Month: February 2010

It’s Been a Weird Year for the Auto Industry

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Play them off, Jon Stewart

With the recall of more than 6½ million to repair a sticky accelerator pedal, Toyota’s sales fell by 47% from December, and 16% year over year, which was enough for both Ford and GM outsell to outsell the Japanese car firm.

Of course, we now know that it’s not just accelerator pedals, but also the brakes on its Prius hybrid, where it appears to be a software issue that creates unsteady breaking in the interplay between regenerative and mechanical braking.

It may not be any consolation to the Toyoda family, but Ford just rolled out a software update for its hybrid vehicles:

Ford Motor Co. announced Thursday that it will ask owners of its Ford Fusion Hybrid and Mercury Milan Hybrids sedan to bring their car into their Ford dealer to replace software that operates the car’s braking system.

While the cars maintain full braking ability, Ford said, drivers may occasionally experience a strange feeling in the brakes under certain circumstances.

So the latest problems may be an artifact of the move to “drive by wire” technologies for hybrid vehicles, you pretty much have to, because managing the battery/engine balance cannot be done manually by the driver.

In any case, the juxtaposxition of glitches in software and automotive hardware, it seems appropriate to invoke the proven to be false by Snopes joke:

At a computer expo (COMDEX), Bill Gates reportedly compared the computer industry with the auto industry and stated: “If GM had kept up with the technology like the computer industry has, we would all be driving $25.00 cars that got 1,000 miles to the gallon.”

In response to Bill’s comments, General Motors issued a press release (by Mr. Welch himself) stating:

If GM had developed technology like Microsoft, we would all be driving cars with the following characteristics:

  1. For no reason at all, your car would crash twice a day.
  2. Every time they repainted the lines on the road, you would have to buy a new car.
  3. Occasionally, executing a manoeuver such as a left-turn would cause your car to shut down and refuse to restart, and you would have to reinstall the engine.
  4. When your car died on the freeway for no reason, you would just accept this, restart and drive on.
  5. Only one person at a time could use the car, unless you bought ‘Car95’ or ‘CarNT’, and then added more seats.
  6. Apple would make a car powered by the sun, reliable, five times as fast, and twice as easy to drive, but would run on only five per cent of the roads.
  7. Oil, water temperature and alternator warning lights would be replaced by a single ‘general car default’ warning light.
  8. New seats would force every-one to have the same size butt.
  9. The airbag would say ‘Are you sure?’ before going off.
  10. Occasionally, for no reason, your car would lock you out and refuse to let you in until you simultaneously lifted the door handle, turned the key, and grabbed the radio antenna.
  11. GM would require all car buyers to also purchase a deluxe set of road maps from Rand-McNally (a subsidiary of GM), even though they neither need them nor want them. Trying to delete this option would immediately cause the car’s performance to diminish by 50 per cent or more. Moreover, GM would become a target for investigation by the Justice Department.
  12. Every time GM introduced a new model, car buyers would have to learn how to drive all over again because none of the controls would operate in the same manner as the old car.
  13. You would press the ‘start’ button to shut off the engine.

Everything old is weird again.

The Employment Numbers

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H/t Calculated Risk


Employment Population Ration, h/t Calculated Risk


Part time involuntarily, h/t Calculated Risk


Worst recession since WWII, h/t Calculated Risk


Temp hiring, which is a leading indicator, is improving, h/t Calculated Risk


Birth/death model, h/t Daily Reckoning

Well, the good news is that the unemployment rate fell to 9.7%. The bad news is that non farm payroll fell by 20,000, while analysts had forecast an increase of 5,000.

Unemployment falling is therefore entirely the result of people, most notably white women, having stopped looking for work, so I would not call it a good thing.

The fact is that long term unemployment, people who have been unemployed for more than 26 weeks,* has hit 4.1% of the civilian workforce, an all time record.

Barry Ritholtz digs a bit deeper, and finds positive data points:

  • The household survey shows an increase, and the household survey covers small business missed by the business survey.
  • Temp employment increased, and temp hiring leads full time hiring, assuming that companies don’t go “permatemp”.
    • I would note that I have anecdotally observed this when I call “job shops” about contract work. Things to seem to be picking up, hence 2 interviews (1 in person and 1 phone) in the past 2 weeks, as versus 1 (phone) interview in the prior 6 months.
  • Part-time for economic reasons (underemployed) fell sharply (3rd graph from top)

As I noted yesterday, there was a big change in the “birth/death” adjustment, (bottom graph) and the adjustment appears to me to be more of an exercise in political number manipulation than a reasonably applied statistical technique.

