Hey, RACIST BUMS With No JOBS! Your PRESIDENT Is Steadily Creating 'Em! But You're Too Dumb & Prejudiced To Admit It!
John Fahrtlington Poopnagel
turnarounds in recent history."
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"A rescue worth fueling"
Op-Ed
By Timothy Geithner
May 31, 2011
On June 1, 2009, General Motors filed for bankruptcy, backed by $30
billion in support from the federal government. The same day, in the
same New York courthouse, a judge approved Chrysler’s plan to forge an
alliance with Fiat and emerge from bankruptcy as a restructured
business with an uncertain future.
Two years later, all three American automakers have returned to
profitability, the industry has added new shifts and 115,000 jobs, and
GM and Chrysler have returned more than 50 percent of the government’s
investment. The industry is mounting one of the most improbable
turnarounds in recent history.
This outcome was anything but assured. In December 2008, the industry
faced the prospect of uncontrolled liquidations just as our financial
system was reeling from the worst financial crisis since the Great
Depression. President George W. Bush provided more than $17 billion in
temporary loans to GM and Chrysler to avert that disaster, but those
efforts, while important, were not enough. President Obama took office
faced with an industry that was burning and had to determine whether
additional government support made sense.
In a series of meetings in early 2009, the administration’s autos team
sought to examine an interwoven web of options and to highlight the
risks each entailed. The companies needed to make dramatic changes.
Years of bad decisions had caused them to progressively lose market
share to foreign competitors, and the financial crisis had dried up
financing for almost everything, compounding the collapse in demand
for vehicles. It was not clear whether there was a responsible way to
put taxpayer dollars on the line in a way that helped ensure the
companies emerged stronger, not weaker.
The challenges extended beyond GM and Chrysler. The restructuring of
these automakers could affect companies throughout the supply chain
that employed nearly 400,000 American workers. Ford and other
automakers depended on those suppliers, increasing the risk of damage
if they liquidated or moved overseas. With the credit markets frozen
and no major sources of private financing available, government
inaction meant devastating liquidations. Nonetheless, even a federally
supported bankruptcy could aggravate the situation by causing car
buyers to lose confidence. And the automakers realistically could have
taken a long time to emerge from bankruptcy. In the balance hung
thousands of auto dealerships nationwide and small businesses in
communities with concentrations of auto workers.
It was the uniquely deep linkages between the auto companies and
suppliers, dealers and communities that led some experts to estimate
that at least 1 million jobs could have been lost if GM and Chrysler
went under.
Ultimately, the most difficult decisions centered on Chrysler, which
was ailing even more than its larger counterparts and was, we
determined, no longer viable as a stand-alone company. The choice was
backing Chrysler’s effort to partner with Fiat or letting the company
fail. A rich internal debate ensued. Our team presented the president
with a range of stark options, including the fact that standing behind
Chrysler’s restructuring still gave only a slightly higher than 50
percent chance of long-term success.
Nothing about the president’s call was popular. It may have been more
politically expedient to let Chrysler fail. But the president knew
that if Chrysler collapsed, tens of thousands of jobs would have been
shed in the near term — a body blow to an economy already on the
ropes.
In return for government support, we demanded tough concessions from
Chrysler and from GM — substantially tougher than had been proposed
before. They were forced to go through bankruptcy, clean their balance
sheets and adopt stringent plans to move toward profitability. We gave
the companies enough space to make sound business decisions and push
ahead as they would in a private restructuring. That meant sacrifices
across the board — from managers, unions, stockholders, creditors and
dealers. These investments offered Chrysler and GM a second chance but
also helped the workers, communities and suppliers depending on them.
Today, six years earlier than planned, Chrysler has repaid its
outstanding government loans. While it has a long way to go, Chrysler
has made enormous strides. Tough decisions, stemming from the
restructuring, have helped Chrysler post five consecutive quarters of
operating profit. It has announced more than $3 billion in investments
in plants and technology since emerging from bankruptcy and is poised
to hire back workers.
The story has been similar for GM — and the industry as a whole. The
domestic automakers are getting stronger. For the first time since
2004, each has achieved positive quarterly net income.
While it remains unacceptably high, Detroit’s unemployment has fallen
nearly one-third over the past two years. The car companies are
leading a comeback in American manufacturing. And while we will not
get back all of our investments in the industry, we will recover much
more than most predicted, and far sooner.
What happens next for Chrysler and GM is up to their executives,
managers and workers — just as with any other company. We cannot
guarantee their success, and at some point they may stumble. But we’ve
given them a better shot. The choice to stop the American automobile
industry from unraveling was the right one.
[The writer is secretary of the Treasury.]
http://www.washingtonpost.com/opinions/a-rescue-worth-fueling/2011/05/31/AGypMlFH_story.html
NibblyNipples
JOBS ...
"In an economy with about 110 million private sector jobs, firms
create and destroy 15 to 17 million jobs in a typical year. This
churning goes on in all industries and all sizes of firms — it even
goes on within the same firm — and what drives it is the the constant
shifting of work from the least productive firms and factories and
stores to the more productive."
