Wednesday, February 08, 2012
Friday, June 03, 2011
Recently-Released Documents Reveal Obama Administration’s Complicity in Deception about Auto Bailout
in Blog,Features
Obama Administration officials had advance notice that General Motors would run deceptive ads claiming to have paid taxpayers back for its bailout, and did not veto or object to those ads despite the opportunity to do so. Only later did Administration officials distance themselves from those deceptive claims, and they did so only after the falsity of those claims became so obvious to the public that they could no longer be parroted. Treasury Secretary Geithner had parroted those deceptive claims, which then drew criticism from the TARP inspector general, members of Congress, and financial reporters. Geithner publicly repeated GM’s deceptive claims, even though the Treasury Department had weeks in which to review GM’s claims and discover their inaccuracy.
Treasury Department Documents released last week in response to a think-tank’s Freedom of Information Act request make this clear. Those documents illustrate that GM and the Obama Administration coordinated GM’s PR strategy regarding the company’s controversial TV and print ad campaign in 2010, in which the car maker misleadingly claimed to have repaid what it received from taxpayers. In those ads, GM’s then-CEO, Ed Whitacre, claimed GM had already repaid its government bailout loan “in full, with interest, five years ahead of schedule.”
In May 2010, the Competitive Enterprise Institute (CEI) filed a deceptive advertising complaint with the FTC, and GM shortly thereafter stopped running the ads. CEI also filed a Freedom of Information request with Treasury for documents on the ad campaign. Those documents were finally released late last month, after a year of delay – far beyond the 20-day legal deadline for responding to FOIA requests.
CEI General Counsel Sam Kazman laments that “the US Treasury Department aided General Motors in its fraudulent claim that it fully repaid its government loans,” pointing out that “the detailed nature of their cooperation is demonstrated in the documents that the Department has finally produced, 12 long months after our original request. Now, the Treasury Department is re-enacting this smoke-and-mirrors routine on behalf of Chrysler,” Kazman observed.
The documents show GM coordinating PR strategy with the Obama Administration more than three weeks before launching the campaign. The White House received some of those GM materials at least two weeks before the ad campaign began. The Treasury Department delayed in responding to CEI’s FOIA request until after GM and Chrysler’s profits temporarily spiked, leading to the Administration’s current PR campaign touting the alleged “success” of the auto bailout. For example, Treasury Secretary Timothy Geithner wrote a Washington Post Op-Ed on June 1, 2011 with a similarly-misleading statement that Chrysler had repaid its government loans. On June 3, Obama himself will give a speech in Toledo, Ohio defending the auto bailout.
The communications between the Treasury, the White House, and GM on this PR effort were extensive. Starting on March 30, 2010, Brian Deese from the Executive Office of the President and many Treasury Department officials began exchanging emails related to the announcement. (See pages 55-59, 97-102.) These emails included draft schedules, draft remarks to be given by GM CEO Ed Whitacre, and draft press releases from both GM and the Treasury Department. See pp. 9-14; 18-24; 36-39; 83-96.
The Treasury Department saw the misleading advertisements GM was planning to make in advance, and did not object, despite having ample opportunity to object.
Indeed, Treasury Secretary Geithner issued a statement at the start of GM’s ad campaign, trumpeting its misleading claims, crowing that “GM had repaid in full the $4.7 billion balance it owed under the government’s Trouble Asset Relief Program.” But this so-called “repayment” was just a deceptive accounting trick. GM used government bailout money to make the “repayment.” As the Washington Examiner noted, Geithner was endorsing a “blatant misrepresentation.”
More importantly, this so-called “repayment” was just a drop in the bucket compared to what GM has received from taxpayers. The federal government had yet to recover the lion’s share of the more than $50 billion it loaned the company. Why? Because that $50 billion was mostly “converted into stock held by the Treasury Department” – stock worth far less than the billions the federal government injected into the company.
These claims were deeply misleading, as Senator Charles Grassley and the government’s own TARP Inspector General noted. GM’s statement that “We have repaid our government loans in full, with interest” was misleading,“according to Neil Barofsky, inspector general for the Troubled Asset Relief Program . . . ‘the source of funds for these quality [debt] payments will be other TARP funds currently held in an escrow account.” Senator Grassley noted that “‘TARP loans were not repaid from money GM is earning selling cars, as GM and the administration have claimed in their speeches, press releases and television commercials.’”
