Warren Buffett on Detroit 3 – New Business Model Needed

OMAHA, Neb. – Billionaire investor Warren Buffett says U.S. automakers need a new business model to better compete, whether it takes bankruptcy or a government bailout to achieve.

Buffett also says he would never serve as U.S. Treasury Secretary. The Berkshire Hathaway Inc. CEO is a member of President-elect Obama’s Transition Economic Advisory Board.

Buffett says any automaker bailout package should include a business solution, and be negotiated by the president, not Congress. Buffett spoke to Fox Business News in an interview scheduled to air Friday afternoon.

Buffett says the government should insist top executives at Ford Motor Co., General Motors Corp. and Chrysler LLC invest a significant percentage of their own net worths in the Detroit-based companies, ensuring both executives and taxpayers would share in any profits or losses.

http://news.yahoo.com/s/ap/buffett_economy

Obama Team Questions Potential Appointees Gun Ownership Status

President-elect Barack Obama’s transition team is asking potential appointees detailed questions about gun ownership, and firearms advocates aren’t happy about it.

The National Rifle Association has denounced the move, which has already led one Republican senator to consider legislation aimed at ensuring a president can’t use an applicant’s gun ownership status to deny employment.

It’s just one question on a lengthy personnel form — No. 59 on a 63-question list — but the furor over the query is a vivid reminder of the intensity of support for Second Amendment rights and signals the scrutiny Obama is likely to receive from the ever-vigilant gun lobby.

Obama’s transition team declined to go into detail on why they included the question, suggesting only that it was done to ensure potential appointees were in line with gun laws.

“The intent of the gun question is to determine legal permitting,” said one transition aide.

But even some Democrats and transition experts are baffled by the inclusion of the question.

Tucked in at the end of the questionnaire and listed under “Miscellaneous,” it reads: “Do you or any members of your immediate family own a gun? If so, provide complete ownership and registration information. Has the registration ever lapsed? Please also describe how and by whom it is used and whether it has been the cause of any personal injuries or property damage.”

Paul Light, professor of public service at New York University, said there was no such question for potential appointees when President George W. Bush took office in 2000.

“It kind of sticks out there like a sore thumb,” Light said.

He expressed uncertainty over why it was included but surmised it was out of an abundance of caution, a desire to avoid the spectacle of a Cabinet-level or other high-ranking appointee who is discovered to have an unregistered handgun at home.

“It’s the kind of thing that, if dug out, could be an embarrassment to the president-elect,” Light said.

Clay Johnson, deputy director of management at the Office of Management and Budget and the head of Bush’s 2000 transition, also didn’t quite understand the purpose of the question.

“It could be their way to say to prospects that they will have to answer all these questions sooner or later, so be prepared,” Johnson observed.

Matt Bennett, a veteran campaign operative who did a stint at Americans for Gun Safety and who now works for the moderate Democratic think tank Third Way, was equally befuddled.

“It strikes me as overly lawyerly,” he said, noting that only a small percentage of guns owned by adults are ever used improperly.

other gun rights supporters want Obama to know the question has raised their antennae.

“It’s very odd and very concerning to put out a question like that,” said Sen. Jim DeMint (R-S.C.), adding that it may also be “unprecedented.”

The freshman senator, who is up for reelection in 2010, had his campaign organization send an e-mail to supporters this week, pledging to enact legislation to bar federal hiring discrimination on the basis of gun ownership.

“Barack Obama promised change, and this is proof positive that we are going to see some of the most liberal change in our nation’s history,” wrote DeMint’s campaign in the e-mail.

DeMint conceded it was unrealistic to try to get a bill on the matter through during the lame duck session this week.

Still, it’s the sort of symbolic issue that may provide a political opening for Republican members of Congress from conservative-leaning states to contrast themselves with the new Democratic administration.

“I want him to know that we’re looking for areas we can work with him but also looking for areas of concern that we want to let him know we’re going to fight on,” DeMint said.

The NRA, the gun-rights group that spent millions to defeat Obama, only to see him easily carry sportsmen-heavy states such as Michigan and Pennsylvania, is signaling that it intends to keep up the fight.

“Barack Obama and his administration are showing their true colors and true philosophy with regard to the Second Amendment,” said Chris Cox, the NRA’s top political official. “It shows what we’ve been saying all along — this guy doesn’t view the Second Amendment as a fundamental constitutional right.”

Cox said the group had put the word out to their members on the question.

http://news.yahoo.com/s/politico/20081120/pl_politico/15835

Are Global Economies Slipping Into Deflationary Death Spiral?

The Global Economy’s Big Fear Becomes Real: Deflation

The deterioration of the global economy in the wake of the ongoing U.S. housing bust and subsequent credit crunch is accelerating at a frightening pace. In the U.S., nothing captures the concussive force of the downturn better than the Consumer Price Index issued Wednesday, which showed prices falling by one per cent in October after being flat in September. Suddenly, the prospect of outright deflation in the U.S. economy — and all the risks that entails — is a clear and present danger. (See TIME.com Nov. 6, 2008). “With the unemployment lines growing ever-longer there is a genuine risk that the U.S. economy could fall into a corrosive deflationary phase,” says Sheryl King, Senior US economist at Merrill Lynch.