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"A healthy dynamic in job creation: Destruction"
Op-Ed
By Steven Pearlstein
May 31, 2011
JOHN HALTIWANGER thinks he may have discovered one reason why the
private sector is not creating more jobs this far into the so-called
recovery, and if he’s right, it is cause for concern:
The U.S. economy has become less dynamic and entrepreneurial.
Haltiwanger is a distinguished professor at the University of Maryland
and one of the best economists around, particularly when it comes to
the subject of job creation. A former chief economist at the Census
Bureau, he’s constantly mining, aggregating and analyzing the data at
the level of the individual firm. He’s also a straight shooter,
without a trace of ideological bias, as far as I can tell.
For years now, Haltiwanger has been trying to set things straight on
the question of which firms are creating jobs, most recently in a
paper with the catchy title, “Job Creation and Firm Dynamics in the
U.S.”
Haltiwanger starts out by noting that in an economy with about 110
million private sector jobs, firms create and destroy 15 to 17 million
jobs in a typical year. This churning goes on in all industries and
all sizes of firms — it even goes on within the same firm — and what
drives it is the the constant shifting of work from the least
productive firms and factories and stores to the more productive.
For many decades, the U.S. economy has been more effective at this
process of “creative destruction” than almost any other country in the
world. And what Haltiwanger and his collaborators have found over the
years is that young firms — business startups and a small number of
new firms that grow very quickly — have played an outsize role in that
process. In job creation, it turns out, it is not size that matters
but the age of the firm. Small businesses don’t create all the new
jobs — young ones do.
In recent years, however, this entrepreneurial dynamism began to slow.
Job creation and job destruction began their decline as far back as
the 1990s, and continued right up to the Great Recession, when job
destruction fell to its lowest level in 30 years, and job creation
even more. The average business became older and larger.
Moreover, since the trough of the recession in 2009, Haltiwanger finds
that the rate of overall job destruction has returned to the more
normal levels before the recession, even as the rate of job creation
remains near its historic low. The culprit, Haltiwanger suspects, has
been the measurable slowdown in business startups and the unusually
slow job growth among those all-important young and fast-growing
firms.
Perhaps you’ve noticed that we are halfway through this column about
job creation and I have yet to mention the Federal Reserve’s monetary
policy or fiscal stimulus or the deficit or even taxes. The reason is
pretty simple: It’s hard to draw a convincing connection between any
of them and a decline in entrepreneurial dynamism that began more than
a decade ago.
That doesn’t mean some won’t try. Conservatives will no doubt leap to
the conclusion that concerns about future deficits and tax increases
and expanded regulation of business weigh so heavily on entrepreneurs
that they are reluctant to launch new firms or expand ones they have
recently opened. Die-hard Keynesians, by contrast, will argue that if
more fiscal and monetary stimulus had been used to generate higher
levels of economic activity, there would be more economic activity and
entrepreneurs would have regained the confidence to invest and hire.
Haltiwanger, however, suspects the roots of this problem are more
microeconomic than macro. He’s still analyzing the data by industry,
region and firm size, but one suspicion is that in the retail sector
there has been a sustained and dramatic shift toward large national
chains that makes it difficult for new firms to get a toehold in the
market.
Another explanation is the credit crunch that followed the bursting of
the credit bubble. Traditionally the biggest source of funding for new
businesses, after all, are credit cards, home-equity loans and the
savings of the entrepreneur’s relatives and friends. But starting in
2008, credit card companies began pulling back on credit lines to new
businesses while banks tightened up on home-equity loans in response
to rapidly declining home values. And with the sharp decline in the
value of their homes and their 401(k)s, friends and family have been
in no mood to take a flyer on new business ventures.
I’d also offer a geographic hypothesis. For years, much of the growth
in the nation revolved around the movement of people and business from
the Rustbelt to the Sunbelt. Before long, a self-reinforcing dynamic
took hold where growth begot more growth. As big corporations moved
work from Pennsylvania and Ohio, entrepreneurs saw the opportunity to
provide the new factories with everything from parts to catering
services. Small contractors sprang up to build houses for the
employees of all those new ventures, followed by other firms to
provide restaurant meals and yoga instruction to all the new
inhabitants. Only when the bubble burst did it become clear that all
that growth-induced growth had gotten way ahead of itself. The
entrepreneurial activity, along with the explosive job growth, came to
a sudden halt.
My guess is that the great Sunbelt migration is now ending. There are
early signs that the next phase of growth will come in some of the
older cities of the north, where wages and prices have been beaten
down, along with much of the entrepreneurial instinct. It may take
some time for that instinct to revive.
John Haltiwanger’s research reminds us of Joseph Schumpeter’s great
insight — that creating new jobs in more productive firms requires
destroying nearly as many jobs in less productive ones. That process
of creative destruction is never easy or automatic, and as we are
discovering, can be short-circuited by asset bubbles and financial
crises. One way to think about recessions is that they are the
mechanism by which markets restore that necessary and healthy dynamic.
SnottoMarx
take it anymore hook up and form a Jim Jones-type cult and drink some
Kool-Aid!
Why continue to suffer because you're condemned to low-classdom?