Eventually, financial reporters for newspapers like the New York Times and San Francisco Chronicle ridiculed these false claims. Gretchen Morgenson of the Times pointed out that “the company simply used other funds held by the Treasury to pay off its original loan.” Kathleen Pender of the Chronicle noted that “GM repaid its government loan with other government money.” The Washington Times observed that “General Motors Lost $3.4 billion” just before running the ad; “GM specifically used funds it received from the Troubled Asset Relief Program to pay off the government loan.”
Only after the falsity of GM’s claims became obvious to the general public did some Administration officials distance themselves from them. An April 29 email shows Treasury trying to “prepare a response today” to escalating criticism. (See pg. 11) On May 10, 2010, former auto czar Steve Rattner publicly admitted that “GM may have slightly elasticized the reality of things” in its claims of repayment. Treasury officials privately began to look for ways to respond to this reality. Rattner’s successor, Ron Bloom, wanted “a couple bullet points… for response if this comes up.” (See pp. 61-62.)
The Treasury Department’s role in facilitating GM’s deception may be far greater than the documents reveal, because the Treasury Department withheld some of the documents covered by the FOIA request, including portions of documents shedding light on White House involvement. For example, a blacked out item in the Treasury document release is a March 30 email from Brian Deese in the Executive Office regarding GM’s upcoming campaign. All of its content was blacked out except for the opening words, “Hi guys.” (See pages 58-59)
The Treasury Department waited until after the automakers’ finances had temporarily improved to produce the documents. GM’s finances have been temporarily propped up by the Japanese earthquake and tsunami that ravaged Toyota, and by earlier erroneous claims that Toyota’s automobiles were unsafe. Its profits have also been artificially puffed up by massive deferral of billions of dollars in growing UAW pension obligations. Moreover, as Conn Carroll notes in the Washington Examiner, Chrysler recent auto bailout pay back is in large measure fake.
As journalist Mickey Kaus has noted, “Sales and prices are up recently in part only because competing Japanese car suppliers have been crippled by the earthquake and tsunami. GM’s stock fell today and is still below the initial IPO price.”
Before that, GM’s finances were temporarily buoyed by bad PR regarding Toyota’s alleged safety defects in its cars, which turned out to be largely bogus. (The Toyota crashes turned out to have been caused by driver error, not manufacturing defects).
These things temporarily drove buyers away from Toyota to GM and Chrysler, artificially pumping up their profits. But massive earthquakes and Tsunamis like the one that hit Japan occur there only once or twice a century, and can’t keep GM going in the long run: “Car sales sputtered in May, slumping to levels that were much lower than expected as higher vehicle prices led consumers to put off purchases in the face of a weakening economy. Tightening supplies of vehicles after the Japan earthquake emboldened many companies . . . to raise car and truck prices, a strategy that analysts and investors said had backfired. U.S. automakers” like GM “reported sales on Wednesday that fell short of expectations as the industry experienced its lowest sales rate in eight months.”
GM stock is worth money partly because its government ownership stake allows it to claim up to $45 billion in tax savings that it would otherwise have had to forfeit as a result of its bankruptcy. GM is also receiving lots of taxpayer subsidies for its Chevy Volt, despite revelations that it lied about that car, which it was trumpeting in a “publicity stunt” to curry favor with politicians crusading against global warming.
GM still owes taxpayers at least $29.4 billion, and its finance arm, GMAC, owes taxpayers billions more. In a sense, taxpayers lost money on the sale of some of the government’s shares in General Motors in a 2010 IPO that was touted by government officials. (They got at least $9 billion less for the stock that was sold in the IPO than taxpayers originally paid for that stock.)
Even Kaus, who grudgingly supported the bailouts, thinks that people who bought GM stock were “suckers,” since GM faces hidden perils, still has too much red tape and inefficiency, lacks “effective internal controls,” and is the beneficiary of accounting gimmicks and unrealistic assumptions about its future market share.
In addition to the $50 billion, GM received billions in additional handouts through programs like the extraordinarily wasteful Cash for Clunkers (which cost taxpayers and used-car and car-parts businesses billions), and $17 billion given to its finance arm, GMAC.
GM might never have needed a bailout if it had just received relief from harmful regulations such as CAFE rules (which wipe out at least 50,000 jobs). It might have survived despite GM’s self-inflicted wounds from poor management, excessive wages and gold-plated union benefits (worth up to $70 an hour), and rigid union work rules.