In any case, if you scroll down on the full BLS report, they talk about the adjustment:

Table A presents revised total nonfarm employment data on a seasonally adjust-
ed basis for January through December 2009. The revised data for April 2009
forward incorporate the effect of applying the rate of change measured by the
sample to the new benchmark level, as well as updated net business birth/death
model adjustments and new seasonal adjustment factors. The November and
December 2009 revisions also reflect the routine incorporation of additional
sample receipts into the November final and December second preliminary
estimates. The total nonfarm employment level for March 2009 was revised down-
ward by 902,000 (930,000 on a seasonally adjusted basis), or 0.7 percent. The
previously published level for December 2009 was revised downward 1,390,000
(1,363,000 on a seasonally adjusted basis).

So they were off by over 1 million in December … Oopsie.

You can see Bloomberg’s interactive page on the effects here.

*Full disclosure, this set includes yours truly, who has been out of work for about 30½ weeks.

New Mayor in Baltimore

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Sheila Dixon’s resignation as Mayor of Baltimore became effective yesterday, and she was sentenced to probation by the judge, while she was replaced by City Council President Stephanie Rawlings-Blake as mayor.

As to my take on this: Dixon appeared to be an effective mayor, but she was always small scale corrupt, it seemed that every 2-3 years, you had her getting caught putting relatives on the payroll or steering work to firms that employed her friends and relatives.

As to Ms. Rawlings-Blake, she has always seemed kind of a non-entity, somebody who is where she was because her father, the late Howard “Pete” Rawlings, was a major power in Maryland politics.

Well, seeing as how we have what could be one of the largest blizzards on record for the area rolling in on us, she gets a baptism by fire.

Just in Case You are Wondering

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Lazard HQ, Let’s bring pitch forks and torches,
30 Rockefeller Center, New York City, NY

Well, one of the older investment banks out there, Lazard Ltd. formed in 1848, just declared a profit in the 4th quarter.

Wait, no, they didn’t they had a loss.

Why did they have a loss? Because they decided that they had to issue yet another round of indefensible bonuses to their staff:

What should have been a profitable quarter a Lazard Ltd. turned into a surprising loss due to the investment bank paying its people big bonuses.

The firm doled out $616 million in compensation and benefits to about 2,300 employees last quarter, or more than triple the amount handed out in the same period in 2008. It was a consequence, Lazard said, of a decision to pay more bonuses in cash and accelerate some deferred cash awards from a prior year. But so great was the firm’s generosity that compensation costs overwhelmed quarterly revenues and resulted in a net loss of about $55 million for the fourth quarter. The charges also almost wiped out full-year profits.

Lazard Chief Executive Kenneth Jacobs, who took over from the late Bruce Wasserstein last fall, argued that he had no choice but to pay his people to protect and build the franchise. Lazard was one of the few major Wall Street firms to avoid government bailout assistance.

“[Our compensation policies] should enhance our competitiveness and drive shareholder value,” Mr. Jacobs said, in a prepared statement. “Our goal is to grow annual compensation expense at a slower rate than revenues.

(emphasis mine)

Note the comment about shareholder value. Lazard has been publicly held since 2005, but what the f%$#, just screw the share holders.

BTW, their goal, “to grow annual compensation expense at a slower rate than revenues,” that means that their goal is to make a profit …………… some day …………… in the indeterminate future …………… because compensation is pretty much their only expense, ex- renting some office space, and pay a few licensing fees.

They are spending over ½ million an employee:

For all of 2009, Lazard had $11 million in earnings, down sharply from the prior year’s $196 million. Total compensation costs for all of 2009 were a little over $1.3 billion, or an average $565,000 per employee.

Mr. Jacobs’ remarks about pay come a day after Morgan Stanley CEO James Gorman promised to rein in compensation this year at his firm. At Morgan Stanley, compensation ate up 62% of revenues last year. At Lazard, it was 72%. Typically, half of Wall Street revenues go out in compensation.

So, under the normal and customary rules, half the gross revenue, you know, before expenses goes to an already overpaid staff, but it’s not enough for the vampire squids smaller cousins.

Congress needs to change laws to allow shareholders to truly hold managers accountable.

I’m also wondering if shareholders have grounds for a suit here, since it’s pretty clear that management is ignoring them, and the well being of the company, in its decisions.

