Geithner and Summers Consolidating Power (Auto Bailout Edition)

It looks like Tim Geithner and Larry Summers are executing a land grab. From the New York Times:

President Obama has dropped the idea of appointing a single, powerful “car czar” to oversee the revamping of General Motors and Chrysler and will instead keep the politically delicate task in the hands of his most senior economic advisers, a top administration official said Sunday night.

Mr. Obama is designating the Treasury secretary, Timothy F. Geithner, and the chairman of the National Economic Council, Lawrence H. Summers, to oversee a presidential panel on the auto industry. Mr. Geithner will also supervise the $17.4 billion in loan agreements already in place with G.M. and Chrysler, said the official, who insisted on anonymity.

The official also said that Ron Bloom, a restructuring expert who has advised the labor unions in the troubled steel and airline industries, would be named a senior adviser to Treasury on the auto crisis.

For the record, we have never been happy about the prominent roles Geithner and Summers are playing. Both played significant roles in creating and maintaining the system that lead to our financial mess. They are simply unable to see beyond their ideological blinkers. And as proteges of Robert Rubin, they are epitomes of what Willem Buiter calls “cognitive regulatory capture”.

So consider the fact set. Geithner is clearly over his head and overloaded. He announced a multiifacted plan to rescue the banks, and it will take a full-bore effort over the upcoming weeks and months to sort that out. And Reuters indicates that Geithner is Obama’s “designee” on the auto program.

The last thing you want to do is overload someone who is already in danger of muffing a crucial project. But here we go, Geithner and Summers now have more to do, and the auto industry bailout is coming to a head shortly. This was already set to be handled by a “car czar”. The car czar has instead been supplanted by a car committee, which does not strike me as wise (it adds interpersonal dynamics into a process that would benefit from clear leadership). And having the overloaded Geithner and bull in the china shop Summers as leaders means that other participants, most importantly those who know something about the industry, are likely to be marginalized.

Consider the track record: this duo sidelined Paul Volcker, who brings enormous experience, a first class reputation, and a willingness to question orthodoxy. That says loud and clear that they place self interest above doing the right thing. Volcker is an enormously valuable resource, but apparently his connections, his skepticism of bankers, and his towering height made him too much of a threat.

And we see this again in the auto bailout, where the dastardly duo has persuaded Obama to set up a structure that assures them control over the answer, even though they have no knowledge of the industry.

Now there could be less nefarious explanations. Perhaps the “car czar” idea died stillborn due to an inability to find someone with industry expertise who could be trusted to be evenhanded and had no tax problems. But even if a committee structure was deemed necessary, why have Summers and Geithner head it? I could see have them, or key deputies of theirs, as members, but having two leaders lacking in industry expertise, and time to bone up, looks terribly short-sighted.

But other reports suggest that we may be in sentence first, verdict afterward mode, so expertise is irrelevant. From Bloomberg:

Five Senate Democrats, including Debbie Stabenow of Michigan, wrote a letter on Feb. 5 urging Obama to name an expert in manufacturing as part of a panel to help oversee the auto loans.

“This advisory group provides a tremendous opportunity to bring together our country’s greatest manufacturing leaders to help our domestic automakers create the vehicles and technology of the future,” the senators said in the letter.

[Ron] Bloom {former investment banker and United Steelworkers adviser], who will be a senior adviser at the Treasury, has experience with an issue at the heart of the restructuring — health-care costs. Bloom helped negotiate the Goodyear Tire & Rubber Co. health-care fund, union spokesman Wayne Ranick has said. In 2005, Bloom met with UAW officials who were then evaluating GM’s request for health-care concessions.

Update: Reader Swedish Lex surmises, “No point in appointing a czar if the companies are going into a pre-arranged chapter 11.” That sounds right, except bankruptcy experts have said a pre-pack is not an option for the automakers. They set forth the timetable and it runs to more than a year and a half. Back to the original post:

And the risk of lack of knowledge is real. Summers is close-minded. That trait was part of his undoing as Harvard president. From the Financial Times, “Out of His League“:

“He himself is not widely educated,” said Judith Ryan, a professor of German literature. I met Ryan, a 63-year-old Australian who speaks with a mid-Atlantic drawl, in her office near Harvard Square. On her walls were pictures of Rilke and Kafka, watching as Ryan ate a late, rushed lunch of yoghurt and Starbucks coffee. She attended the faculty meeting in University Hall on February 7 and was one of the academics who stepped up to the microphone to criticise Summers.

“He is a brilliant economist but not really very curious about how other disciplines function and what is at stake today in those disciplines,” she said. Ryan regularly sat in on tenure meetings with Summers. “He really tends to translate things into economic models and he would start to talk about his impressions of the field. Our visitors were astonished. He would ask the meaning of words that I thought were part of most people’s vocabulary.” “Syntax” was one example, she said….

Ryan also expressed misgivings shared by some of the other professors I spoke to about the pro-science direction Summers was taking the university. “He had a very present-day notion of the aims of education,” she said with a shrug. “He didn’t see the point of studying ancient Greece.”

I have long believed that one of the most valuable traits for people in general, and leaders in particular, is to understand the limits of their knowledge, and to seek out sources and individuals who can help fill those gaps. Summers (and perhaps Geithner, if the Summers imprinting has taken) is of the reverse inclination: he thinks that what he knows has universal relevance. Scary.

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93 comments

  1. artichoke

    Training in Economics can do that to someone. It did it to me, to be honest. After doing my doctoral work in financial economics, actually at some point during that process, I came to see most things in life as applications of game theory.

    What can I say, the theory works. It is a superior tool. (It doesn’t make one understand old German, but it has pretty broad application.)

    That doesn’t mean I agree with their approach to the bailout. It would be hard to agree with their approach anyway, since as yet they have not announced one. But so far they have not made blunders, something Krugman pointed out.

    I respect Summers anyway. Geithner presumably was appointed because he is weak.

  2. Anonymous

    dear yves,
    i usually enjoy your analysis and have a lot or respect for your take on things.

    but this time dont you think you are making an ad hominem attack?

  3. socimagination

    I’ve always been stunned by the certitude that comes with economics training.

    I don’t doubt the importance of rational actor models, as they do provide a great deal of understanding about the complexities of human behavior given a finite set of data about the social world.

    However, I can’t help but think that the lessons of LTCM and this financial crisis are being unheeded. People arent’t that rational! Sometimes, they buy houses/mortgages they cannot afford because they are pursing the “American Dream” or some other internalized cultural form. Although there’s nothing wrong with greedy bankers, it seems to stun and anger millions of Americans that they were reckless and pursued short-term goals over sustainable ones. Has Bonfire of the Vanities really slipped off the shelf that much?

    There’s something to be said of a liberal arts education, one that is meant to teach doubt and skepticism, and not rely on a singular discipline for the answers to everything. It certainly doesn’t exist in the dynamic and constantly shifting social world.

  4. Anonymous

    All the headlines about GM have been:

    more money or we’ll file BK (if you provide the DIP financing).

    My read is that more money is coming to bail them out some more.

    Why else put the money man in charge of the process with a top presidential adviser?

  5. Swedish Lex

    My immediate thought when I read that that the postion of car czar had been scrapped was that the chances of a GM & Chrysler bankruptcies had increased (as reported by the WSJ). No point in appointing a czar if the companies are going into a pre-arranged chapter 11.

    Not a surprise to me that chapter 11 would be the only viable solution albeit distasteful.