Obama’s car czar left most of those wasteful work rules and excessive benefits intact, and gave the UAW much of General Motors’ stock, even though the UAW helped bankrupt the company, and the company has value today because the taxpayers pumped billions into the company (and engineered the wiping out of General Motors’ bondholders, some of whom were non-union employees who had invested their life savings in the company).
Veteran political commentator Michael Barone called the Obama administration’s treatment of Chrysler and GM bondholders “gangster government.” GMU law professor Todd Zywicki called it an attack on “the rule of law.” Such treatment may well discourage investors from investing in industrial companies in the future, reducing job creation and investment in the American economy.
Source
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Wednesday, June 10, 2009
Swift Overhaul Moves Ahead as Fiat Acquires Chrysler Assets
Matthew Staver/Bloomberg News
Juaquin Rornia carrying out equipment from a closed Chrysler dealership in Castle Rock, Colo. More Photos »
By MICHAEL J. de la MERCED and MICHELINE MAYNARD
Published: June 10, 2009
With the touch of pen to paper and a simple wire transfer, Chrysler completed its deal with Fiat on Wednesday morning, largely ending its quick trip through bankruptcy.
The last obstacle to an exit — a temporary stay imposed by the Supreme Court — was lifted late Tuesday, after the nine justices declined to hear a challenge of the deal by three Indiana state funds and several consumer groups.
The wire transfer, from the federal government, gives Chrysler $6.6 billion in exit financing.
A two-page order from the Supreme Court made it clear that it was not ruling on the merits of the Indiana funds’ case. But the justices wrote that the funds, which represent teachers and police officers, “have not carried the burden” of proving that the Supreme Court needed to intervene.
After more than a month of sometimes dramatic court hearings, Chrysler sold the bulk of its assets to Fiat in almost anticlimactic fashion: in the offices of the Cadwalader, Wickersham & Taft, the law firm that is advising the Treasury Department’s auto task force. The sale was completed at about 9 a.m.
“This morning’s closing represents a proud moment in Chrysler’s storied history,” a Treasury official said. “The Chrysler-Fiat alliance has now exited the bankruptcy process and is poised to emerge as a competitive, viable automaker.”
The speed with which Chrysler’s restructuring plan swept through the court system was an important victory for the Obama administration, which is seeking to remake the American auto industry after years of declining sales. When Chrysler filed for bankruptcy on April 30, President Obama promised its restructuring would be “efficient” and “controlled.” Company and government officials repeatedly exhorted the courts to approve the restructuring swiftly, citing the $100 million a day that Chrysler was consuming as it idled its plants and paid other overhead costs.
Chrysler was openly acknowledged as a test case for General Motors, a far larger and more complex company only in the early stages of its bankruptcy case.
As envisioned by Chrysler, Fiat and the government, Wednesday’s sale will create a new carmaker freed from old Chrysler’s crushing labor costs and debt levels. It will have gained in Fiat, which will run the company, a partner skilled in making and selling small, fuel-efficient cars around the world.
Under the plan, the carmaker would emerge from bankruptcy with a union retiree trust owning 55 percent, Fiat owning a 20 percent share that could eventually grow to 35 percent, and the United States and Canadian governments holding minority stakes.
But the hardest part for Chrysler begins now. Stung by the recession, Americans have shown relatively little appetite for buying new cars.
Chrysler has been hit hardest among the three Detroit companies by the slump which began last year and which has resulted in the worst sales in more than a quarter century.
Through May, Chrysler sales were down 46.3 percent, and it held just 10 percent of the car and truck market, down from nearly 15 percent a few years ago. It ranks only fifth in the American market, behind G.M., Toyota, Ford and Honda.
Chrysler employees, who were once considered among the industry’s most energetic and innovative, now face the prospect of adjusting to their third set of owners in less than two years. In recent weeks, teams from Fiat have been going over the company’s operations in Auburn Hills, Mich., much as teams from Cerberus Capital Management did in 2007, when the investment group bought the company from DaimlerChrysler.
Likewise, employees can expect new management at Chrysler, much as Cerberus brought in Robert L. Nardelli, the former Home Depot chief executive, and James Press from Toyota’s American operations. Sergio Marchionne, the chief executive of Fiat, has said he would run Chrysler, but he, too, is likely to bring in some managers.
