January 11, 2010

PR from AP: Wire Service Lets GM, Chrysler Make Vague, Unchallenged, Numbers-Free Rehiring References

FordYesGMchryslerNo1109

Executives from Government/General Motors and Chrysler are at the North American International Auto Show in Detroit vaguely holding forth on the prospect of reopening previously shuttered production facilities.

Uh, don’t sales have to start heading seriously upward before that happens?

Apparently the Associated Press’s Tom Krisher, who has his hands in separate stories on the two companies, and Jeff Karoub, who is co-spokesman — er, co-author — of the report on Chrysler, aren’t asking that question.

Here are selected paragraphs from Krisher’s report on GM’s non-announcement announcement:

GM may reopen some factories to meet higher demand

General Motors Co. may reopen some shuttered factories because it can’t produce certain vehicles fast enough, its North American president said Monday.

Mark Reuss told reporters at the North American International Auto Show in Detroit that plants building the Chevrolet Equinox, GMC Terrain and Cadillac SRX crossover vehicles and the Buick LaCrosse sedan are at capacity and can’t satisfy demand.

Reuss mentioned an idled factory in Spring Hill, Tenn., but stopped short of saying any plants would be reopened.

He said if he does his job right and restores faith in the GM brands, the company could hire workers again. In the short term, he said the company will try to raise output at existing plants.

The Terrain and Equinox are made at a factory in Ingersoll, Ontario, while the LaCrosse is built in Kansas City, Kan. The SRX is made in Ramos Arizpe, Mexico.

Reuss said he will meet with GM’s manufacturing and sales executives next week to see if they can figure out how to squeeze more vehicles out of the existing plants for the short term.

For the long term, he said he doesn’t like GM to have factories idled.

The models Reuss cites are growing, but plenty of others aren’t. A quick review of the detail at the Wall Street Journal’s December car sales report indicates that the Chevy Silverado’s December 2009 sales barely matched the depressed sales level of December 2008, while the Chevy Impala’s December sales were down 35.6%. The company has reported that sales of its core brands were up 13% over November, but its total calendar 2009 sales trailed calendar 2008 by a whopping 30%. Yet there is no evidence of skepticism on Krisher’s part, let alone any citation of any real numbers.

In a separate story, Sergio Marchionne of Chrysler part-owner Fiat sang the same tune to Krisher and Karoub about that company’s prospects:

Chrysler may rehire workers if sales forecasts met

Chrysler CEO Sergio Marchionne says the automaker will start hiring production workers again if it sells enough cars and trucks.

Marchionne said at the Detroit auto show Monday that Chrysler Group LLC is revamping its models and will need more engineering and development workers. He says the company doesn’t have the manpower at present to accomplish what it wants to do.

He didn’t give a time frame for hiring more production workers but says it will depend on meeting its own sales projections.

Marchionne also says Chrysler still has cash reserves and is performing slightly better than expected despite a very difficult 2009.

The same WSJ resource indicates that Chrysler had a decent December, moving over 86,000 units after several months in the 60s and 70s. The problem is that according to an industry observer at edmunds.com quoted in a separate WSJ article, “almost half” of Chrysler’s December volume probably came from low-margin “sales to fleets such as car-rental concerns,” a percentage of fleet dependence that was probably double that of GM and Ford. This could indicate that the company was desperate to show some kind of decent sales volume after a nearly unbroken year-long string of monthly year-over-year declines of 30% or more. Chrysler’s December was down only 4% from December 2008, but its sales for all of 2009 trailed 2008 by a staggering 36%.

Meanwhile, a separate Karoub and Krisher report from the affair notes that Ford is stealing the show, in one case on the energy-efficient turf GM and Chrysler that is supposedly going to be their specialty:

Ford Fusion Hybrid wins 2010 car of year award

Ford Motor Co.’s market momentum got a lift Monday by winning both the 2010 North American Car and Truck of the Year awards.

Ford’s Fusion Hybrid midsize sedan took top car honors and its versatile Transit Connect compact van snagged truck of the year at the Detroit auto show.

