This certainly doesn't look good: "The basic issue raised here is this: How do we account for the fact
millions of dollars were contributed to GOP candidates by Chrysler who
are being closed by the government, but only one has been found so far that is being closed that contributed to the Obama campaign in 2008?"
My operating assumption is that this story is a red herring. Democratic and Republican dealers are unlikely to be found in the same place, and the rural counties that tend to be red are probably less profitable. I would be less surprised to find out that the administration rescued specific donors from the hit list than to find that they deliberately closed Republican dealerships.
Still the administration should answer this; it gives the appearance of Chicago-style corruption that is going to further taint a Chrysler takeover which has already left a number of people in the business and finance community wondering how firm the rule of business law is these days.
Update: Nate Silver points out that most auto dealers are Republicans. That doesn't quite explain why so far only one Obama donor has been closed down, but it makes it difficult to definitely conclude bad faith.
Copyright © 2009 by The Atlantic Monthly Group. All rights reserved.
Your second link lists some maps that shows several closed delearships and the ones that were left open. The closed dealerships do not look rural to me. I'd be amazed if Obama made this decision. But its probably pretty likely that someone in his crew made the decision knowing full well they were taking care of their own.
Democratic and Republican dealers are unlikely to be found in the same place, and the rural counties that tend to be red are probably less profitable.
I don't think the closing of rural dealers is what we should expect (or what would make sense). If you have five dealerships in an urban area that could be served by three dealerships, you can close two and assume loyal customers will switch. On the other hand, if you close a relatively isolated rural dealership, the customers are likely to switch to a brand that does still have a dealership in town (rather than have to drive 20 or 30 miles for service). One of the competitive advantages that Detroit still has is rural dealerships -- their market-shares would be even lower without them, and it would be stupid to close those shops up (while keeping urban dealerships with overlapping territories). Of course, this is the government we're talking about, so doing something really stupid certainly can't be ruled out.
As Nate Silver put it at fivethirtyeight.com, "News Flash: Car Dealers are Republicans (It's Called a Control Group, People)." People who own car dealerships are overwhelmingly Republicans, and if you pick a bunch of them at random or in any other non-partisan fashion, it is likely that the group selected is going to be overwhelmingly Republican.
It's a shame that 538 transitioned from a useful, non-partisan site to just another site on the Internet that gets worked up anytime someone criticizes Obama.
Yes, it really is a shame that Nate has decided to use rigorous and objective statistical analysis to see if these overheated claims have any merit. Would to God he'd have have come up with different results so people like KTL would feel comfortable bequeathing the "non-partisan" moniker to him.
Because, apparently, even the facts are liberal.
dragnet, I took KTL's objection to be not against the conclusion, but against the snotty condescending manner in which the conclusion is explained.
Even the minority-owned dealerships? None of them would donate to Obama?
Or is it at least reasonable to assume that politics meant that Chrysler avoided closing minority-owned dealerships, even if that wasn't meant to help Democrats specifically?
Before the closings were announced, reports were that about 140 minority-owned dealerships could be closed. In reality, it seems that far fewer than feared, only about 33 minority owned dealerships were closed. Many minority-owned dealerships are smaller and less profitable, which is why minority dealer associations feared that they would be the first target.
I'm still skeptical of the entire story, but someone could investigate those 33 closed minority dealerships. I would expect to find at least some Democratic donations among them.
And certainly I would think a policy of avoiding closing minority dealers to avoid outcry would itself bias towards Democratic donors, even incidentally.
The first link says there are about 175 total such dealerships. 140/175 is much much higher than the 25% or so that were closed. 33/175 is a bit lower than 25%, but not terribly far off and probably not statistically significantly different.
All of this isn't plausible anyway, because Chrysler used a very explicit formula to derive who would be closed, due to the fact that the dealers would sue and make claims at bankruptcy court, they couldn't play games.
One would certainly assume that they used a formula for precisely those reasons. I'm not sure how "explicit" it is; it's certainly not published with the numbers, which has resulted in dealers loudly complaining that they didn't deserve to be closed because their numbers are better than their competitors who weren't.
It is kind of odd that the minority dealers association was loudly fearing that 140 out of 175 would be closed, but then a percentage in line with the overall percentage were closed. That in itself is somewhat suspicious-- perhaps under an unadjusted formula minority dealers would have been disproportionately closed (that was a real fear before hand), but the formula was adjusted with some sort of affirmative action weighting so that minority owners were not hurt only in proportion to the overall number.
It certainly seems incredible to target on a partisan basis just because it would be unbelievably stupid for them to do that. It seems more plausible that they might want to avoid disproportionately closing minority-owned dealerships, though that's far from proven. It's still worth someone investigating, just to clear the air. So long as the formula and numbers remain secret, this sort of poisonous allegation will thrive.
However: the Administration screwed over the bondholders who held secured debt in order to give a better deal to the (massively Obama donating) UAW. The bondholders would have been able to sue; they were able to make claims at bankruptcy court.
The Administration has already demonstrated that it is willing to screw over some creditors in order to give favors to political allies, even if this risks lawsuits or claims at bankruptcy court. So while I agree that it's unlikely that something so blatant would happen, Administration actions so far weaken the natural defense.
It should actually be a pretty simple matter to determine if anyone in the administration is approving/changing the list of closings. If someone in the administration is doing this, then it will be very difficult to explain this kind of interference as anything other than corruption.
And, I agree with Slocum- it wouldn't seem to make much economic sense to close the single rural dealership in a 75 mile radius when you can close one of three urban dealerships within a 20 mile radius.
"It should actually be a pretty simple matter to determine if anyone in the administration is approving/changing the list of closings."
How? You'd have to assume that the administration would answer honestly if asked. Considering the party controlling the legislature, you can be assured that they won't ask.
To get an answer from Chrysler, somebody would probably have to get discovery rights through litigation. Even then, stonewalling could drag out forever.
ed,
Too many people involved for it be covered up. Someone will talk, and someone in the main-stream-media will eventually pick up this story if there is anything to it.
Anecdotally, there are Democratic-owned dealerships which are not being closed, but which are seeing all or most of their competitors closed. Equally anecdotally there are profitable-Republican owned dealerships which are being closed. That's troubling, but as must be forever pointed out, the plural of anecdote is not data. Until - and unless - someone does some statistical analysis of both the dealers which are being closed and the ones which are being left alone, this is just a collection of troubling anecdotes. (Okay, a surprisingly large collection of troubling anecdotes, but still...)
What's fueling the suspicion is that the process has been incredibly opaque to date. Since nobody knows what criteria may or may not have been used (small dealerships? big dealerships? rural? urban?) it invites people to suggest their own criteria (republican donors, or dealerships competing with well-connected dealerships). If the administration is blameless here - as I suspect they are, as this would be an almost unbelievably crude piece of political thuggery - then they should outline their criteria so that it can be checked.
So...yeah. Car dealers are widely thought to be widely Republican - assuming this is more than a myth, then any list of closed dealership will always have a large number of Republican's on it. So far so good - but precisely because of that the administration should have taken steps to make sure the process was fair and transparent. So far they have not, and they need to get out ahead of this story. (Assuming, of course, they can...)
Short form: The administration is being somewhat incompetent, or incredibly corrupt. I'd vote for the former so far, but the story is just now getting started.
The transparency so far has only been to list incredibly broad criteria: profitability, sales volume, customer service scores...one or two other things I'm forgetting.
The problem is that when you actually analyze alot of the closings, they make very little sense. Many dealerships that have been closed have come out and stated their profitability, sales volume, and customer service scores compared to their competitors who were left open....and are wondering why they were closed.
But, as pointed out, that's all anecdotal.
Unfortunately, the "Car Czar", Steve Rattner, is married to the former National Finance Chair of the Democratic Party.
There are huge POTENTIAL conflicts of interest here. How involved was Rattner in the reorganization of the chrysler dealership network? What exactly were the dealership closing criteria?
So far, all we've got is alot of evidence gathered that seems to suggest the closings had at least a big dose of political thuggery. Since the closing process was not transparent (despite the huge sums of money given by the government to fund such operations), the evidence holds weight until proven otherwise.
Joe
The sidebar here is the virtual absence of "main-stream" media coverage for this. Once again we have the "blogosphere" reporting something that should the MSM should already have checked up on.
And they wonder why we laugh as they go bankrupt? Who in their right mind will subsidize these clowns?
"Once again we have the "blogosphere" reporting something that should the MSM should already have checked up on."
Ever met a journalist who understands statistics well enough to understand that if you have a pool 90/10 split between GOP/Democrat, and a guarded political decision strikes members of that pool in a 100/1 rate along that GOP/Democrat split (or whatever number exists here--I made that one up), this is a big red flag? I haven't. Most are lazy at detail work and switched to journalism (or worse, communications) in college after tanking bad in something as pathetic as English Lit.
Combine lazy with detail and poorly educated, and you get the useless mopes in media today. They will spend an 18 work day producing something glossy that has no real information in it that was not fed to them by someone else, and exclaim how hard they work.
Funny - just last night I was reading a book in which an "editor-at-large" for Esquire talks about how he outsourced his research for an article to a personal assistant firm in India....
I'd say "unbelievable," but it's all too believable.
And I share in Spartee's contempt for most MSM'ers. The days of educated and responsible journalism are long gone, at least at the main print and television outlets - including, as often as not, Fox.
A journalist has touched upon this, in the washington examiner. It's not a top-tier publication, but then again....the evidence so far is inconclusive, and any top-tier journalist who published this as it is would be:
A. Shunned for having published something potentially harmful to the new administration (this isn't me being a nut, the MSM is 90+% democratically oriented, as studies have proven).
B. Torn apart for having a lack of evidence to back up their claim against a democratic institution (vs. the supposed McCain affair with Vicki Iseman, or how the MSM didn't report the John Edwards scandals despite overwhelming evidence).
Many great reporters are only willing to make their career, not report news that will harm their careers. It's a lack of a principled ethic in today's media.
(this isn't me being a nut, the MSM is 90+% democratically oriented, as studies have proven).
Can you point to the studies that prove this? Just because someone says they are registered as a Democrat doesn't mean squat(See Evan Bayh and Ben Nelson). Second, we know that Drudge rules a lot of reporters world. So I seriously doubt it is 90%. Might it be 50 or 60%? Sure. 90? No.
Calvin,
Here is a link with references to various primary sources. You don't have to like the secondary source that collects them together, but there are references to studies.
You're actually backwards about the registration angle, Calvin, in my opinion. Many reporters fail to register as Democrats precisely to show a sign of independence, but then actually vote only for Democratic candidates. The studies linked show a greater percentage of votes for Democratic candidates than registration would predict. Journalists are not overwhelmingly Southern Democrats who vote Republican nationally.
One point that I would take exception with TreeJoe is that the 90+% number only holds for the national media and the major metro newspapers. There are plenty of smaller and regional newspapers that are conservative. And certainly in many areas with two dailies, one daily is conservative.
Thanks John. And yes, I agree, I was speaking about national outlets and didn't caveat my statement appropriately.
I believe the studies show the preference of the national outlets by voting & by donation.
L. Brent Bozell III's joint? Seriously? Now I know you are bullshitting me. That's a partisan outfit. One without a shred of credibility. Of course they are going to say it is 90/10. Thanks for proving my point.
"Just because someone says they are registered as a Democrat doesn't mean squat"
Um, yeah, it means something...at least to people who want to fairly view this matter. It strongly signals their political views are generally left of center relative to people who register as Republicans or have no registration at all.
If you cannot concede points where you have no serious argument beyond demands for evidence to prove the obvious, don't be surprised when people think you slightly trollish.
"L. Brent Bozell III's joint? Seriously? Now I know you are bullshitting me. That's a partisan outfit. One without a shred of credibility. Of course they are going to say it is 90/10. Thanks for proving my point."
In other news, Calvin just declared himself the Intellectual Shadowboxing Champion of the World. To claim the title, Calvin knocked out his shadow in the 11th round with a strong right hand blow Calvin imagined to be more ferocious than Tyson's best-ever punch.
Is this what this site has been reduced to? Picking up Right-wing talking points that have no basis in fact? I guess people don't also believe that most sports players are Republicans despite the great majority(if not all) of them belonging to a union(I mean MLB, NFL and so on.. ). Auto dealers are by there nature Republican. So of course a lot of them are going to suffer closed dealerships. But then Republicans love making a mountain out of a molehill.
"by there [sic] nature conservative"?
that may be. but given the government's unprecedented meddling in the business decisions of private enterprise, and the equally unprecedented opportunity for enrichment of FOOs (Friends of Obama) at the expense of, well everyone else, I'd say the onus is on the administration to make this uncomfortable process as transparent as possible, and not on Republicans (or anyone else wondering who the hell are making these decisions and why?)