The impact on Chrysler’s lineup will take longer to be felt. Chrysler, more than any other American player, depends heavily on Jeeps, minivans and pickups as the bulk of its lineup, even after gas prices rose above $4 last year. Small Fiats are expected to be sold at Chrysler dealers, such as the Fiat 500, the latest version of the perennial Italian favorite. But it could take months or years to adapt them to emissions and safety requirements in the United States.
For the moment, Chrysler dealers will have to rely on many of the same vehicles sold by Chrysler before it entered bankruptcy. And there will be far fewer of those dealers: hundreds closed Tuesday night, and their cars and trucks will be redistributed among remaining showrooms.
Source: http://www.nytimes.com/2009/06/11/business/global/11chrysler.html?_r=1&hp
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P.S. It's a sign of the times for those that have eyes to see; The shelves stripped bare and the last remaining vestiges of the U.S. Manufacturing prowess boldly transferred to the Revived Roman Empire. It wasn't enough to ship all factories, plants, industries to Asia; Now the service jobs are also fleeing to Asia, and the rest of the Third World;
Enjoy the upcoming Independence Day with a Global perspective.
They need the jobs; We have beef, swine and barbecues!
Enjoy your baby back ribs, and pig feet*! * Chief Justice SoniaPlease see previous post of 6/09/09 on supreme court approves Chrysler gift to Fiat:
"Supreme Court Clears Way for Sale of Chrysler to Fiat"
Arsenio.
Wednesday, May 06, 2009
The Impact Of Chrysler's Bankruptcy
Doctor Doom
The Impact Of Chrysler's Bankruptcy
Nouriel Roubini, 05.07.09, 12:01 AM EDT
Lessons for GM--and for the rest of us.
On April 30, Chrysler filed for Chapter 11 bankruptcy protection from its current creditors. As such, Chrysler will be able to operate as a going concern, while the company renegotiates its debt structure and other obligations. The U.S. government has described Chrysler's action as a "prepackaged surgical bankruptcy," through which it hopes the company will be able to exit the bankruptcy process within 30 to 60 days.
If Chrysler achieves this, it will emerge with a new global partnership with the Italy-based Fiat ( FIA - news - people ). Instead of cash, Fiat will provide the equivalent of billions of dollars in research- and investment-related (R&D) investments for a 35% stake in the new Chrysler. However, many experts think a quick trip into (and out of) bankruptcy might be unrealistic.
In the administration's view, cost cuts--implemented by Cerberus and the new management brought in by Bob Nardelli, who cut into Chrysler's R&D budget and new product development--left Chrysler, the smallest of the Detroit automakers, with a very thin line up of new vehicles.
The Obama administration set partnering with Fiat as a precondition for any further government assistance. Nevertheless, Chrysler was unable to avoid the bankruptcy process, because some creditors balked at the terms being offered in the proposed debt-to-equity swap by the government.
Fiat is vying to get a 35% stake in Chrysler without paying anything for it. What it brings to the table is billions of dollars in R&D that have positioned it well to produce new cars in the future.
Fiat exited the U.S. market decades ago. The marriage between Fiat and Chrysler is based on harsh realities, as evidenced by continuing layoffs in Chrysler's bloated U.S. and Canadian operations, but it seems to be a symbiotic relationship, aimed to help both car makers survive the new tests of an even more competitive landscape. Moreover, it is a reflection of the considerable overcapacities in the global auto sector which may require further consolidation in several national and international markets.
The short-term outcome of Chrysler's bankruptcy filing may come to determine the path for General Motors ( GM - news - people ), if not the entire U.S. auto industry. If bankruptcy proceedings for Chrysler go as the company and the U.S. government have planned, Chrysler's filing may very well turn out to be just a test case before the bankruptcy filing of GM itself.
GM has until the end of May to convince the government it has a viable business plan for restructuring outside a Chapter 11 reorganization. If it fails to renegotiate its debt and convince its current creditors to undergo a debt-for-equity swap--as Chrysler failed to do--then GM will have no option but to file for Chapter 11 protection.
GM's new chief executive, Fritz Henderson, has vowed to do whatever is reasonably necessary to prevent the automaker from going under, including seeking loan packages from U.S., Canadian and European governments (particularly Germany). But GM can no longer afford its extensive European operations and is in the process of looking for bidders.