A ½ Step

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It looks like there is increased momentum in the Senate for raising the tax rate on big bonuses for bailed out firms

Senators Barbara Boxer and Jim Webb proposed a 50 percent tax on 2009 bonuses above $400,000 at any firm that has received more than $5 billion in government assistance.

The senators said they had not yet gathered broad support for the proposal, and neither sits on the tax-writing Senate Finance Committee, which would likely have to take up the bill. A 35 percent tax on bonuses at bailed-out companies was proposed last year by the leaders of the Finance Committee, Democrat Max Baucus and Republican Charles Grassley, but it has not been acted on.

I call it a half step, because in order to fix this, it needs to apply to a lot more people than that, and to apply to all income.

The marginal tax rate for people earning more than about $5 million a year should be north of 75%.

I don’t care if it’s Lloyd Blankfein, A-Rod, or Lady Gaga, let’s raise their taxes.

In the News of the Unsurprising

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The soon to be ex-wife of South Carolina Governor Mark “Hiking the Appalachian Trail” Sanford says that he refused to promise fidelity in his wedding vows:

South Carolina first lady Jenny Sanford recalls how she made the “leap of faith” to marry husband Gov. Mark Sanford even though the groom refused to promise to be faithful, insisting that the clause be removed from their wedding vows.

“It bothered me to some extent, but … we were very young, we were in love,” she said in an exclusive interview with Barbara Walters to air on “20/20” Friday. “I questioned it, but I got past it … along with other doubts that I had.”

Sanford and her marriage were thrust into the national spotlight in June 2009 when her husband admitted that he had been secretly visiting his longtime lover in Argentina instead of hiking the Appalachian Trail, as he had told his staff.

Imagine that.

On the brighter side, I imagine that he learned how to Tango.

Oh Crap.

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The Federal Reserve has announced that it is terminating its Term Asset-Backed Securities Loan Facility (TALF) at the end of March.

Basically, the Fed buys bonds secured by loans at sub market rates, in order to keep interest rates low.

Well, now that this program is starting to wind down, we are starting to just how much rates will climb when government support is withdrawn, and it ain’t pretty:

The end of a Federal Reserve program that helped unlock credit markets is spurring sales of asset- backed bonds with relative yields five times wider than on debt secured by car loans.

The expiration of the Fed’s Term Asset-Backed Securities Loan Facility is driving companies to sell bonds tied to loans that would otherwise require higher yields. Borrowers are offering bonds backed by subprime auto loans, mortgage-servicing payments and assets that have proved hard to sell after the worst credit seizure since the Great Depression.

They are talking about auto loans, where the spread (It’s not clear, but I think that this is in comparison to treasuries) for TALF instruments is 0.35% and for non-TALF it is 1.75%.

If the end of the TALF results in anything like a 1% increase in mortgage rates, home sales fall off the cliff again, and they fall hard, because for the same payment, you have about 11% less in home prices, and people buy houses on the basis of monthly payment, not price.

Obama Goes to “National Prayer Breakfast”

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So, he showed up to the little bit of Christian Dominionism run by “The Family”, though he did condemn the “kill the gays” bill in Uganda.

I have no word yet on whether the Ugandan genocidal manics David Bahati, author of the Ugandan “Kill the Gays” bill, and Ugandan Ethics and Integrity Minister James Nsaba Buturo, one of its chief supporters, were in attendance, though they had intended to until this entire thing blew up.

I also think that any politician who associates with “The Family” to any degree is doing this country a great harm.

Andrew Cuomo Sues Ken Lewis and Bank of America for Fraud

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Now that the SEC has settled with Bank of America over its misrepresentations, New York State Attorney General Andrew Cuomo is going after the bank for the same thing:

Former Bank of America Corp. Chief Executive Officer Kenneth Lewis was sued by New York Attorney General Andrew Cuomo for defrauding investors and the government when buying Merrill Lynch & Co. The bank agreed to pay $150 million to settle a related lawsuit by U.S. regulators.

Cuomo also sued the bank’s former chief financial officer Joe Price and the bank itself for not disclosing about $16 billion in losses Merrill had incurred before it was bought by Bank of America in an effort to get the merger approved. Afterwards, Lewis demanded government bailout funds, Cuomo said.

