Sunday, February 01, 2009

Your Tax Dollars At Work, Saving Jobs in Brazil: GM to Invest $1 Billion of Bailout Money in Brazil

WASHINGTON POST -- The stimulus bill passed by the House contains a controversial provision that would mostly bar foreign steel and iron from the infrastructure projects laid out by the $819 billion economic package. A Senate version, yet to be acted upon, goes further, requiring, with few exceptions, that all stimulus-funded projects use only American-made equipment and goods.

Proponents of expanding the "Buy American" provisions enacted during the Great Depression, including steel and iron manufacturers and labor unions, argue that it is the only way to ensure that the stimulus creates jobs at home and not overseas.

LATIN AMERICAN HERALD TRIBUNE -- General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker. According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012."

"It wouldn't be logical to withdraw the investment from where we're growing, and our goal is to protect investments in emerging markets," he said in a statement published by the business daily Gazeta Mercantil.

MP: I guess "Buy American" or "Invest in America" wasn't part of the GM loan package?

24 Comments:

At 2/01/2009 2:39 PM, Blogger Bloggin' Brewskie said...

And they're using bailout cash to continue their lawsuits against higher fuel economy standards in places like California. Does GM want to go bankrupt?

GM isn't the only miscreant kid on the block, though. Do banking executives honestly deserve to stick their hands into the "bailout cookie jar," especially when they helped steer their ships into disaster?

 
At 2/01/2009 3:26 PM, Blogger Milena said...

The funny thing is, the plants they can build in Brazil will make them profitable again, only the unions won't ALLOW to be built in Michigan, because they don't utilize enough humans and allow supplier integration - big no no's for the unions. Nothing to streamline and reduce costs.

You must watch this - to the end.

http://info.detnews.com/video/index.cfm?id=1189

 
At 2/01/2009 3:43 PM, Blogger Bloggin' Brewskie said...

Update: There’s a bit in the press about bailed out banks that sought to bring in foreign workers for high-paying jobs, even as they’ve been laying off Americans. Why the fuss? Because foreigners are often paid less than their American counterparts.

Perhaps the banks should have sought foreigners to supplement the CEOs of these wrecked ships. Substantial savings would be achieved, and perhaps they would get people who actually know how to handle money and run a business. It couldn't hurt GM.

 
At 2/01/2009 4:14 PM, Blogger PeakTrader said...

U.S. economy expanded 1.3% in 2008 and how to prevent an economic contraction in 2009 (currently, roughly a 2% contraction is projected in 2009):

1. Obama should change his stimulus plan to a $2,000 tax cut per worker (in the form of a tax holiday), along with increasing unemployment benefits by a similar amount. This will help households strengthen their balance sheets, i.e. catch-up on bills, pay-down debt, increase saving, spur consumption of assets and goods, etc. This plan will have an immediate and powerful effect to stimulate the economy. When excess assets and goods clear the market, production will increase.

2. Shift "toxic" assets into a "bad bank." The government should pay premiums for toxic assets to recapitalize the banking industry and eliminate the systemic problem caused by global imbalances. The Fed has the power to create money out of thin air, to generate nominal growth, boost "animal spirits," and inflate toxic assets.

3. Government expenditures should play a small role in the economic recovery. For example, instead of loans for the auto industry, the government should buy autos and give them away to government employees (e.g. a fringe benefit). So, automakers can continue to produce, instead of shutting down their plants for a month. Auto producers should take advantage of lower costs for raw materials and energy, and generate a multiplier effect in related industries.

 
At 2/01/2009 6:48 PM, Blogger Submarine Saildier said...

How about if each state's caucus got together and decided how they would spend/return a portion of $825 billion, and then we got 50 separate bills. In this case, each caucus could get "laser guided" input from their state government and input from their respective constituencies. A vast, bipartisan majority would vote for it because a majority of each states' caucus would voter for it. It would also serve as a national science project: we could see which kind of stimulus package works best in real time, and then we could settle the spending/tax cut stimulus question forever.

 
At 2/01/2009 6:48 PM, Blogger wcw said...

1. A payroll-tax holiday isn't a bad idea, but it wouldn't be nearly enough.

2. If you want to make a good-bank/bad-bank model, you can't pay a premium to market prices. If that means nationalizing, so be it. It probably does. When needed in a crisis, real capitalists nationalize.

3. Government expenditure must play a large role in the recovery until we are off the zero lower bound and can use monetary policy as otherwise is customary.

 
At 2/01/2009 8:13 PM, Anonymous Anonymous said...

" ...real capitalists nationalize."

Real capitalists accept the consequences of their decisions. They do not use the federal treasury to fund a welfare state. The Constitution provides for the appropriate remedy, Article 1, Section 8. Bankruptcy.

 
At 2/02/2009 12:40 AM, Blogger wcw said...

Anon8:13, that is the Andrew Mellon prescription that worked so motherfucking well from 1929 to 1932.

Real capitalists learn from the past.

 
At 2/02/2009 2:33 AM, Anonymous jimGR said...

I thought there was an "issue" with money supply back then.

But then, the god who blesses this country, made one of his rare appearances and showed off as the man most people know as GVR.

 
At 2/02/2009 8:42 AM, Anonymous t jefferson said...

G.M. is following the same model that Delphi did. Use the American profits to fund new overseas plants. The difference now is these intelligent productive Executives are using our tax-payer money to fund new investment in Brazil, Then claim bankruptcy in the U.S.

