Is What's Good for GM Still Good For The Country?

1973 Chevy truck
Photo by Gilbert Mercier/color infrared
All Right Reserved.


More than 50 years ago, then General Motors president Charles Wilson said: "What is good for GM is good for the country." In the light of GM's chapter 11 bankruptcy filing of today, this quote from Wilson is troubling. It seems that one can say today that: What is bad for GM is bad for the country. Is America on the brink of chapter 11 bankruptcy filing?

Of course there is another way( indicated in president Obama's speech today) to look at it, as any death can be viewed as a rebirth.

Until the mid 70's the Big Three had a comfortable lock on the US market. OPEC's move to jack up oil prices in 1973 changed the parameters all of a sudden. The Japanese car industry was quick to adapt and started building fuel efficient cars. On the other hand, neither GM, Ford or Chrysler had the intelligence to do the same. They just kept building gas guzzlers for 3 decades, and were never able to grab any significant share of the fuel efficient cars market.

In the late 80's GM had a potential winner in the form of the very first electric car available on the market, they failed in seizing this opportunity and stopped the production.

Quite simply the big 3 made cars that consumers did not want to buy any longer.

General Motors was once upon a time a symbol of America's economic success, it has now become a symbol of America's failure. President Obama today said that the US government has "become a reluctant share holder of GM". It is indeed as US tax payers have now 60% shares of the bankrupted company. We should just call it for what it is: General Motors was just nationalized today, and this not necessarily a bad outcome. President Obama claims it is temporary but, in any way you look at it, the collapse of what was once the biggest company in the world, is a blow to the American psyche.

Michael Moore lives in Flint Michigan; both the birth place of General Motors & the epicenter of the economic disaster triggered by GM's collapse. He wrote this touching farewell to GM today. To read it click on the title.

Delinquent Mortgages and Foreclosures Hit Record High.

The number of borrowers, either in foreclosure or delinquent on their mortgages, has reached the alarming record level of 12 %, according to data just released today.

To read story click on the title.

Core Issue: Wealth Redistribution or Revolution.

Photograph by Gilbert Mercier
All Rights Reserved.

If you click on the title, it will take you to a fascinating document.

This academic document presents details on the wealth and income distribution in America and explains how wealth & income are crucial power indicators. Further, it explores the critical underlying question of what and who rules America.

I just want to highlight a few critical points contained in this document.

In 2004 the top 1 % of the US population, in terms of income & assets, controlled 42 % of the total financial wealth. On the other hand the bottom 80% controlled a meager 7 %.

Another stunning example of this obscene social inequality is the pay of CEO's compared to the salary of production workers. From 1990 to 2005, CEO's pay increased 300 %(adjusted to inflation) while workers gained a scant 4.3 %.

The slippery slope of this extreme gap between the " haves " & the "have- nots ", while always a factor in America's social makeup, took a dramatic turn for the worst from 1983 on.

It is not a surprise that it corresponds with the Reagan era and its promotion of wealth concentration and systematic deregulation of the financial market. The very concept of the "trickle down " economy. The Clinton administration did absolutely nothing to reverse this dangerous trend.

In good economic times, this type of system can be sustainable, at least for a while as long as the "little guy" stays happy with the few crumbs coming his way. However, the global economic crisis and financial meltdown has changed the equation. The trickle of wealth has dried up.

Historically, there are only two outcomes of such a situation: A Revolution or a peaceful wealth redistribution from taxation.

From 1789 on, all revolutions and/or social unrest had the same root cause: Namely concentration of wealth & power among an aristocracy or an elite. This applies for France in 1789, Russia in 1917, China in 1949 & Cuba in 1959. The only way to avoid such violent events is by voluntary reforms of the system.

This would entail a drastic income tax increase for the top 1% of the US population, but more importantly a reform of the "death tax" ( estate tax). In Europe, it is the key tool for wealth redistribution. Some countries tax as much as 60 %. It seems that it is the only fair & logical way of leveling the social "playing field".

This position is not about ideology, it is about sound government looking after the majority's common good, as opposed to our current system run by the elite, strictly for their own benefits and the one's of their children.

So what is it going to be: Peaceful reforms or a Revolution?

Wells Fargo pays $371.5M to "Taxpayers"? Who's Really Paid?

TARP made Wells Fargo & other Top Anointed Banks even bigger "too big to fail" banks. Fargo says taxpayers now reap A Dividend for "their" $25 billion investment: But Who really benefits from the Bait & Switch TARP TRAP? Who owns AIG? THE FED owns AIG, NOT the gov't or Taxpayers. THE FED prints "money" & owns/controlls the US Treasury & DC Whores!