The significant roles the auto sector plays in employment, exports and industrial production have heightened the political importance of responding to their vulnerabilities, which have been exacerbated by the credit crunch, prompting rescue packages including bridge loans, incentives to purchase domestic vehicles and increases in tariffs on imported cars and auto parts. In the face of rising unemployment in other sectors, governments hope to avoid any disorderly bankruptcy proceedings.
Furthermore, the Chrysler-Fiat merger could set off a chain of consolidations within the auto sector, which continues to have significant production overcapacities. Even emerging economies are likely to contribute slower auto demand growth in coming years. In Russia, automakers, including Toyota ( TM - news - people ), have repeatedly shuttered production, and domestic automakers are now increasing car loans in order to encourage purchases.
Other countries, such as China, also face the near-term challenge of consolidating their many automakers into several companies large enough to take advantage of economies of scale, increasing their share of the domestic market, and possibly expanding abroad.
Fiat is also trying to position itself to obtain an ownership stake in GM's European affiliate, Opel. The plan, which includes the other GM subsidiaries in Europe--Vauxhall in Britain and Saab in Sweden, would create a new global auto company with annual sales of up to 7 million cars and 80 billion euros (106 billion U.S. dollars) in revenues, which would secure Fiat a winning position in the post-crisis market.
The move, however, is likely to face political hurdles, as neither the German nor Italian governments would like to deal with the job losses (an estimated 8,000 to 9,000 jobs) likely from such a merger, particularly not in an election year (Germans vote this fall).
According to press reports, Berlin issued a list of conditions for Fiat, which includes stating where the headquarters would be located, where the taxes would be paid, the number of expected job losses and the future of Opel plants in Germany. GM, though, has the final say in assessing Fiat's offer. Yet the German economic minister suggested Fiat needs German state credits in lieu of adequate financing, which might increase German government leverage. However, supporting the formation of a global car maker with the German government's credit guarantees may enrage other German car makers, such as the VW Group, BMW and Mercedes-Benz.
The pressure on domestic jobs has increased the political importance of responding to the automakers' woes in many countries. In February, France raised protectionist fears after introducing state aid for the domestic car makers in return for an unwritten pledge to keep jobs and production at home. It posed a test for the EU's single-market rules and triggered an angry response from the Eastern European countries that would be hurt the most by the measure. Other countries, like Argentina and Russia, have increased restrictions on auto or parts imports in an attempt to support domestic industries. These might actually have the opposite effect--those in Russia hurt the business of used-car sellers.
But some government attempts to stoke auto demand may well erode future demand. So-called "cash-for-clunkers" deals--in which governments provide incentives for consumers to trade in their old cars for new (and often more fuel-efficient) ones--have had the desired effect, boosting auto sales in countries like Germany and China for the types of cars targeted.
These measures are helping to erode the inventory of manufacturers in a relatively orderly manner, but may be deferring the adjustment process the automakers will later face. Moreover, rising unemployment is likely to weigh on consumption, especially for large, credit-dependent purchases like cars.
The bankruptcy also has significant repercussions on the corporate bond market. Chrysler's bankruptcy filing was preceded by tough negotiations among creditors and the government to conclude an out-of-court restructuring in which lenders would receive 29 cents on the dollar in cash in exchange for wiping out about $6.9 billion of Chrysler's debt.
A group of about 20 secured creditors refused to sign off on the deal, arguing that their stakes were worth more and demanding that their seniority rights be observed. However, recent empirical evidence shows that as default rates increase, recovery rates are falling fast in this cycle. Moody's ( MCO - news - people ) reported that in the past seven months, completed CDS auctions resulted in a recovery rate of 30 cents on the dollar for loans and about 15 cents on the dollar for bonds, compared with 85 cents and 70 cents on the dollar, respectively, for all of 2008.
The latest research by Edward Altman yields similar results, stressing that distressed exchanges to avoid bankruptcy have surged since 2008, and that they usually yield significantly higher recovery rates to participating bondholders. In fact, S&P warns that, due to loose covenants and missing early-warning triggers, the losses even for secured creditors in this cycle might turn out to be substantial if a company cannot reorganize and liquidate.
Henry Hu of Texas University points to the "empty creditor" phenomenon to explain why some lenders prefer to hold out and force a bankruptcy seemingly against the company's--and thus their own--best interests. In short, creditors with enough credit default swaps may simultaneously have control rights and incentives to cause the debtor firm's value to fall. And if bankruptcy occurs, the empty creditor may undermine proper reorganization, especially if his interests (or non-interests) are not fully disclosed to the bankruptcy court.
