Marcy Wheeler---"We are All Flint,Michigan, NOW! (Marcy was a GM Lobbyist)

[KoKo]

We Are All Flint, MI Now
By: emptywheel Sunday November 16, 2008 9:30 am


I was talking with mr. emptywheel about what one of the bad--but by no means worst--case scenarios in a GM bankruptcy would be. This scenario is just one of several that might happen--by no means guaranteed, and Congress would fight the scenario at every stage, though with increasingly less leverage. But it is a scenario that follows a great deal of logic about possible outcomes. It is this scenario, though, that explains why both Toyota (I've seen reported--looking for the link) and many in Congress want to bailout GM before it gets to bankruptcy.

Here's the short version: more details below.

1. GM files for Chapter 7 bankruptcy
2. GM's Chinese partner, SAIC, buys much of GM (Buick, Chevy, Cadillac)
3. GM/SAIC starts importing Chinese-made Buicks and Chevys, undercutting Toyota's cost advantages
4. GM/SAIC owns the Volt technology, requiring US firms to lease it if they wanted to use it

GM Files for Chapter 7 Bankruptcy

As Jonathan Cohn points out, an imminent GM bankruptcy is more likely to be a Chapter 7--total liquidation bankruptcy--rather than a Chapter 11 bankruptcy. That's for the same reason why GM is begging for cash right now in the first place: no one is lending.

In order to seek so-called Chapter 11 status, a distressed company must find some way to operate while the bankruptcy court keeps creditors at bay. But GM can't build cars without parts, and it can't get parts without credit. Chapter 11 companies typically get that sort of credit from something called Debtor-in-Possession (DIP) loans. But the same Wall Street meltdown that has dragged down the economy and GM sales has also dried up the DIP money GM would need to operate.

That's why many analysts and scholars believe GM would likely end up in Chapter 7 bankruptcy, which would entail total liquidation.

So if GM goes bankrupt in January, as may happen, it may well have to sell itself off (unless the government guarantees the same kind of financing that it is refusing now). And I believe one company is one of the most likely--and indeed sensible--buyers: Shanghai Automotive Industry Corporation, or SAIC, the Chinese company with which GM partners to do business in that country.

GM's Chinese partner, SAIC, buys much of GM (Buick, Chevy, Cadillac)

SAIC is, in my opinion, by far the most sophisticated of China's automobile companies.
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Greg Craig as White House Counsel
By: emptywheel Saturday November 15, 2008 8:50 pm
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You might remember Greg Craig--the guy Obama just named his White House Counsel--from the FISA fight. Craig, who I guarantee you gets paid a lot more for his lawyering than I get paid to do whatever it is I do here, and who I'm certain has a lot more training and experience in the law than me, explained Obama's cave on FISA this way.

Greg Craig, a Washington lawyer who advises the Obama campaign, said Tuesday in an interview that Mr. Obama had decided to support the compromise FISA legislation only after concluding it was the best deal possible.

“This was a deliberative process, and not something that was shooting from the hip,” Mr. Craig said. “Obviously, there was an element of what’s possible here. But he concluded that with FISA expiring, that it was better to get a compromise than letting the law expire.”

As I pointed out at the time,

FISA is not expiring anytime soon. Last I checked, FISA's been on the books for 30 years, and I have every expectation it will remain on the books for the next 30 years, regardless of how Obama votes on July 8.

Either Craig or Obama is making the common--but ignorant--mistake of conflating the Protect America Act with FISA. The former does expire in early August. The latter does not.

I might be accused of pedantry by maintaining this distinction. But it<'>s useful to maintain the distinction because it focuses on the differences between FISA and PAA. FISA provides a way for the government to wiretap individuals legally, while providing real protections for American citizens. Whereas PAA provides the government the ability to get basket warrants based on the say so of the Attorney General, dramatically eroding the protections for American citizens.

When someone erroneously claims that FISA is going to expire shortly, it's a good bet that that person is thinking about retaining the basket warrant provisions of the PAA and not--as the spin suggests--simply "modernizing" FISA so the government can wiretap foreigners via telecom circuits in the United States.

It'd be useful if someone asked the Obama campaign which of these authorities Obama is really intent on maintaining.

Granted, that was just one teeny tiny little issue--you know, our Fourth Amendment rights, and the willful abuse of the law by the Bush Administration?
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No Girlz Aloud
By: emptywheel Saturday November 15, 2008 5:31 pm
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Here's the lineup for the big newsmakers on tomorrow's shows.

ABC News this Week: Gov. Arnold Schwarzenegger (R-CA). Topics: The nation's economy, a possible national stimulus plan, and the fiscal crisis facing his state. Plus, Schwarzenegger's thoughts on the future of the Republican Party and his state's passage of the same-sex marriage ban Proposition 8.

CBS' Face The Nation: Rep. Barney Frank (D-MA) Chairman, House Financial Services Committee; Sen. Richard Shelby (R-AL) Ranking member, Senate Banking Committee; Gov. Bobby Jindal (R-LA); Newt Gingrich (R) Former House Speaker.

Fox News Sunday: An update on Capitol Hill's plans for dealing with the financial crisis from Sens. Jon Kyl (R-AZ)., and Byron Dorgan (D-ND). Plus Gov. Tim Pawlenty, (R-MN) and Michael Steele. And the Fox News All Stars.

NBC's Meet The Press: Sen. Carl Levin (D-MI), Co-Chair of the Senate Auto Caucus and Sen. Richard Shelby (R-AL), Ranking Member of the Banking, Housing and Urban Affairs Committee. Topics: Pressure on the Government to bailout the U.S. auto industry. Then, T. Boone Pickens on how our nation's energy dependence effects both our environment and our economy. Roundtable: New York Times Columnist Tom Friedman; Washington Correspondent For BBC World News America, Katty Kay, NBC News Correspondent Andrea Mitchell; and Tavis Smiley.

Notice something different from what the shows had for the last nine months or so, when we had a girl (either Hillary or Palin) competing to be President or Vice President of the United States?

No more girlz--at least none besides the Washington villager pundits.

Now, some of these decisions make sense. I have no complaint that Carl Levin--one of the biggest auto bailout champions in Congress--is matched up against Richard Shelby--who's trying to make the world safe for Japanese SUVs built in Alabama's non-union plants. Similarly, House Financial Services Chair Barney Frank against Senate Banking Ranking Member Richard Shelby makes sense for partisan balance. Hopefully Arnie will get on and talk about how Prop 8 is evil and bad for the economy. Though if you really wanted to talk about Prop 8, don't you think it would have been a good idea to get someone whose marriage may have just been dissolved, like Ellen Degeneres? Pawlenty and Steele make sense if you want to talk about how the Republican party might drag itself out of the hole it's in. Bobby Jindal, for the same reason ... But Newt? And are Kyl and Dorgan the only people who know about a potential financial bailout?

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[navarth]

1. thank, gotta check that out. Marcy's always good.

k & r