Please!! We had eight years of enrichment of FOB(Friends of Bush), and you didn't complain then. Why now(It's a rhetorical question)?
Everyone of those rhetorical questions has a counter question. If you are opposing the enrichment of FOB, why aren't you opposing the enrichment of FOO?
Again you inconsistently blame people for lacking consistency.
I complained about it when I perceived it. In any event, this is a non-answer.
Calvin - Unlike how you are picking up someone else's talking point and just broadly stating "Auto dealers are by their nature Republican"?
Please actually read the comments on this. People are gathering information, and the trend thus far is concerning.
Yes, a T-test needs to be done. But there are huge conflicts of interest involved and a opaque process behind a government-involved closure of hundreds of businesses.
Why are you reflexively dismissing it? Similar to how you reflexively dismissed my 90% stat until someone provided the actual link?
Joe
Oh, come on. He didn't "reflexively dismiss it until someone provide the actual link", that would imply that he accepts the data now. He reflexively dismissed it, mocked your source, and continued to ignore your data.
Anybody who thinks Calvin is going to back down in the face of actual data hasn't been reading his posts these last few months.
I highly doubt that most sports players are Republicans. Blacks lean heavily Democratic and 2/3 of NFL players are black. The NBA is 76% black. It would be highly unlikely that there would be that much variance in these sports at least.
During the campaign there was a story about the Boston Celtics entire team supporting Obama, except for Brian Scalabrine. I think this is probably pretty close to standard in the NBA. MLB is about 30% hispanic and 8% black, so they might be majority Republican, but I would like to see some data.
I'm not a Republican, and I don't think it is unreasonable to ask some questions about pressure being applied to Chrysler to politicize dealership closings.
You really don't get it, do you. Black has nothing to do with it. Just because they voted for Obama doesn't mean they are Democrats. Have you ever seen an atheist in sports? You do know that pro sports are a hotbed for recruitment by evangelicals, right?
Calvin,
Above, you implied that just because someone is a Democratic senator doesn't mean they are Democrats. What is that makes someone a Democrat, exactly? From what you have written, I would have to conclude there are no Democrats.
I don't get it? You say Black has nothing to do with it, even though blacks overwhelmingly vote Democratic. Voting for Obama doesn't mean they are Democrats, even being registered Democrat doesn't mean anything. What the hell are you talking about?
Has anybody yet counted up the proportion of Republican donors in the closed group and the proportion of Republican donors in the non closed group and actually done a proper t-test? I mean, I am no Democrat, but "most of the closed dealers are Republicans" seems like a likely outcome if more Chrysler dealers are Republican donors in general.
'Salso possible that the numbers got skewed if there was a concerted effort to avoid closing minority-owned dealerships. Race-based decisions on closing dealerships are not exactly something I would support, but it's a bit more well-meaning than donor-based decisions.
I would like to direct any of you who are interested in participating in a crowd-sourced data collection project to the following blog:
http://rebootcongress.blogspot.com
and this post specfically:
http://rebootcongress.blogspot.com/2009/05/its-ford-or-foreign-from-now-on.html
This is an attempt to collect the records of all political donations for all Chrysler dealers, both those to be closed and those to be kept. After that an Excel spreadsheet will be created to determine if there is a correlation between donations and decision to close.
An analysis has been done at the statewide level and there is no correlation between states that voted for McCain vs Obama and selection of dealerships to close. But statewide may not be of sufficient resolution.
While you're at it, check to see how the dealers who are being closed who contributed to Democrats split their primary-season contributions between Clinton and Obama.
Okay... so what is inherently Republican about owning an auto dealership? Are Democrats inherently bad businessmen? I'm not sure I'd buy that given how many executive types and upper management types are Democrats. So what is it? The sleaziness?
Well, think about the demographics that are typically Republican. White, male, Christian, married, small business owner, making between 50k and 500k. That fits owners of auto dealerships to a tee.
But I think the larger point is that the more focused you are in life on making money, the more you're going to gravitate towards the party that offers you the lower tax rate. Owners of auto dealerships, I think more so than other small business owners, fit this description perfectly.
Yes, only auto dealers are focused on making money, unlike other small business owners who are motivated by the goodness of their hearts.
Don't be coy. You know exactly what I mean. Many car dealerships are known for their shady business practices. Much of their profit comes from taking advantage of their customers' lack of knowledge. Other small business owners have as their first priority their reputation and a sense of honesty and fairness when dealing with customers. This is assuredly not the case with many car dealerships, for whom profit is the only concern.
Adam,
Based on that analysis, I might conclude that you are writing that auto dealers really are Democrats.
You might conclude that, Yancey. But you're a rather deluded soul and habitually wrong about virtually everything, so that's the kind of conclusion I would expect from you.
Not deluded, Adam, but making fun of the implication of your comment, but you didn't notice that, did you?
Shorter Adam: Car dealers tend to be bad people, and we all know that bad people vote Republican.
Adam - What about if I'm focused on be able to raise my family with the lifestyle I want on one income, or working less than 75 hours a week, and therefore gravitate towards lower tax rate?
Or the concept that lower tax rates (to a point) are beneficial to both government (by making them operate leaner) and society (by making their efforts more fruitful)?
But I guess it's just focused in life on making money.
Then I would question your allegiance to the Republican party, whose economic policies largely revolve around tax cuts for millionaires, tax cuts on capital gains, and tax cuts on corporations, not tax cuts on the middle class.
I think you're looking for the Libertarian check box. And I assure you car dealers' donations to GOP candidates are not because of a belief in the Laffer Curve.
Interesting how neatly the world fits into a prepackaged box when all you need to win an argument is stereotypes and sloganeering, Adam.
Somebody should perhaps notify you that the prepackaged box is merely one form of a fantasy world, but...nah. You're more fun as a court jester.
Actually, there's a certain wealth level - and it's lower than you might think, I think around 200k - where people above it are actually majority-Democrat again. Whether you attribute that to guilt, generosity, cluelessness, or anything else, the fact remains that "rich people vote for tax cuts" is surprisingly false.
This whole thing is the kind of meaningless distraction that continues to make Republicans look petty and aimless, and diverts energy away from conservatives from actually crafting a winning political platform.
Maybe, or maybe the Obama appointed Auto Czar is trying to pay back major Democratic donors like Robert Johnson and McClarty. No, they would never do anything like that. Steve Rattner is a real paragon of integrity.
http://tpmmuckraker.talkingpointsmemo.com/2009/04/did_auto_czar_steve_rattner_help_scam_new_york_pen.php
It's more Rahm Emanuel. Rattner is about as much a real Democrat as Ben Nelson. People in the position of a Rattner use political affiliation as a way to climb the ladder, so to speak.
"Both papers also specify that Rattner is not himself a target of the probe"
"hard to imagine Rattner, a billionaire with lifelong political ambitions and more connections than any one person could ever legitimately milk for profits, would go along with it in good faith."
"The complaint leaves the impression that Rattner might have been cooperating in the investigation"
Well, that seems about as damning evidence as I've ever seen. If there's one thing that seems likely here, it's that one billionaire would help another billionaire to keep a measly six dealerships in backwater towns open, so he can increase his net worth by 0.000025%.
And you wonder why people think you're petty and aimless.
Or, perhaps when the federal government is in the process of unprecedented interference in private industry and has already given the appearance of skewing the process toward favored constiuencies (e.g. handing the keys of GM's kingdom to the UAW), people are naturally suspicious of an opaque process that may or may not have produced more of the same. Skewed inputs will produce skewed outputs, and that may be the only substance to the story here, but a skewed process will also produce skewed outputs and politicians working without transparency have all kinds of incentives to skew the process.
Btw, I find it humorous that the detractors of this topic are saying this is a meaningless distraction. What exactly is meaningless about carefully observing the government's unlawful intrusion into private business operations, bankruptcy proceedings, and unmandated (or even voted upon) gifting of taxpayer dollars.
Seems to be this is a completely meaningful distraction: the executive branch is massively expanding it's domestic authority. We can assume they are doing it with our best interests at heart (from which paves the road to hell), or we can try to be watchful of the terrible propensity for corruption.
"What exactly is meaningless about carefully observing the government's unlawful intrusion into private business operations, bankruptcy proceedings, and unmandated (or even voted upon) gifting of taxpayer dollars."
A few problems here:
There's nothing unlawful about it. Chrysler had the option of going under or asking for billions of government money. The government told them they could have the money under a lot of conditions, and they agreed. If they didn't want to be told how to run their company, they were free to turn the money down. But of course, that would mean the executives making such decisions would lose their jobs.
The bankruptcy proceedings are also perfectly lawful. The government offered the creditors a deal, and the creditors were free to accept the terms or go to bankruptcy court, like they would have anyway without a deal. Unless you're suggesting the government will tell the judges how to rule, which is quite an accusation.
"the executive branch is massively expanding it's domestic authority."
Unlike, say, every expansion of domestic authority the past eight years that Republicans didn't (and still don't) seem to have the slightest problem with.
"We can assume they are doing it with our best interests at heart (from which paves the road to hell), or we can try to be watchful of the terrible propensity for corruption."
That's perfectly sensible. Be as watchful as you like. Just be warned that when you come up with a story of corruption as flimsy and ridiculous as this, you're going to be mocked for it unless you find some real evidence.
"the executive branch is massively expanding it's domestic authority."
Unlike, say, every expansion of domestic authority the past eight years that Republicans didn't (and still don't) seem to have the slightest problem with.
- Adam
Adam, I had many problems with the expansion of executive branch powers that occured during the Bush administration, but most of them were security related and not economically related. IMHO, it is far easier to reign in a security-related overreach than an economically-related overreach...which is why I'm so concerned here.
But you didn't even argue with me that they were vastly expanding their reach, you just offered an empty rhetorical device.
"We can assume they are doing it with our best interests at heart (from which paves the road to hell), or we can try to be watchful of the terrible propensity for corruption."
That's perfectly sensible. Be as watchful as you like. Just be warned that when you come up with a story of corruption as flimsy and ridiculous as this, you're going to be mocked for it unless you find some real evidence.
- Adam
Have I advocated a story, or said this is fact? No. Please reign in your claims.
"There's nothing unlawful about it. " - Adam
Tell me something Adam. The government has given (not loaned) GM alone over $15 billion. Not including GMAC. Not including Chrysler.
Not including the 69% stake in GM it's about to take (post C11).
Since the Executive Branch, to the best of my knowledge, is not legally entitled to these actions, and Congress has not set aside funds for these purposes, can you tell me exactly how this is legal?
Or is it one of those "It's not expressly forbidden" arguments? I guess my intepretation is that it is forbidden.
http://www.washingtonpost.com/wp-dyn/content/article/2009/05/21/AR2009052104467.html
BTW, here's a nice article (from a source you apparently accept) which includes a few notes about the government trampling over existing rights, contracts, and precedents in these proceedings.
At the risk of making this too nested and insular:
On the bankruptcy plan - the government isn't "trampling" over anything, though that word is indeed used. They put forth a plan, and that plan had to be approved by the creditors. As you might have heard in the week since that article was posted, the bondholders rejected that arrangement, and it's now headed to bankruptcy court barring an intervening agreement.
As for the legality - as I understand it, the money is being issued by the Federal Reserve, not the executive branch. The Fed has a wide range of authority to print and distribute money however it wishes. I wouldn't necessarily oppose reigning in some of that authority, and Paul's bill seems like a good start.
Also, I apologize for assuming you were advocating the story. What we did say is a meaningless distraction is the facts of the story as they currently exist, and were posted here. When further facts emerge, it may no longer be meaningless. I rather doubt that will happen, but it's certainly possible.
"The bankruptcy proceedings are also perfectly lawful. The government offered the creditors a deal, and the creditors were free to accept the terms or go to bankruptcy court, like they would have anyway without a deal."
Except that Steve Rattner threatened recalcitrant bond holders with IRS audits, SEC investigations and the wrath of the sycophantic White House press corps if they didn't go along with the pre-packaged deal that they brought to the bankruptcy court. The secured creditors could have done much better in the normal bankruptcy process.
