Observations from the Cheap Seats
- Patrick Fitzgerald did the Illinois Democratic party no favors last week. By announcing the criminal complaint with supporting affidavit, Fitzgerald created an expected uproar amongst the national press regarding the level of any Obama Transition team involvement and simultaneous hand-wringing amongst Illinois Democrats over what to do next. Now, in a matter of a few short days -- we have the announced impeachment process stalled and an Attorney General's petition for disability removal that was going nowhere before it was even filed and to all of this effort, Governor Hairdo is thumbing his nose, in no hurry to resign. This Blagojevich affair to date amounts to no more than a curious thunderstorm, with its claps of thunder and streaks of lightning, but no rain of any consequence.
- Further, more and more it's appearing as if Fitzgerald's "job security" prosecution may be a few bricks short of a load. Bottom line, I am not sure that there was any prosecutable crime committed here. In the absence of substantial facts supporting a conspiracy or an attempt charge, it will be difficult, near impossible, to prosecute Blagojevich for talking about wanting to get something for the Senate appointment. Without more, talking about wanting to take a bribe isn't the same as taking a bribe.
- For a whole host of reasons, with due apologies to Governor Sanford et al., America needs a domestic auto industry. Further, call me a cynic, but I am not persuaded that opposition to a government bailout, predominant amongst southern Republicans, is not more a function of the substantial foreign manufacturer investment in South Carolina, Georgia, Tennessee, Alabama and elsewhere through the south than it is of a more principled opposition to assisting GM, Ford and Chrysler. If my suspicion is justified, such parochial posturing is stunningly shortsighted and underestimates the harmful impact that an evicerated domestic industry will have on other foreign producers operating here in the U.S. Toyota has ostensibly confirmed as much earlier this week.
- That being said, to the standard line that bankruptcy won't work for GM, Ford and/or Chrysler, largely because people won't buy cars from companies in bankuptcy if they don't have assurances that new car warranties will be backed up, sorry, I don't buy it. Time to call their bluff. Instead of giving the auto companies $15 billion, the federal government could state the following: 1) there will be no bail-out money now; 2) the auto companies will have to file for chapter 11 protection by mid-January, 2009; 3) prior to the bankruptcy filing, the federal government will establish a well-publicized, separate entity/warranty clearinghouse, which will financially guarantee any warranty claim against the Big 3 for cars purchased during the bankruptcy (under certain conditions, consumers and the manufacturer may draw off such fund to support warranty claims); 4) upon successful reorganization and emergence from chapter 11 proceedings, the clearinghouse will be closed and warranty responsibility shifted back to the Big 3 alone, and in addition, the Big 3 will receive pro-rated shares of $35 billion ($25 billion already earmarked for developing green technologies, plus $10 billion in additional funding to improve liquidity for consumer lending programs operated by the manufacturers directly and to further bankroll the complete implementation of remaining reorganization steps, which would likely include substantial payroll reduction through continued voluntary early retirement programs (which have significant up-front costs) and attrition, etc.)