Financial Meltdown

I've allowed the dust to clear after last week's late night auto bailout debacle. In the passage of time, Senator Dodd's performance looks sorta like this

Several weeks ago, Senator Dodd was appointed the Senate's point person on the auto bailout. http://www.telegraph.co.uk/motoring/manufacturers/3711734/US-Senate-close-to-14bn-auto-bailout-deal.html The evening of the critical vote he claimed there were just "some issues that remain outstanding"

Hmm...like not having enough people in your own caucus behind the deal.   http://www.weeklystandard.com/weblogs/TWSFP/2008/12/senate_democrats_had_enough_re_1.asp

Not really addressing the issue of competitive employee compensation http://news.yahoo.com/s/ap/20081212/ap_on_go_co/congress_autos this year...not 2011..when GM is losing money at a titanic pace http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/02/13/BU5KV10HF.DTL 

and allowing the Republicans to control the final negotiations  http://news.yahoo.com/s/ap/20081213/ap_on_go_co/autos_corker

Indeed, one wonders why Dodd bothered at all, since he seemed to not care what sort of dreck the federal government generated on an issue of rather pressing concern...saying of Bob Corker

"If perfection was supposed to be his goal, he was sent on a mission he could never complete,"

Well, Chris, we know never to expect perfection from your efforts in the Senate. But we have learned to expect petulance and finger pointing after your failures http://www.courant.com/news/politics/hcu-autobailout-1212,0,6886086.story

An effective chairman would have rounded up his votes and forced some form of temporary compromise between the GOP and the UAW to pass a bill that offerred some meaningful relief. But after the TARP disaster, http://www.thenextright.com/ironman/chris-dodd-on-the-bank-bailout-yep-i-pulled-a-plaxico  Chris Dodd's delivery skills might be better employed at Domino's   

It's not just that Dodd is a liberal, or as my CT compadre Artful Doddger points out, his act back home is wearing very thin http://theartfuldoddger.blogspot.com/2008/12/this-was-not-good-weekend-for-publicity.html. It's that he just isn;t very effective at what he does anymore. And after almost 30 years in the Senate, there's little reason to expect improvement.

The irony, of course is much as the Bush adminstration does not want a GM bankruptcy on the record, they also do not want to be directly blamed for creating "American Leyland" . http://en.wikipedia.org/wiki/British_Leyland Hence,  while they may permit the use of TARP cash to tide over GM and Chrysler, they may not be a whole lot more lenient than Bob Corker was http://www.ft.com/cms/s/0/ac2c623a-cafe-11dd-87d7-000077b07658.html?referrer_id=yahoofinance&ft_ref=yahoo1&segid=03058

This will kick the can down the road a piece. Upon further reflection, I would suggest that the DC wizards think about a few other issues than whether GM ought to replace its CEO http://www.thenextright.com/ironman/message-to-senator-dodd-you-first

The always inquisitive Michael Barone suggests that beyond pay packages, union work rules have to be redone for the domestic firms to become competitive http://www.usnews.com/blogs/barone/2008/12/15/who-is-at-fault-for-the-decline-of-the-big-three.html

I would also suggest to the "save the planet" people out there that the market is indicating that in the immediate term, a massive retooling to electric cars is going to be an exercise in fiscal insanity. If Toyota doesn;t see that much of a market for the Prius until maybe 2011,  http://www.courant.com/business/nationworld/wire/sns-ap-toyota-plant,0,7578590.story, perhaps a more prudent short to mid term strategy for Detroit  might be to maximise revenue selling conventional vehicles? 

Sure it's unplesant and dull, but I've yet to see anyone explain how this works even for the purposes of postponing a bankruptcy until better economic times unless the Detroit 3 cut costs and sell profitable cars http://thenextright.com/ironman/can-hope-change-a-spark-plug

(as an aside, I figured out why the image is a) Detroit only sells big SUV's and b) no one buys their cars. I was in lower Fairfield County this morning. That's the deal down there--the only GM products I saw were Escalades and Tahoes--yuppies assume that's how it works for the whole country)  

I might also suggest much as the auto industry is a big picture, it isn't the biggest picture. Since the election of Obama, we have seen the Dow plummet and recover, but as the zeroes on the proposed stimulus package get larger, the value of American currency gets smaller.

 http://finance.yahoo.com/echarts?s=USDEUR=X#symbol=USDEUR=X;range=3m

http://finance.yahoo.com/echarts?s=USDJPY=X#symbol=USDJPY=X;range=3m

Maybe its time to ask Senator Dodd who gets to bail out Uncle Sam?

Talking Head Chris Dodd appeared on Face the Nation this morning.  His statements will be remembered  for their breathtaking chutzpah

 A key senator says the nation's car companies should have to replace top executives in exchange for a long-term bailout package from Congress.

Sen. Chris Dodd heads the Senate Banking Committee. He says he is hopeful Congress will pass a short-term $15 billion aid package for the automakers in the next several days. But the Connecticut Democrat says the companies should have to restructure if they want a more significant bailout from Congress next year.