In regard to "flimsy and ridiculous" stories of corruption, Democrats revelled in them over the last eight years. Just a few examples from the hundreds to choose from: trying to tie Goerge Bush to Enron because he supposedly called Ken Lay "Kenny Boy". It didn't matter that Bush had absolutely nothing to do with Enron, he didn't own stock nor was he on its board, the accounting practices for which Enron executives were prosecuted were devised and implemented when Clinton was the president (and running the SEC), Enron gave more money to Democrats, six of the top ten Congressional recipients of Enron money were Democrats, Enron was a huge supporter of the Kyoto boondoggle that it saw as a major profit opportunity, Ken Lay was one of the Lincoln Bedroom donors, Enron paid 7 figures for one of the Clinton/Gore 1997 inaugural balls, etc. Just saying "Enron", "Kenny Boy" and "George Bush" was sufficient to get liberals foaming at the mouth. How about that all-important, fake controversy about Bush and the allegedly plastic turkey in Iraq? That was a really important issue. How about Valerie Plame? She sent her oafish, unemployed, political-hack husband on a vacation to get him out the house and Democrats wanted to pretend that her cover had been blown by the White House. Her cover had been blown a decade before in Cuba, Andrea Mitchell admitted that the Georgetown cocktail party crowd all knew Plame worked for the CIA, and Bush-hating Richard Armitage was Novak's source (after he had told Bob Woodward). Nonetheless, liberals just know that Bush/Cheney outed a undercover agent as political payback. There are literally hundreds more examples but it doesn't really matter. Liberals' imaginations were working overtime during the last eight years and facts don't really matter.
Obama has repeatedly abused his power and will continue to do so. That is what Democrats do. He has intervened in the affairs of private businesses, he has repeatedly changed the rules regarding the TARP money that the government forced banks to accept, etc. It is good to question authority. I know that because, over the last eight years, I saw literally thousands of bumper stickers espousing that belief right next to other bumper stickers that said things like "Impeach Bush", "Kerry/Edwards" and "Obama/Biden". This is a great opportunity to question authority and determine whether Democrats are playing politics with the auto bailout.
As for the actual post:
They seem to be basing their "this must be corruption" claim on the premise that the odds of any dealership being closed is 25%, and then multiplying 25% and 75% a bunch to come up with their astronomically small odds of this happening. It should be immediately obvious why this is a ludicrous approach (hint: it's the same odds of any particular subset of dealers being closed).
Let's check the other evidence:
A quote from a lawyer who represents the terminated dealers, about what he thinks the president of Chrysler thinks. Note there is no quote from anyone actually associated with Chrysler, just someone with an obvious motive.
A review by WND. If you're going to make any argument to be accepted outside of the echo chamber it's going to have to come from somewhere other than WND. Sorry, but that's how it is. You wouldn't accept a HuffPo or Kos study if the shoe were on the other foot. Find someone with a reputation for being unbiased to do such a review.
A quote from someone giving an interview on Fox News. Right.
A conspiracy involving someone who has "given countless amounts of money to Democrats over the years." Really? Countless? He was able to come up with a figure for every other person mentioned in the story. Surely he could note how much Johnson has given to Democrats in, say, 2008. Or 2004.
And the end result of this conspiracy is that...a billionaire keeps six car dealerships open. Wow. There is, of course, no outside cite that he actually owns just six dealerships and that those are the only ones remaining open. His only link is to a document with no author and no sources on an uploaded website.
But fine, maybe there's something there. I don't have any idea. I encourage those who think there is to keep digging and come up with good evidence, and I encourage a completed, factual story to come to light. But what's here is filled with holes and lack of evidence, and reads to me about like the birth certificate conspiracy theories. I trust you guys can come up with something better.
Oh, and let's look at the links on the sidebar of the article:
"Barack and Tony Rezko"
"Holder's chickens come home to roost"
"The stimulus doomsday machine"
"The secret scrapbook of Barack Obama"
"William Ayers and twelve dead police officers"
"Official ACORN employment application"
"Hey kids! Help Pastor Wright find his Mercedes while he decries materialism!" (my personal favorite)
"The largest election law fraud in history"
Well, there's Rezko, Ayers, ACORN, Wright. We're almost to bingo.
But hey, I'm sure this time what the guy's posting is legit. Not like, oh, everything else he's said over the past year.
Silver's analysis has a couple flaws--
He uses the dollars donated to political parties to determine the percentage of auto dealers who are Republican vs Democrat. The flaw being (for example) that one dealer who is Republican that donates $1,000 gets counted twice as much as a Democrat dealer that donated $500. The dollars would suggest 66% of dealers are Republican when the acutal is 50%.
Beyond that -- lets assume the dollars donated are indeed a good proxy for the political party representation in auto dealers ( Silver calcs the figures as 88% Rep 12% Dem )
The population of dealers being closed is something like 99.5% Rep and .5% Dem. While not having access to the raw data -- the variance is enough to suggest significance. Consider this -- if those stats had been on ethnicity of overall population ( 88% / 12%) and hiring results from that population (99.5% / .5%) -- you can bet it would be considered a VERY significant variance.
IF there was political bias in the decision making process -- it likely would have taken place at the margins. It wouldnt have been one of the main considerations -- but a well placed source could very easily go through the final list and take 30 or so politically favored dealers off the "cut" and replace them with an equal number of politically disfavored dealers.
"The flaw being (for example) that one dealer who is Republican that donates $1,000 gets counted twice as much as a Democrat dealer that donated $500. The dollars would suggest 66% of dealers are Republican when the acutal is 50%."
I think it makes sense to look at donation amount. If a dealership that donated $100 to a Republican got closed, that would mean significantly less in terms of a conspiracy than if one that donated $10000 did, wouldn't you say? Unless you think they're just on a partisan witch hunt and punishing every Republican. Which is a bit silly to me, but hey.
"The population of dealers being closed is something like 99.5% Rep and .5% Dem. While not having access to the raw data"
In other words, you have no idea what you're talking about, because you don't have the raw data. You have a story without evidence from a site with links about Rezko and Ayers. If we do get the full data and it turns out to vary significantly from 88/12, and they can't provide a good reason for it, then yes, that could be a big deal. So go find the data if oyu're going to make that claim.
"IF there was political bias in the decision making process -- it likely would have taken place at the margins. It wouldnt have been one of the main considerations -- but a well placed source could very easily go through the final list and take 30 or so politically favored dealers off the "cut" and replace them with an equal number of politically disfavored dealers."
So in other words, the big scandal here is that there were basically 60 dealers that scored roughly evenly on the metrics that decided what to close, and instead of picking the ones that were 0.01% better they picked the ones who donated to Democrats. OK, that's a little underhanded. It's also par for the course in just about every branch and level of politics ever. I'd hope you'd get just as worked up over a hundred other things that happen every year, and not just the one done by the politician you really dislike.
And of course, that's given that this actually happened, which I haven't really seen any evidence of so far.
Adam - I'd like to give you a crash course on the internet vs traditional media.
Traditional media - Theme is made, evidence is researched to back-up theme, article is published.
Internet - A claim is made based upon loose evidence, lots of people with lots of different sources of information clamor into the fold, the claim is either discredited or massive amounts of information are gathered and the claim is cemented.
I don't think anyone is saying that this claim has been substantiated (although I like how quick you are to completely dismiss it). This is the evidence gathering phase of an online claim.
To give an example of two previous online claims that used widely varied sources to substantiate (these are two "right-wing" classics):
1. Dan Rather's career being destroyed on some phony memos (and then Dan Rather continuing to destroy his career and reputation)
2. John Edwards being forced to admit his affairs & various lies, thus destroying his career after almost becoming VP in 2004 and running again in 2008
Both of these started online and had to gather alot of information from varied sources before becoming substantiated. If not for the online rumor mill, they never would have been discovered.
And for each of those, there are 100 claims that have been tossed around the internet and disproven.
You're correct, of course. Don't read my intention as to shut down a story while it's in development.
What I did see from the first 10-15 posts in this thread was the usual anti-Obama, anti-Democrat rhetoric that pretty much just assumed the story was true. So my response was that, well, the facts as is don't really justify that kind of conclusion, and you should keep digging before making those kinds of broad generalizations. And I support you and others doing so.
Thanks for clarifying. Stuff like this is incredibly hard to prove or disprove, but that doesn't mean it's not worth the effort.
I'm really concerned about Steve Rattner's wife honestly, as that's a huge conflict of interest. There was never a need for a car czar (nor many of the other executive branch positions created recently without any legislative oversight), and his lack of experience only exemplified that. Now with his conflict coming out, I'd like to make sure claims like this is fully checked out.
Lotta statistical noise, and the lack of transparency into the selection process is aggravating, but with time we'll probably find out. Stuff like this is pretty easy to statistically prove/disprove once the information comes to light.
"In other words, you have no idea what you're talking about, because you don't have the raw data."
Going on what has been reported -- 789 to be closed. Clearly not all were Rep donors (or donors to any party) -- but only 1 Obama donor and a handful of Hillary / Edwards donors. At a 12-14% population, you would expect more than just a handful. Nate Silver made an emphatic statement that auto dealers are predominately Rep, so there is nothing to be seen here. I dont think the information he stated justified his emphatic conclusion.
"So in other words, the big scandal here is that there were basically 60 dealers that scored roughly evenly on the metrics that decided what to close"
We dont know if they scored closely or not -- but even if they did, the fact that the expression of a First Amendment right earned you retribution from the government in the form of losing your business is very, very serious matter and not one that happens in every branch of government every day.
If you use the number of donors, rather than dollar amounts, you get approximately the same result. 86% Republican.
so what is inherently Republican about owning an auto dealership?
Republicans are more likely to favor lower sales taxes, vehicle registration fees, and emissions regulations, which make the out-the-door cost of a car cheaper for the dealer. They are also more likely to tout zoning laws that are favorable to dealerships, and interpretations of labor laws that allow them to have the bulk of their "employees" designated as independent contractors (read: no minimum wage), rather than as hourly workers.
Have a look at the Open Secrets website, and you can see that about 3/4th's of auto industry campaign money goes to Republicans. Much of that money comes from dealers. I would generally assume that a car dealer will give spiff to whomever he thinks will win elections and be favorable to his agendas, which is pretty much what businesses tend to do with their campaign money.
They aren't closing enough dealers as is. The question that should be asked is why they are keeping as many as they are, when the projected sales volumes are inadequate to support that many. These things are a drain on Chrysler's capital requirements; the more of them that are kept open, the more tax dollars that will be required for the DIP financing. They should be expanding that list, not trimming it.
This discussion highlights what I hate about politics. At base, we have some odd numbers that in all likelihood mean nothing, but are curious enough that even Democratic supporters might want to see investigated further (unless, of course, the consider their side incapable of corruption).
The catch is that an investigation might as well be an indictment as far as the damage it causes a party. You can be guaranteed that the Republicans would use such an investigation to basically imprint in the public the impression of guilt before there was any evidence to back it up. (The Democrats would do likewise if the situation were reversed).
So, if you support the Democratic party yet would like to see even low-probability corruption scenarios investigated, you're basically trapped. Guarantee damaging the party at a level close to what would occur if it was actually guilty or trying to kill the possibility of an investigation that might uncover something you'd want to see exposed.
Yuck.
I don't necessarily agree with you. It depends on what you mean by "investigation". I don't think WND and sites like it investigating this does any damage to a party. And if they want to try to take it mainstream without sufficient evidence (which is currently the case), they're just going to get laughed at as much as they did when they tried it with the birth certificate. And if they do get sufficient evidence and then take it mainstream, then, well, we deserve to have Democrats damaged, because something was done that warrants it.
Of course, I suppose the danger is that it goes mainstream and doesn't get laughed at, because there aren't really objective fact-checkers anymore and we have to rely on the often unconvincing Democratic surrogates. This was certainly the case with Wright and Ayers. But those blew over because of Obama's political talent, and if there's nothing to this I imagine it will as well. If there is, then, well, we fucked up.
Can you say 'working the refs'? Sure. I knew you could.
Notice how disregarding a hopelessly partisan site is now, somehow, hating on it. These people do not get an infinite amount of do-overs, nor is anyone obliged to look at their 'primary' sources. If someone wants to pull this stunt, they can cut out the middleman and go to the 'primary' source themselves for their cites. And finally:
Nominated for Irony of the Hour. If you cannot concede very obvious points - these are your words - don't be surprised when people think you trollish. This goes so far beyond a resanoble standard that I'm forced to agree with you. Look - nothing from Cato, Heritage, AEI, MRC, the WSJ OpEd page, etc. This is obvious, and trite.
[sarcasm]I'm sure that when lack of proof is forthcoming, these people will get shot down by certain commmenters here and elsewhere. The'd never resort to saying that you have to prove them wrong, or that whether it's true or not, it still 'looks bad' for the Democrats.[/sarcasm]
I don't think it would be too much to expect to actually do some research before throwing those 'odd numbers' out there. Nor do I think it too much to penalized the people who, over and over never seem to get hit for the technique of just throwing stuff up there and seeing if it sticks. Instead of allowing an infinite number of do-overs. There's a reason why most people don't accept Cato, et al as a legitimate source, and to whine about 'hating' on it is, quite frankly, rather despicable in and of itself.