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Lehman Brothers collapse stuns global markets

Global markets were reeling Monday after a historic day on Wall Street that saw two famous names become the latest victims of the credit crunch. Lehman filled for bankruptcy protection and Bank of America purchased giant Merril Lynch, to add to this turmoil the share of AIG tumbled by 52 %. Who is next?

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It's the economy, stupid!

Remember the James Carville's one liner that is often credited to summarize why Clinton got elected in 1992. According to most economists ( including Greenspan) our situation is even more serious now.This is Secretary of labor Robert Reich take on our current economic and financial turmoil. His book " Super-capitalism " is a must read.

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Are we heading for a world wide depression worse than 1929?

8 years of the Bush administration mismanagement of the US economy is about to bankrupt not only America but also the rest of the world. The two wars ( Iraq & Afghanistan ) that we can't either afford ( 1 trillion so far) or win are fought with money borrowed to China. Bin Laden's ultimate goal was to cripple the US economy. He is succeeding.

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Freddie and Fannie back in the news.

And it is not good. It seems that a bailout by the Fed is in the very near forecast. Prepare your check book and get ready for a bumpy ride. Could this turn of events bankrupt the US economy?

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Did Pelosi saved Pres. Bush " chestnuts"?

The congress passed a bill to rescue the mortgage giants Fannie & Freddie and address other systemic issues with the housing sector at large.Most Democrats voted in favor of the bill .The GOP voted 75% against the bill. Time will tell if the sweeping bill to rescue the crippled housing market will be a band-aid or offer a long term solution.

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Home sales hit record 10 year low.

WASHINGTON (Reuters) - The pace of existing home sales in the United States fell in June to a 4.86 million-unit annual rate, the National Association of Realtors said in a report on Thursday that saw the sales volume hit a 10-year low. Economists...

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Is your money safe at your bank?

Your banking institution knows a lot about you; with more banks facing problems on a daily bases, it is time for you to look into your banking institution's health and make sure your money is safe ( providing you still have any left).

This official link from the FDIC give you reliable sources you can use to find out if your banking institution is at risk. It will give you a bank rating, and could prevent you from losing your life saving.

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Could another " New Deal " be what America needs?

After almost 8 years of incredible mismanagement by the Bush Administration, America is in a state of complete shamble. Last year, I took a photographs of a graffiti sprayed on a crumbling house in the lower 9th ward in New-Orleans; it said " America needs help". This is probably, in a nutshell, the most accurate political statement of today.

The numbers can make one's head spin. Our budget deficit is 9 trillion, the dollar has reached record low against currencies such as the Euro, the Yen, and the Pound.The low dollar is not really helping our manufacturing sector either, it is more or less gone thanks to the strategy of corporation such as Wall Mart of exporting jobs to India and China. The jobs left to maximize corporate profit and they won't come back.In this insane hyper-capitalist logic Americans were supposed to be the eternal consumer with a credit card never maxed out.

Well, guest what, Americans ( except the super wealthy ) are going broke. Since the burst of the real estate bubble, they can not borrow on their houses any longer. In the mean time, the skyrocketing oil prices is triggering inflation. In the last few weeks, the Feds had to take over a Bank and are tracking a few on their " at risk " of going under list.

The so call economical " stimulus" from the Bush administration ( remember the $600.00 you spent already) was insulting, inefficient and pure political pandering. Another symptoms of the drastic economical misconception of this administration. Bush wanted people to spend the money....well they should have saved the money instead.

Americans have been spending money they don't have for too long consuming stuff they quite often don't need. It is time to re-think our behavior or face the consequences. What we have being doing for years with our own financing management reflect at a much smaller scale the " economic model" of the Bush crack team. The best example is the two wars on installment plan ( with money borrowed from China and Japan) at a cost of 1 trillion combined and counting.

What the next president will have to do to prevent America to become a 2nd or even a 3rd world country is to revisit the type of ideas that FDR implemented to take America out of the great depression in the " New Deal". The next president and the next Congress will have to put a real stimulus plan together, not based on consumer spending but one focusing on fixing the infrastructure of the countries ( roads, bridges, levees, sewage systems, ports, public transportation).
Our country is falling apart, and spending on infrastructure generate much more growth than cutting taxes.

We also need to re-think our conception of " free market" in the long run. It is a paradox that the Bush administration, now a day, is practicing a socialized capitalism consisting of private gain and public losses. With just happened with Fannie & Freddie is an illustration of this point.

It is time to spend money in America not on wars that we can't either afford or win.

Bush: Cheerleader in chief or completely delusional?

Today, Bush had a quickly arranged press conference to address the growing anxiety of the American people.