Last month, Ford announced concrete plans to increase production by 58%. As noted in a previous post (at NewsBusters; at BizzyBlog), Krisher and AP colleague Dee-Ann Durbin, in covering Ford’s November sales, relegated that real news to their report’s final paragraph.

Cross-posted at NewsBusters.org.

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BIZZYBLOG UPDATE, Jan. 12: Copies of the AP stories referenced for this post are at my web host for fair use and discussion purposes (GM, Chrysler, Ford awards).

BIZZYBLOG UPDATE 2, Jan. 12: In its 3:25 p.m. update to the Ford story, Karoub and Krisher detail how impressive Ford’s awards are –

It was only the third time in 17 years that an automaker has won both awards, selected by 49 auto journalists and given annually since 1994. Finalists for the car award included the Buick LaCrosse and Volkswagen Golf GTI and TDI diesel. The Chevrolet Equinox, Ford Transit Connect and Subaru Outback were finalists for the truck award.

“It’s such a huge motivator for our team,” Mark Fields, Ford’s president of the Americas, told reporters after the announcements on the first day of media previews for the show. “It’s a reaffirmation of all the hard work over the past couple of years.”

The awards, given annually by journalists who test cars throughout the year, are often used by automakers in advertising. Vehicles are judged on innovation, design, safety, handling, driver satisfaction and value.

Hey, Republican Party, Don’t ‘Whig’ Out!

Dick Morris is one of a few weighing in on democRATS jumping their sinking ship. Inadvertently or not, it contains a message that concerns me…

Dorgan and Dodd Quit Sinking Ship
by Dick Morris

…But the broader problem the party faces is that it no longer has a right or a center, only a left wing.

The very public way in which the existence of a center-right in the Democratic Party proved to be a mirage has done more to undermine the party’s chances for victory in 2010 than any other aspect of the healthcare debate.

When liberal Republicans failed to rally to Bill Clinton’s 1993-1994 agenda — including his failed healthcare proposal — they laid the basis for their total demise in subsequent years. Sens. Jeffords, Chaffee, D’Amato, Packwood, Hatfield and Specter (as a Republican) are gone. Sens. Snowe and Collins are all that remain of the once-dominant Rockefeller wing of the GOP. They have been replaced by real Democrats.

Now that Ben Nelson, Blanche Lincoln, Mary Landrieu and Byron Dorgan in the Senate and the likes of Marion Berry, Tom Perriello and John Spratt in the House have shown how easily they fold under pressure and how thin their conservatism really is, their states and districts will no longer be deceived into reelecting them. They will be replaced by real Republicans.

OK Dick, what defines a “real Republican” these days? The party’s self-described leaders can’t even answer that question. Perhaps I’m missing the point, but being [whatever constitutes] a modern-day “real Republican” is what lead to the party’s current minority status.

…Bill Clinton ended the exile by persuading voters that there was a center-right in the party after all and the Democrats were freed but on probation.

And they screwed it up by passing tax hikes and pushing healthcare reform, leading to the GOP sweep of 1994.

Then Clinton’s moderation in 1995 and 1996 assuaged voter skepticism again and put the Democrats back in the game. By 2008, voters were actually willing to elect a liberal Democrat. Now that Obama’s administration is exploding due to its own extremism, the Democrats again face consignment to minority status. And the first to go will be those who try to make their political living on the conservative edge of a liberal party.

For them, in 2010, the mandate is clear: Switch parties or lose the election.

Oh, “establishment” Republicans (RINO’s) would LOVE that “switch”…a return to power without the hard work of having to earn back the good faith of those they betrayed. Concurrently, it would NOT bode well for those who want to take back the Republican Party. An influx of “maverick” Dem-lites into the Republican Party? Had enough of those, thanks.

Ironic, the crossroads at which the Republican Party finds itself. In the late 1850′s, as slavery advocates moved to the Democrat Party and abolitionists moved to the newly-formed Republican Party, the Whigs – who tried to cater to both – drifted off into oblivion. If over 150 years later, more Dems migrate to an already-wayward Republican Party, void of leadership and no conviction to remain faithful to its foundation, there will be a third party movement.