But are credit markets finally thawing? Indeed, corporate bond issuance has picked up substantially since December, especially in the high-yield segment amid tighter spreads since the immediate Lehman aftermath. On a more cautious note, the IMF notes that, given shortening credit lines and still tight bank lending standards (confirmed in the April Bank Loan Officer Survey), corporations are taking advantage of this window of opportunity to refinance themselves in the bond market, despite substantially higher costs.
An additional factor fueling this front-loaded corporate bond activity is the likely future crowding-out by sovereign and government guaranteed debt. While the high-yield segment has returned 17.4% year-to-date in 2009, the fates of Chrysler and GM show the default rate may not yet have reached its peak.
Nouriel Roubini, a professor at New York University's Stern Business School and chairman of Roubini Global Economics, is a weekly columnist for Forbes. Analysts at Roubini Global Economics assisted in the research and writing of this piece.
Source:http://www.forbes.com/2009/05/06/chrysler-gm-fiat-bankruptcy-opinions-columnists-nouriel-roubini.html
P.S.My question to Professor Roubini is why is the White House micro-managing and giving it's blessing to this Fiat-Chrysler consolidation?
I pose that question to anyone: Why is there such an obssession with a merger with a foreign company, of the Italian persuasion?
Che Fai?
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Monday, April 13, 2009
Midwest auto industry: Tough times ahead for towns across region
April 12, 2009
In tattered and gray industrial towns across the Midwest, no one knows exactly where the ax will swing next. But there is no doubt the forced downsizing of General Motors and Chrysler, which will begin to take shape in the coming weeks, will fundamentally change the quality of life in communities and the region for years to come.
Even if both automakers survive, economists say, they will be smaller and will pay lower wages and benefits. More communities will lose production and parts plants, and the states that have relied heavily on those manufacturing jobs—especially Michigan, Indiana and Ohio — will take a big hit that, economists warn, will take years and perhaps decades to overcome.
"If you go back to 1980 to 1982, with the upheavals in the steel, rubber, glass and auto industries, that really was the end of an economic era that started in the 1890s," said Ned Hill, an economist at Cleveland State University. "This is the last movement in the symphony."
While the American auto industry played a large role in creating the modern Midwest a century ago, its unraveling has exposed the region's economic over-reliance on vehicle manufacturing. In recent decades, the demise of specialized manufacturing—shoes in Missouri, TV picture tubes in Indiana and Ohio, glass in Toledo and rubber in Akron—sent many towns and cities reeling from the loss of jobs. On a larger scale, Chicago, northwest Indiana and northeast Ohio suffered from Big Steel's slide more than 25 years ago.
But the auto industry has a much broader footprint in the region, with about two dozen assembly plants of General Motors, Chrysler and Ford in the Midwest and many hundreds of parts suppliers peppered about, according to the Federal Reserve Bank of Chicago.
"Every job in the auto industry usually can be responsible for five to six jobs in general throughout the entire economy," said Jerry Conover, director of the Indiana Business Research Center at Indiana University. "The direct and indirect effect of all of this means a lot less money circulating through the cash registers in these states."
The details of the downsizing are being discussed as GM faces a deadline at the end of May to satisfy the government's requirements for federal assistance. Chrysler has until the end of April to work out a merger deal with Italian carmaker Fiat. Those private discussions have fed rumors of plant closings around the Midwest and across the nation. Bankruptcy is an option for both automakers.
How bad would it be if one or more of the Detroit automakers failed? In perhaps the most dire forecast, the Center for Automotive Research in Ann Arbor, Mich., said the 2009 job loss would be nearly 2.5 million if there were a 50 percent cut in operations at the Big Three. Personal income would drop by $276 billion, the report forecast.
That, Hill noted, assumes the lost auto production would not be picked up by other automakers, including Honda and Toyota, which have production facilities in the Midwest. Still, even under less pessimistic projections, pain will be spread around the region as jobs are slashed and pay, health-care and retirement benefits are scaled back, Hill predicted.
"The unfortunate thing is you've got a large number of small- to mid-size communities dependent on this income," Hill said. "What's happening now will put the industrial Midwest at a bigger disadvantage."
