in a herd of cattle for their new full-size Ram pickup to "drive" through downtown Detroit. Putting aside the sheer stupidity of that stunt and lack of relevance of using the truck for actual labor, they were even further behind than GM.

Now I'm not saying all of those vehicles weren't a little long in the tooth, and didn't need a facelift—they did, and they are the best looking versions of those trucks yet—but GM (and last year, Chrysler) was betting EVERYTHING on these vehicles at a time when it was clear the Era of the Big SUV was winding down. They've made some admirable gains in fuel economy, introduced a hybrid Tahoe, but the fact remains they were behind the curve in a big way, and instead of investing in warm blood and fur, they poured hundreds of millions of dollars redesigning the dinosaur right before the Ice Age.



It appears they have learned that lesson now, when it is too late. GM has indefinitely suspended plans to redesign the line again, instead of the standard six-year lifespan. What brought them to that conclusion? Full-size SUV sales have plummeted 51% since they unveiled the 2007 models. The Trailblazer (mid-size SUV) sales fell 73%. And those numbers are from before gas prices spent the summer over $4.

One thing Detroit can clearly still do is rear-view mirrors.

Here's the thing: Two years ago, I knew those SUVs were going to be launched, and how fucking stupid a bet GM was making, but that's not what's most frustrating... It was going to the NAIAS this past January and seeing these cars:



What's wrong with those cars, Mr Furious?

Nothing. Nothing except the fact that in January of 2008 they were still fucking concept vehicles for GM! I'm pretty sure Toyota's been making money hand over fist in that niche with Scion since 2004.

All I could do is stare from offstage, snap my pics and wonder aloud, "Why the hell aren't cars like that in showrooms NOW?!?"

If I were on the Senate Banking Committee today, I'd ask Rick Wagoner why it wasn't some team's 24/7 job to get those two cars on the road by the end of the year. Seriously. And don't waste time blanding-down the design—those two cars are hot and would sell like crazy just as they are.

Which leads me to my first bailout requirement:

Fire everyone who looks at a concept car and says, "our focus group tells us that they won't like..." I bet there's a whole level of management jackasses in each division responsible for taking cool cars and turning them into Cobalts and G5s. History backs me up on this. The cars released in the last decade that made the smallest style jump from show floor to showroom were successful: The New Beetle, Mini Cooper, PT Cruiser, the current Prius. Next up? The Volt. They've already made the concept car look too much like a Stratus. Why is Detroit afraid to take a fucking chance? The Volt NEEDS TO look different. It's the first electric car. People who buy one don't want to be mistaken for Malibu drivers (and for the record, I think the Malibu is the best-looking Chevy sedan in forty years). Do you hear what I'm saying, GM? "Green" sells. Prius drivers aren't just saving gas, they're making a fucking statement driving around in that lozenge. All the hype around the Volt is going to deflate somewhat when that cool-ass concept everyone saw looks "normal."

Let me get to the real nuts and bolts stuff that needs to happen to save these companies. Trim the fat. And there is plenty of it. All of the Big Three have too much duplication across brands. Cut brands, and cut models:

GENERAL MOTORS

Buick—Gone. The loyal Buick customer base has to be pushing 70. Elderly people buying their last car ain't a plan for the future.

Cadillac—An upscale line is good. And I like the new "sharp edge" direction. Skews younger. Pick one full size sedan, I like the STS, so ditch the DTS. You can only keep the Escalade if every single one is Hybrid or DoD (Displacement on Demand—shuts off half the cylinders when not needed)

Chevy—Family cars, SUVs, pickups and the Corvette. That's it. Start making Hybrid Equinoxes. And goddammit, build a fucking station wagon again. No more Avalanche—stupidest idea ever. All full-size trucks and SUVs need Hybrid or DoD powertrains.

GMC—Gone. There is no need to duplicate with Chevy: Yukon=Tahoe. Stop building both. All commercial trucks are Chevys now. Why? Because the separate division has a whole layer of management that is redundant.

HUMMER—Gone. Just for symbolism's sake if nothing else, but that market is dead.

Pontiac—Because I like the Vibe, Solstice and G6 so much it's hard to let go. Pontiac can be the "sporty division" and those three and the G8 is their lineup. That's it. No SUVs or vans, and ditch the G5, it's ugly.

Saab—Sell it. Please. Let somebody in Sweden make cool, quirky cars again. GM trashed this once great brand the second they bought it, and I will go back to Detroit and kill someone if their mismanagement means Saab's demise.

Saturn—Duplication is a problem here, but they have the best lineup in the company, run differently from factory to sales floor and as far as I know do well.


FORD MOTOR COMPANY

Ford—Your website won't load, so you get nothing. Actually, here's what I want: The European Focus. Wagons and hatchbacks. Trust me.

Lincoln—Again, and upscale brand is fine. Sedans only. No SUVs.

Mercury—A fetish for vertical grillwork is no reason to duplicate an entire line of automobiles. Good bye.

CHRYSLER

Chrysler—Family sedans and minivans. No more Aspen. All trucks and SUVs are now Dodges or Jeeps. Limit duplication.

Dodge—Sporty cars and trucks only. All lame sedans (Avenger=Sebring) and vans are now Chryslers.

Jeep—Compass, Liberty or PAtriot: Pick one, lose the other two. Everything else is fine.

Note: In no way do I support a financial benefit for Cerberus, the holding company that owns Chrysler, until the company is back in the black and they earn a reward for their investment.

--

All companies need to start cracking on electric, hybrid and alternative fuel vehicles like fucking yesterday. Engine technology improvements have gone too far over towards power instead of efficiency. There is really no need for any average family car to be packing over 200 horses. Get that shit turned around.