So for “establishment” Republicans in 2010, let me issue a counter-mandate: Jump on the Tea Party bus, or get run over by it. At this point, we have nothing to lose (just ask the Whigs).

Mickster Mentions Friday’s Fan and Fred Column

Actually, I got to Mickey Kaus’s point in my BizzyBlog tease for my Friday Pajamas Media column on Fannie Mae and Freddie Mac (BizzyBlog mirror here), but he wouldn’t know that.

Under discussion is this paragraph from Peter Wallison’s December 29 Wall Street Journal op-ed (“The Price for Fannie and Freddie Keeps Going Up”; bold is mine):

There is more to this ugly situation. New research by Edward Pinto, a former chief credit officer for Fannie Mae and a housing expert, has found that from the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime or Alt-A.

In the tease, I noted four possible reasons why this “routine misrepresentation” may have occurred:

  • James A. Johnson, who was Fan’s Chairman and CEO from 1991 to 1998.
  • Frank Raines, who was Fan’s Vice Chairman from 1991 to 1996 and its Chairman from 1998 until 2004.
  • Leland Brendsel, acting President of Fred since 1985. He officially became the company’s president and CEO in 1987, was its Chairman and CEO by 1990, and stayed until 2003.
  • David Glenn, who became Fred’s President and COO in 1990 and also left in 2003.

Kaus aims the dart directly at Johnson, and usefully extends the exposure of Ed Pinto’s point (internal links are in the original):

“[A]s early as 1993.” Hmm. Doesn’t that put this alleged routine misrepresentation well before Designated Fall Guy Franklin Raines’ tenure as head of Fannie Mae–and back into the watch of Getting-Away-With-It-Because-I’m-Well-Connected-and-Spread-It-Around Mondale campaign manager and initial Obama veep-vetter Jim Johnson? I think it does! (Johnson was CEO of Fannie Mae from 1991-1998.) … P.S.: “Misrepresented the mortgages ….” Isn’t misrepresenation some kind of, I dunno … fraud or … crime? Even if it was done in an arrogant, misguided attempt to extend the American dream of home ownership down the income scale (which maybe had a side effect of justifyiing the high pay of Fannie Mae executives)? … Just asking! …

Many more people, including some district attorneys and attorneys general, should also be asking.

Lucid Links (011110, Morning; Econ-Focused Edition)

Filed under: Lucid Links — Tom @ 9:00 am

ISM Catchup: The Institute for Supply Management’s Manufacturing Index, covering about 12% of the economy (the percentage, which is lower than the 15% I have been using to this point, is from this WSJ item), showed a strong uptick for December, coming in at 55.9%, up from 53.6% in November, and beating expectations of 54.3% (any reading greater than 50% indicates expansion). It was highest reading since April 2006, the fifth positive reading in a row. ISM also asserts that the overall economy has grown every month since May of last year.

The Non Manufacturing Index, covering the other 88% of the economy, came in at a barely expansionary 50.1%, up from November’s 48.7% contraction reading, and slightly trailing expectations of 50.5%. Seeking Alpha’s Daryl Montgomery sees worrying inflation signs in the underlying detail. Employment is still seen by ISM respondents as in contraction.

The weighted average ISM indices, using the 12-88 weighting in both cases, came in at 50.8% in December vs. 49.3% in November. That’s a net move into expansion, which is better than the alternative. But given how deep the recession was, you would ordinarily expect stronger optimistic sentiment this far into an incipient recovery, which has not by any stretch of the imagination shown that it is a legitimate rebound.

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Uncle Sam had to sell $2.1 trillion in new debt to keep the government running last year.

The subheadline at Min Zeng’s Wall Street Journal item says that the fact that we found borrowers for all of this debt “is (a) ‘Victory’ for the U.S.” Excuse me if I pass on the celebration.

Info behind the WSJ’s subscription wall indicates that the number will need to be about $2.45 trillion this year — if borrowers are willing to go another round.