“We believe the bank management understated the Merrill Lynch losses to shareholders, then they overstated their ability to terminate their agreement to secure $20 billion of TARP money, and that is just a fraud,” Cuomo said today at a telephone press conference. “Bank of America and its officials defrauded the government and the taxpayers at a very difficult time.”

Of note is the fact that Bank of America performed its due diligence on Merrill Lynch in only 25 yours, which, along with their firing of their general counsel when he suggested that there might be issues, does appear to indicate that something stinks here.

Another bit of weirdness is that while BoA had intended to buy a brokerage for some time, it wasn’t Merrill, at the board meeting in which the proposal was mooted, most of the board members thought that they would be purchasing Lehman:

When Bank of America Corp.’s board met to approve the acquisition of an investment bank on Sept. 15, 2008, members thought they were going to buy Lehman Brothers Holdings Inc., not Merrill Lynch & Co., according to New York Attorney General Andrew Cuomo.

The bank bought Merrill after examining its books for just 25 hours, Cuomo claimed. Shareholders approved the deal Dec. 5, 2008. The acquisition closed Jan. 1, 2009, after Merrill losses had increased by billions of dollars, a change the bank didn’t disclose before the shareholder vote, Cuomo said.

“It’s the way we approved acquisitions that ticks me off the most!!!” director Chad Gifford later wrote in an e-mail about the last-minute switch, according to a securities-fraud complaint Cuomo filed today in New York against the bank, former Chief Executive Officer Kenneth Lewis and ex-Chief Financial Officer Joe Price over their handling of the Merrill deal.

E-mails and written notes that were gathered by Cuomo for his investigation of the matter show personal reactions of executives as they learned of Merrill’s rising losses, which reached $16 billion before taxes by December 2008. They also show Merrill kept Price informed of the losses as they grew, yet he resisted pressure from his lawyers to disclose them to shareholders.

“Read and weep,” wrote Bank of America accounting officer Neil Cotty to Price on Nov. 4, 2008, when Merrill’s financial reporting unit forwarded preliminary October results with a loss of $6 billion. The merger documents had already gone out to shareholders. Five days later, the October loss was put at $7.5 billion before taxes.

I think that this was a deliberate scheme to get some more taxpayer money to do the deal, and I hope that Cuomo goes where the SEC did not, and throws Ken Lewis’ sorry ass in jail.

H/t Huffpo for the full complaint (90 pages, scrollable PDF window) after the break.


BoA_Complaint –

Yet More Evidence that Cap & Trade Sucks

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The latest is that the EU is looking to declare cutting down rain forests for farming are actually the maintenance of forests:

The European Commission and some EU member states hope to redefine palm oil plantations as “forests,” according to a leaked document from the EU executive.

Rules governing the use of biofuels were supposed to be designed to sort out the sustainable versions of the technology from their dirtier cousins following a massive backlash against it in 2008. At the time, an avalanche of reports revealed that many forms of the fuel source both increase greenhouse gas emissions and put pressure on food prices.

…………

But in a manoeuvre that has shocked environmental campaigners, a draft commission communication offering guidance to EU member states on the use of biofuels has classified palm oil plantations – the source of one of the most destructive forms of biofuels – as “forests.”

Essentially, the document argues that because palm oil plantations are tall enough and shady enough, they count as forests.

(emphasis mine)

This is why you go with a carbon tax: Because cap and trade, and the offsets that are inherent in the system are going to be dominated by forces that will use fraud and political influence peddling to make themselves money.

If you tax carbon when it comes from the ground, you disincentivize using fossil fuels. If you allow for offsets, you create phony carbon offsets, like palm oil forests, and Chinese hydroelectric dams that do not hook into the grid.

This is going to be a disaster.

Economics Update

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Scary graph pr0n of the day, option ARM resets
h/t Calculated Risk

Well, today is “Jobless Thursday,” and initial claims unexpectedly rose to 480,000, rather than dropping as forecast, as did the rather more significant 4-week moving average, while continuing claims remained flat, though better productivity numbers might indicate a bit of an upswing.

Additionally, factory orders rose more strongly than forecast in December, which also is good news.

In the class half empty/full division. we have home listings rising for the first time in 18 months, which could presage a turn around in the market (full), or the fact that sellers who were trying to wait out the downturn are finally capitulating to the real estate market (empty), which would indicate further price declines ahead.

Me, I’m a bear on this.

Meanwhile, over on the other side of the pond, the Bank of England kept its benchmark rate at 0.5%, but perhaps more significantly, it announce that it is “pausing” in its quantitative easing (printing money) through buying bonds.