No companies can pay dividends, and stockholders are holding the bag—I don't care if they take a bath. Top level executives forgo salaries until the loans are paid back. Their stock options should be compensation and incentive enough. Mid-level management should have been thinned with consolidation of brands and models, all salaries and bonuses are frozen.

Union wages freeze. Contracts are not opened up, but concessions can and should be made. Negotiations to alter terms for legacy costs should ensue.

ALL THREE COMPANIES NEED TO ACTIVELY PUSH FOR UNIVERSAL HEALTHCARE. When enacted, all employees top to bottom, plus retirees need to abandon company healthcare in favor of national plan. This single factor will relieve their biggest current and legacy financial burdens.

That's all I can think of now, and I'm tired. Get it done, you bastards.

Dee-troit Breakdown

Jim at Sweet Juniper! has the best takedown of the Big Three Haters I've read anywhere...here's a chunk of the mirror he holds up:

I have been surprised by the anger and disgust expressed by so many at the workers (and their unions) for their role in the current state of the American auto industry [...] how all kinds of people---conservatives and liberals---have such a visceral, angry response to the idea of the [...] lazy, do-nothing UAW member sitting in a room doing cross word puzzles instead of working on the line, collecting $70 an hour salaries with better health and retirement benefits than the CEOs of the company.

[...] I think this ugly response to a mythology perpetuated about blue-collar workers is particularly shameful because so many American white-collar workers in both the public and private sectors are incredibly lazy themselves. God forbid a factory worker should step away from her job twisting the tops on the toothpaste tubes for a minute, but just because someone has a Bachelor's degree that apparently entitles them to dick around on the internet all day with impunity.

I once wrote (somewhat in jest), "Thank goodness almost every office worker in America has virtually unfettered access to the internet. Imagine what would happen to our economy if employers started taking away internet privileges and people were forced to actually work. The sound of crickets would reign at fark, digg, and reddit. Entire fantasy football teams would stand around on their virtual sidelines with nothing to do. Projects would get done way earlier than they needed to be. Soon there wouldn't be enough work to go around. Bureaucracies would actually become efficient. Massive layoffs would follow. The entire American economy is balanced precariously on the fact that the average American office worker spends only about 20 percent of his or her time actually working." This is corporate America's dirty little secret. Anyone who's ever worked in an office environment knows that it is at least somewhat true. Add to all that internet time the Sisyphusian piles of meaningless paperwork, unproductive conversations with coworkers, endless meetings, pointless conferences and worthless training seminars, and I think there's enough fodder for a stereotype of the lazy, do-nothing middle-class white-collar office worker who may not have a union to protect him, but who hardly deserves his salary. Where is the animus towards this mythical being?

The thing is, he's not a myth. He is real, and right now he is spitting on the men and women who still make things in America because they dared to believe they could be just like him.

Read the whole thing.

Also, here is Jim's previous post on the auto companies, complete with some of his amazing, eerie and haunting photos of Detroit. More of those can be found here.

Hell, I just spent an hour gazing at photos and reading fascinating tales of the Detroit Book Depository—they're going in the blogroll.

Photo © Sweet Juniper Media, Inc.

Water Is Wet

The country is in a recession.

And Wall Street is filled with pussies.

Mitch Writer & The Detroit Wheels

A good column from Mitch Albom on the hypocrisy and posturing by Congress regarding the auto industry.

[h/t Bob]

This is Bull-Cit

Robert Reich wonders aloud why, now, Citibank is about to get bailed out, while the automakers are still left out in the cold...

I can't come up with a good reason, and neither can he.

Down Jones

Dow Jones Industrial Average
Index Value: 8,273.58
Trade Time: Nov 17
Change: Down 223.73 (2.63%)
Prev Close: 8,497.31
Open: 8,494.84
Day's Range: 8246.89 - 8571.30
52wk Range: 7,773.71 - 13,850.90

The market has been up and down in daily 300 point swings for two months now, so most of those numbers don't mean much—it could be up 3% tomorrow. But that bottom row is pretty shocking though: The Dow Jones is worth HALF what it was a year ago. Half.

Michael Lewis (of Moneyball fame) has a great piece on the End of Wall Street in Portfolio. Lewis literally wrote the book on what is happening now—twenty years ago. From the article [emphasis mine]:

He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number. “They were just assuming home prices would keep going up,” Eisman says.

Later:

Now he saw. There weren’t enough Americans with shitty credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. “They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,” Eisman says. “They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans. But that’s when I realized they needed us to keep the machine running. I was like, This is allowed?”

That these fucking thieves are getting bailed out, but the auto industry is left to rot is—in context—a goddamn travesty.

[h/t Angelos for the Lewis link]

Panic in Detroit

Do I understand the financial markets or the economy? No. But I do understand that Wall Street has been promised over $700 billion, half of which has already been handed out with no oversight and no disclosure of who is getting the cash. AIG alone has walked up to the bail-out window to the tune of $150 billion in three months.

So it seems to me giving the automakers $25 billion—less than three percent—of that same bailout money to preserve millions of real, living wage manufacturing jobs and to help prop up an industry that actually makes a product—as opposed to one that shifts hypothetical credit defaults and bad loans around—doesn't seem so outrageous to me. Add to that the fact that this loan can be conditioned on The Big Three implementing some changes that will benefit the environment as well? It looks like fucking bargain by comparison.

Will the failure to deliver this money actually result in one or more of these dinosaurs going down? I don't know. But as someone who lived the last seven years in southeastern Michigan, I can tell you with certainty and seriousness that if one of them does, it will be akin to dropping a nuclear bomb on that area—everything from mid-Ohio north will be wiped out.

(NOTE: I have links to throw in there for a lot of that stuff, but I don't have time for that shit now...I'm at work after all...)