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This (“Hey, Rich People: Drop Dead. And I Do Mean Now”) is supposedly “funny,” — especially the part where the author refers to the “ill-gotten hoard” that anyone who is rich presumptively has in his view accumulated.

I wonder what would happen if I wrote a “humorous” column entitled “Hey, Medicaid Nursing Home Patients: Drop Dead. And I Do Mean Now,” and thought it funny (which I don’t) to refer to patients’ “ill-gotten care”?

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At Volokh, Kenneth Anderson notices a Financial Times item claiming that U.S. state and local pension funds “would need to find more than $2,000bn to meet future pension obligations.”

A large percentage of these benefits are gold-plated in comparison to what’s available in the private sector, and desperately need to be pared back. Short-term efforts to preserve benefits on the backs of taxpayers will cause them to vote with their feet and leave (see Pittsburgh).

Sadly, as Anderson notes, the there is a strong possibility of a long-term federal bailout of the whole mess with out-of-control benefits more than likely preserved. If it goes down that way, the negative consequences for long-term economic growth will be significant.

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Speaking of people voting with their feet, there’s this from the Tax Foundation

OhioMoveouts

Ohio lawmakers recently reached a last-minute deal to close the state’s $851 million budget shortfall by delaying a scheduled 4.2 percent income tax cut. As many lawmakers acknowledged, the deal was just a band-aid solution and avoids addressing the more structural issues facing the state’s finances.

At the heart of Ohio’s fiscal problems is a tax system and business climate that has been driving people out of the state for more than 15 years, resulting in a shrinking economy and a smaller tax base. At the same time, state government spending grew unchecked, resulting in a heavier tax burden on the state’s remaining citizens. Ohio taxpayers now have one of the highest tax burdens in the nation.

The key to reversing these trends and improving the long-term fiscal health of the state is a sensible reform of the state’s tax system.

This has occurred because, as I asserted in my September 2008 New York Post column, with the exception of a rare breather in the early 1990s, Ohio has been governed economically like a blue state for a decade and a half. Going back further, the Buckeye State, regardless of which party has been in power, has never really embraced sensible conservative economic governance in my lifetime.

Note that during Bob Taft’s tax-increasing second term, the negative trend accelerated, and that during our first two years under Ted Strickland, things on average got a bit worse. The retroactive 2009 tax and prospective 2010 tax increases just enacted (NOT “tax cut delays,” despite what Ohio’s politicians and media establishment want us to believe, and how the Tax Foundation unfortunately described it) will surely not reverse it.

Positivity: Bush to receive Cardinal O’Connor Award for pro-life efforts

Filed under: Life-Based News,Positivity,Taxes & Government — Tom @ 5:56 am

From Washington:

Jan 8, 2010 / 10:48 am

Former President George W. Bush will be presented with an award by the lay group Legatus, for his work in advancing the pro-life cause. The ceremony will be held at the annual Legatus Summit Feb. 5-6 in Dana Point, Calif., where Bush will address the business group for the first time since leaving office a year ago.

The prestigious Cardinal John J. O’Connor Pro-Life Award is being given in response to the former president’s eight years of pro-life legislation. Legatus cites his administration’s opposition to embryonic stem cell research, an executive order barring federal funds from being used for abortion related projects abroad, the appointment of two pro-life Supreme Court Justices and a rule protecting federally funded health employees from taking part in abortion or practices that conflict with their faith as policies that Bush helped enact during his presidency.

The group of Catholic business professionals also noted that one of the former president’s last efforts while in office included a declaration of Jan. 18, 2009 as “National Sanctity of Human Life Day,” along with a statement that “the most basic duty of government is to protect the life of the innocent.”

The former president will be a accompanied by a host of other speakers at the event, including Cardinal Francis George, Archbishop Timothy Dolan, actress Patricia Heaton, entrepreneur Frank J. Hanna III, Fr. Robert Spitzer, Newt and Callista Gingrich, and Thomas Donahue, the president of the U.S. Chamber of Commerce. ….

Go here for the rest of the story.