From SOV:
I am going to have to demand some support for this assertion. I doubt that "most people" even have a clue who The Cato Institute is (Jay Leno could do his street interviews, I suppose, to determine this), much less even disbelieve any study it publishes, but I will assume you do have some support for this that we can peruse. It might even be from a source "most people" will even trust.
I don't think that campaign donations are a good proxy for party preference. Historically the Senators and Representatives in the majority party get a bigger proportion of campaign donations.
Donors are buying access.
Why would Obama and the Auto Task force eliminate ANY profitable dealership? Who cares if they are less profitable as long as they are profitable.
After all, the dealerships have to buy the car and their parts from the manufacturer. Beyond that, what does it cost a manufacturer to keep that dealership around?
It costs the car company ZERO to keep the dealer. The dealer actually pays the maker for things like signage, computer services, and marketing materials.
One noted reason for dumping dealers is that reduction will help keep the other dealers in business by reducing competition within the brands. However, that goes out the window when considering rural/small town dealers where the distance to the next dealer can be very far.
If you would like to know why this "automotive task force" might be doing things that appear stupid, take a look at who's on it.
Steven Rattner, financial guy and conveniently married to former finance chair of the DNC.
Peter Orszag Office of Management and Budget Director
Carol Browner, the White House climate czar
Austan Goolsbee, staff director and chief economist for the White House Economic Recovery Advisory Board
Joan DeBoer, the chief of staff to Transportation Sec. LaHood
eather Zichal, deputy director of the White House Office of Energy and Climate Change
Gene Sperling, counsel to the Treasury Secretary
Edward B. Montgomery, senior adviser to the Labor Department
Lisa Heinzerling, senior climate policy counsel to the head of the EPA
Diana Farrell, the deputy National Economic Council director
Dan Utech, senior adviser to the Energy Secretary
Rick Wade, a senior adviser at the Commerce Department
Jared Bernstein, Vice President Joe Biden’s chief economist
Of course this Greitner guy is involved too
What you'll notice is that most have no experience in the business world. Those that do only have experience in finance. Nobody with any auto experience, or with manufacturing experience, or with retailing experience. We even have tree huggers on this board; people who actually despise most autos.
Would you thing that, if Barry wanted to get the auto companies back on their feet, he might have found some people that actually have some idea how to run a business? Nope, we've got a bunch of political clowns running this thing
Who cares if they are less profitable as long as they are profitable.To eliminate competition from the other dealer(s) in the area. If you've never played Monopoly, I highly recommend it as a lesson in the benefits of sole ownership of all properties in the same color group.
Why would Obama and the Auto Task force eliminate ANY profitable dealership?
From the automaker's standpoint, the issue is not whether the dealer is profitable. The dealer profits go to the dealer, not the manufacturer. The dealer doesn't share those with the company. It's quite possible for the relationship to be lucrative to the dealer, but costly to the automaker.
the dealerships have to buy the car and their parts from the manufacturer.
Those purchases are fully financed by the automaker. The dealer may buy it, but the burden of carrying that car on the lot is ultimately borne by the manufacturer.
Beyond that, what does it cost a manufacturer to keep that dealership around?
A fortune. The capital burden of carrying the financing load ties up billions of dollars of cash. Having this number of dealerships is a cost burden to the producer, not a financial benefit.
And that's absolutely wrong.
The dealer makes very little on the sale of a new car. The profits come from service, used cars, and selling add ons to the car buyer (like extended warranty, etc.). Dealers also pay additional fees to the makers. They have to pay for brochures, network computer access, signage, everything.
The stock and parts are NOT carried by the car maker. The dealer MAY floor plan through the maker's financial arm but, if he does he pays handsome interest to the finance arm. Floor planning was always a good chink of many banks business and would have nothing to do with auto makers. Both GMAC and Chrysler financial were hurt by their CONSUMER lending and leasing. The dealer financing was highly profitable. AND, in case you missed it, GMAC and Chrysler Financial are now one company unrelated to the auto makers so floor planning dealers would have
ZERO impact on GM or Chrysler.
Thanks for all the inner workings of the manufacture/dealer relationship.
It's quite possible for the relationship to be lucrative to the dealer, but costly to the automaker.
Assume "profitable" as defined in terms of profitable for both parties. Why would you end that relationship?
I know Obama is really big on sunshine being the greatest disinfectant, I wonder if he will release the data and formula used to decide which franchises were closed?
Obama is big on talking about sunshine. Not much evidence of it so far, though. Aside from selectively releasing documents from the Bush era, what has he done in a more transparent fashion than any president?
It costs the car company ZERO to keep the dealer.
This is absolutely incorrect.
The manufacturer provides the dealer with the financing needed to make the purchase, called "floor plan."
The manufacturer pays the initial interest payments of the floor plan, in the form of "hold back."
If vehicles take a long time to sell so that the hold back is consistently not sufficient to pay the interest, then the manufacturer will then get stuck with paying incentives to the customer and/ or dealer to move the car.
So no, it isn't free at all, and it ultimately is quite costly if the metal can't be moved in a timely fashion.
The auto business is ultimately about inventory turn, and the turn ratios among the domestics are well below average. Slow turn is costly to the automaker, because capital is tied up in inventory and carrying costs, instead of generating revenue.
If dealers used their own cash to buy the cars and paid in full at the time of delivery, then you'd have a point. But they don't, so you don't.
The dealer MAY floor plan
It's not a matter of "MAY." It's pretty much the norm.
if he does he pays handsome interest to the finance arm
The hold back is supposed to pay the interest. If the dealer can't sell the car in 60-90 days, which is about the amount of interest that the holdback will typically cover, then the manufacturer will pump out the incentives to move the inventory.
So ultimately, a slow moving car is the manufacturer's problem, even though the automaker technically sold it. They're still stuck with the debt burden, they're paying the interest indirectly via inventives and holdback, and their net revenue is declining. Cash that could be deployed more effectively elsewhere is gathering dust on dealer parking lots across the country.
The successful automakers have quick inventory turn, the unsuccessful ones don't. Slow sales sting the manufacturer who ends up subsidizing them. Of course, it's ultimately the manufacturer's fault for making lousy cars that nobody wants, but their problems don't end when the deliver the car to the dealer.
Jeez, it looks like they've set things up so the manufacturer takes all the risk. Why even bother with franchising in that case?
I don't think it would be too much to expect to actually do some research before throwing those 'odd numbers' out there. Nor do I think it too much to penalized the people who, over and over never seem to get hit for the technique of just throwing stuff up there and seeing if it sticks.
For me, that's not really the way it works. There's a ton of "biased" sites in either direction that *occasionally* get something right. So, yes, as far as my curiosity is concerned, they *do* get an infinite number of do-overs. Certainly during the Bush years, I was more than willing to see further examination of each accusation made against Bush even when most didn't end up meaningful. (No attack on Iran, for one.)
Without giving infinite do-overs (except for the most egregious of cases), I suspect we'd simply be left with the outlets that confirm our own biases in very short order. After all, any excess on the part of my side is perfectly understandable :-).
There's a reason why most people don't accept Cato, et al as a legitimate source
I have to question 'most'. Is your claim that more than 50% of people polled would dismiss any news coming from the Cato institute as false. Or is your claim that over 50% of the people who have heard of the Cato institute dismiss any report they make, regardless of content?
Or did you mean over 50% of responsible, intelligent people? (from which I think I've just disqualified myself :-))
to whine about 'hating' on it is, quite frankly, rather despicable in and of itself.
Well, it certainly was a whine. But despicable? Ouch.
Assume "profitable" as defined in terms of profitable for both parties.
You can't assume that. From the automaker's standpoint, they have to worry about their own fate. They have an indirect incentive to make sure that their dealers aren't losing money, but they have no motivation to throw a lot of money around propping up dealers who they don't need.
What Chrysler and GM needs are dealers who can sell vehicles quickly, which would improve cash flow and reduce the automakers' debt burden. If they carry dealer loans and inventory that aren't paid timely, they then need to support that slow turn with cash from somewhere else, which means selling more bonds and getting more credit from whomever will provide it.
Inventory management is critical. Don't expect the mainstream media to explain that, most of them don't know about balancing their checkbooks, let alone how slow turn costs companies money.
they have no motivation to throw a lot of money around propping up dealers who they don't need.
Then that dealership wouldn't be profitable to the manufacturer would it? I understand that things aren't black and white and there a lot of factors that go into "profitability" including as you mention cash flow, opportunity cost and other longer term factors than a number on a balance sheet. It's something my business deals with every day, for example, a client that pays their invoice late while they may be profitable at the transaction level can (with a large enough invoice) create ripples across the business that costs us very real money related to that transaction turning it from a profit to a loss.
I suppose I incorrectly assumed that "profitable" actually meant "profitable" to all parties.
I don't expect the media to explain it to me, but I wonder if the folks in charge understand it. Last time I checked our government was running $1.8 trillion in the red. Maybe some of them need to learn how to balance a checkbook.
Megan McArdle writes:
"I would be less surprised to find out that the administration rescued specific donors from the hit list than to find that they deliberately closed Republican dealerships."
I'm not sure she's implying otherwise, but that motive would be just as invidious as deliberately targeting Republican dealers for closure. If there's a black and a white guy applying for the job, and the black guy told: "We didn't reject you because you're black, it's just that we really liked the other guy because he's white," I don't think the black guy feel better about the result.
In both situations we have a zero-sum game, and a result caused by favoritism according to some factor other than merit (or economic performance.)
(Just an analogy; obviously discrimination by ideology or Party doesn't approach the historical evil of race-discrimination in America.)
As Nate Silver put it at fivethirtyeight.com, "News Flash: Car Dealers are Republicans (It's Called a Control Group, People)." People who own car dealerships are overwhelmingly Republicans, and if you pick a bunch of them at random or in any other non-partisan fashion, it is likely that the group selected is going to be overwhelmingly Republican
More to the point dealers who donate to Democrats are probably in heavily Democratic areas which tend to be very dense urban areas. Since land prices are higher in such areas existing dealerships in such areas are likely to be well placed and profitable.
ed
To get an answer from Chrysler, somebody would probably have to get discovery rights through litigation. Even then, stonewalling could drag out forever.
If profitable dealerships are being closed simply becuase they are Republican donars then it would seem like the creditors and shareholders would have a legal claim to challenge that in the bankruptcy proceeding. The closed dealerships themselves could likewise probably challenge the decision as well as a violation of due process and equal protection thereby giving them a way to save their dealerships beyond simply appealing to the bankruptcy judge.
Cody
What's fueling the suspicion is that the process has been incredibly opaque to date. Since nobody knows what criteria may or may not have been used (small dealerships? big dealerships? rural? urban?) it invites people to suggest their own criteria (republican donors, or dealerships competing with well-connected dealerships).
Err what? Incredibly opaque? I have no idea what process McDonald's or Starbucks uses to decide which stores to open and which stores to close. Every time a big company announces thousands of layoffs they never tell you exactly how they decided who gets the ax and who gets to stay.
You totally misstated my point. It had nothing to do with "republican". I only answered an earlier post that said that it should be easy to find out if politicos are involved in such decisions. I only stated that the only way to find out from Chysler would be though obtaining discovery rights.
Your point about McDonald's and Starbucks is just ridiculous. First Starbucks are company owned stores and are closed based on profitability for the company that owns them. McDonalds are franchises with hard and fast rules in the franchise agreement. The only way for the franchisee to lose it is to repeatedly violate the agreement. The Chrysler dealers are not being closed due to any violation of any agreement they might have had with Chrysler.
Neither of the two companies you mentioned are being directed to do things by the government.
1. Griping is human nature but a good test to see if there's anything behind the griping is to ask if people are willing to put their money behind it. A closed dealer can stand to make a good score if he can show the decision to close him was political rather than in the best interests of the company. Likewise creditors will be getting a less for their money if profitable dealerships are closed or unprofitable ones are allowed to be open. Chrysler needs to make every dollar of profit it can, any dollar lost is a claim its debtors have. So if there is a real case for this I'd expect to see some of these people mounting a legal fight. If I see lots of blog griping but little lawyer hiring, I think it's fair to take that as evidence that the hypothesis is weak.
