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“What do you think the percentage likelihood is that, if we give this deal a chance, it will succeed?” Rattner didn’t make the decision any easier. “Fifty-one per cent,” he said. “But, Mr. President, in my experience, deals get worse, not better, over time.”
Ryan Lizza recounts the decision to bail out Chrysler in his epic New Yorker piece on Larry Summers and the president’s economic team [via Kausfiles]. This exchange came after the economic council split 4-4 on the automaker bailout, and Rattner was identified as the tie-breaking vote. Is it safe to say now that nobody expects Chrysler to survive?
23 Comments on “Quote Of The Day: Betting Odds Edition...”
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Hey, it made the UAW happy for awhile, didn’t it? And Rattner has, of course, “moved on.”
Hey, it made the UAW happy for awhile, didn’t it? And Rattner has, of course, “moved on.”
Exactly. GM should have been left to die, but because B Hussein owes to his UAW leadership buddies, he paid them back with $50 billion of our hard-earned tax dollars…
I really wish you’d drop the “B Hussein” nonsense – makes you sound like one of those birther morons.
Mickey Kaus was all over this one:
What do you think the percentage likelihood is that Rattner’s answer was sincere? I hope, for his sake, it’s close to zero. There was substantially less than a 51% chance the Chrysler bailout would succeed (if “success” means a viable company). There still is. … Not being a sophisticated investment banker, I would translate Rattner’s answer as: “I know you’d like to approve this deal, and I’m not one to buck the tide, so I’ll give you the minimum necessary reassurance, while covering my ass as much as possible (in the 80% likelihood that it fails).”
Great article in The New Yorker?
That article holds Summers out as some sort of combination of saint/genius, who has seen his policy imperatives been proven correct by the real world acid test!
If the jury is in, I’d say they’d tend to vote nay on a forced verdict.
Also, the article badly repeats many false claims parroted by many economists about today’s economy, with many of the false claims being originated by government economists themselves (e.g. that the unemployment rate is 9.7%, when it’s far, far higher in reality, and reported as such only because BLS has a severely flawed, and possibly politically motivated, calculation methodology).
Autosavant :
October 12th, 2009 at 2:16 pm
Exactly. GM should have been left to die, but because B Hussein owes to his UAW leadership buddies, he paid them back with $50 billion of our hard-earned tax dollars…
You conveniently neglect to mention that it was Bush, not Obama, who made the decision to use TARP funds to bail out the automakers. Obviously, that was Bush’s way of thanking the UAW for all their support over the years, right?
Obama also bailed out the banks, mortgage industry, and AIG at a far higher cost – are these unionized organizations? No. In fact, these sectors of the economy are stridently anti-union.
Never let the facts get in the way of a good ideological rant, though… :)
ohsnapback :
October 12th, 2009 at 2:32 pm
Also, the article badly repeats many false claims parroted by many economists about today’s economy, with many of the false claims being originated by government economists themselves (e.g. that the unemployment rate is 9.7%, when it’s far, far higher in reality, and reported as such only because BLS has a severely flawed, and possibly politically motivated, calculation methodology).
Can you be more precise about that?
The Chrysler bailout will succeed in the sense that a shell of the company will most likely survive. Without the bailout, there was a 100% chance of failure and liquidation.
FreedMike:
Here is a great article, written by a Wheaton College Economics Professor, as to how severely flawed BLS statistics on unemployment are:
http://www.dollarsandsense.org/archives/2009/0709miller.html
And the Wall Street Journal reports (as of October 2, 2009) that the “real” unemployment rate is 17%:
http://blogs.wsj.com/economics/2009/10/02/broader-unemployment-rate-hits-17-in-september/
p.s. – I’ve seen very credible articles that make a good case that the UE rate is actually 22%+ using the same methodology that the Wall Street Journal cites.
Yet one more surprise from our brilliant central planning committee, along the same lines as “shock” that car sales plummeted after cash-for-clunkers.
I’ll second ohsnapback’s links there about the flawed BLS stats. Also, you need to add in the number of hours worked, which has been declining.
A lot of companies have cut back on hours and benefits as a way to mitigate layoffs. Should we not see a marked improvement in the real economy (read: NOT the stock markets), you can expect layoffs to resume in a few months.
Also, you can expect the GDP numbers for the 3rd and 4th quarters and maybe even the 1st quarter of next year to be positive as sold-down inventories need to be restocked. Remember that this does not constitute ‘growth’, merely a new lower-state-of-normal and need to replenish stocks…similar to the production ramps you’ve seen at GM and Chrysler.
So FreedMike, was it a good deal or not?
Just because Bush started it, Obama had to continue it? You are blaming this vote for bailout on Bush?
I’ll rephrase that.
If George jumps off the bridge does Barack have to jump to?
I’m getting a little tired of Obamas “I inherited it”. Bush was stupid and I don’t plan on cutting the current genius any slack.
Well since it’s in the New Yorker I guess it must be factual, right?
