Thursday, November 20, 2008
It is a markedly different approach than the one taken by Sarkozy in France:
Earlier, in Detroit, the president of the United Automobile Workers union, Ron Gettelfinger, on Thursday urged Congress to approve some type of financial support for automakers before adjourning for the year to prevent millions of people from losing their jobs.
“If one of these companies goes over the cliff, it could for sure take at least one of the others, if not both, with them,” Mr. Gettelfinger said, speaking at a news conference at the U.A.W.’s headquarters, known as Solidarity House. “We cannot allow one of these companies to fall off a cliff.”
Mr. Gettelfinger joined the leaders of General Motors, Ford Motor and Chrysler in testifying before two Congressional committees in Washington this week, as the companies requested $25 billion in loans to avoid bankruptcy.
The executives encountered harsh criticism and little sympathy on Capitol Hill toward the auto industry’s plight, and so Mr. Gettelfinger is now attempting to focus the discussion on saving jobs rather than the much-maligned automakers.
He said that a Detroit bankruptcy, which many industry critics have said is the best option to allow for effective restructuring, would ripple throughout the United States economy and that “the current recession would be made much worse.”
Hundreds of thousands would be laid off by companies that supply parts to the automakers, he maintained, and each job related to automotive manufacturing supports many more in other fields.
Mr. Gettelfinger blasted members of Congress whose states enticed foreign automakers like Honda and Mercedes to open plants there by giving out $3 billion in tax breaks and other incentives since 1992 but who oppose help for Detroit.
He specifically cited Alabama, the home of four nonunion car factories, and of Senator Richard Shelby, a Republican who condemned the Detroit carmakers and their chief executives this week.
“We can help the financial industry and give incentives to let foreign automakers compete against us,” Mr. Gettelfinger said, “but at the same time we’re able to walk away from the industry that is the backbone of our economy.”
As an aside, it is interesting to note the the implied inducement by the author of the article for the EU competition authorities in Brussels to intervene to stop the disbursement of monies to French industry. Not surprisingly, the article was published in the New York Times, one of the media bastions of neoliberalism, as reflected by Thomas Friedman, Nicholas Kristoff and others. Nothing is more horrifying to the Times and its staff than the prospect that a country might use its resources to prevent US capital from obtaining a dominant position within it.
Vowing to protect French industry from foreign predators and a worsening economic slump, President Nicolas Sarkozy introduced a strategic investment fund of 20 billion euros ($25 billion) on Thursday.
He also announced its first investment and promised a stimulus package in coming weeks with the aim of investing “massively” in infrastructure, education and research, and hinted that the auto industry might get a helping hand.
The European Commission is likely to scrutinize the fund’s investments to ensure they do not restrict the free flow of capital, a violation that could lead to legal action by the commission.
Mr. Sarkozy said the first investment would be made in Daher, an aeronautics supplier located near Tours, in central France.
Speaking at Daher, Mr. Sarkozy said the fund stood ready to take stakes in large and strategically important companies vulnerable to takeovers because of falling stock prices.
“I won’t let foreign funds get bargains thanks to the current levels of the stock market,” Mr. Sarkozy said. “I won’t let French industry move out.”
The fund will also invest in smaller companies that have high growth potential but are having trouble getting loans from fearful banks, the president said, a gesture that officials hope will appease the competition authorities in Brussels.
More substantively, the notion that the EU could act to prohibit such policies sounds ludicrous. Most countries are going to invariably undertake whatever pragmatic prolicies they consider appropriate to escape one of the most merciless economic downturns in decades. Unfortunately, so far, the US is not one of them. Political and media elites remain mesmerized by memories of a US global financial dominance that was swept away by the bursting of the housing bubble.