G.M. was committed to invest in a new engine plant in Michigan but that investment has been halted.

 
At 2/02/2009 8:54 AM, Blogger Walt G. said...

I don’t think it matters what people think, any large and viable company will have a substantial foreign presence in a globalized economy.

I don’t think “Buy American” was part of GM’s loan package because the focus was on breaking the UAW. You can't help but notice the lack of any restrictions on the banking industry employees to be paid in line with their Japanese counterparts.

 
At 2/02/2009 10:32 AM, Anonymous Anonymous said...

"that is the Andrew Mellon prescription that worked so motherfucking well from 1929 to 1932.

Bankruptcy simply clears the decks. It takes real fuck-ups like Hoover and FDR to create and sustain a depression.

But, heh, not to worry, your boy Obama has got it all figured out. He's going to spend us all into prosperity. Just like, well, Hoover and FDR.

Who was is that said, "those who forget the past, are doomed to repeat it"?

 
At 2/02/2009 10:42 AM, Anonymous t jefferson said...

But, heh, not to worry, your boy Obama has got it all figured out. He's going to spend us all into prosperity. Just like, well, Hoover and FDR.

What about our boy Bush he didn't do us any better. Our boy Bush started the bail outs.

 
At 2/02/2009 10:53 AM, Blogger 1 said...

"Real capitalists learn from the past"...

Whereas real socialists are apparently incapable of learning from the past...

 
At 2/02/2009 12:26 PM, Blogger misterjosh said...

I'd like to see some of these "real capitalists" you speak of. There's certainly not any of them in government!

 
At 2/02/2009 3:00 PM, Blogger 1 said...

"And they're using bailout cash to continue their lawsuits against higher fuel economy standards in places like California. Does GM want to go bankrupt?"...

Interesting point...

I wonder just how many jobs have been lost due the inanities of the EPA?

"Do banking executives honestly deserve to stick their hands into the "bailout cookie jar," especially when they helped steer their ships into disaster?"...

Well since the politicos were so in a hurry to reward failure, why shouldn't banking execs and others take the bailouts for everything they can get their hands on?

 
At 2/02/2009 8:23 PM, Blogger wcw said...

Anon10:32, making shit up does not become you. I have dealt with far-right tropes on Hoover here before, and failed, pace fairy tales like Shlaes's, to find anything to back them up. But please, try try again.

1, anyone who thinks F.D. "on a stretcher" R. was a 'real socialist' has issues perceiving reality. Real capitalists understand that the sky will be blue on a sunny day whether or not it suits their politics.

 
At 2/03/2009 7:18 PM, Blogger 1 said...

wcw says: "anyone who thinks F.D. "on a stretcher" R. was a 'real socialist' has issues perceiving reality"...

Reality check here, is social security a socialist program or not?

We know it isn't voluntary...

 
At 2/03/2009 10:31 PM, Blogger wcw said...

No, insurance programs are not socialism.

This has been the latest in a series of short answers to stupid questions posed by third-grade minds. Tune in next week when we answer the fourth-grade question, "why isn't Social Security socialism if its first six letters spell 'S-O-C-I-A-L?'"

 
At 2/04/2009 7:12 AM, Anonymous Anonymous said...

Insurance is not socialist. Government owned insurance that requires participation at threat of criminal prosecution is. After we are done with the fourth grade essay on why social security is not socialist because it begins with "social," we can start the fifth grade essay on why the government ownership of insurance is socialist.

Please include a reference to a sixth grade essay in your reply.

 
At 2/04/2009 9:15 AM, Anonymous Anonymous said...

Go to the source. The trouble here is that the Latin American Herald Tribune story (originally published Nov. 18, 2008, but for some reason making its way around again as it is a new story) got things wrong. If you go to the cited article in Gazeta Mercantil (in Portuguese), you can see that US$1 billion in investment to renew the product line by 2012 is mentioned (out of a total US$1.5 billion investment), but those funds are coming from what GM do Brasil generates, and are shielded from whats happening with the U.S. parent company. At the same time, note that the Brazilian federal government and Sao Paulo state governments are investing R$8 million in the company's local operations.

You can argue that GM should use that US$1.5 billion raised through GM do Brasil to aid its operations in the U.S. instead of going to U.S. taxpayers, but say that GM is putting TARP funds into Brazil is wrong.

 
At 2/12/2009 4:33 AM, Anonymous Millionaire Maker said...

We can get all the gazette of science we have money and money is also good sources earn money to have provided all facilities in the world and money is most important so is making money online.

 
At 2/12/2009 5:16 PM, Blogger house of payne said...

The claims that General Motors is planning to invest $1 billion of U.S. federal aid money in its Brazilian operations is unequivocally wrong and without any basis in fact. No monies from a U.S. government loan would be allocated to investments in Brazil. In the case of Brazil, GM has $1 billion in investments that have been announced over the last two years. These investments are fully financed by GM's Brazilian operations through local sources. GM's operations in Brazil are fully self-funded.

 
At 1/13/2010 11:53 AM, Blogger stephan said...

You forgot to mention that from 2008 into 2009, the only market that GM had a profit was Brazil. They reported a profit of US 1.3 Billion and sales of $20.26 Billion, it is the foreing markets that are maintaining the US GM alive. Perhaps you think it's wrong that they invest in their most profitable market.
According to Economist Magazine, Brazilian economy should surpass France's and England's by 2014. What GM needs to do is to bring their Flex Fuel vehicles to the US.

 

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