    Buy your SAAB now, soon they will be collectors' items…..

  6. artichoke

    @socimagination: I don’t see a necessary inconsistency between economic theory and what happened with LTCM, or in this crisis.

    LTCM was trying a convergence trade that had worked before in the past but didn’t work this time.

    Excessive leverage, then and now, is quite consistent with the compensation structure for traders: if you win you’re rich, if you lose you are at worst fired.

    People who got liar loans with teaser rates live in a house they could never have dreamed of getting for a while, then at worst they have to leave and get a bad FICO score, heck they’re probably tired of borrowing anyway.

    It’s economic rationality indeed. Individual utility-maximizing behavior can produce a second-best outcome or worse for the society.

    One can find the same theme in much literature, although it is not usually identified as such. The economists are the ones who bring it to the fore.

    Of course this works easiest in retrospect! It’s harder to predict the results before they happen. But many, including of course Roubini, and I too, saw that a big crash was possible

  7. cj7

    Yves,

    Your simple phrase:

    “I have long believed that one of the most valuable traits for people in general, and leaders in particular, is to understand the limits of their knowledge”

    strikingly points to what is wrong in the world today. Good leaders can always tell when they are dealing with someone who exceeds their own knowledge on a particular subject, and this is indeed a very valuable trait. The problem with Western society today is that people are generally promoted exactly to their level of incompetence, which Geithner for some reason overshot by several levels.
    The problem with this commonality is that we now see many people in positions of power throughout the corporate and political world that fail to see their own limitations and thus make decisions based on some combination of ignorance, arrogance, or a need to satisfy others.
    Humility throughout the course of human civilization has been considered one of the greatest virtues, yet sadly modern day Wall St. and Washington have construed this noble characteristic as a weakness.

  8. Yves Smith

    Anon of 12:27 AM,

    It isn’t an ad hominem to point out that Geithner botched, or at best failed to deliver on his first major task as Treasury Secretary, to say that he and Summers appear to have pushed aside Volcker, and that reveals something about their sense of priorities, or to say that Summers and Geithner don’t much about the auto industry, and that there is plenty of evidence in Summers’ history to suggest he lacks curiousity and respect for experts outside economics.

    Those are all elements of their personal histories that indicate how they will approach this task.

  9. Cash Mundy

    From Asia Times, back in November:

    “For a quarter of a century, the inbred products of the Ivy League puppy mills have known nothing but a rising trend in asset prices. About the origin of this trend, they were incurious. The Reagan administration had encountered a stock market in 1981 trading 50% below its the long-term trend. Reagan restored the equity market to trend by cutting taxes, suppressing inflation and easing some regulations. The private equity sharps were fleas traveling on Reagan’s dog. They simply rode the trend with the maximum of leverage. ….

    That explains how a Washington political operative like Rahm Emanuel, now Obama’s chief of staff, who studied ballet rather than balance sheets, could earn a reported $16.2 million in two-and-a-half years at Wasserstein Perella, the mergers and acquisitions boutique. At the height of the bubble, Bruce Wasserstein’s firm sold out to Germany’s Dresdner Bank for the fairy-tale sum of $1.6 billion. Even the crumbs from Wasserstein’s loaf could make a Chicago politician rich.

    Without leverage, the clever folk around Barack Obama are fleas without a dog. None of them invented anything, introduced an important new product, opened a new market, or did anything that reached into the lives of ordinary people. They wore expensive cufflinks, read balance sheets, exercised regularly, sat on philanthropic boards, and assumed that their flea’s ride on the Reagan dog would last forever.”
    Inbred puppies and one-trick ponies. Apparently Summers is an aging yuppie, a breed which always struck me as being well-trained to serve theier corporate masters to the limits of their limited abilities and generally incurious and uneducated about anything not directly remunerative. “Syntax”. Really.

  10. Anonymous

    The thought of this committee coming up with anything that would be useful to an actual productive company, as opposed to a practiced government teat-sucker, is laughable on its face.

  11. Anonymous

    MIT had a bunch of top auto guys, like Daniel Roos.

    His collaborator James P. Womack is another candidate.

    Why were they not called?

    D

  12. SocialismSucks

    “but this time dont you think you are making an ad hominem attack?”

    No way. Yves is seeing things clearly: The jig is up. The American people hired Obama ultimately because of a lack of good options, and the reality of Obama does not equal the notion of Obama.

    This is a fiasco. A stunning no confidence vote from the markets is dead ahead. Watch Summers and Geithner exit this administration within the year.

    Reagan/Volcker were able to save the economy only after extreme pain and much permanent loss. Obama can’t even duplicate that feat because of his central planning economic ideology. This is not 1933 where the savior gets elected and at least has plenty of cash to put to work. USA Inc is broke to an extent that Roosevelt never dreamed of. We are staring at a full stop Iceland-style gear grinding freeze up of this economy.

  13. Swedish Lex

    On SAAB Automobile, by the way:

    GM is demanding that the Swedish Government should inject 0,6 bn USD into SAAB. The “socialist” Swedish Government is however refusing, taking the view that under the rules of market economy, shareholders, not taxpayers, should take the burden. Negotiations apparently broke down between socialist GM and neo-liberal Sweden over the week end.

  14. Steve

    With Summers, it’s not `cognitive regulatory capture’ — he’s a player who was a managing director at DE Shaw until he accepted the crown and scepter from Jimmy Carter Obama.

    Summers was dead wrong about credit derivatives, Glass-Steagall, institutional leverage, and the `great moderation’. I’m still waiting for someone to point me to a single important academic paper authored by him.

  15. Nomenklatura

    Isn’t the more important point here that Obama is trying to distance himself from our economic problems by delegating them to experts because he’s totally out of his depth?

    Larry Summers’ arguably inadequate respect for ancient Greek, and what some Arts professor at Harvard may think about it seem to me to be awesomely trivial next to this. It’s Obama’s cluelessness that is really going to cost us, as this plays out.

  16. doc holiday

    I’m too bored and tired, but as I recall The Constitution sort of suggests that Treasury not be involved in commerce, and it seems, off the top of my head, that for The Treasury Dude to be directly involved in being a co-car czar is utterly retarded. This type of stupidity builds on the Constitutional distortions from The Paulson Era and adds to confusion, fragmentation and thus creates chaos at a time when order is needed! BOOBS!

  17. Anonymous

    Summers ripped off his paper from Keynes; what a bounce of boobs! Summers will make a grrat car salesman and now he will have the cash behind him to buy a pair of new white shoes…

    Plagiarism FYI: ‘Gibson’s Paradox’ is the belief that interest rates and prices are positively correlated, not negatively correlated as most academic economists have accepted since 1832 when a Parliamentary Committee chaired by Lord Althorp studied the banking system as part of discussion leading to the renewal of the Bank of England’s Charter. The 5300+ questions put by the Committee and answers are recorded in the Minutes of the Secrecy Committee of the Bank. The question which led to the accepted theory was No. 678, and it was answered by J. Horsley Palmer, the Governor of the Bank.

  18. artichoke

    Yves, game theory is a part of microeconomics. I suppose one can find applications of cooperative game theory in macroeconomics.

    But it’s not divorced from mathematics. From wikipedia:
    “John Forbes Nash, Jr. (born June 13, 1928), is an American mathematician and economist whose works in game theory, differential geometry, and partial differential equations provided insight into the forces that govern chance and events inside complex systems in daily life.”

