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Bailing Out Detroit

BAILING OUT DETROIT....John Judis, feeling in a rantish mood this morning, wants to know why we're dragging our feet on rescuing the auto industry. If it fails, he says, it won't be like the semiconductor industry in the 80s after...

| Fri Dec. 5, 2008 2:04 PM EST

BAILING OUT DETROIT....John Judis, feeling in a rantish mood this morning, wants to know why we're dragging our feet on rescuing the auto industry. If it fails, he says, it won't be like the semiconductor industry in the 80s after the Reagan administration restricted imports and subsidized new research:

The upshot was that the U.S. did lose out to Asia on low-cost semiconductors, but it retained its lead in the most advanced computer technology....That's not going to happen with automobiles and trucks. With them, it is not going to be possible to abandon manufacturing while retaining the ability to engineer and administer. The industry will disappear the way the American television industry disappeared. American workers and engineers will lose their ability to compete in a major durable goods industry — and that's not a good thing.

Other countries seem to understand this. French President Nicholas Sarkozy announced a $33 billion bailout package yesterday. France is not in as bad shape as the United States, but Sarkozy is worried about the French auto industry and is promising to protect it in exchange for a commitment from it to produce cars in France rather than to outsource the production of them.

Speaking for myself, I guess part of my problem is arguments like this one. Will the demise of the Big Three really decimate our design and engineering abilities? Was the loss of the television industry really that big a deal? Do we really want to follow the French lead of bailing out their perpetually ailing national champions year after year?

I guess I want to see a different argument. I don't mind spending the money that much — what's $34 billion between friends? especially during a world historic economic collapse? — but I want to hear a reasonably plausible explanation of how Detroit is going to become viable again in the face of a massive global oversupply of auto manufacturing capacity. Someone's car production is going to have to fall pretty steeply over the next few years, after all, and I want to hear a plan for how it's going to be Germany's or Korea's, not ours.

Even a great plan would only be an absolute minimum requirement, but at least it's a minimum requirement. If we're going to bail these guys out, there needs to be at least, say, a 25% chance that the restructuring plan will produce healthy, going concerns five years from now. I'm not sure I've seen that plan yet, and if being 30 days away from running out of cash isn't enough incentive for GM to produce one, just exactly what is it going to take?

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Don't Just Limit Executive Compensation. Limit Financial Industry Compensation

Gao Xiqing, president of the China Investment Corporation, speaking to James Fallows: I have to say it: you have to...

| Fri Dec. 5, 2008 2:04 PM EST

Gao Xiqing, president of the China Investment Corporation, speaking to James Fallows:

I have to say it: you have to do something about pay in the financial system. People in this field have way too much money.... It distorts the talents of the country. The best and brightest minds go to lawyering, go to M.B.A.s. And that affects our country, too! Many of the brightest youngsters come to me and say, "Okay, I want to go to the U.S. and get into business school, or law school." I say, "Why? Why not science and engineering?" They say, "Look at some of my primary-school classmates. Their IQ is half of mine, but they're in finance and now they're making all this money." So you have all these clever people going into financial engineering, where they come up with all these complicated products to sell to people.

Another benefit of working in finance, other than the spectacular paychecks? Job security. You create the economic crisis, and people in manufacturing and construction lose their jobs.

Blackwater Shooters To Be Charged Under Obscure Drug Law

Since September 2007, when Blackwater operators opened fire in a Baghdad traffic circle, killing 17 Iraqi civilians and wounding...

| Fri Dec. 5, 2008 1:50 PM EST

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Since September 2007, when Blackwater operators opened fire in a Baghdad traffic circle, killing 17 Iraqi civilians and wounding 24 more, the Justice Department has been struggling to build a criminal case. The challenge is indeed unique: Blackwater employees in Iraq are, like all other foreign contractors in the country, immune to Iraqi law. (This now stands to change under the new "Status of Forces" agreement, which strips contractors of their legal shield.) Because the Blackwater shooters were operating under a State Department contract, they also fall outside the jurisdiction of the US Code of Military Justice, which applies only to military contractors. US criminal and civil law also has yet to catch up to the reality of armed US contractors operating in conflict areas, and the few provisions that do cover such work need further clarification. In essence, the Blackwater operators who opened fire that day fell through the legal and regulatory cracks, effectively rendering them immune to charges of murder.

Well, almost. News reports indicate that the Justice Department, as early as Monday, could charge between three and six Blackwater contractors for the September 2007 shootings under the Anti-Drug Abuse Act of 1988. The law calls for mandatory 30-year prison terms for the use of machine guns in violent crimes. The law was created in response to the crack epidemic of the 1980s, but can apparently be applied more broadly, or so federal prosecutors will argue.

Cluster Bombs, Now Slightly Less Incredibly Depressing

Yes, the US still refuses to stop stockpiling the pretty, brightly-colored death toys colloquially known as cluster munitions. But isn't it nice to know that at least some of our NATO allies are smarter than that? From an observer in Oslo of the cluster munitions treaty signing this week: "We have heard a great deal about child soldiers, but what we are witnessing here...

| Fri Dec. 5, 2008 1:49 PM EST

Yes, the US still refuses to stop stockpiling the pretty, brightly-colored death toys colloquially known as cluster munitions. But isn't it nice to know that at least some of our NATO allies are smarter than that?