But deflation isn’t just a U.S. anxiety. Japan, which only emerged from deflation earlier this decade, is now back in recession, has negligible inflation, and could soon see prices falling again. So too in Europe, where the European Central bank was behind the curve in seeing the risks to growth that the credit crisis posed, and kept interest rates too high for too long. Though not in outright deflation yet, the pressures across Europe are all on the downside. Even in China, the world’s largest developing nation, officials now acknowledge that the risk of inflation — its main concern at the time of the Beijing Olympics in late August — is now gone. At a high powered international financial conference in Beijing over the weekend, a senior People’s Bank of China official acknowledged to TIME that, “if anything, we now need to fight against falling demand, and possibly even falling prices.”

See pictures of The Global Financial Crisis

At the core of the mounting global concerns about deflation is this: the global financial system is going through a vicious process of deleveraging: financial institutions are reducing debt and raising capital, either directly from governments or from private sector sources. By desperately trying to rebuild their battered balance sheets and regain some semblance of investor confidence, banks and investment banks are not doing much lending. Indeed, the definition of deleveraging means reducing debt relative to assets. Assets, for banks, are loans. And these days pretty much everyone is deleveraging.

That doesn’t bode well for global growth prospects. David Roche, President of Independent Strategy, an economic consultancy in London, notes that throughout most of this decade “the world economy has been used to using $4 to $5 of credit for every $1 of GDP growth.” Even if this “profligate use of capital is halved,” Roche argues, “it still means credit expansion of 10 to 15% is needed to achieve real growth of 2 to 3%.” The problem: credit, far from expanding, is still contracting globally — despite governments’ efforts to date to salvage the financial system.

The result — a deflationary bust — is evident everywhere. On Thursday morning crude oil prices — as good a barometer as any for global economic activity — plunged below $50 a barrel. In July crude peaked at $147.

As Merrill Lynch economist King argues, it’s likely the deflationary forces will intensify as the result of a vicious cycle. As economic conditions deteriorate, bank lending naturally declines because the number of credit-worthy borrowers — whether corporate or individual — shrinks. In other words, financial institutions that got into their current, egregious situation by making bad loans aren’t going to recover by making more bad loans. Thus, a declining economy leads to contractions in lending, which further dampens demand.

What’s astonishing about the current cycle is how quickly the global economy got into this situation. Government — from Ben Bernanke, the U.S. Federal Reserve chief, to the Chinese Communists in Beijing to pretty much everyone in between — all know more or less that the only policy response available to them is to flood their economies with money. China announced a big stimulus package nearly two weeks ago, and in Beijing last weekend, government policymakers acknowledged that more is probably coming. In the United States, another fiscal stimulus plan seems inevitable; the Federal Reserve, meanwhile, is likely headed to what in Japan in the 1990s became known as the “ZIRP:” zero interest rate policy. The Fed funds rate is already down to one per cent, and the economy is still sinking. Rates have nowhere to go but down — all the way to zero. And by the time President-elect Barack Obama takes office in January, it’s likely the US will be debating what sort of tax relief to individuals and businesses might be best — mimicking policy discussions that are already occurring along the same lines in Europe and Asia.

The ferocity of the downturn now under way, and the downward pressure it is putting on prices, cannot be underestimated, argues Shanghai-based independent economist Andy Xie. “The world doesn’t need to just throw the kitchen sink at this to avoid a disastrous deflation, it needs to throw the bathroom sink, and the garage sink, and any other sink it can find.” And it needs to hurry.

http://www.time.com/time/business/article/0,8599,1861105,00.html?xid=feed-yahoo-biztech

Democrat Liberals Win – Detroit/UAW loses Another Round

In Big Win For Liberals, Waxman Ousts Dingell As Energy And Commerce Chair

By Greg Sargent and Eric Kleefeld – November 20, 2008, 11:22AM

This is big, big, big. In a victory for the Democratic left, Rep. Henry Waxman has just successfully ousted Rep. John Dingell from his longtime perch as head of the Energy and Commerce Committee.

Speaker Nancy Pelosi’s office confirms to us the vote count in the Democratic Caucus moments ago: Waxman 137 votes, Dingell 122 votes.

The defeat of Dingell is a major victory for environmentalists, removing a key obstacle to real energy reform just as a Democrat with climate change high on his agenda takes the Presidency.

Dingell, who first entered the House way back when Eisenhower was president, had been the head Democrat on this committee ever since 1981. But many of the more liberal members over the years came to view him as too friendly to Michigan’s auto industry and hostile to environmentalists — especially on issues like climate change and carbon limits.

It also shakes up Congress’ seniority system and is yet another sign that the political momentum is squarely in the camp of aggressive Dems. Waxman played a lead role in staking out a far more aggressive stance towards the Bush administration than many other more cautious Dems would take.

Waxman used his House Oversight chairmanship to grill the administration over its scandals and incompetence, making him a hero to many Democrats and a viable candidate for change over Dingell.