2. "Your point about McDonald's and Starbucks is just ridiculous. " No its not. Yes a McDonalds or Starbucks is not exactly like a Chrysler dealership but the point is business decisions made by McDonald's and Starbucks are not less opaque. There's a huge number of factors a company like Chrysler has to consider when evaluating dealerships and many of them can become highly subjective (will the dealership grow in the long term? will it grow at the expense of other dealerships? etc.) You're not going to get a simple objective decision making process like "rank all the dealerships from top to bottom in sales, kill the bottom 800".
3. "Neither of the two companies you mentioned are being directed to do things by the government." Neither of those two companies are in bankruptcy and seeking multibillion dollar bailouts. Going bankrupt (either by filing legally or seeking bailouts) basically means a company will be forced to make hard choices. And lets face it, the dealerships are probably just as responsible as the unions for the bankruptcy. All those donations to the Republicans didn't go to buy free market laws but went to buy special provisions for dealerships that made it almost impossible for Chysler to cut off dealerships that were costing it money.
Neither Starbucks nor McDonalds is currently in de facto government receivership, accepting taxpayer-backed "loans" from a firehose the diameter of a child's wading pool while having their reorganization directed by an unelected official within the executive branch. That's why your analogy speaks little to the present circumstances.
Then that dealership wouldn't be profitable to the manufacturer would it?
A dealer that borrows money for long periods before repaying it is a burden on a company with limited debt capacity.
We all need to understand that it is the federal government that is carrying the debt load. That slow inventory turn costs the taxpayer money. It is in our best interest to sell the cars quickly.
In the past, the automakers had high debt ratings, which gave them access to cheap capital. At the same time, they were using their dealers to push their own agendas of "channel stuffing," dumping unwanted inventory into the dealer network while booking those transactions as sales, even though they were ultimately money losers.
GM and Chrysler are both going to have to get a lot smaller if they are to have any chance of making it. They need to build less stuff, but try this time to make money on what it is that they do sell. They also need to manage their now-limited capital far more efficiently.
Your example of the slow paying client is a good one. It shows that it isn't just about selling something above its theoretical cost, when that cost number doesn't necessarily account for everything. A company can produce paper profits, but if that translates into a cash deficit, that company is going to die.
Megan doesn't give Nate Silver enough credit in her update. Nate attempts to find out how the overall population of 'auto dealers' donates and he finds that they give more to Republicans than Democrats by a scale of 88% to 12%. That means it wouldn't be very surprising to find that most, even all, of the closed dealerships were Republican donators. You have to almost go out of your way to find a Democratic donating dealer.
Silver's analysis is actually giving the Republicans an extra amount of slack. People who identify as 'auto dealers' or 'car dealers' do not say if they are operating lots that sell new cars or used cars (or a mix of both). Highly Democratic areas tend to be high density urbran areas. These areas have numerous small car lots selling used cars rather than large dealerships specializing in new cars. If you could somehow factor out the used/independent dealerships from the donation data you would probably find that the trend is even more overwhelming in favor of Republicans. If only 2-5 out of 100 dealers donate blue it isn't amazing to find only one blue ball out of a few hundred picked randomly from a giant drum of balls.
That is stats 101 people!
Arent you making some pretty broad generalizations to go from a researched 88%/ 12% split to maybe 2% or 5%?
Even assuming you are right -- if the generally population was 3.5% (i.e. between 2% and 5%) and you run 300 trials (i.e. a few hundred) -- a finding of 1 would be unexpected.
1. I don't think going up from 88% is unjusfied. 88% applies to the universe of donations from all car dealers. I think there's good reason to suspect that the cream of the crop, the dealers who work with new cars, lean more Republican than the ones that have small lots of used cars and are independent of any big auto company. If the whole population is at 88% how much room is left to go up for the more Republican sub-population of new car dealers?
2. And it wasn't just 1 but several dealers so far found by a partisan that donated to Democrats. He just decided he was only going to count dealers that donated to Obama.
3. A finding of 1 would be unexpected but again you are assuming there's no difference between a Dem. donating dealership and a Republican one. Since Republican donating dealerships represent close to 90% or more of all dealerships it seems right off the bat that a Democratic donating dealership is a strange duck. Why would one assume that such a dealership wouldn't be in a market that is quite different from the average market for the entire population of dealers?
One more factor at play here, we are assuming that Chrysler as a brand is just like all other cars. In other words, if 5% of new car dealers donate to Democrats then 5% of Chrysler dealers likewise donate to Democrats. But is that a valid assumption? If Chrysler has a reputation for being a slightly upscale franchise their dealer network might be a bit more Republican than average (and likewise other franchises like Honda might be a bit more Democratic than average). We probably can't get a hold of this data easily but just doing a 'sniff test' I think the hypothesis is not yet believable unless you can get something more *real* backing it up like clear evidence of a Democratic operative making line by line calls on the dealer closing list.
I suspect there is little in the way of bad faith here. Small business owners do go very, very heavily Republican (and if, like me, you own a small business, you know why).
Nonetheless, this is the type of sticky "perceptions" quagmire we're wading into with government control of a major business. This may be the tip of the iceberg. The dealers were vulnerable, but other small businesses who supply GM are even more in the crosshairs. The potential for political mischief is so high I'm tempted to start a pool on when the first indictments come in.
I'm from Chicago, I've seen patronage first-hand. Now we've elected a Chicago politician President.
which has already left a number of people in the business and finance community wondering how firm the rule of business law is these days.
It also doesn't help when the POTUS states "empathy" should trump the rule of law and that he plans to make SCOTUS appointments on that basis.
Also, take a peek at
http://directorblue.blogspot.com/2009/05/red-alert-did-campaign-contributions.html
and read very carefully----
There has been MORE THAN ONE dealership that was on the closed list and made Democratic donations! The additional dealerships just didn't donate to Obama. Some donated to his rival Hillary Clinton or John Edwards and others simply donated to Democratics running for other offices. The author, ever in hyper-partisan mode, reads this as a diabolical punishment for failing to donate to Obama (just donating to Dems ain't enough).
But stats and probability 101 people. Say 95% of dealers donate to Republicans. Say 5% donate to Democrats. Now let's just say that a dealership that is making political donations will split 50-50 between big name national candidates and more local races for Congress and so on.
In a sample that is perfectly representative then you would expect to see 95 Republican donars (split between big ticket races and lower ticket ones) and 5 Democratic donars with maybe 2 giving to a local race and say 3 giving to a national race. OK Obama and Hillary were pretty evenly matched until the end of the primary so let's just say out of those 3, 2 gave to Obama and 1 to Hillary (or others like Edwards).
So the portion of Obama donars is probably something like 2% or even less. On top of this you're making a heroic assumption that Obama donating dealerships look exactly like GOP donating dealerships in terms of non-political relevant criteria (sales, profitability, competition etc.) Add to this the fact that the 'so far' tells us that the analysis of closed dealers is not complete...we may 'find' more than one dealer who donated to Obama and got closed, and all this adds up to pretty piss poor evidence in support of the hypothesis.
The Chrysler dealers are not being closed due to any violation of any agreement they might have had with Chrysler.
The Supreme Court has already ruled that contracts can be terminated in bankruptcy without cause. Ironically enough, the precedent was set by the Rehnquist court, in connection with a collective bargaining agreement.
In the case of Chrysler, there is absolutely nothing illegal about severing these contracts following a bankruptcy filing. In GM's case, they will have gained that right once they file. If the dealers want to kick and scream, then filing 11 will be inevitable.
I didn't say one thing about legality. I answered someone who used MacDonalds and Starbucks as comparisons to Chryslers termination of dealers.
I might also note - again - the desirability of doing a little research before engaging in these sorts of trolls:
Note also that this was not a random distribution of dealerships:
Would it be too much to ask for if, instead of this drivel that is apparently considered acceptable fodder, we could get our 'econoblogger' to report on stories off of, say, bloomberg.com
From the link, that somehow got cropped out in the other blockquotes:
What is clear is that the dealerships are being severed because the company wants stronger outlets for its products, not that the present system drains them of cashflow. It is a strategic maneuver- they think outlets facing less competition from other Chrysler dealerships will be in a stronger position to market and sell the product. That it is Chrysler and the government making this move is probably reason to question its efficacy. However, I don't think anything could save Chrysler anyway, so I feel the entire issue is moot.
So they are eliminating rural dealerships that are paired with the competition leaving ONLY the competition with a dealership in that rural area? Genius!
Seems like they might want to change the nature of the contracts they have with the dealers to reduce the burden they place on the manufacturer and then let them continue to try to sell vehicles.
The power of visibility and advertising is so strong that it's hard for me to really believe that closing store fronts will help them make more money. But I guess we'll see.
On the other hand, if the government is intervening in the first place because a failure of Chrysler would cause too many jobs to be lost, closing a bunch of dealerships and eliminating a bunch of jobs seems counter productive. But I guess employees of car dealerships are not union workers and don't vote Democratic in a block like the UAW. So shafting them to give the UAW a 55% stack in Chrysler is a win for Democrats.
I also want to add my support for more transparency. Now that the government is meddling and pouring money into Chrysler and GM, we are stake holders and given the nature of government and the prevelance of corruption, we need more transparency than normal. Otherwise, the temptation for Congress to start meddling in the details will be overwhelming.
I didn't say one thing about legality.
You previously stated, "The only way for the franchisee to lose it is to repeatedly violate the agreement." That is not correct. Bankruptcy allows for the termination of franchise agreements.
You also said, "Neither of the two companies you mentioned are being directed to do things by the government." At minimum, this is certainly misleading.
The government's participation has absolutely nothing to do with the right of a bankruptcy court to unilaterally terminate franchise agreements. This right is a matter of case law, and is not limited to situations in which the federal government participates. This right is tied to bankruptcy, not to the government. Any debtor that filed Chapter 11 could request that a court terminate its agreements.
How dense can one person be? Didn't you read that I was referring to MacDonalds and how a franchisee can lose the MACDONALD"S franchise? It didn't have one damn thing to do with bankruptcy.
There is a world of difference between being biased in deciding which stories to pursue, and being biased in the sense of shoddy journalism. As Adam says, look at the sidebar:
"Barack and Tony Rezko"
"Holder's chickens come home to roost"
"The stimulus doomsday machine"
"The secret scrapbook of Barack Obama"
"William Ayers and twelve dead police officers"
"Official ACORN employment application"
"Hey kids! Help Pastor Wright find his Mercedes while he decries materialism!" (my personal favorite)
"The largest election law fraud in history"
You can run with any or all of these stories, so far as I am concerned, as long as you have something more than 'unnamed sources say' or 'In an ominous turn of events, authorities declined to speculate as to whether foul play was suspected'.
That's the difference.
Now there's a term that takes a beating - 'most egregious'. Again, it's not reporting on the story and getting it wrong that wins demerits; it's doing the most slipshod reporting on a story in order to get it out there without seeing if there's any substance to it. Which brings us to:
My claim is that once people are aware of Cato's behaviour, they tend to disregard anything they may say. Not automatically assume it's wrong, mind you, but they just tend to roll their eyes and move on. Let me quote myself from an earlier post on the subject:
This stuff is easily researched; if you want, just highlight some of what I've quoted and paste it into Google(formatting doesn't seem to make it through a cut and paste.) Um, here, let me link to that last one, just to avoid accusations of shoddy journalism. I've found that when most people see stuff like this, they tend to stop listening to Cato :-)
This puts me in mind of a guy that used to hang out in our circle many years ago: a gay junkie, which of course meant in our first blush of ignorance we thought was cool. After half a year, we were thoroughly disabused of that notion, and no one wanted to have anything to do with him. He used to whine at the local clubs about these people who were hatin' on him because he was gay. Er, no Tim, in fact, you got a lot of slack because you were gay. We don't want you around because when you go to people's houses, you go through their things and steal stuff(hot news flash: if someone allows as they've got a serious drug habit, don't think they won't steal from you just because you tell them that's pretty cool. They'll still steal from you because they're junkies, that's how they're put together.)
In the same vein, you can't whine about how people are hatin' on you just because you're 'politically incorrect' (always said with the quotes inflection) when in reality they just don't want to have anything to do with your poorly researched journalism and dishonest scholarship.
This is hilarious stuff coming from a guy that likes to support his arguments with links from Public Citizen.
Yes, most car dealers, most business owners, most of the people that pay income tax...are Republicans.
I doubt there's much to this story, but it's a good example of another reason why the government shouldn't be involved in this. But hey, when we get Zimbabwe-type hyperinflation from Obama's huge debtload, this will look like small potatoes.
"...most of the people that pay income tax...are Republicans."
That may be true, and if it is, that fact is pretty heavy with meaning for a republic. Unless it is something that is well known and not really in dispute, saying where you got that bit of information is a good idea. Is that well known and not really in dispute? I have no idea, but I suspect the truth is a bit more complicated.
