The Old Studebaker Plant, Detroit Pic: DetroitYES
Nobel economics prize winner Paul Krugman said Sunday that the beleaguered U.S. auto industry will likely disappear.
"It will do so because of the geographical forces that me and my colleagues have discussed," the Princeton University professor and New York Times columnist told reporters in Stockholm. "It is no longer sustained by the current economy."
Krugman won the 10 million kronor (US$1.4 million) Nobel Memorial Prize in economics for his work on international trade patterns. Some of his research on economic geography seeks to explain why production resources are concentrated in certain locations.
Speaking to reporters three days ahead of the Nobel Prize ceremony, Krugman said plans by U.S. lawmakers to bail out the Big Three automakers were a short-term solution, resulting from a "lack of willingness to accept the failure of a large industry in the midst of an economic crisis."
Associated Press | Krugman: US auto industry will probably disappear
Urk. I gather that there’s a report on the wires quoting me as saying that the US auto industry would disappear. What I actually said was that the concentration of the industry around Detroit would disappear.
And did I really say “me and my colleagues”? I guess it’s possible — but that doesn’t sound like I speaking.
Paul Krugman | Me, misreported
At least the blogs offer a a respected journalist opportunity to correct misquotes. It seems Krugman merely pointed out the folly of handing $15 billion to Ford, Chrysler, and GM — an informed and highly qualified insight for which we thank him.
Because it (the bailout) really is a dumb move, demonstrating a "lack of willingness to accept the failure of a large industry in the midst of an economic crisis." As is reported elswhere, Detroit — the auto-capital, has been dying for decades.
A frantic, last-ditch attempt to forge a relief package for the auto industry collapsed in the U.S. Senate, dealing a giant blow to the immediate hopes of the Big Three.
Senate Majority Leader Harry Reid of Nevada suggested the $14 billion wouldn't be revisited until January. "It's over with," he said.
Wall Street Journal | Rescue Bid for Detroit Collapses in Senate Friday 12 December
Parse that carefully. It's Friday and it ain't over yet. As the WSJ later points out, the auto moguls will likely coerce the White House into allowing them to shave 'their share' from the discredited $700 billion Wall Street Benevolent Fund.
[Later...]
The Treasury Department said Friday that it would step in and lend funds to the Big Three auto makers until Congress has time to consider a long-term rescue package next year. ... The decision to use TARP funds is a shift in the White House's previous position that the $700 billion should be used only to stabilize the financial sector. However, the head of the Government Accountability Office testified last week that the wording of the legislation was flexible enough to authorize loans to the auto industry.
MarketWatch | Treasury stands ready to aid auto sector Friday 12 December
God! They're as predictable as addicts. There's far too much of this going on:
If GM is faking it, good for them. Ethics should be secondary to shareholder and employee concerns.
24/7 Wall St | Douglas A. McIntyre
I'm sure iconic Wall Street wizard and investment adviser Bernard Madoff would concur.