Dodd says the companies need quick cash to avoid collapse in the next several weeks. But over the long-term, Dodd says Chrysler probably ought to merge with another company and General Motors should be required to replace chief executive Rick Wagoner.

http://biz.yahoo.com/ap/081207/congress_autos.html

Now, Chris, I'm with you on Wagoner walking the plank. After all, GM is hemorraging money and Wagoner failed to prevent this from happening.

But, shouldn't you be held to the same standard as Rick Wagoner? 

You've admitted the Wall Street bailout that you principally drafted largely failed http://thenextright.com/ironman/chris-dodd-on-the-bank-bailout-yep-i-pulled-a-plaxico

You spent the critical month of August 2008 at your vacation home in Ireland instead of working to prevent the financial meltdown http://www.thenextright.com/ironman/oh-doddy-boy-the-banks-the-banks-are-failing 

You were the number one recipient of campaign funds from Fannie Mae and Freddie Mac  and your all time top contributor, Citigroup http://www.opensecrets.org/politicians/contrib.php?cycle=Career&cid=N00000581 just got an early $20 Billion Christmas present from the Treasury, just like all the other friends you have on Wall Street going hat in hand http://thenextright.com/ironman/the-best-senate-banking-chairman-money-can-buy    (Funny, I don't recall the heads of Citigroup or Bank of America being asked to tender their resignation prior to getting taxpayer bailout money?)Then again, you've always been a "reliable friend' the banking industry http://www.washingtonpost.com/wp-dyn/content/article/2007/02/15/AR2007021501555.html

Your "reliable friends" at Countrywide Mortgage are being investigated by the G-Men http://deepbackground.msnbc.msn.com/archive/2008/10/30/1613877.aspx 

You tried to enrich ACORN at the expense of the taxpayers when you drafted the Wall Street Bailout http://thenextright.com/ozarkguru/major-earmark-in-democrat-bailout-agreement

Now, I'm sure you are going to say that Rick Wagoner lacked vision since he failed to foresee the collapse of his industry. Well, how aren't you equally culpable?

You said your bill in July 2008 was the answer to the housing crisis http://blogs.courant.com/on_background/2008/07/housing-bill-finally-heads-to.html

This was after in March of 2007, you said legislation on foreclosures was unnecessary http://query.nytimes.com/gst/fullpage.html?res=9E01EEDE1530F930A15750C0A9619C8B63

And before the complete meltdown of the global financial system you said you did not expect "many more banks to fail" http://thehill.com/leading-the-news/dodd-does-not-expect-many-more-banks-to-fail-2008-07-14.html and told people not to "panic" http://www.usnews.com/usnews/politics/bulletin/bulletin_080715.htm

Rick Wagoner has gone through tens of billions of shareholder equity. What is the present estimate of the various financial bailouts out there? (I' ve seen $7 Trillion!) http://money.cnn.com/2008/11/26/news/economy/where_bailout_stands/index.htm?postversion=2008112615

Maybe had Dodd not lived in Iowa in 2007 this could have been avoided http://www.gwu.edu/~action/2008/ia08/doddiavisits07.html

On September 23 I called for Dodd to step down as Banking Committee Chairman

Does anyone think Chris Dodd's performance since September 23 as Banking Committtee Chairman has done anything worthy of his retention?

How has he proven to be any less incompetent than Rick Wagoner?

I await the Senator's response.

then.....

Dodd  Had Central Role In Crafting Bailout Bill

By JESSE A. HAMILTON

October 2, 2008

NOW....

http://www.upi.com/Top_News/2008/12/04/Dodd_disappointed_with_financial_bailout/UPI-89491228431017/

Dodd disappointed with financial bailout

Chris Dodd, once again proving he is a strong voice of reason "leading" the Senate Banking Committee

Even a top Democrat in charge of evaluating their aid requests made it clear he was eager to avoid voting on a bailout. Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, wrote to Federal Reserve Chairman Ben Bernanke on Wednesday asking the central bank chief whether there was anything stopping him from using his considerable lending authority to help the automakers.

http://biz.yahoo.com/ap/081204/congress_autos.html

There is a crying need for a legislative response to craft a new set of policies that will enable American manufacturing to survive in the hostile economic climate, and what does Chris Dodd suggest---just send them down to Bernacke to get some cash to tide 'em over awhile.

Chris: the Fed should not be:  a)lending to manufacturers and b) trying to do Congress's job. As is painfully apparent to anyone with working synapses, cash alone will not make Detroit healthy.

What is all the more galling about this is Dodd wasn't shy at all about trying to bail out ACORN. Or any of his well heeled Wall Street buddies http://www.courant.com/news/nationworld/hc-dodd0929.artsep29,0,1341992.story

Then again, punting from trouble is now a Dodd specialty. He spent August 2008, as Fannie and Freddie approached death's door, lounging around his vacation home in Ireland.  http://www.thenextright.com/ironman/oh-doddy-boy-the-banks-the-banks-are-failing Perhaps that is the politcal version of the "JOBS Bank".