Cui bono indeed. The auto czar's supporter's are an upstanding, idealistic lot. Caesar's wife could sleep with the next door neighbor, and they would tell you the a/c was just stuck on on at her place. She had to warm up, wouldn't you? Old Jules would probably tell you differently though. The appearance of justice would probably have been better served if an organization, say Chrysler just to pick an organization at random, had chosen who its dealers were going to be.
The primary thing that bothers me here is the very idea that government functionaries are making a business decision. Granted, this is a company that accepted a government bailout but still--one would think the best way to make a smart business decision and prevent political taint (and let's face it--there's no way any decisions made by the government as to who to shut down wouldn't cause cries of political favoritism) would be to put the decision in the hands of some independent panel of business experts who could make the decision based on the best interests of the company's profitability. This is why corporatist/statist economic models don't work.
The primary thing that bothers me here is the very idea that government functionaries are making a business decision.
The primary thing is that bankruptcy is a government function.
would be to put the decision in the hands of some independent panel of business experts who could make the decision based on the best interests of the company's profitability.
'Business experts'? You mean the shareholders?
I understand your concern about the 'political taint' but that sword cuts both ways. To get out of bankruptcy Chrysler needs to hurt some stakeholders. Those that get hurt have all the incentive in the world to claim that they are not to blame, that the plan is a bad one etc. etc. This argument, IMO, is just an attempt to put politics into the decision making process. But the fact is the company is in bankruptcy and needs to downsize drastically and immediately. If it doesn't then EVERY dealer is out of business and so is every worker and every creditor gets nothing but the scrap value of the company's rusted factories.
This is why corporatist/statist economic models don't work.
Corporatist/statist models refer to gov't running *functioning* businesses. A business in bankruptcy, on the edge of it, or needing a bailout to avoid it is by definition not functioning. This argument would be relevant if Obama was talking about the gov't becomming majority shareholder of Microsoft or Wal-Mart, it isn't here.
I don't understand the hesitancy to believe this. Politicians are scum. This is a scummy thing to do. Why wouldn't they, and prove to me that they haven't screwed anyone over.
What will be more interesting is to see what reaction this story gets from the White House. I'm sure they are reading about it, and watching if it gains traction. If they try to minimize it, or ignore it totally, whether it is true or not, they are purposely making the point that Republican business will be targetted if at all possible. If they explain or attempt to limit the damage to Chrysler, then that makes another point, far more comforting and mature.
In any case, it is Chrysler who will suffer whether it's true or not, unless an effort is made to correct the impression. Pissing off 50% of your customer base is not the best way to build a business. Although journalists wouldn't know that.
Derek
Just to add, politics is perception.
Derek
Why the hesitancy to believe this?
Well...
1. The numbers don't add up. Given that dealerships are already almost 100% Republican donars there's no evidence that the closing list demonstrates a statistical bias in favor of Democratic dealorships.
2. From the game theory perspective it likewise doesn't make much sense. Assume politicians are scum. Does it make sense for Obama to game the closing list? Not really. Obama gets millions in small donations and that credibility is one of his primary campaigning strengths. Even if the remaining dealorships all decide to give Obama a few thousand dollars next election the benefit to him is trivial. The potential risk is huge if he is detected and...given the dealorships that are losing have every motivation to take action...the risk of detection is high.
Granted there's plenty of examples of politicans taking stupid risks. Nixon, for example, gained nothing by the Watergate breakin (he was already winning in a super landslide). But so far Obama does not appear to be one to take stupid risks for trivial gains.
3. Your 'politicans are scumbags' is not much of an argument. In essence you're saying you don't really have to know whether or not this is true, you'll just assume it because...well politicians are scumbags. Well maybe Obama is molesting the children of Republicans in the White House basement. Why not? That's a scumbaggy thing to do. Ohhh wait, no evidence, well that doesn't matter its all about 'impressions' like you said....
I'm not sure what this sentence is supposed to mean. Do you mean the dealers are almost 100% Republican (which is clearly wrong), or do you mean the donors are are almost 100% Republican?
It was said to be one of his primary campaign strengths. But since his people turned off the verification software on his website, we'll never really know where the money came from. And how many Norman Hsus were out there splitting large donations for Obama? To assume his money came mostly from small donations because that's what is on the paperwork is the height of gullibility.
I think there's plenty of evidence Obama likes to play in the political gray areas. After all, he's the guy who bullied secured creditors in the Chrysler bankruptcy so they ended up behind the unions in the pecking order.
Didn't you read that I was referring to MacDonalds and how a franchisee can lose the MACDONALD"S franchise?
Right. And you missed the point that Boonton was making, namely that you aren't likely to find some horrific smoking gun that implicates the government in some grand conspiracy to shut down dealers by political affiliation, because there is not likely to be much documentation, either way. Your claims about discovery are likely baseless, because there would not be anything that a discovery request would uncover. If there was some grand conspiracy, they'd be dumb to document it, given all the eager wingnut talk show hosts and bloggers who would like to find it.
Your arguments on the thread have been consistently inaccurate. You claim that dealerships are not a burden to a cash-strapped automaker, when they clearly are. You claim that the finance businesses were somehow fantastically profitable, while neglecting to note that the relationship between the financing and production/sales sides of the business are closely linked, and that an automakers that generates "profits" on dealership financing and "losses" on the actual car sales is just playing a shell game and is ultimately losing money.
If the domestics were making money from their businesses, they wouldn't be in the situation in which they find themselves now. When the automaker is eating losses in the form of high incentives payments and subsidized financing programs, those are still losses.
The cull isn't big enough as is. They could probably double the number of franchise terminations, and still have too many dealers. And since it's legal to cut the franchise agreements through the courts, it's frankly disappointing that more haven't been cut. There will be plenty of dealers who should have lost their franchises but didn't, and most of those lucky indirect beneficiaries of Uncle Sam's DIP financing plan are going to be Republicans.
On the contrary, dealers are almost 100% Republican donars (we don't know what they really are, they might not care about politics but donate to cultivate business connections, have influence on the local zoning board etc). Our baseline estimate for the population is already 88% Republican but that is almost certainly underestimating because it includes lower end used car dealers who are more numerous in Democratic strongholds.
The verification software does nothing to 'tell where the money came from'. The verification software confirms matches on addresses before charging the card. It is used by merchants to avoid a situation where you get a confirmation, mail out merchandise and a few weeks later have the money yanked out of your account because the guy was using a stolen credit card. In the case of donations there is no need to do this because you're not sending out any merchandise so you can't get ripped off. Nonetheless, the fact remains Obama received numerous small donations that added up to a lot. You can pretend they were all just a handful of superrich guys....I suppose the same people who had ACORN help them vote for Obama millions of times over....but then who here is really the gullible one.
The second issue most people here missed is that if Obama wanted to take out GOP donating dealers the easiest thing for him to do is nothing. If Chrysler fell into full bankruptcy with no support almost all of it 3000 dealers would be closed. With the GOP donation rate close to 90% a ten GOP donars would go down for every spare Democratic donar.
It would be quite easy to also craft a policy that nuked the dealers while protecting the union. For example, Obama could have advocated a law that basically takes out the dealers and allows the car companies to sell directly to consumers....
it looks like they've set things up so the manufacturer takes all the risk. Why even bother with franchising in that case?
The dealer carries the burdens of owning and operating the retail end of the chain, including the staffing, property costs and the rest. When times are good and vehicles can be sold quickly enough, the dealers do provide benefit to the automaker.
The ultimate culprit is that the cars haven't been very good. Because of that, the domestics have lost market share, and now carry the infrastructure associated with companies that are larger than they are. The reality check is finally here, and they need to shed the dead weight.
Had they made good cars and not lost market share, there wouldn't be too many dealers. The mistake that the dealers made was to stick with these companies, when the slide has been underway for decades. Franchisees can't do business with a troubled franchisor and not expect there to be problems that affect themselves.
he's the guy who bullied secured creditors in the Chrysler bankruptcy so they ended up behind the unions in the pecking order.
That sounds like a nice talking point, but it's false. The bondholders were offered 100% of the equity with no cash, but they didn't want to own the company. When offered the choice between owning the business and getting cash, they expressed a strong preference for cash. Cash is king.
The UAW VEBA got 55% of something with no current market value. If things don't work out with FIAT, they're screwed. Hard to say that they won when they got no greenbacks and a big chunk of the company that the bondholders didn't want.
The bondholders are getting 100% of the grand prize, which was cash. Unless you're a goldbug, you must know that cash is far more desirable than worthless stock.
Meanwhile, the bondholders got more than they would have had the company liquidated, so they have absolutely nothing to complain about, and those among the pool who paid 20 cents on the dollar made a tidy profit.
Follow the money, not the right-wing bloggers who don't get it, if you want to figure out what's going on. The biggest winners were the bondholders, who got all the money, and FIAT, who got the DIP financing. The government came in a distant second by avoiding the pension burden of a failed Chrysler, at least for now. The union had better pray that FIAT can create profits.
And, just to remind everyone, if the agenda was to bash GOP donators a much more effective policy would have been for the gov't to have th company get liquidated. Then thousands of dealers would have been taken out and with the donation ratio around 88:12 to 95:5 many Republican donars would have been wiped out.
and thousands of preferred UAW workers also lose their jobs -- not a good strategy if political motivation was primary.
And if political motivation was primary why not a bailout for the company to begin with? Certainly the UAW produced a lot more donations to Obama than the Obama donating dealers who were supposedly spared from the list (which is like, what, 3 or 4 donations even using very generous statistical assumptions).
Alternatively, Obama could have proposed Federal laws that would screw over the the dealers but saved the company. For example, a Federal law to override various state laws that prohibit auto companies from selling directly to consumers rather than through dealers who act as middlemen.
they did bail out the company -- we are all now proud owners of not one, but two insolvent auto companies --
and, surprise -- the UAW being the second largest owner of each, even though they werent the second most senior lender (either by size or seniority)to either.
a new fed law would require congress, and no way would they go for all those dealerships being closed. Non starter.
lets be clear -- the concern expressed here is that some member of the administration took advantage of the governments role in a private business decision to exact retribution on political adversaries. Its banana republic stuff (or city of Chicago, I suppose).
Proven? no. Cause for a further look? No question, and I am not placated by the "12% in my opinion is really 5%, which is close to 2%, which makes the numbers work, so there is nothing to see here" rationale you are selling.
Thus far the Obama administration has shown a willingness, if not a preference, for the same kind of disturbing "ends justify the means" approach to economic policy that the Bush administration practiced in foreign policy.
The verification software matched the given address with the address on the card. Without it, donors with home addresses in other countries could donate and put a bogus domestic address (or real one that isn't theirs) in the system. What we don't know is how many people who said they were in the US were really in other countries nor do we know how many people in one household donated and gave multiple other addresses. One person with four credit cards could give four times the legal limit merely by giving the maximum on each of four different cards and giving four different addresses.
So basically, Obama could have received a lot of illegal donations with no way to check (unless he lets someone audit the list and manually verify credit card numbers with given addresses).
@Boonton - Government manages bankruptcy, yes, but normally through the judicial branch and in accordance with established bankruptcy law. In the case of Chrysler and GM, the executive and legislative branches are meddling quite heavily, dragging in the taint of playing politics with what is supposed to be a relatively apolitical process.
Has anyone checked that Reboot Congress site to see how they are doing on gathering info? While their statistical theory is weak, it'd be interesting to see their data.
(They calculate the odds of one dealer's competitors in every market being shut down because he's the best in all markets and neglect the possibility that that particular dealer IS very good and all of his dealerships are run the same way. I agree with them that it smells bad but the odds are a lot higher than the 1:1,000,000 or whatever they came up with.)
Nonetheless the fact remains Obama got lots of small donations. (And the one person who used 4 cards to donate more than he was technically allowed might have 4 different billing addresses). It's one thing to say that an audit is needed (and I suspect its the FEC's job to audit, not something Obama 'decides' to 'allow') but you're getting into wacko Matrix territory if you're going to seriously claim that Obama didn't receive a huge number of small dollar donations....that it was all ingeniously faked by a handful of big doners who somehow made it look like millions of little ones.
Government manages bankruptcy, yes, but normally through the judicial branch and in accordance with established bankruptcy law. In the case of Chrysler and GM, the executive and legislative branches are meddling quite heavily, dragging in the taint of playing politics with what is supposed to be a relatively apolitical process.