I’m not sure if they are just taking a month to survey the landscape, or if they think that recovery is, “just around the corner.”

Meanwhile, the recent swings in global stock markets, along with the jobs number, have investors worried, which has them buying up dollars, and these concerns also drove oil and other commodities lower.

Formal Charges of Child Kidnapping in Haiti

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Let’s be clear about this: There is sufficient evidence for formal charges to be filed against these “missionaries” attempting to “rescue” the children.

Now that they have been officially charged with a crime that can result in 5-15 years in prison, we can see some truth seeking.

As I have said before, I think that they were kidnapping the children with the goal of raising them as Evangelical Christians, and so I welcome the fact that they have been charged.

There has been all to much in the way of prosecutorial discretion cutting in favor extremist religious fundamentalists, and the realization that they can charged, tried, and sent to jail when convicted makes for a good deterrent.

Much of the problem with violent religious extremists throughout the world has been an outgrowth of authorities ignoring the “little things”, because it is seen that their hearts are in the “right place”.

Big Change in Birth/Death Adjustment

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Last night, I made a brief mention of changes to the birth/death adjustment for jobs numbers.

Birth/death is basically a way to deal with the fact that small companies are being formed and ceasing to exist all the time, and the normal methods, the survey of employers miss the effect on net employment.

Well, tomorrow, the Department of Labor will release their annual adjustment, and it looks like the statistical fudge factor missed 824,000 job losses.

I guess they thought that all those people had chucked it all to become professional eBay merchants, but they were wrong:

As bad as the government’s jobs readings numbers have been during the Great Recession, we’ll soon find out the real situation likely was worse.

Much worse.

ob losses during the recession may have been underestimated by close to a million jobs. So instead of employers cutting just over 7 million jobs from their payrolls since the economic downturn began in December 2007, it’s expected that the Labor Department’s new estimate will be a loss of 8 million jobs.

“It’s an enormous understatement of the severity of the crisis,” said Heidi Shierholz, labor economist with the Economic Policy Institute, a union-supported think tank. “It confirms that things were actually worse on the ground than what the reports suggested.”

(emphasis mine)

The phrase, “The problem is that BLS models appear to have grossly overestimated the number of new businesses that opened during the recession.” is kind of an understatement.

With banks not lending to anyone how can someone start a business anyway?

I’m inclined to think that this was something that was driven in some manner by electoral concerns from Bush and His Evil Minions™, but that might just be tinfoil hat.

Talk About Mixed Emotions

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Dan Coats will run against Evan Bayh for the US Senate in Indiana, and I have mixed emotions about this.

Coats is clearly a wingnut, he was screaming “wag the dog” about Clinton military activities in addition to being a fierce supporter of Harriet Miers, but he is running against Evan Bayh, and Evan Bayh really sucks.

I know that LBJ said that, “Better to have him inside the tent pissing out, than outside pissing in,” but Bayh is inside the tent pissing in.

What’s more, he’s corrupt, bought and paid for though his wife, who gets highly remunerative board positions by virtue of his pro-special interest votes.

Since he’s given up on being President, he’s moved very far to the right, and he’s more of a hurt than a help.

Whiskey Tango Forxtot?

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Warren Buffet’s Berkshire Hathaway has had its long-term counterparty credit rating cut from AAA to AA-plus.

They don’t like his purchase of the BNSF railroad:

Counterparty credit ratings reflect how well a company can meet its financial obligations with customers, trading partners or other parties.

“We believe that the railroad acquisition will reduce what historically has been extremely strong capital adequacy and liquidity, and that investment risk with sizable concentrations remains very high,” S&P said in a statement.

The rating downgrade came on the same day that Berkshire announced a bond sale of up to $8 billion to help pay for the Burlington acquisition.

You see, if Buffet buys insurance companies, good, but if he buys companies whose business which involve something tangible, that’s bad, I guess.

It’s clear that rail is in a growth curve. Oil is permanently above $50/bbl (consider my poor track record on this), and there are signs that fees to over the road truckers will reduce the subsidies given to that industry.

But all S&P sees is money being spent on big iron, and they do not like this.

OK, I Might Consider Donating to Fiorina

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Rachael Maddow’s take


Full ad

If just because she is an even bigger disaster as a candidate than she was as CEO of HP, where staffers broke out into “Ding, dong, the witch is dead” upon announcement of her firing.

You see, she has followed up the worst political website ever with the worst political ad ever.