In the last few days, the crisis in the mortgage and financial market has reach a critical mass. On Friday, the Feds had to take over Indy Mac,a mortgage lender and saving institution, based in California. The institution is FDIC insured, but Monday at the crack of dawn, hundred of customers were lining up to withdraw their money. What most of them didn't know is that the Fed guarantee only up to 100,000 dollars...above that you are on your own. A man, who got in line early, still lost 40% of his entire life saving after 40 years of hard work. The scene at the bank was a reminder of the 1930's and the great depression.

An even bigger problem is the state of disarray of giants mortgage co. Fannie and Freddie. The two private institutions are traded on the stock market and hold 5 Trillion worth of mortgages in the US market. A collapse of the two institutions would have catastrophic consequences and the Feds, over the week-end, made an explicit commitment to bail them out if needed. Later today, their stocks took a dive of 26%....I guess the share holders do not really trust the Bush administration.

How about trusting " the market to regulate itself", Pres. Bush? Right now, the Bush administration is doing exactly the opposite. The rule is simple: In good time the profit stays private and go to the very top, the top executives at Fannie & Freddie are very well compensated. In bad time, it becomes everyobody's problem and we all pick up the tab.

Pres. Bush this morning kept saying that things were " tough " for Americans right now but that we were not in a recession and we had to stay " optimistic". He used the word " psychological" a few times, as if he wanted to give Americans the sense that everything would be OK. Another point that he made over and over was the validity to " drill for oil " to solve the high gas prices. He conceded that it wouldn't solve any problem in the short term, but once again he brought up the " psychological impact" it would have on the rest of the world.

What I find ironic about this is the symbolic aspect of it: The Bush administration has put America in a giant hole of debts ( 9 Trillion and counting). We are fighting two wars, with borrowed money, that we can't neither afford nor win and yet the Democrats' controlled Congress is still funding the wars and all the " tools needed"( by a delusional administration) to fight the so call " war on terror". Thanks to Bush's policies we are in a giant hole, yet in his absurd logic, the " Decider" wants to digg( drill) more.

What I got from Bush' s press conference was a feeling of panic, the sense of someone even less focus than usual, lost and quite frankly almost on the verge of a nervous breakdown. Could it be that he is drinking again?
If Bush was planning to be America's President/ Dr. Phil today, I don't think the " mission was accomplished".

Are Americans a " nation of whiners"?

They are, at least according to former Senator Phil Gramm.

Gramm is a top economic adviser for McCain, he made the statement in an interview with the Washington Times.
He added : " You've heard of mental depression, this is a mental recession ". He went on to peddle the talking points of the Bush administration that " The US was not in an economic recession" and then said in closing " We have sort of become a nation of whinners".

I am sure people losing their jobs, houses and their 401 k's ( if they still have any) will be happy about the ludicrous statement. Today, the numbers were in; the foreclosures were up by 50 % from last year. Is this our imagination, Mr. Gramm? Gas is at record high and the dollar at record low. When was the last time you went to a gas station, Mr. Gramm? Are you aware of the 9 trillion deficit Mr.Gramm?

In politic you are only as good as the people you hire as " adviser", and getting Gramm in his team says a lot about McCain's judgement.

McCain moved quickly to limit the political damage caused by the comment of former Texas Senator Gramm. " Phil Gramm does not speak for me. I speak for me. So I strongly disagree " McCain said.

Yet, McCain picked Gramm in his "team", and quite often,in political campaigns the freudian slips of advisers reflect the real position of the boss. In the case of Gramm and McCain, it shows the disconnect that the very wealthy have with the real struggle of the middle class ( at least what is left of it).

Obama went on the attack saying: " It's not a figment of the imagination, it's not all in your head. I think it is time we have a president who doesn't deny our problems..or blame American people for them."

McCain is the ultimate flip-flop artist.

McCain has flip-flopped so fast on the economy, taxes and balancing the budget that our head is spinning. Bush's heir changes his mind faster than anyone in politic, his mind fluctuates at the speed of a pin ball gone crazy. Is he taking his meds for ADD?

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Is a world wide depression worse than 1929 in the forecast?

The month of June was the worse month on Wall Street since 1930. With the financial sector still shaky, price of oil at record high and the US dollar at record low against the Euro, how can the US afford two wars at a cost of 1 trillion,so far? Are George W. Bush's policies bankrupting the US economy and bringing down the world wide economy?

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Robert Reich was Secretary of labor in the Clinton era.

This is a link to his web site. He is one of the sharpest economical mind to ever serve in public office. Beside his blogging activity, Dr. Reich currently teachs at Berkeley. You can also listen to his comments on NPR's Market Place. The posts on his blog are factuals, articulated and brilliants. It is a must read if you care about solutions to fix the economy.

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