And there's two very good reasons for this. One is that the US gov't is a major creditor to the two companies for the proto-bailouts that did happen under Bush and Obama so taxpayers have a direct interest. The other is that the collapse of major auto manufacturers into bankruptcy during a depression is a major issue. We are talking about the largest bankruptcies ever done and it is fair to wonder if the system as designed can really handle this. Most bankruptcies do not have such dramatic externalities. For example, the collapse of GM & Chrysler could wipe out major parts manufacturers giving Ford and other manufacturers major problems.
(They calculate the odds of one dealer's competitors in every market being shut down because he's the best in all markets and neglect the possibility that that particular dealer IS very good and all of his dealerships are run the same way. I agree with them that it smells bad but the odds are a lot higher than the 1:1,000,000 or whatever they came up with.)
What smells fishy is the assumption that the list should be created by a randomness. That never happens in real life. When companies announce layoffs or close a certain number of stores they rarely come up with the list by looking at one simple metric. There's often subjectivity involved. For example, consider one guy who owns six dealerships. Even if he isn't the best dealer out there, there's an advantage to Chrysler dealing with one guy rather than six different guys. Maybe that advantage makes up for the guy being a bit below average, maybe not. It's a subjective call.
But that's not the issue really. The issue is not whether the list is perfect. No one really can know until we see how Chrysler does over the next ten years or so. The issue is whether the list was made politically so as to discriminate against Republican donars or non-Obama donars and so far no such evidence exists or has been presented. Statistical tests as the only evidence if discrimination is very, very weak. The right would normally be very skeptical of a claim of discrimination where the evidence consists of "X makes up 10% of the population but was only 8% of those hired"....
I STILL hate nesting. Sicne we are logging in anyway, would it be possible to at least flag posts made since our last visit? Or gives us the option to show only new posts or only posts made today?
Please?
Pretty please?
Yes, the site really needs the option to unthread.
Holy jesus christ. Hey, Atlantic Editors? If I wanted this level of analysis, I could head over to RedState. Or my local elementary. Truly, you're tarnishing the good name of your magazine with this sort of tripe.
DEATH TO THIS THREAD AND MEME
From Nate Silver's search of the 2008 contribution database. What matters is what portion of dealers make any type of donations at all. According to USA Today there's about 20,000 new car dealers. According to Nate's searches, there seems to be only about 1,000 who made any type of donations. Long story short, out of 800 closed dealers, we can only expect about 5% to contribute to the 2008 campaign. Of that 5%, 90% will break for the GOP and 10% for the Dems. Here is what to expect.
"auto dealer" 546 Rep 72 Dem total 618
"car dealer" 141 Rep 42 Dem total 183
"automobile dealer" 138 Rep 20 Dem total 158
"automovitve dealer" 11 Rep 2 Dem total 13
Total contributors: 972 / 20,000 = 0.0.486 or 5%
5% * 800 dealers = 40 who made donations * 10% Dem donations = 4 Dems
So we expect to find less than 5 Democratic donors and that includes not only Obama donors but also any type of Democratic donor whether you're talking about a rival of Obama like Hillary or a Senate race or whatnot. That's exactly what has been found so far! One Obama donor and several who gave money either Dems running against Obama or to Dems in other races.
@Boonton - Obama received a lot of small donations. No question. The problem is that an unknown number came from foreign donors (illegal) and from people splitting donations to avoid maximum amounts (illegal). And unlike every other candidate, Obama's campaign changed software settings to facilitate this. In fact, the change to the settings is an unusual one. What are the odds that the President will order an audit of the Obama campaign?
The fact that the federal government is a creditor is even more reason to let the judicial branch handle it. The executive branch, being elected by people who work for the auto makers, has a serious conflict of interest. That's exactly why bankruptcy court is so important.
Bankruptcy doesn't mean shutting down the whole operation. The court can keep it running and work with the company to end up with a viable company on the other side. But political considerations by the President's team and Congress will screw all of that up.
MB, Boonton, why the call to "move on"? Results are as of yet inconclusive, but there's enough smoke here to merit further investigation.
Data analysis takes time. I haven't seen a conclusive, exhaustive analysis by either side of this issue. While it is premature to make accusations, it is also too early to declare this issue dead, or to excoriate Megan for commenting on it.
I suspect it will take at least a week or two to gather data and form testable hypotheses, longe still to examine the results and check. Until then, it still seems a relevant topic for inquiry.
I have looked at Nate's post on this, and it seems rather perfunctory both in scope and method. That's understandable -- it will take a lot of work to fully investigate this, and I can see why his heart is not in it. Still, I wouldn't cite it as a reason to move on. Actually, his "research" to date makes a number of errors that raise my hackles. He should know better, and at least post a disclaimer.
Folks --
Chrysler dealers are mostly franchises, and cost the home office virtually nothing.
There's no business reason for closing dealerships as part of the Chapter 11 filing, except to permit lawsuits from the closed dealerships to be handled by the bankruptcy court. The closings are being conducted in a particularly vicious manner, to avoid state regulations requiring compensation to the closed franchisee; Chrysler has asked that all state regulations be waived in lieu of handling under federal bankruptcy court. The Chapter 11 filing requests that all lawsuits be directed against the pre-reorganization Chrysler, which means that the franchise owners would receive pennies on the dollar even if they won a lawsuit. Chrysler is also already shopping for franchisees to replace those they cut.
The very act of cutting franchises is probably a political hardball move.
Another point, that I have not seen elsewhere, is that the stakes here are a lot higher than in your standard partisan kerfluffle. It seems to me (and I am NOT a lawyer) that any perceived misconduct could lead to expensive, long-lasting civil suits against the government.
Best to investigate this thoroughly while this is still a plan, rather than after businesses are closed and people are hurt.
SL
MB, Boonton, why the call to "move on"? Results are as of yet inconclusive, but there's enough smoke here to merit further investigation.
No SL, there is ZERO smoke. The fact that of the closed dealerships one has so far been found to be an Obama donar and a few others have donated to other Democrats is EXACTLY what one would expect given the best statistics we have so far (our estimate of what portion of dealers donate to politics and of those that do donate, what portion typically go GOP versus Dem).
If you have more smoke then please produce it. But the initial smoke has fizzled out.
Data analysis takes time. I haven't seen a conclusive, exhaustive analysis by either side of this issue. While it is premature to make accusations, it is also too early to declare this issue dead, or to excoriate Megan for commenting on it.
I have no problem with this statement. Unfortunately people often do not spend their time wisely. If people are working on an 'exhaustive analysis' then more power to them. I suspect the more partisan orientated will simply keep screaming "One Obama dealer, twenty Republican ones!".
I also suspect that a more productive way to investigate this is to examine how Chrysler came up with the list and how the task force approved it (for example, did they just approve the blanket numbers...25% closed or did they go though the list state by state). In other words, a non-statistical investigation. But if you or someone else produces more or better statistics and analysis then please post it. Otherwise the initial burst of analysis has lead to a dead end.
Best to investigate this thoroughly while this is still a plan, rather than after businesses are closed and people are hurt.
Right now Chrysler is bankrupt. Without a reorganization plan its creditors have a legal right to demand immediate payment. That means the whole company is scrapped and sold for scrap. In the middle of a depression when there is much more car making capacity than car buying customers that means it will sell for nothing and all the dealers are closed as well as a lot of other people.
A plan needs to be implemented quickly and it will hurt people which means there will be plenty of incentive for people to raise spurious objections. Right now there is no evidence on the table that the plan is improperly political. No monkey wrench should be thrown into the recovery process unless there's real evidence that rises above trivial.
Plumb Bob
Chrysler dealers are mostly franchises, and cost the home office virtually nothing.
OK but then he writes
There's no business reason for closing dealerships as part of the Chapter 11 filing, except to permit lawsuits from the closed dealerships to be handled by the bankruptcy court. The closings are being conducted in a particularly vicious manner, to avoid state regulations requiring compensation to the closed franchisee
State regulations requiring compensation? How could the franchises cost the home office nothing if the franchises have a legal right to demand compensation from the home office? The game is given away, if the dealers were true retailers who simply brought cars from Chrysler and sold them for a profit there would be no need for Chrysler to close them. They would close themselves since car sales are way down.
Boonton,
Thanks for your reply. We seem to disagree on the amount of smoke. On the other hand, a prudent firefighter checks for heat before declaring the fire extinguished, and there is certainly plenty of that.
There is also plenty of fuel, too. There's lots of money involved; family businesses are being closed, and there are potential political as well as personal grudges.
Normally, this is defused by the bankruptcy. There's no point in suing if there is no money to win, and no one to hold accountable. But in this case, the government is involved. Deep Pockets. Possible civil rights violation. The ultimate version of "The Man" to fight against.
Too, these suits would be against the Government -- not Obama, nor even just the Democrats. Furthermore, they could go on for years -- maybe longer than Obama has left in office. Not the sort of thing one wants in the latter years of ones administration, or defining one's legacy afterwards!
I'm not a lawyer, but would be surprised if there aren't a number of lawyers slavering over the prospects of big bucks and lengthy lawsuits, with a few expert witnesses perusing the facts to see if there is anything that might convince a jury.
Put it this way: Nate's analysis was a quick look-see. Do you think it would last a minute on the witness stand with a fancy lawyer picking it apart? Someone putting together a lawsuit would have both the luxury of time and much greater analytical resources.
You can yell "Move on!" all you want, but if I were Obama, I would make sure that I had rock-solid proof that the process was fair and non-partisan. I would have someone checking every argument that could be made against me, not hanging my defense on a cursory and partisan analysis.
Even better, I'd back off, hand this whole Chrysler mess over to a bi-partisan, independent entity, and distance myself and my administration as far away from it as possible, with a few fall guys conveniently placed between the whole issue.
"Put it this way: Nate's analysis was a quick look-see. Do you think it would last a minute on the witness stand with a fancy lawyer picking it apart?"
Quite true but what you seem to be forgetting is that the original charge was an even quicker 'look-see'. No discrimination lawsuit can be won or even began with such flimsy evidence. When it is said 'one Obama donar' for example, it just means one found so far. Try to imagine a civil rights lawsuit for racial discrimination where the evidence isn't even actual statistics but simply a guy sitting in the parking lot seeing lots of white men going in at the start of the business day....
Chrysler dealers are mostly franchises, and cost the home office virtually nothing.
For the life of me, I can't figure out how anyone could possibly believe that being on the hook for carrying billions in dollars in inventory debt is could "cost the home office virtually nothing."
It's quite the opposite. If the dealers are so anxious to stay in the network, let them remain on the condition that they only buy their inventory COD and without any incentive payments. They'd change their tune in a hurry with conditions like that.
Boonton,
I agree that the original charge was also hasty, and that no discrimination lawsuit would be won with such evidence. But rest assured, such lawsuits will have the benefit of time to perform far moe detailed and rigorous analysis.
Yet there is not much time before the action that would trigger such lawsuits, that is the closing of the franchises, occurs! And once that action occurs, it is much more difficult to resolve the issue.
When bungee jumping, if someone tells you that something is wrong with your bungee rope, best to make sure they are in error -- and the best time to do so is before you take the plunge!
SL
Your analogies are mixed up. Bungee jumping is a recreational activity. If someone told you the rope may be bad, you could just go home and come back next week. Chrysler is not closing dealers for the fun of it, they are closing dealers because they are collapsing and if they don't take drastic action now, the bankruptcy law will shred the entire company.
Perhaps a better analogy might be a plan that is falling out of the sky. If someone told you the one parachute hadn't been inspected would you take 30 minutes to unpack it, inspect it, and then carefully repack it? Or would you strap it on your back, leap and hope for the best.
Now you and anyone else is free to 'investigate' but to be taken seriously you must do so from a position of honesty. And the honest position is that right now there is no prima facia case for discrimination against GOP contributors. The insistence on keeping t his meme going with phases like 'well there's smoke' indicates someone who isn't approaching this question from a serious angle focused on the truth but rather a partisan one focused on keeping the idea alive no matter how awkward the facts become.
Boonton,
Well, there is another point on which we disagree -- the urgency of the matter. I am concerned that this will be a case of act in haste, repent in leisure. Nor do I think a bankruptcy would be as catastrophic as you infer.
Nor is my take a strictly partisan one. A strictly partisan one might welcome Obama stepping into this trap, because it would haunt him for years to come. My primary motivation is selfish -- it looks like something that could cost taxpayers a lot of money. I would prefer to spare Obama the embarassment, and myself the expense.
This is not a "meme". It either is or is not a problem. I hope it will not be a problem, but if it is, it will keep going by itself -- indeed, snowball, with considerable downside. These possible consequences make it different from other political spats that crop up in these comments sections.
It looks like your main point has been overcome by events anyway. A more detailed analysis of the situation has emerged over the weekend which backs up earlier allegations of favoritism.