There was no huge “crash” after Cash For Clunkers. Hyundai sales were actually up and Ford’s were flat. GM and Chrysler crashed, but they didn’t even do THAT well under C4C to begin with.
I agree with the auto bailouts, I disagree strongly with bailing out the bankers.
That’s the Oval Office in which they’re having their chit-chat. Must have been a Casual Saturday.
So FreedMike, was it a good deal or not?
Just because Bush started it, Obama had to continue it? You are blaming this vote for bailout on Bush?
I’ll rephrase that.
If George jumps off the bridge does Barack have to jump to?
You are right Bush agreed to a terrible deal and remember it was Bush who socialized AIG, Citi bank, Freddie, Fanny, (long list) etc etc etc… Obama is in the process of privatizing these firms… up is down and down is up.
Back to the Bush deal… He more then just STARTED it… He legally committed to it… Imagine what everyone would be saying if the President ignored the rule of law and just ripped up this agreement…
My bet if he ripped up this agreement… You would have Glenn Beck get 800 Senior citizens dress up like pilgrims… March on DC under the Banner of an awkward and embarrassing sexual act. Oh that actually happened… never mind.
50merc: “That’s the Oval Office in which they’re having their chit-chat. Must have been a Casual Saturday.”
Casual? I remember when Pres. Reagan was said to have said that anything less than a jacket and tie was unacceptable in the O.O. Apparently, Larry “no socks” Summers never got the memo…
p.s. anybody else having trouble with the “edit function”?
ohsnapback :
October 12th, 2009 at 3:11 pm
FreedMike:
Here is a great article, written by a Wheaton College Economics Professor, as to how severely flawed BLS statistics on unemployment are:
http://www.dollarsandsense.org/archives/2009/0709miller.html
Thanks for the clarification. Even in the best of times, though, unemployment numbers are always skewed somewhat – they don’t measure the people who have simply given up on trying to find a job, for example.
But I’d also suggest that the figures you quote above may, in fact, be skewed to ignore that millions of people have replaced one full time income with several part time jobs. Our local paper dubbed this “gig-a-nomics” – working several part time “gigs” to get by.
What percentage of those people, for example, are truly working one part time job, versus several? And if someone is making ends meet working several part time jobs, is he really unemployed? In one sense, perhaps, but not in another.
This is a stat that’s hard to get one’s arms around, that’s for sure. Good info.
dejal :
October 12th, 2009 at 3:51 pm
So FreedMike, was it a good deal or not?
Just because Bush started it, Obama had to continue it? You are blaming this vote for bailout on Bush?
You misread my point. The person I was responding to was clearly an anti-Obama poster of the right-wing bent (notice the silly “Hussein” reference, which is a dead giveaway), so I was pointing out that this started under Bush.
Having said that, was Bush right? Absolutely, and Obama was right to continue the policy. It’s easy to rest on ideology and say “the free market will correct itself,” but that’s the mistake Herbert Hoover made.
Sometimes you have to hold your nose and do something you don’t want to do in order to save the ship. That’s what Bush did. I applaud him for it.
dejal :
October 12th, 2009 at 3:51 pm
….. Bush was stupid and I don’t plan on cutting the current genius any slack.
OK, I was going to let this one slide by but… since we are on an ideological subject I want to add my two cents in on this comment.
I actually used to think that Bush was stupid. He might actually be, but he certainly was smart enough to surround himself with people that could at least get him by.
As for Obama (yes, I am a registered Dem) I am not going to cut him any slack either… nor should anyone else. His job is to help get our economy going again, get people working again, and keep us safe (among many many other things). I don’t like the idea of the bailouts (both in the financial system and the automotive companies) but if it takes a bailout to get things moving, we need to do it. I really have always felt that Chrysler should have been left to fail… they have lackluster, poorly executed, badly built products that nobody wants to buy. So why exactly did the taxpayers save this company, besides preserving the associated jobs? This is the question I would love to hear an answer for.
I am going to assume that “dejal” was being sarcastic when he called Obama a genius. I think we all have to agree that being articulate, genuine, and dedicating your career to impoverished people in Chicago is certainly preferable to Bush’s history and legacy.
“His job is to help get our economy going again…”
“Our greatest primary task is to put people to work. This is no unsolvable problem if we face it wisely and courageously. It can be accomplished in part by direct recruiting by the Government itself, treating the task as we would treat the emergency of a war, but at the same time, through this employment, accomplishing greatly needed projects to stimulate and reorganize the use of our natural resources.” FDR, 4 March 1933.
Mid 1938 the New Deal was dead and unemployment was 18 percent.
It is the imagined power of the President vs Reality.
I remember when Pres. Reagan was said to have said that anything less than a jacket and tie was unacceptable in the O.O.
Was that before or after he (Reagan) was certifiable???
I think Bush had the same coat and tie policy in the oval office. This was in sharp contrast with the previous administration, when wearing pants was optional.
Reagan was certifiable? You know, I never heard any regrets from people who made fun of his old age-isms after he was diagnosed with Alzheimers.
@ mattstairs
You might enjoy this.