  19. Walther von Reinbach

    @artichoke 2:13

    Naming Wikipedia as the definitive source of knowledge is a bit of a non starter.

    plato.stanford.edu

    The mathematical theory of games was invented by John von Neumann and Oskar Morgenstern (1944). For reasons to be discussed later, limitations in their mathematical framework initially made the theory applicable only under special and limited conditions. This situation has gradually changed, in ways we will examine as we go along, over the past six decades, as the framework was deepened and generalized. Refinements are still being made, and we will review a few outstanding philosophical problems that lie along the advancing front edge of these developments towards the end of the article. However, since at least the late 1970s it has been possible to say with confidence that game theory is the most important and useful tool in the analyst’s kit whenever she confronts situations in which what counts as one agent’s best action (for her) depends on expectations about what one or more other agents will do, and what counts as their best actions (for them) similarly depend on expectations about her.

    Despite the fact that game theory has been rendered mathematically and logically systematic only recently, however, game-theoretic insights can be found among philosophers and political commentators going back to ancient times. For example, in two of Plato’s texts, the Laches and the Symposium, Socrates recalls an episode from the Battle of Delium that involved the following situation. Consider a soldier at the front, waiting with his comrades to repulse an enemy attack.

  20. AlanM

    I’m leaning a bit contrarian (odd, or not, that the spellchecker wants me to change that word) to most here. Seems I read somewhere that Obama started getting CIA briefings exceptionally early in the campaign. He’s bound to have been obsessed with the financial crisis for the past six months at the very least.

    Just as Yves and many of the commenters here know a great deal more about all this than I do, so I suspect do Obama and his team have access to much information that we don’t.

    This crisis has great international ramifications. When I read that the Japanese PM has an approval rating of less than 10%, and that western European banks’ exposure to eastern Europe exceeds US banks’ to subprime, I wonder if dawdling might not suit the moment.

    Just as domestic politics dictate that Obama might have no choice but to wait for great pressure to build before temporarily nationalizing big US banks, there might be a need to allow pressure to build before restructuring key global economic arrangements.

    And I do believe we cannot avoid the latter. Chimerica has major issues.

    Might Japan and Korea go for an updated Greater East Asian Co-Prosperity Sphere? Will oil from the Middle East be priced in a basket weighted that way? If the euro collapses, who might throw their cards in with Gazprom? (Please sit down and stop waving your hands, Mr. Berlusconi.)

    We’re in very deep waters. I would be much more concerned if the new administration had come out with a complete save-the-world plan in its first month.

    If the G30 meet produces nothing but platitudes and smiles all around, then we’ve really got to jump on these people.

    That said, regulatory reform and the auto industry should be addressed in substance before the G30.

  21. Dave

    Well, looks to me like Summers and his protege Geithner are going to get the chance they always wanted – to prove to everybody just how smart they are. Everything so far has been building up to this glorious moment.

    Anyone want to take some bets on the outcome? Can we use USD CDS spreads as a proxy ;) ?

    And before some precious fool cries “ad hominem” – these guys are in the public sphere and their actions are subject to critique and criticism. Deal.

  22. Roger Bigod

    The examination of Summers’ previous management performance is legitimate and useful. To take some reasonable examples, Carter, Reagan, Clinton and Bush II had been governors, and the way they handled the Presidency conformed to their known styles of “leadership” (if that is the word). Or as the ancient Greeks put it, character is fate.

    And no, game theory isn’t economics, any more than differential equations is engineering. And Nash was not an “economist”. Engineers don’t try to claim that Isaac Newton was an engineer or con a private firm into setting up a Nobel Prize in engineering.

  23. foghorn

    What in the world do those guys know about the auto industry? Obama is supposed to be very smart, and he certainly ran a smart campaign. I’m quite alarmed about hi goto guys on economics, but I guess the real measure of Obama’s savvy will be how he handles them when they don’t deliver- and nothing in their pasts indicates they will.

  24. Carnap

    I hate when people try to “debate” something by quoting from encyclopedia entries.

    Game theory is no more a branch of Mathematics as it is Philosophy among other things. Its a field that is rather interdisciplinary (Sorta, ironic that a entry from a encyclopedia of philosophy was used) and the discussion about which field it properly belongs in is just rather banal.

  25. Carnap

    “And before some precious fool cries “ad hominem”

    You do realize that is a sort of fallacious argument?

    The reasoning given in this post is a pretty good example of an ad hominem. The author is bringing up a variety of issues that attack the character of the named individuals instead of attacking their ideas.

    To what degree Summer/Geithner were wrong in the past is irrelevant to whether they are correct today.

    To what degree Summer’s values ancient Greek studies, art etc is irrelevant to whether he is correct about the economy.

    Honestly the last bit of this post was just a bit odd and clearly displays the bias of the author who is ironically calling Summers “closed-minded”. Summer’s had a pro-science agenda, so naturally those outside of the sciences are going to complain about him. This is not to mention that he pissed of a number of women by suggesting that men/women may not be mentally equal in all regards. Citing someone who has rather strong reasons to bad mouth Summers isn’t exactly interesting.

  26. run75441

    Yves:

    It is unfortunate Obama has not seen beyond the economic/financial world and selected a manufacturing person of the same stature as Drucker to guide automotive’s reinvention of itself. We are in need of a person who has an understanding of manufacturing and can guide the industry, as well as other ones, into becoming a global business that is efficient and competitve. We do not need a dynamic dual who have spent more time getting their nails manicured and have helped create today’s W$ mess. This dynamic dual are in over their head and lack the knowledge.

    The issue is reshaping the industry; revamping the product lines by eliminating carlines and models, standardization of parts and platforms, matching manufacturing capability and capacity to those product lines, and finally dealing with the product distribution. Driving the material and burden costs down to match the overall business demand whether they change product lines or not. In the same fashion, a smaller more capable industry can take on those pivital product changes that match the demand trends. Automotive had taken “belated” steps in that direction and was well on the way towards implementing a leaner manufacturing model until they were caught up in the W$ clift diving exercise.

    The fallout to the restructuring will be and has been labor; however, it is not the cause of today’s automotive problems and it will pay for the failures of an inbred industry. Healthcare insurance and healthcare costs are an issue; but then, healthcare has been an issue for most of the US citizens and business with few imaginative solutions being portrayed to resolve the dilemma. To blame the union and workers for today’s issues is silly.

  27. Anonymous

    “To what degree Summer/Geithner were wrong in the past is irrelevant to whether they are correct today.”

    First, in picking a manager, it is silly to ignore their track record. Summers’ and Geithners’ is horrid.

    Second, Geithner is unlikely to deviate from his failed course of action while at the NY Fed. Like bailing out AIG, because it owed Goldman Sachs over 20B and Goldman would have been hurt or maybe died if Goldman lost that 20B. Why should anyone believe Geithner will deviate from his prior course of action?

  28. Anonymous

    We all know that tomorrow is decision day for the auto makers and they have to present there plan and how they intend to meet the requirements set into the loans. These requirments include reducing debt by two thirds and negotiating wage deals with the Unions.

    What we suspect from comments by Ray Young, GM’s chief financial officer is that GM is struggling to reduce debt. Ray is reported to have said that the two thirds is just a guideline and the vaguely worded agreement will be open for discussion and renegotiation with any Car Czar.