From an observer in Oslo of the cluster munitions treaty signing this week: "We have heard a great deal about child soldiers, but what we are witnessing here is a children's peace. In the Oslo City Hall just one block from the Nobel Peace Center, I cannot help but wonder if it is time for children to be awarded the Peace Prize."

Barring that, maybe kids can at least be awarded the right to play without danger on a former battlefield gone to grass.

Watching the Sky Fall

WATCHING THE SKY FALL....Michael Shnayerson writes in Vanity Fair this month about the nouveau poore on Wall Street:One former Lehman executive in her 40s stood in her vast clothes closet not long ago, talking to her personal stylist. On shelves...

| Fri Dec. 5, 2008 1:20 PM EST

WATCHING THE SKY FALL....Michael Shnayerson writes in Vanity Fair this month about the nouveau poore on Wall Street:

One former Lehman executive in her 40s stood in her vast clothes closet not long ago, talking to her personal stylist. On shelves around her were at least 10 designer handbags that had cost her anywhere from $6,000 to $10,000 each.

"I don't know what to do," she said. "I guess I'll have to get rid of the maid."

Why not sell a few of those bags?, the stylist thought, but didn't say so.

"Well," the executive said after a moment, "I guess I'll cut her from five days a week to four."

There's good entertainment value here if you're looking for a few minutes of escape and fully justified schadenfreude from today's grim news.

On another note, it appears that one piece of fallout from the Wall Street collapse is that there are loads of huge penthouse suites available now at fire sale prices. Sadly, I won't be moving into one of them. Aside from being a wee bit short of the circa $10 million fire sale prices, when I mentioned this to Marian the other day she told me that she wouldn't want to live 50 stories up in the air anyway. What a drag. I think it would be great. But even if I scrape together the scratch, it looks like it will never happen. Another dream shattered.

When His Lips Are Moving

WHEN HIS LIPS ARE MOVING....In a mere few months, Henry Kissinger has gone from lying about Barack Obama to sucking up to him. Helluva guy. And that's not unreliable lefty blogger me saying that Kissinger was lying, it's sober, mainstream...

| Fri Dec. 5, 2008 1:03 PM EST

WHEN HIS LIPS ARE MOVING....In a mere few months, Henry Kissinger has gone from lying about Barack Obama to sucking up to him. Helluva guy. And that's not unreliable lefty blogger me saying that Kissinger was lying, it's sober, mainstream Time reporter Karen Tumulty saying it. So don't fall for it, Mr. President-Elect.

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Quote of the Day - 12.05.08

QUOTE OF THE DAY....From Matt Yglesias, on the argument that the collapse of Wall Street was a systemic problem, not a personal one:If nothing the CEOs and top fund managers are doing makes them worthy of taking the blame when...

| Fri Dec. 5, 2008 12:38 PM EST

QUOTE OF THE DAY....From Matt Yglesias, on the argument that the collapse of Wall Street was a systemic problem, not a personal one:

If nothing the CEOs and top fund managers are doing makes them worthy of taking the blame when the crash hits, then they also don't deserve nearly the share of the credit — and money — that they got while things were going up.

Quite so. Street crime might be a systemic problem caused by drugs or poverty or whatnot, and that means that it makes sense to attack those root causes. But we still put muggers in jail while we're working on the other stuff.

Popular Vote Trivia

CrossingWallStreet.com has a neat catch. Total Democratic Presidential Votes Since 1932: 745,407,082 Total Republican Presidential Votes Since 1932: 745,297,123 That...

| Fri Dec. 5, 2008 12:26 PM EST

CrossingWallStreet.com has a neat catch.

Total Democratic Presidential Votes Since 1932: 745,407,082
Total Republican Presidential Votes Since 1932: 745,297,123

That difference, 109,959 votes out of 1.5 billion cast, is 0.00733 percent. Next time a conservative tells you we're a center-right country, tell them numbers exist. And they say we're pretty well split.

Equal Opportunity Opprobrium

We point out when Republicans abuse their power in ways that ought to get them kicked out of office, so...

| Fri Dec. 5, 2008 11:27 AM EST

We point out when Republicans abuse their power in ways that ought to get them kicked out of office, so we have a responsibility to do the same for Democrats. Time to go, Charlie Rangel.

New Palin Expenses Are... Curious

Politico reports that the RNC spent an additional $30,000 on clothes and accessories for Sarah Palin and her family late...

| Fri Dec. 5, 2008 11:17 AM EST

Politico reports that the RNC spent an additional $30,000 on clothes and accessories for Sarah Palin and her family late in the campaign, in addition to the $150,000 previously reported. Take a look at where the money was spent:

The RNC's post-Election Day report documented another $30,000 at outlets that read like a suburban shopping directory.
Dick's Sporting Goods, The Limited, Foot Locker, Wal-Mart, Toys R Us and Victoria's Secret are all listed in between the expected payments for media buys, direct mail and polling.

Sporting goods? Toys? Lingerie? In what conceivable way could these expenses be related to the campaign? I think it's a bit excessive that Palin's traveling makeup artist got paid $68,400 for roughly three months of work, and that her hair stylist got paid more than $42,000 for about two, but at least those expenses have a bearing on how Palin looked in rallies, interviews, and other campaign-related activities. What does Victoria's Secret sell that was relevant to the campaign?