Now his victory stands as a harbinger of just how much change is coming.

http://tpmelectioncentral.talkingpointsmemo.com/2008/11/in_big_win_for_liberals_waxman.php

Waxman’s Ascent Could Foreshadow Good Relations Between President And House

By Greg Sargent – November 20, 2008, 1:26PM

Here’s another wrinkle to consider in the wake of Henry Waxman’s stunning ascent to the chairmanship of the Energy and Commerce Committee.

Congressional insiders point out that Barack Obama, in a little-noticed move a few days ago, appointed as the top White House liason to Congress one Philip Schiliro, who has spent many of his past 25 years on the Hill working for (you guessed it) Waxman.

In the wake of Waxman’s victory, this is significant. It means Waxman will be closer to the center of the action and will have a direct line into the White House. Congressional insiders also point out that House Speaker Nancy Pelosi is an ally of Waxman — and hence, of Obama’s liason to Congress.

Also, as Harold Meyerson points out, Waxman is perhaps the House’s leading legislator on three key issues prioritized by Obama: Universal health care, global warming, and the need for strengthened consumer protections.

All of this presages better relations between the Dem administration and the House than the last Democratic President enjoyed, even while Congress was controlled by Dems. This isn’t a terribly surprising prediction, but it’s another sign that Obama is extremely well positioned to make big things happen rather quickly once he takes power.

http://tpmelectioncentral.talkingpointsmemo.com/2008/11/waxmans_ascent_could_foreshado.php

READ THE ORIGINAL POST ON THIS STORY HERE – LEARN THE UNBIASED STORY OF REPRESENTATIVE DINGELL’S SERVICE TO AMERICA AND HIS TRUE RECORD ON THE ENVIRONMENT AND CIVIL RIGHTS

https://mcauleysworld.wordpress.com/2008/11/07/obama-granholm-pelosi-waxman-dingell-the-death-of-american-automobile-manufacturing/

Democrats Choose “Green Agenda” Over UAW

A Democratic Congress, unwilling or unable to approve a $25 billion bailout for Detroit’s Big Three, appears ready to punt the automakers’ fate to a lame-duck Republican president.

Not our responsibility, countered the White House.

“If Congress leaves for a two-month vacation without having addressed this important issue … then the Congress will bear responsibility for anything that happens in the next couple of months during their long vacation,” said Dana Perino, the White House press secretary.

She said there was “no appetite” in the administration for using the financial industry bailout money to help auto companies.

GOP Sens. Kit Bond of Missouri and George V. Voinovich of Ohio were at work on that measure Wednesday, toiling to placate skeptical Democrats by including a guarantee that the fuel-efficiency loan fund would ultimately be replenished.

“It is the only proposal now being considered that has a chance of actually becoming law,” said Republican leader Mitch McConnell of Kentucky.

But there was little sign that Democratic leaders would go along. They are vehemently opposed to letting the car companies tap that money — set aside to help switch to vehicles that burn less gasoline — for short-term cash-flow needs.

The “Green Agenda” cash may not actually have been targeted for the auto companies anyway – it maybe directed to “alternative energy research firms” that Democratic Speaker of the House Pelosi and Democratic Represenative Waxman favor. Pelosi and Waxman are trying to unseat Democratic Representative John Dingell, (Dem, Detroit) from his Chairmanship Seat. Dingell has served longer than any other member of Congress. http://www.latimes.com/news/nationworld/nation/la-na-energy7-2008nov07,0,7068890.story?track=rss

https://mcauleysworld.wordpress.com/2008/11/07/obama-granholm-pelosi-waxman-dingell-the-death-of-american-automobile-manufacturing/

Many lawmakers in both parties, however, are now openly discussing whether bankruptcy might be a better option for auto firms they regard as lumbering industrial dinosaurs that have done too little to adjust their products and work forces for the 21st century.

http://news.yahoo.com/s/ap/20081119/ap_on_go_co/auto_bailout_what_s_next  

One point that several members of Congress hit on was the way the CEOs got to Washington.

Rep. Gary Ackerman, Democrat from New York, noted the irony of the CEOs flying on private jets and “getting off with tin cups in their hands.” “Couldn’t you have downgraded to first class or something, or jet-pooled … to get here?” he asked. The executives on Wednesday’s panel — GM CEO Rick Wagoner, Ford CEO Alan Mulally and Chrysler CEO Robert Nardelli — said they flew on private jets.

http://news.yahoo.com/s/nm/20081119/bs_nm/us_autos_bailout;_ylt=AsF35t7iWFTSuN7tgAY_dq.yBhIF

Rep. Jeb Hensarling, a Texas Republican, also expressed skepticism about helping the industry, “What I have not heard is a plan that convinces me that with the $25 billion, that you will achieve sustainability,” said Hensarling.

The Generals Motors CEO claimed his compoany was losing $5 Billion a month.

http://news.yahoo.com/s/nm/20081119/bs_nm/us_autos_bailout;_ylt=AsF35t7iWFTSuN7tgAY_dq.yBhIF