    On Friday union negotiators walked out of talks with GM and talks with unions have slowed considerably at Chrysler. Meanwhile negotiations at Ford seem to be coming to fruition. We also know that Nissan and Chrysler have put joint projects on hold as finicial aspects of the project are looked at again. Fiat a major competitor of Renault who own a large part of Nissan is in talks to buy a substantial stake in Chrysler. One report on CNBC shows that GM will discuss bankruptcy in its plan.

    CNBC – GM Chrysler labor talks slow as deadline nears

    It appears to me that the automakers are struggling to meet government conditions and the cancellation of the car czar is an announcement that automakers will have to deal with the treasury. This may be that they will be dealt with toughly, or more possibly the cracks will be papered over.

  29. Anonymous

    “What we suspect from comments by Ray Young, GM’s chief financial officer is that GM is struggling to reduce debt. Ray is reported to have said that the two thirds is just a guideline and the vaguely worded agreement will be open for discussion and renegotiation with any Car Czar.”

    Obama’s plan to force car company bondholders to give up debt for equity sounds like a perfect plan for the big 6 banks. I wonder if Obama has the balls to propose treating the banks the way he does the car companies.

  30. Roger Bigod

    Carnap,

    Everything started out as philosophy. Philosophers have for a long time pondered issues of change and motion. Still, it is useful to consider calculus as a branch of mathematics. In the same way, the mathematical formalism and abstraction that von Neuman and others applied to games makes it more akin to the rest of mathematics for many people than traditional economics.

    Yves was demure, considering some of the observations she could have made. The obvious comparison for Summers is the best and brightest of the LBJ White House, especially McGeorge Bundy. In particular, the pretension to polymathic omnicompetence, exemplified in this decision to reform the car industry in his spare time. It’s too bad Barbara Tuchman isn’t with us to comment on the folly.

    So far, Obama has economic policy in the hands of the same people who drove the economy into the ditch. And foreign policy in the hands of the same people who drove our international relations into the ditch. The appointments to the window-dressing slots are excellent, though. It’s change we can believe in to have officials in charge of science policy who stayed awake during their science classes.

  31. charlie

    RE: SAAB, I think the Swedish decision has less to do with principles than with the fact that SAAB doesn't make cars in Sweden anymore. No sense protecting jobs that aren't there….

    I found it interesting that it was Axlerod would did the Sunday shows with the line about GM looking at all options, and then the news about G&S killing the car czar. Some fun politics going on in the WH.

  32. Jacob the Syrian Hamster

    What do you call the other graduates of Judith Ryan’s German Literature class?

    Unemployed.

    I’m glad you found time to include some German Lit prof sniffing at Summers over her yogurt and Starbucks. That was really helpful.

    As for the rest of the post, well, duh. What did you think you were getting with Obama? The only thing he did well were speeches in front of mass rallies and Greek columns. His managerial experience is precisely ZERO. The dude hired the first people he saw in the hallway on the way to the office and then ran out to make more speeches.

    And you were expecting … what, precisely?

  33. DoctoRx

    Yves,

    You make Barack Obama seem like a bystander rather than the President: You have the “duo” “execute a land grab” rather than be assigned/be granted new responsibilities by their boss; “this duo sidelined Paul Volcker” rather than “Barack Obama margnalized Paul Volcker, whose prestige he used to get votes during the election campaign”; “they (Summers/Geithner) place self-interest above doing the right thing” rather than “the President has made a mistake”. Etc.

    Do you have a scoop that Barack Obama is so passive as President? Is he IYO Kevin Kline in “Dave”?

  34. K T Cat

    DoctoRX, it’sw a good bet that Obama was too busy to get involved in the “land grab”. Those sculptors need him to pose for a long time in order to get his noble face just right.

  35. Edwardo

    A few thoughts:

    Someone wrote:

    “Or as the ancient Greeks put it, character is fate.”

    The ancient Greeks believed that the gods and their arbitrary whims determined one’s fate.

    Shakespeare’s work operated on the idea that character was fate.

    Now, on to Obama. It has been asserted here by different commentators/posters that Obama is out of his depth. I think that is absolutely true. The proof of this assertion is in Mr. Obama’s choice of D.C. approved retreads, Summers, Geithner, and equally, and possibly more lamentably, CIA head, Robert Gates.

    Were Obama truly ready for prime time, he would have developed the sort of personal connections and relationships with professionals that would have then manifested in cabinet level appointments reflecting his-not someone else’s- vision.

    Instead we have had (all along), choices which wreaked of someone who was not acting from a position of knowledge and strength, let alone command. As someone suggested, Obama, at this stage, looks far more like Jimmy Carter than F.D.R. or Abe Lincoln.

    Indeed he does.

    This brings me to my most important point… drum roll please.

    The U.S. political system is now, more than ever, the sort of place where leadership, of the sort that many of us pine for, is almost impossible to achieve. How could it be otherwise when elections run for years and not months. Our politicians are now creatures that are designed to do one thing well, run for office. When it comes to legislation and “vision” it is of the tunnel sort where absolutely everything is enslaved to the imperative of the next election cycle. Until the entire political system is recast where election cycles are vastly shortened, term limits imposed, and the manner of funding fundamentally altered, we will continue to experience what he have had now for generations, people unfit to lead.

    Witness the passage of The Stimulus Bill; if ever a piece of legislation was tailored to the next election cycle by the party in power, this was it.

  36. run75441

    anon:

    To ignore the results of their efforts in what they are supposedly experts in and then assume they may do better with manufacturing is a stretch, “dontcha think?” If we choose to have an automotive industry, the issues are as I detailed in my original paragraph”

    “The issue is reshaping the industry; revamping the product lines by eliminating carlines and models, standardization of parts and platforms, matching manufacturing capability and capacity to those product lines, and finally dealing with the product distribution. Driving the material and burden costs down to match the overall business demand whether they change product lines or not. In the same fashion, a smaller more capable industry can take on those pivital product changes that match the demand trends. Automotive had taken “belated” steps in that direction and was well on the way towards implementing a leaner manufacturing model until they were caught up in the W$ clift diving exercise.”

    The efforts to achieve the restructuring goals need to be worked out in the product lines, parts, distribution, and burden. Do that and the sound financial reports, the tally sheet of the score, will follow. Giving out financial reports is a score card and not a plan of action.

  37. Anonymous

    What someone should have looked up before correcting someone:

    “A man’s character is his fate.”

    Heraclitus, On the Universe
    Greek philosopher (540 BC -480 BC)

  38. YK

    “He would ask the meaning of words that I thought were part of most people’s vocabulary.” “Syntax” was one example, she said….”

    We all know the meaning of a word “temperature”, for example. But when you are discussing the term with a physics professor, it is worth trying to clarify the term. You may quickly discover that your knowledge is not deep enough.

    It is foolish to assume that Summers didn’t understand what the word “syntax” meant. Most likely, he was trying to make sure he had the same understanding as the literature professor did. So, in fact, he realized the limits of his knowledge, and attempted to clarify the term with the expert.

    Did Judith Ryan ever try to ask anyone the meaning of a word “reality”?

  39. MyLessThanPrimeBeef

    I like Willem Buiter, but let’s not over quote ‘cognitive regulatory capture,’ whatever that means.

    Remember, just as reckless spending is the problem, and more reckless spending is not the solution, cleverness got us into this mess and cleverness will not get us out.

    So, PLEASE, simple english.