It's past time for Chris Dodd to quit and someone who cares about the economy and has a clue to take over his committee. http://thenextright.com/ironman/the-bargain-for-the-bailout

Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, said the automakers still need to prove they can survive and be profitable. "If these companies are asking for taxpayer dollars, they must convince Congress that they are going to shape up and change their ways," Dodd said in a statement

OK.

You First, Chris

  Democratic Senator Christopher J. Dodd, chairman of the Senate Banking Committee, said Nov. 28 that Congress may demand executive changes from auto companies as part of the bailout.

‘http://www.bloomberg.com/apps/news?pid=20601209&sid=ad5Ibr86SFtY

makes just as much sense as taking gun safety advice from THIS guy

NFL star shoots himself in leg

Remember how we the taxpayers became the primary shareholders of  AIG, the world's largest insurance firm?

Within days we might also own the largest bank in the United States.

Citigroup is taking on water fast. The stock has lost half its value in recent days and efforts to find a new investor are underway http://www.time.com/time/business/article/0,8599,1861332,00.html?xid=rss-topstories

One expert, Brad DeLong, is openly suggesting Citigroup be de facto nationalized http://delong.typepad.com/sdj/2008/11/time-for-the-go.html Given that the present market cap for a $2 Trillion institution is down to $20B,  http://finance.yahoo.com/q?s=C the out-of-pocket Treasury cost to assume full control here is a mere smidgen of Paulson's $700B slush fund.  

Now, how did Citigroup get in such parlous shape, especially when compared with the NYC rival, JPMorgan Chase?  Well, the Citi was asleep to the level of risk it had in mortgage securities. http://www.nytimes.com/2008/11/23/business/23citi.html?pagewanted=1&_r=1&em

And guess what? The prime architect of Citi's disasterous strategy was the once renowned Clintonista hard money advocate, former Treasury Secretary Robert Rubin

Citigroup insiders and analysts say that Mr. Prince and Mr. Rubin played pivotal roles in the bankʼs current woes, by drafting and blessing a strategy that involved taking greater trading risks to expand its business and reap higher profits. Mr. Prince and Mr. Rubin both declined to comment for this article.

Now where has Rubin been seen lately?...hmmm..advising Barack Obama 

http://money.cnn.com/2008/11/07/news/easton_obama.fortune/index2.htm

How does Senator Dodd. Chairman of the Banking Committee figure in all this?

a) Citigroup is the #1 contributor to Chris Dodd's political campaigns http://www.opensecrets.org/politicians/contrib.php?cycle=Career&cid=N00000581

$425,000 in lifetime contributions to Dodd.

b) Dodd said in the summer he did "not expect many more banks to fail"

 http://thehill.com/leading-the-news/dodd-does-not-expect-many-more-banks-to-fail-2008-07-14.html

Naw, just the biggest one

So, how does a politician respond when his opponent complains he gave away $700 Billion taxpayer dollars to the same people who gave him $500,000 in campaign cash?

http://davidcappiello.com/dc/content/view/169/75/

You do what Chris Murphy did. You trot out your infant son!

http://www.youtube.com/watch?v=pXKps6L8Krc

The only printable term for this stunt is shameless.

There's little good news to report these days from CT, which is behaving politically more like a Red State than a "Red State" these days. But even our liberal electorate have seen through Senator Chris Dodd

Poll Finds Dwindling Approval Ratings For Dodd, Lieberman

http://www.courant.com/news/politics/hc-connecticutpoll1028.artoct28,0,1851441.story

The Lieberman number is poor because people here now think he is a shill for the GOP and they are going Democrat.  But Dodd is running way behind  Obama's popularity

The poll by The Courant and the Center for Survey Research and Analysis at the University of Connecticut found that 48 percent of residents disapprove and 42 percent approve of Dodd, a Democrat.

Eighteen percent of Connecticut residents say they have followed the Countrywide story very closely, and 36 percent said they have followed it somewhat closely.

Among those following the story, 52 percent said the episode raises a question about Dodd's integrity. Among all those surveyed, 38 percent called it "a very serious matter," and 52 percent described it as "mostly politics"

This may be the most troubling number in the poll for Dodd.

Only 12 percent of residents polled said they had a great deal of confidence in Dodd's ability to manage the mortgage crisis that precipitated the wider meltdown on Wall Street. Twenty-nine percent had a "fair amount" of confidence.

Fifty-one percent had either "only a little" confidence (25 percent) or "none at all" (26 percent).

I suspect that vacation home in Connemara may be looking a lot better than facing the CT voters in 2010

Like the day you vote to give the tycoons on Wall Street  $700 Billion

It just might be the wrong day to put the hit on the American Bankers Association for three large. Especially when you lambasted your predecessor for soliciting cash from folks who worked with her committee, and now you sit on the Financial Services Committee. 

http://davidcappiello.com/dc/component/option,com_frontpage/Itemid,1/

The bailout is NOT going to go away as an issue for awhile, I suspect.