The domestic auto industry has been shrinking since the 1980s, and some of the cities affected by that decline provide a bleak view of what may be in store for others as the industry continues to contract. For generations, Anderson, Ind., was a major parts supplier for GM, but most of those operations have been gradually shut down over the past 25 years. Anderson, which has struggled to regain its economic footing, is defined by a disproportionate number of senior residents, steady job losses and wages at less than 75 percent of the U.S. average, according to a report from STATS Indiana.
In nearby Muncie, Ind., another city that supplied GM, the last of the major suppliers is scheduled to complete its shutdown later this year. The average wage has dropped in Muncie, which is making a painful transition from a well-paying manufacturing economy to one dominated by health care and Ball State University.
"It takes decades to make the adjustment," said Roy Budd, executive director of Energize-East Central Indiana, a non-profit economic development group. "I think we've trough-ed out and are on the upswing. But it takes a lot of time. We didn't get into it overnight and won't get out of it overnight."
The economic crisis has made Michigan, once one of the more prosperous states, a net population loser, with 109,000 more people moving out last year than moved in, according to census data. Among the obstacles for the region to recover, Conover said, is the relatively low percentage of college graduates in these states. The national average of people with a bachelor's degree or more is 27.5 percent, according to the Census Bureau. The percentages in Michigan, Ohio and Indiana are 24.7, 24.1 and 22.1, respectively.
The questions of how, and indeed whether, GM and Chrysler survive will begin to be answered in a few weeks, and then any affected communities will begin the adjustment to life without their biggest breadwinner.
"This is pretty devastating stuff," Hill said. "It takes almost 20 years to rebuild your economy, and usually you waste five to six years because of denial."
tmjones@tribune.com
Thursday, February 19, 2009
Genetically Modfied Seeds: Monsanto is Putting Normal Seeds Out of Reach
by Linn Cohen-Cole
Not so simple. Where are farmers supposed to get normal seed these days? How are they supposed to avoid contamination of their fields from GM-crops? How are they supposed to stop Monsanto detectives from trespassing or Monsanto from using helicopters to fly over spying on them?
Monsanto contaminates the fields, trespasses onto the land taking samples and if they find any GMO plants growing there (or say they have), they then sue, saying they own the crop. It’s a way to make money since farmers can’t fight back and court and they settle because they have no choice.
And they have done and are doing a bucket load of things to keep farmers and everyone else from having any access at all to buying, collecting, and saving of NORMAL seeds.
1. They’ve bought up the seed companies across the Midwest.
2. They’ve written Monsanto seed laws and gotten legislators to put them through, that make cleaning, collecting and storing of seeds so onerous in terms of fees and paperwork and testing and tracking every variety and being subject to fines, that having normal seed becomes almost impossible (an NAIS approach to wiping out normal seeds). Does your state have such a seed law? Before they existed, farmers just collected the seeds and put them in sacks in the shed and used them the next year, sharing whatever they wished with friends and neighbors, selling some if they wanted. That’s been killed.
In Illinois, which has such a seed law, Madigan, the Speaker of the House, his staff is Monsanto lobbyists.
3. Monsanto is pushing anti-democracy laws (Vilsack’s brainchild, actually) that remove community’ control over their own counties so farmers and citizens can’t block the planting of GMO crops even if they can contaminate other crops. So if you don’t want a GM-crop that grows industrial chemicals or drugs or a rice growing with human DNA in it, in your area and mixing with your crops, tough luck.
Check the map of just where the Monsanto/Vilsack laws are and see if your state is still a democracy or is Monsanto’s. A farmer in Illinois told me he heard that Bush had pushed through some regulation that made this true in every state. People need to check on that.
4. For sure there are Monsanto regulations buried in the FDA right now that make a farmer’s seed cleaning equipment illegal (another way to leave nothing but GM-seeds) because it’s now considered a “source of seed contamination.” Farmer can still seed clean but the equipment now has to be certified and a farmer said it would require a million to a million and half dollar building and equipment … for EACH line of seed. Seed storage facilities are also listed (another million?) and harvesting and transport equipment. And manure. Something that can contaminate seed. Notice that chemical fertilizers and pesticides are not mentioned.
You could eat manure and be okay (a little grossed out but okay). Try that with pesticides and fertilizers. Indian farmers have. Their top choice for how to commit suicide to escape the debt they have been left in is to drink Monsanto pesticides.