  40. Anonymous

    To me, a central problem is that many US companies have grown too large and too complex to manage. I doubt there is any “car czar” who is capable of restructing the auto industry. It grown too big and cumbersome, and in my opinion will have to be destroyed and rebuilt from the ground up. If the government had let Chrysler die back in the 80’s instead of bailing them out, that could have had the very good effect of scaring the hell out of the other two car companies, and they might be much healthier today. Speculation of course, but still seems plausible.

    Failure and death is an important part of growth. Death can be scary, but it is part of life. I wish our government would embrace this fact and allow companies to die the death they deserve.

    (Aside: I much prefer the criticizing of boobs running our government to the criticizing of board posters’ intelligence…)

  41. sjc

    I wonder to what extent healthcare costs are GM’s undoing. And whether a nationlization/socialization of healthcare would solve the automotive industry’s problems in one fell swoop. Of course, the cost to the U.S. Treasury with such a move would be staggering.

  42. Anonymous

    point well taken (by some)…
    Webpost word limits constrain your gift for perspectives. When a singular discipline is intellectual ground zero for an unexplained explosion cross-disciplinary training will benefit the comprehension and solution to the problem.

    Those who bring a notebook of Summers’ brilliance to your pieces get it. Keep up the damn fine work.

    Self

  43. Anonymous

    Roosevelt provides an example of leadership that went against the grain, for example: his pick of Marriner Eccles to chair the Fed was unconventional and the decision to devalue the dollar was also unpopular with many of his senior advisors. It is not unprecedented for a president to radically overturn policy courses, but I agree that Obama appears to be in over his head.

  44. Jesse

    Could not agree more with Yves.

    Geithner and Summers are part of the problem, with a long history in it.

    There is no ‘fresh view’ being heard. One has to wonder what caused the otherwise politically adept Obama to select them in the first place. They are unlikely reformers.

    Summers in particular is no team player, and has a political tin ear.

    Why not just bring back Greenspan as well?

    The is the point Yves is making and its spot on.

  45. Anonymous

    I get a kick out of people wondering why these “clowns” do what they do. Well if you knew anything about the Trilateral Commission then you would know these guys are PAID to make it WORSE for us regular folks. The arsonists have the fire hose and the sheeple wonder why the house still burns. Stock up on imports while you can. Cheers!

  46. Be Green

    Auto Alternatives: There are smaller, more efficient auto manufacturers that can replace the Big-3. For every $1 Billion dollars the federal government gives or guarantees for the Big-2 (soon to be 3), BG Automotive Group, could build 40 assembly plants (located in 40 separate cities where employment is needed), hiring 12,000 employees, and producing 600,000- 100% electric vehicles. We can save the jobs and save us from our dependence on foreign oil. The latter figures are for EACH $1 Billion dollar allocation. We would also be requiring more batteries/battery packs than the North American battery industry could produce. We would also require 600,000 U.S. made motors, computer systems, etc. to operate the vehicles. 100% of our components under the hood, including the power system, is made in America and assembled by Americans.

    We have a huge demand, domestic and foreign for our electric vehicles, but do not have the funds required to meet the overall demand. BGelectricCars.com

  47. Avl Guy

    Good post, Yves, but you seem to be going to great pains to remove any executive decision-making responsibility from Obama.
    I hope you are not allowing “inner-doubts” as an Obama supporter, or PC-ness, to drive you to set the bar for Obama’s performance so mind-boggling low (e.g. don’t be like Frank Rich in his 2/15 NYT’s column). Did we not hold Bush accountable for messes made by Rumsfeld, Gonzales, Cheney and the gang?

    As for Obama, a 70% approval rating is a terrible thing to waste on hand-me-down GOPers like Geithner.

    The real motivations behind columns like Rich’s and the Obama-Enabler content in your blog likely can be explained by the Kubler-Ross Grief Cycle and where the writer is in that cycle. I’m at the Acceptance stage; I happily voted for Obama in 08’s general election, though he was only my 3rd choice in the dem primary.

    Many Nov. Obama votes came from folks genuinely frightened to their core by the Autumn Crash in their 401Ks on top of the 30% drop in the house they’ll not be able to sell for years. While mired in the Denial and Bargaining stages, they used voting to seek a Messiah to save them; I was simply voting Democrat just as I did with Clinton in ‘96, Gore in ‘00 and Kerry in ‘04.
    Human Messiahs do not come on a voting ballot.

  48. artichoke

    Summers is not a team player? That is a good thing, as long as he isn’t secretly on an opposing team, and I haven’t seen evidence that he is. And if he was, Obama would know about it. In the end of course Obama is responsible for what his administration does.

    As Krugman said, they could have done much worse than they have so far. Krugman isn’t saying we will rule the world after this as we did after WWII. In my mind, at this point it isn’t about national dominance any more. It’s about the survival of the nation and the people in it.

    DoctorRx, you state a good principle in saying we should pull together and pay off the debt. But it’s too big to pay off, and it doesn’t belong to us. So I disagree with you. The best approach, though it is ugly, is to reduce it through inflation.

    It’s legitimate to examine the background of Summers and Geithner. They are public figures. But maybe they’ll do the right thing now.

  49. Anonymous

    Where is there a Car Czar in the constitution?

    All these czars are simply lip service schtick from Washington to quiet vocal special interests. Any car “czar” would be a figure head with no actual bureaucratic power. Nothing this czar would want to do, could be done without the Treasury Secretary’s approval. There is a Treasury Secretary in the Constitution.

    The less “czars” and “wars” we have the better.

    It is strange that someone can know so much about economics, but nothing about how government functions. And anyone claiming the appointment or non-appointment of a “car czar” means anything knows nothing.

  50. Eric L. Prentis

    Japan’s lost decade of the ‘90s is a direct result of the government’s use of taxpayer money to protect politically-connected failed banks and corporations from bankruptcy; sound familiar: Bear Stearns, Merrill Lynch, Citigroup, BofA, AIG, GM, Chrysler. Corrupt US politicians, i.e., Schumer/Dodd/Frank/Geithner/Summers, in order to protect their bonus-baby, welfare king, Wall Street bankers, are condemning Americans to the same disastrous “lost decade” fate. To retain power, a mea culpa from each complicit politician should be compulsory. President Obama, where are you.

  51. Anonymous

    2:29, for someone who claims expertise, you display little.

    There is no requirement for the car czar to have reported to Treasury. He could just as easily have reported to Commerce, or to Obama directly. Various special committees have reported directly to POTUS, no reason a specially designated individual can’t.

    And the President can delegate substantial authority to individuals and special teams. Witness Kissinger as National Security Advisor, who effectively circumvented the State Department, or the OSS.

  52. retread

    Those complaining about ad hominem don’t understand the concept. An ad hominem attack is a logical fallacy. It occurs when someone attacks a speaker instead of attacking their argument.

    Yves is criticizing Geithner’s and Summer’s conduct, their pushing aside experts who would be great resources, their loyalty to the status quo, their role as architects of failed policies. To say that someone has a bad track record and we should be leery of their efforts to expand their role is not an ad homimen. It’s an observation about their managerial skills and style, per a comment above. And she has in other posts criticized their policies.

    And it may sound petty, but I have to agree about “syntax”. A president of a major university is an ambassador as well as a leader/orchestrator internally. It is a job requirement that one be broadly educated, or at least able to fake it. The fact that Summers asked about “syntax” was a real foot in mouth. Better to look it up privately than demonstrate ignorance. The fact that he is UNABASHEDLY ignorant of the basics other disciplines is the problem.

    You wouldn’t have someone head a record company who listened only to the Beatles and didn’t know about U2 and Radiohead. Same issue.