I’m beginning to wonder if former HPers are working on her campaign ad just to f%$# with her.

In any case, when one considers her history at HP, where she demoralized and hurt the company but got pay increases, or her history at AT&T, where her staff falsified sales data, she is a poster child for over-privileged senior management, and so would be dead meat on the table in the general.

But right not, she is flinging sheep at Republicans, so she’s doing “God’s work.”

Wish Me Luck

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I have a job interview for a short term contract, it starts now.

I posted this last night, but forward dated it.

It’s lower level than I would like, but hey, it’s work.

I won’t provide any information on the client, I think that it is a bad idea to blog about potential employers.

Google Mulls Jumping C. Megalodon*

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This is one big shark that they jumped.
With Frikken Lasers!

So, now that the Chinese have hacked into Google, the Google has decided to throw in their lot with the National Security Agency to protect themselves:

The world’s largest Internet search company and the world’s most powerful electronic surveillance organization are teaming up in the name of cybersecurity.

Under an agreement that is still being finalized, the National Security Agency would help Google analyze a major corporate espionage attack that the firm said originated in China and targeted its computer networks, according to cybersecurity experts familiar with the matter. The objective is to better defend Google — and its users — from future attack.

Google and the NSA declined to comment on the partnership. But sources with knowledge of the arrangement, speaking on the condition of anonymity, said the alliance is being designed to allow the two organizations to share critical information without violating Google’s policies or laws that protect the privacy of Americans’ online communications. The sources said the deal does not mean the NSA will be viewing users’ searches or e-mail accounts or that Google will be sharing proprietary data.

Of course, neither does giving money to a junkie mean that they will be buying heroin.

As Noah Schachtman notes, it doesn’t require a tinfoil hat to think that it is possible, nay, even likely, that the NSA will use this access to suck data like a giant hoover. It’s what they do:

But there’s a problem. The NSA and its predecessors also have a long history of spying on huge numbers of people, both at home and abroad. During the Cold War, the agency worked with companies like Western Union to intercept and read millions of telegrams. The during the war on terror years, the NSA teamed up with the telecommunications companies to eavesdrop on customers’ phone calls and Internet traffic right from the telcos’ switching stations. And even after the agency pledged to clean up its act — and was given wide new latitude to spy on whom they liked – the NSA was still caught “overcollecting” on U.S. citizens. According to the New York Times, the agency even “tried to wiretap a member of Congress without a warrant.”

All of which makes the NSA a particularly untrustworthy partner for a company that is almost wholly reliant on its customers’ trust and goodwill. We all know that Google automatically reads our G-Mail and scans our Google Calendars and dives into our Google searches, all in an attempt to put the most relevant ads in front of us. But we’ve tolerated the automated intrusions, because Google’s products are so good, and we believed that the company was since in its “don’t be evil” mantra.

The issue here is not that Google would voluntarily allow the NSA to access personally identifiable data, it is that they are ill equipped to defend themselves against a company that hoovered the entire Internet.

If the NSA does not leave a back door in the Google servers, without the knowledge of Google management, as part of their efforts, then they would not be doing their job properly.

This is like employing Lady Gaga as a model for tastefully modest evening wear.

*The largest shark, and likely largest predator fish ever. It died out some 1.5 million years ago. The Genus is still in dispute, between either Carcharodon (Great White) or Carcharocles (broad toothed Mako). But in either case, you are jumping C. Megalodon, you have jumped the biggest shark ever.

I Said that This Would Happen

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When GM backed out of its deal to sell Opel, so that it could suck up the promised state aid from Germany, I said that they were snatching defeat from the jaws of victory.

Well, they are now seeing blowback from this decision.

The German government is demanding that GM put significant resources into Opel, resources that it really doesn’t have, before it will make any state aid available:

Germany wants General Motors Co. to increase its contribution to the Opel unit’s reorganization before considering whether to provide state aid, according to two people familiar with the matter.

Economy Minister Rainer Bruederle is using a two-day U.S. visit, which includes a meeting with Treasury Secretary Timothy F. Geithner in Washington, to express that view, said the people, who declined to be identified because the discussions are confidential. GM has said it will provide 600 million euros ($836 million) for Opel’s restructuring and ask for as much as 2.7 billion euros from European governments.

I said that the result of the decision would be labor unrest, consumer disgust, and hostility on the part of German authorities.

You can’t go wrong betting on the managerial incompetence of GM.