5. Monsanto is picking off seed cleaners across the Midwest. In Pilot Grove, Missouri, in Indiana (Maurice Parr), and now in southern Illinois (Steve Hixon). And they are using US marshals and state troopers and county police to show up in three cars to serve the poor farmers who had used Hixon as their seed cleaner, telling them that he or their neighbors turned them in, so across that 6 county areas, no one talking to neighbors and people are living in fear and those farming communities are falling apart from the suspicion Monsanto sowed. Hixon’s office got broken into and he thinks someone put a GPS tracking device on his equipment and that’s how Monsanto found between 200-400 customers in very scattered and remote areas, and threatened them all and destroyed his business within 2 days.
So, after demanding that seed cleaners somehow be able to tell one seed from another (or be sued to kingdom come) or corrupting legislatures to put in laws about labeling of seeds that are so onerous no one can cope with them, what is Monsanto’s attitude about labeling their own stuff? You guessed it - they’re out there pushing laws against ANY labeling of their own GM-food and animals and of any exports to other countries. Why?
We know and they know why.
As Norman Braksick, the president of Asgrow Seed Co. (now owned by Monsanto) predicted in the Kansas City Star (3/7/94) seven years ago, “If you put a label on a genetically engineered food, you might as well put a skull and crossbones on it.”
And they’ve sued dairy farmers for telling the truth about their milk being rBGH-free, though rBGH is associated with an increased risk of breast, colon and prostate cancers.
I just heard that some seed dealers urge farmers to buy the seed under the seed dealer’s name, telling the farmers it helps the dealer get a discount on seed to buy a lot under their own name. Then Monsanto sues the poor farmer for buying their seed without a contract and extorts huge sums from them.
Here’s a youtube video that is worth your time. Vandana Shiva is one of the leading anti-Monsanto people in the world. In this video, she says (and this video is old), Monsanto had sued 1500 farmers whose fields had simply been contaminated by GM-crops. Listen to all the ways Monsanto goes after farmers.
Do you know the story of Gandhi in India and how the British had salt laws that taxed salt? The British claimed it as theirs. Gandhi had what was called a Salt Satyagraha, in which people were asked to break the laws and march to the sea and collect the salt without paying the British. A kind of Boston tea party, I guess.
Thousands of people marched 240 miles to the ocean where the British were waiting. As people moved forward to collect the salt, the British soldiers clubbed them but the people kept coming. The non-violent protest exposed the British behavior, which was so revolting to the world that it helped end British control in India.
Vandana Shiva has started a Seed Satyagraha - nonviolent non-cooperation around seed laws - has gotten millions of farmers to sign a pledge to break those laws.
American farmers and cattlemen might appreciate what Gandhi fought for and what Shiva is bringing back and how much it is about what we are all so angry about - loss of basic freedoms. [The highlighting is mine.]
The Seed Satyagraha is the name for the nonviolent, noncooperative movement that Dr. Shiva has organized to stand against seed monopolies. According to Dr. Shiva, the name was inspired by Gandhi’s famous walk to the Dandi Beach, where he picked up salt and said, “You can’t monopolize this which we need for life.” But it’s not just the noncooperation aspect of the movement that is influenced by Gandhi. The creative side saving seeds, trading seeds, farming without corporate dependence–without their chemicals, without their seed.
” All this is talked about in the language that Gandhi left us as a legacy. We work with three key concepts.”
” (One) Swadeshi…which means the capacity to do your own thing–produce your own food, produce your own goods….”
“(Two) Swaraj–to govern yourself. And we fight on three fronts–water, food, and seed. JalSwaraj is water independence–water freedom and water sovereignty. Anna Swaraj is food freedom, food sovereignty. And Bija Swaraj is seed freedom and seed sovereignty. Swa means self–that which rises from the self and is very, very much a deep notion of freedom.
“I believe that these concepts, which are deep, deep, deep in Indian civilization, Gandhi resurrected them to fight for freedom. They are very important for today’s world because so far what we’ve had is centralized state rule, giving way now to centralized corporate control, and we need a third alternate. That third alternate is, in part, citizens being able to tell their state, ‘This is what your function is. This is what your obligations are,’ and being able to have their states act on corporations to say, ‘This is something you cannot do.’”
” (Three) Satyagraha, non-cooperation, basically saying, ‘We will do our thing and any law that tries to say that (our freedom) is illegal… we will have to not cooperate with it. We will defend our freedoms to have access to water, access to seed, access to food, access to medicine.’”
ews.com