  53. Roger Bigod

    “Character is fate, the Greeks believed. A hundred years of German philosophy went into the making of this decision in which the seed of self-destruction lay embedded, waiting for its hour. The voice was Schlieffen’s, but the hand was the hand of Fichte who saw the German people chosen by Providence to occupy the supreme place in the history of the universe, of Hegel … What made the Schlieffen plan was not Clausewitz and the Battle of Cannae, but the body of accumulated egoism which suckled the German people and created a nation fed on ‘the desperate delusion of the will that deems itself absolute’.”

    Barbara Tuchman, Guns of August, p. 26

  54. Anonymous

    Properly managed, an articulate bonehead like Summers could be an invaluable asset in dealing with the preening failures who bankrupted their banks. With his deadeye facility for inverse tact he could revel in saying obvious things: ‘Who gives a shit what you guys think, you ran your bank into the ground,’ or ‘Remember, you’re here to beg for your job,’ or ‘Who should we bring in to liquidate your firm, Carlyle or Balckstone?’ Maybe he has yet to get in stride.

  55. Waldo

    Character: Ralph Waldo Emerson

    2nd Series Essays (circa 1844)

    Essay title “Character”

    Very short read (brevity) Highly recommend to Yves’s bloggers.

    Excerpts:

    “… Character – a reseved force, which acts directly by presence and without means”

    “It is conceived of as a certain undemonstrable force, a Familiar or Genius, by whose impulse the man is guided, but whose counsels he cannot impart; which is company for him, so that such men are often solitary, or if they chance to be social, do not need society but can entertain themselves very well alone.”

    “Character is moral order seen through the medium of an individual nature.”

    “The men of character are the conscience of the society to which they belong.”

    I penned a poem defining character. May at first look childish (do not be fooled).

    Character (Love)

    Character is never built, it is revealed – unfurled.
    To define it is to understand and rejoice – sing!
    “The point of view the soul sees the world
    And applies this vision to it’s natural being.”

    Love can always be found in a beautiful verse.
    To define it reveals the plan of the eternal King.
    “The point of view God sees the universe
    And applies this vision to his Natural being.”

  56. run75441

    anon:

    There are quite a few people out there in manufacturing who understand throughput and pull demand type of planning to minimize materials and burden in the process. The evolutinary process is exactly what they are doing to date, although belatedly. The closing of plants, the killing Oldsmobile and Plymouth, the discontinuance of multiple other models, the negotiation of new levels of wages for new union workers, the passing on of retiree healthcare to the union at 60 cents on the dollar, etc.

    The big three can be reconstructed into something better and more efficient along the line of 10 million cars per year (down from 17 million) including the electric vehicles.I hate to sound like an apologist for automotive; but, I sat in Catapillar Peoria and their other facilites doing the exact same thing in the eighties . . . similar in size and product proliferation.

    Scaring the other two by letting one die accomplishes nothing and only hurts innocent people in the end. Losing the W$ mentality is a better strategy. Anon, I appreciate your candor.

    SJC:

    It was once estimated that healtcare costs were ~$1500 for each auto manufactured and I am betting that would be for retiree and active workers together (retiree healthcare is in the process of being transferred to the UAW). With that said, I will also say there has been serious issues in underforecasting pension and healthcare fund returns which allowed the companies to take out money from the funds set aside to fund healthcare expenses. Low returns and now they, as well as states, and other companies as well are in trouble.

    Universal healthcare would help or >100% of healtcare expense tax deduction would help also and keep it private if that is your bend.

    Be Green:

    40 assembly plants to build 600,000 cars? Why? It would be highly inefficient to do so in my opinion. Jinbei automotive in China will put on line a new auto plant that will produce 150,000 small cars at ~$450 million. I am not so sure your costs for 40 plants in the US would be $1B. I suspect it would be higher.

    While you may eventually replace the Big-3, those suppliers to the Big-# also supplythe Toyotas, Nissans, Hondas, Suzukis, Subarus, etc of the world. Destroy the Big 3 and you destroy the supplier base in the US. We do need electric automobiles; but, it will be a while before you replace the Big 3.

  57. Carnap

    “First, in picking a manager, it is silly to ignore their track record. Summers’ and Geithners’ is horrid.”

    Whether Obama was wise to pick these people and whether these people are correct in their actions/understanding of today’s economy are two completely separate issues. Their track record can’t be used to suggest that they are wrong today. At best its a rather weak induction.

    “In the same way, the mathematical formalism and abstraction that von Neuman and others applied to games makes it more akin to the rest of mathematics for many people than traditional economics.”

    Certain aspects of it are “more akin” to mathematics, but others are not. And that is just the point, it is interdisciplinary.

    Simply took at who is doing work in Game theory, you’ll find that the work comes from a variety of fields. This is unlike say research in Real Analysis (e.g., Calculus) that is almost exclusive to Mathematics.

    There are a variety of fields that don’t have an official home academically speaking, game theory being one of them.

  58. Anonymous

    Carnap,

    Weak induction? Hardly.

    Most economists, even some of Republican backgrounds (Ken Rogoff) are of the view that some form of nationalization (call if receivership if that plays better) of insolvent banks is necessary. The evidence strongly points to resolving the banking industry as being a necessary condition for recovery. Summers and Geithner do not appear to be with that program.

    And I do not see how their past failures are irrelevant. It suggests that they are operating from incorrect premises, or have decided to bound the decision space in ways that are counterproductive (e.g., no nationalization of big banks).

    Managerial competence does make an enormous difference. A good manager knows how to identify and use talent, and how to motivate people. The ability to find common ground and negotiate with people of differing views is also important. Summers is sorely lacking in these areas, Geithner appears weak.

  59. Anonymous

    Summers is the number one enemy of the feminist careerists. Maybe that is the reason why Yves feels a bit too aggressive toward him. Especially given the fact, that she forgets to mention that Judith Ryan may have the same reason to dislike Summers.

  60. Anonymous

    Now that is an ad hominem attack. So she is “too aggressive”? By whose standards? I know tons of men who deplore his choice.

    Yves has been consistently critical of Geithner. You gonna find a way to make that a sexist issue too?

    If you had bothered to follow the politics at Harvard, the faculty had been gunning for his ouster for a while. The women in science remark (interesting how you generalize that to something broader that it was to take a swipe at Yves) was the straw that broke the camel’s back. It was actually unfortunate that that was the proximate cause for the palace revolt, since it obscured what the real issues were. Summers wanted to be a change agent, and was hopelessly inept at it.

  61. Anonymous

    If there was a protest(s) against these two & the congress on the Mall with as many people as the recent inauguration, would that help?
    It would have to be fairly soon, though. We would have to have great focus & logistics. I do not know who that person, or persons,would be. Is the average American ready to do this?

  62. Anonymous

    The strategy by the administration is to deliver an ultimatum to the involved parties (mgmt, labor, suppliers, and dealers) that specifies the parameters of concessions they will have to cough up (or the administration forces the manufacturer into bankruptcy).

    Summers and Geithner being very busy and very senior members of the administation who know nothing about the car business. This tells the various auto parties involved that this arbitration is about financial deals, specifically concessions. The message is comply or else.

    If Summers’ is blunt and forceful, that should be an asset in this exercise.

    Having said all that, Obama is probably bluffing because there is no way he is going to force a car company into bankruptcy right now. The bankruptcy may happen but it will be at least partially negotiated.

    Steve Koch

  63. gordon

    Run75441 and other car experts: the “product lines, parts, distribution, and burden” are the problem as seen from Washington, not the solution. Because addressing those sorts of things is industtial policy, to be avoided at all costs.

    Once you start talking about that, somebody will raise trade policy, then somebody else will see a link with labour policy, and before you know it all sorts of policy nightmares (including health policy, which has already been raised in this thread) will tumble out of the lock-box where Washington is trying to keep them hidden away.

  64. Anonymous

    skippy and reprobate, you are missing the point. Judith Ryan had “issues” with Larry Summers and therefore her remarks are biased. Yves conveniently forgets to mention that. That’s a fact. I suspect that Yves forgets to mention that most likely because she also has a strong opinion about this topic and tries to avoid it. That’s a reasonable assumption. What does it have to do with my penis? How do you know I have one?

  65. Anonymous

    Yves,

    All this ink and we still don’t know whether the bopsie twins drive GM or Chrysler cars, oh well!

    You have been criticized as possibly oversensitive to Dr. Summers injudicious remarks on “women in science.” While we all know economics is hardly a science, had you been a banker or farmer, italian or jew you might have equally taken umbrage at Larry’s remarks in the same speech which I paraphrase here – – “anymore than an Italian would be good in investment banking or a Jew in farming.” Alas if Dr. Summers had some of the intellectual curiosity your friend suggested he might have heard of the Medici or the Kibbitzum. Absent wide ranging intellects let’s hope our friends drive American, at the very least a possible qualification for this job. SS

  66. Richard Smith

    Anonymous of 7:07,

    Can’t tell whether you have a penis.

    One thing’s for sure though: since you say skippy and reprobate are missing the point of your *ad-hominem argument*, you certainly don’t have a sense of irony.

  67. reprobate

    7:07, You see bias everywhere, and use that as a convenient excuse to dismiss the point of post.

    Ryan may have been impolitic enough to talk on the record to the FT, but the piece makes clear that plenty of people had “issues” with Summers. The two people who lead his ambush were men. But you choose to see this as a feminist cabal, when it was much bigger than that.

    As Anon 6:26 said, Yves has take plenty of swipes at Geithner. She brings in Summers only because he got mentioned in the story. If she had such a raging hatred against Summers, as you suggest, there’d be more of a footprint on this blog.

    Your ONLY basis for assuming Yves is operating out of bias is that she is female and I infer, a professional. Female professional = Larry Summers hater. All you’ve done is repeat your original ad hominem attack.

    Your characterization is a walking example of bigotry.

    My experience is that people who are quick to accuse others of bias are in fact biased themselves and assume the rest of the world is as bigoted as they are.

  68. Anonymous

    reprobate,

    Do you really think that Larry Summers is “not highly educated” or that he has to “ask the meaning of words” that are “part of most people’s vocabulary”? I had to assume that both Yves and Judith Ryan had to be biased.

  69. OSR

    “Consider the track record: this duo sidelined Paul Volcker, who brings enormous experience, a first class reputation, and a willingness to question orthodoxy. That says loud and clear that they place self interest above doing the right thing.”

    I’d figured that Volcker was going to be parked in a corner before Obama took office. I doubt those two clowns had anything to do with it. Instead, I imagine it was the work of some witnesses at the last TARP accountability hearing.

  70. Markel

    My lord, enough with the twaddle about ad hominem. Yves is not critiquing Summers’ argument. She’s criticizing him as a choice to manage the auto industry, where we need a first-class problem solver and a leader. Shockingly, she’s doing this by referring to his previous track record as a problem solver and a leader. You must be a very soft touch as a hiring manager if you think candidates for a job can’t be criticized.

    By the way, up here on the Charles we were regularly subjected to news reports of Summers’ voluminous pronouncements on all sorts of topics during his misrule at Harvard. Frankly, he never seemed all that bright. But he was an extraordinarily talented self-promoter. Somehow, comments that would have gotten any other man dismissed as an idiot became proof of his subtlety as a “serious” thinker.

    To Edwardo’s point, it’s not so much that Obama is out of his depth. He is as intelligent a president as we are likely to get. Had he, rather than Bush, taken over from Clinton, we would likely be in better shape today. The problem is not intellect but principles. Obama came to power with the trappings and taglines of a movement, but little of the agenda of one. He seems a nice, bright manager. But what we need at the moment is a revolutionary.

  71. Anonymous

    7:07, who I assume is 7:39,

    You really do not give up, and choose not to get it.

    No one said Summers was not educated. The charge is that he is narrowly educated and not curious. You have again shown you do not read carefully and impose your own, self-serving interpretations on what was written.

    And anyone who asks what “syntax” means is saying that he does not know what it means! How can you arrive at any other interpretation? He was clearly NOT asking to make a rhetorical point; Ryan would not have been gobsmacked otherwise.

    How often in a BUSINESS meeting, which is what a meeting with the Harvard faculty would be, do people stop the action and ask for definitions of words used in conversation? Usually that occurs only if it’s key to an analysis (“how do you calculate net profit less adjusted taxes?”).

    This is yet another indication of bias on your part. You are struggling to find a way to make a feminist agenda explain why Larry looks bad, when Larry obviously put his foot in his mouth and chewed, all on his own.

  72. Wes

    “Had he, rather than Bush, taken over from Clinton, we would likely be in better shape today. The problem is not intellect but principles. Obama came to power with the trappings and taglines of a movement, but little of the agenda of one.”

    What? Obama clearly has an agenda: Big Government is good for you, and it knows what to do with your life and your money better than you do.

    And, no, I’m not defending the last round of neo-conservative Republicans who also don’t know the meaning of “small government” and “individualism.” Nice to see the Republicans starting to grow a pair against all the ridiculous bailout bills, though.

    If people wanted real change, they would have put Ron Paul in there. But people like handouts and having government tell them what to do, and they got what they wanted. And now the country is doomed.

    All you have to do is look at the people Obama has nominated to see he’s either a fool or he is destroying the country on purpose. Maybe we can get some more tax cheats in his cabinet while we’re at it.

  73. Anonymous

    In the summer of 1982, DeLorean received a phone call from James Hoffman, a former drug smuggler turned FBI informant. DeLorean met with Hoffman on July 11, 1982, to discuss an investment opportunity to help save his company. Over the course of the next three months, Hoffman slowly explained his intricate plan involving cocaine smugglers, a bank for laundering money, and the specifics of how much money DeLorean would be required to front to procure the deal. DeLorean went along with these discussions, planning to trade DMC stock for the seed money for any deal that would benefit the company, but leaving the drug-smuggler investors with stock in a company completely controlled by the British government. On October 19, before going to meet the investors to consummate the deal, DeLorean wrote a letter to his attorney and sealed it, with instructions to open it only if he did not return. The letter explained the situation he was in and his fear for his family’s safety if he tried to back out of the deal. On October 19, 1982, DeLorean was charged with trafficking in cocaine by the US Government.
    Before the trial began, the FBI’s videotape of the sting was leaked to the media by Hustler Magazine publisher Larry Flynt. This prompted the judge to postpone the trial until the following year because of undue bias from the leaked tape.
    DeLorean successfully defended himself with a procedural defense, arguing that the police had asked him to supply the money to buy the cocaine. His attorney stated in Time (March 19, 1984), “This [was] a fictitious crime. Without the government, there would be no crime.” The DeLorean defense team did not call any witnesses. DeLorean was found not guilty due to entrapment on August 16, 1984.
    In late 1982, DeLorean’s legal troubles were satirized in the comic strip Doonesbury, in which the character of Uncle Duke travels to Hollywood to become a film producer and make a movie based on DeLorean’s life story. In an ironic twist, Duke, in an attempt to raise the money needed to buy the rights to the story, sets up a cocaine deal and is arrested by undercover government agents.

  74. run75441

    Gordon:

    Has nothing to do with trade policy and as I have said, automotive is a large part on the way to that goal; however, they were caught up in the cliff diving by W$. This is all internal to the business and has nothing to do with WTO rules and regulations, which by the way is ridic . . . we can invade a sovereign country and yet as the largest consumer economer in the world, we are afraid of the WTO. Get real Gordon.

    If you were a manufacturing person, you would understand what I am talking about. Drucker did as well as Demming. It is all internal to the business and manufacturing, something the score keepers and the economists have not soiled a finger doing yet. Within the problem is the solution and that resolution saves the business. You are aware of the costs of manufacturing?

    That Washington would raise other issues is proof of my contentions, they lack the knowledge to solve the problem.

  75. run75441

    Gordon:

    By the way, I am manufacturing and have worked in more industries than you have fingers on your hands. Parts is parts, product is product, and I am flexible.

  76. Anonymous

    Several comments pointed out that what was missing here was the President’s role. At this point, we really have too little information to adequately judge Obama’s executive management style and how he uses advisors. My impression of the previous administration is that Bush hired “the right guy” and then proceeded to do whatever the right guy told him to do. My impression of Obama is that he is more in the mold of Bill Clinton and listens to a variety of opinions before he thinks the issue for himself and makes a decision. At this point we don’t know if Obama is only going to listen to Larry Summers and let Paul Vokler be kicked to the curb. Obama plays his cards close to the chest and is most effective as a counterpuncher.

    The salient point: Bush left his successor with no good options. He drove the economy over a clift and no amount of horn honking or brake stomping will keep the economy from crashing. You can ditto this on Gitmo, Afghanistan, Iraq…Bush made decisions (or allowed decisions to be made) that have had seriously bad consequences and the American people, who after all elected him, will have to pay the price for their decision.

    Economists have to get over the illusion that there is some wonderful fix to this problem. You cannot evade history and human nature. The best we are going to do is muddle through a very bad situation and at least in this administration smart people are in the room AND the chief executive may be listening to them.

  77. Anonymous

    Sorry, I misquoted “not highly educated” should have been “not widely educated”.
    How often do you hear someone calling a Harvard professor “not widely educated”?
    Did Judith Ryan consider Cornel West to be widely educated?

  78. Markel

    What? Obama clearly has an agenda: Big Government is good for you, and it knows what to do with your life and your money better than you do.

    Sorry, at this late stage of the game, you can hardly expect a patient audience more of the same intellectually vacuous cant that got us into this catastrophe.

    First, if one pays a modicum of attention to facts rather than some outdated fantasy of a Big Librul nemesis, one would know that Obama was roundly criticized during the primaries for being significantly more cautious and incrementalist than some of his opponents, including Clinton. Krugman in particular had harsh words for his watered down healthcare plan. Second, in case this little detail escaped notice, Obama just proposed a stimulus that wastefully focused 40 percent of the total on tax cuts as a sop to Republicans.

    Reflexively painting Obama as Big Government is merely a symptom of the obsessive-compulsive disorder that passes for modern conservativism. In fact, Obama needs to get a lot more Big Government than he is, and fast.

    Oh, and do “we” know better than government what to do with our money? Better, as in take out mortgages we can’t pay and leverage our financial firms 30 to 1 and worse? No. We clearly don’t.

    

Nice to see the Republicans starting to grow a pair against all the ridiculous bailout bills, though.

    Republicans just voted a $3 trillion tax cut for the rich, which, if they had still been in charge, would have turned this country into Zimbabwe. Nor are they growing a pair of fiscal restraints when it comes to defense spending, where the Pentagon has promised another mushroom cloud if we don’t instantly give them the massive increase it is looking for.

  79. Anonymous

    10:17, I will say it again, you don’t get it and you don’t give up.

    Invoking Summers status as a professor proves nothing about the breadth of his knowledge or lack thereof. Theoretical math professors, for instance, are often very narrow (and they can be pretty weird too). That isn’t a negative when one stays within the discipline, but we are not talking about Summers as a tenured member of the Harvard faculty, we are talking about how he has performed in other roles. BTW, Summers was made a tenured professor at the age of 29. There is cynical commentary in the thread earlier of his lack of noteworthy contributions to the discipline.

    And you again show bias. You imply that Cornel West is not well rounded or well read. I don’t know either way, but you presume not, because he is a professor of Afro-American Studies, or whatever they call it these days. So you’ve just revealed bias against women and blacks. Charming.

    The point is that Summers was the president of Harvard, Even if he really didn’t know much about other academic disciplines, it is incumbent upon someone in his position to at least fake interest in and knowledge of them. He did neither. In fact, he seemed to make a point of demonstrating that he neither knew nor cared to know much about them.

    West was in no such position, therefore your comment is irrelevant. It’s mere diversionary sniping.

  80. Anonymous

    Ohh dear, it seems “we” have trod in monsieur’s *ad-hominem bucket*.

    http://www.youtube.com/watch?v=BlK62rjQWLk

    or for a good time call Mr bucket:

    http://www.youtube.com/watch?v=dV1hv6L0R74

    best for last:
    http://www.youtube.com/watch?v=BlK62rjQWLk

    Skippy….. BTW Forum Penis means: aggressive (penis as a weapon), size in relationship to comment (over compensating) in regards to statements on the net.

    You could have asked Yves, to comment further and clarify her position, but your forum penis exploded.

  81. Anonymous

    It seems to me that we are about, in this Blog, is evaluating the effectiveness of a new appointee to a position that has to be one of the 20 most influential people in the World right now, and someone on whom the World HAS TO rely to facilitate resolution of this mess.

    What do we see?
    1. Publicly branded China a currency manipulator before even being confirmed, even though it was common knowledge that any long term solution would involve China’s cooperation,
    2. A Bailout package that AVOIDS dealing with the core problems of the US Financial system – i.e., not just the fact that the Banks are insolvent, but does not address why the Banks are insolvent, or implement any measures to avoid Systemic risk due to future insolvency, (Yes, there is supposed to be a Stress Test – nowhere near as accountable or effective as slamming the door on CDS’s, and/or re-invoking Glass-Steagall)
    3. At the G7, Geithner handballed the “problem” to the G20 (or is it 30 this week?) Huh!!?? What sort of Leadership is that?
    For someone who has been in Office for 3 weeks, in an Administration that trumpeted “CHANGE”, and facing the largest Financial Crisis since 1929, this is a dismal performance.

    Yves is right on the money here, regardless of all the excuses & posturing. When you look at what results have been or could be produced by Geithners’ efforts, compared to what is needed, this is SCARY!

  82. Anonymous

    “Theoretical math professors, for instance, are often very narrow (and they can be pretty weird too).”

    And that is not bias? How about “German and Comparative Literature” professors? Are they not often weird and narrow minded?
    or take another angle of it.You’ve just revealed your own bias against white males, because that’s who all theoretical math professors probably are.

  83. sjc

    Re: “clean up in isle 6:18, forum penis explosion.”

    Might we soon expect an official “Yves’ Annual Swimsuit Calendar”? Por favor?

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