Nor do I think a bankruptcy would be as catastrophic as you infer.
Whether a bankruptcy with liquidation will be catastrophic for the larger economy is an open debate. For Chrysler, though, it isn't. Just go find some people who used to work at Circuit City. If Chrysler does not have a sensible plan to restore itself *right now* it will be liquidated and that means all the dealers are out of business as well as workers, suppliers etc. Keep in mind as a company in bankruptcy Chrysler cannot use what funds it has to conduct business right now. To do things like buy needed supplies, run ad campaigns etc. instead of paying its debts it needs permission from the bankruptcy court and without a serious plan the court cannot grant it if the creditors object. So yes there is a measure of urgency to this.
My primary motivation is selfish -- it looks like something that could cost taxpayers a lot of money. I would prefer to spare Obama the embarassment, and myself the expense.
I think your missing the other side to this debate. If 25% of dealers need to go, more than a few of those 25% would like to swap places with someone in the 75% who are staying. There's a real incentive for them to try to gum up the plan with spurious challenges in order to buy themselves a better deal (actually all the players have this motivation...bond holders, stock holders, the UAW etc.). This is why challenges at this point should be viewed as suspect until proven otherwise. If there's something there besides smoke it better be presented RIGHT NOW. Otherwise it is fair to assume it should be dismissed as simple stalling.
Of course, if you allow one stalling tactic to work you open the door for additional ones. If some of those 25% get swapped out the old 75% will object. Or if the 25% becomes 20% the bondholders may object that the company's chances of profitability are now lower and they want what little cash they could get from liquidation rather than being stockholders in a corp. that will never be profitable again.
If the works are gummed up, Chrysler is dead. To keep doing business it needs cash and the ability to use that cash for business rather than paying off their creditors. Without a plan right now new creditors won't give Chrysler cash and the courts won't let it use the cash it has. You concern for taxpayers is touching but the alternative seems to be the US gov't forking over even more cash to keep Chrysler from having to make any tough decisions. While those closed dealers will be very happy to live with that, it isn't what the taxpayers need.
It looks like your main point has been overcome by events anyway. A more detailed analysis of the situation has emerged over the weekend which backs up earlier allegations of favoritism.
Really? Where?
Boonton,
I think we may have reached the crux of our disagreement -- Urgency. Your last post seems to focus on the reasons why delay in resolving the dealer franchise closing apportionment would adversely affect Chrysler.
But that sidesteps the entire point of my first post!
I said that this needs to be more thoroughly investigated before taking action, because the potential lawsuits would be expensive and would last for a long time. You seemed confident in Nate's findings to pronounce that such lawsuits would have no realistic basis. I pointed out that Nate's analysis was hardly thorough enough to responsibly support that pronouncement.
Your position seems to have morphed to be that the likely consequences of any lawsuits resulting from this action would be less harmful than the likely consequences of delay. It's a different point from the one we've been discussing, but I'll call horsefeathers on this one, too.
One of the Obama administration's favorite crutches is to play up the urgency of a situation in order to force the decision down a predetermined path. Timothy Geithner anyone? How about that "Stimulus"?
Chrysler has been in trouble for thirty plus years. You are saying unless we go forward with this plan now, it is going belly up? And the dealer closings, exactly as they are planned now are absolutely essential to this entire process?
Also, what new creditors do you have in mind? Any names?
As to new analyses, zero hedge has noted a "noticeable (we have rightly been called out for using significant here) and highly positive correlation between dealer survival and Clinton donors"
Nate is pooh-poohing this study too, ignoring that this study never claims to be the definitive word. I don't expect you to be convinced, but then what you or I think really doesn't matter. It matters what the dealers, their lawyers, and the various juries think. Will you admit that they might think there is something to all this?
I said that this needs to be more thoroughly investigated before taking action, because the potential lawsuits would be expensive and would last for a long time. You seemed confident in Nate's findings to pronounce that such lawsuits would have no realistic basis. I pointed out that Nate's analysis was hardly thorough enough to responsibly support that pronouncement.
I disagree, I suspect with the approval of the bankruptcy court it would be almost impossible to file a successful lawsuit except maybe if a smoking gun came out. Maybe not even then...then again perhaps a lawyer is watching this thread and could interject...
Your position seems to have morphed to be that the likely consequences of any lawsuits resulting from this action would be less harmful than the likely consequences of delay. It's a different point from the one we've been discussing, but I'll call horsefeathers on this one, too.
Liquidation means the taxpayers get next to nothing back as well as Chrysler's other creditors....not to mention the other taxpayer outlays such as unemployment benefits etc. Cost-benefit wise I still see the benefit of acting with urgency in the taxpayer's favor when set against your cost of possibly expensive lawsuits filed on what appears to be spurious evidence.
Chrysler has been in trouble for thirty plus years. You are saying unless we go forward with this plan now, it is going belly up? And the dealer closings, exactly as they are planned now are absolutely essential to this entire process?
No Chrysler has not been in trouble for 30+ years. Not this type of trouble anyway. They avoided bankruptcy in the early 80's with Reagan's bailout. They were profitable for quite a while. Now they are in bankruptcy because they are in *legal default* on their debt. This means its creditors have a legal right to demand liquidation. This is hardly just a 'bad year' or 'disappointing numbers'.
Chrysler's creditors are in a bad situation. They are to be made shareholders in the new corporation. Shareholders get zero in bankruptcy so if the new Chrysler fails its old bond holders get nothing. So it's easy to see how many bondholders would rather take pennies now than be shareholders of a company that will be back in bankruptcy years from now.
As to new analyses, zero hedge has noted a "noticeable (we have rightly been called out for using significant here) and highly positive correlation between dealer survival and Clinton donors"
1. I'd like to see an actual link.
2. Clinton donors? I thought the original story was that Obama was punishing both GOP donors and Democratic donors who gave to his opponants?
3. Autocorrelation anyone? Did Zero hedge establish that Clinton donors (or any type of donors) are randomly scattered among dealers to begin with? You need to establish that donors are NOT correlated to relevant economic variables. For example, suppose Chrysler sales are relatively stronger in the northeast where Hillary and later Obama had strong support than, say, Texas and Arizona where McCain had very strong support. The chances of closure in the northeast will be smaller than the chances than in Tx and Az. You will then see a correlation between donating blue and surviving but autocorrelation needs to be ruled out. This is why it is almost impossible to make a discrimination case, even a prima facia case, on stats alone.
Boonton,
Well then we disagree on my original point -- that the lawsuits due to this action are a valid reason to defer and will have significant financial consequences.
And I am not a lawyer, so I could be wrong.
And if potential lawsuits do not matter, then discussion about the claims of political bias becomes mostly a partisan shouting match. If you don't care about the consequences, you can believe what you want.
so how exactly should Chrysler close a large number of dealerships? You have yet to provide any link to the latest 'study' showing bias. So given evidence that ranges to non-existent to spurious we should hold off allowing Chrysler to close dealerships. How exactly will it ever do so without someone somewhere alleging some bias, hinting that a lawsuit may result and thereby hold the list up again and again?
Whoever is on the list will get hurt and will seek to claim some type of bias.
Boonton,
Chrysler should close the large number of dealerships with no input from federal government as to who should be closed. That way, the government would not be a party to any lawsuits. Sure, whoever is on the list may claim some type of bias -- but they will be claiming it against a bankrupt entity, not the federal government.
As for the study, per your 4:16 post -- are you telling me that you wrote a whole paragraph questioning the methods of a analysis you have not even read yet? I thought I had too much time on my hands. In any case, follow the links up top and you will find it. Nate has already put up a pretty extensive partisan rebuttal.
Since we disagree on my main point -- that the potential for lawsuits against the federal government due to this action are a valid reason to defer and will have significant financial consequences -- the study is not relevant to our discussion (although zerohedge.blogspot.com is worth reading for many other reasons).
I will predict that further refinements of data and hypotheses are coming, so if you find this one unconvincing, another will be along soon.
1. No evidence has been presented that the Fed. gov't had input on who made the list and who didn't.
2. I didn't question the analysis of the 'study', only its conclusions. Finding a correlation is only the first step in a 'study', not the final one or even the middle one. As I pointed out, it's quite common for correlations to exist not because of causation but because of autocorrelation.
Boonton:
1) If such evidence never turns up then no need to worry.
2) Yes, I know.
I think you mean http://zerohedge.blogspot.com/2009/05/i-am-marlas-observations-on-artifical.html
Several interesting things:
1. If I'm reading the chart correctly, donating to Obama, McCain or Democrats produced a negative coefficient....in other words, a dealer supposedly was punished for such donations but donations to Clinton or Republicans were rewarded. Odd.
2. While the numbers aren't given, "little in the way of interesting relationships" were found with amounts donated. So the only actual relationship is making a donation to either the Republican Party or Clinton improved a dealer's odds of being ok....but only making a donation of any size....larger donations didn't yield any savings. If this was an intentional result rather than a statistical artifact, one has to wonder what the intent was.
3. P-value - Sorry but the standard tests for confidence are 99% or 95% and sometimes 90%. Below that you just don't get enough confidence. Here the Clinton variable is the 'best' of all the relationships but its confidence is 87.5%. A 12.5% chance of a type I error is simply too high. That means there's a 1 in 10 shot that there is no relationship between making a Clinton donation and not getting shut down but the 'sample' was just 'unlucky'. Well zero hedge tested 6 different variables to see if there was a relationship. Flip a ten sided die 6 times and is it really amazing if you score a '1' on at least one flip?
A last issue, I'm not sure what Zero Hedge is testing in his regression but he doesn't seem to be testing the standard hypothesis:
M1 = M2
In other words, the average rate of donations for the entire population of dealers is equal to the average rate of donations for the entire population of closed dealers.
This is kind of basic. You want to know in the entire population of dealers (both open and closed) what % donated to, say Clinton. Then you ask what % of the closed ones donated to Clinton. Only then do you ask is the alternative hypothesis true, namely that
M1 != M2
In other words, the rate of Clinton donations among the closed firms is significantly higher than the rate of Clinton donations among ALL firms (not just the ons that remained open).
Boonton,
But you never answered my original argument. Why the haste to declare this "meme" dead and move on? It certainly got a lot more interesting over the weekend.
I've declared it dead because it is. Should better information come out its always possible to bring it back to life. So far, though even Hedge's analysis is not very impressive.
Shouldn't the deadness kind of mean that no one is still talking about it?
I mean, the controversy over that video in the eighties with the Ronald Reagan puppet? Dead. Outrage over Elvis's suggestive dance move. Dead. Excitement about Greta Garbo talking in the movies? Dead.
This bias in dealer closure subject doesn't seem to have the same quality of deadness to it.
It's dead in the sense that the charge as initially presented has been responded too and the response represents a stronger analysis of the available information than the original charge.
Is it possible it will stay alive? Sure, people can scream for years that Obama secretly plotted to hurt Republicans (or someone on Obama's team inexplicable plotted to reward Clinton donors)...but unless more and etter evidence is presented it will stay alive as a political myth. Easily debunked for those who care about its truth value but easily repeated for those who care more about its potential rhetorical points.
In this way I'd consider it like the supposed 'Bill Clinton death list'. It remained alive, despite all actual evidence, only during his administration. Afterwards it lost all support when those who cared only for its rhetorical value moved on to other things.
FiveThirtyEight did a followup post on Hedge's 'study'
http://www.fivethirtyeight.com/2009/05/on-moon-landings-michelle-malkin-p.html#comments
His criticism wasn't based on autocorrelation as much as the 'false positive' error. When you keep testing variable after variable you're going to get a false positive through chance alone at some point. This is especially true if you're going to accept p-values that are under 95% confidence, and Hedge is highlighting a single p-value that doesn't even make it to 90% confidence. The oddds of a 'false positive' according to Nate when you test 6 different variables independently? Close to 50-50.
That doesn't seem to be much of a definition for death. Especially as you say in the next paragraph that it might stay alive. The living dead? Zombies don't exist in reality.
Proper analysis takes time. Not all reasonable hypotheses have even been evaluated as of yet. I still don't understand why you proclaimed this idea dead now, let alone as of last Friday.
Burden of proof here, I think a charge that the close list is politically biased should be treated the same way as a charge that it is racially biased, geographically biased, or whatnot. The burden is on those making the charge. I'm not saying you need absolute proof but you need some prima facia evidence and the evidence presented....a 'look through' (i.e. "I only see one Obama donor on this list!") and then a more comprehensive analysis has failed. Hedge's statistics appear to be good, she just misread what the results mean.
I don't think it's quite clear just how much the p-score kills the theory that the list was biased.
Suppose I had a coin that I suspected was biased towards heads. I flip the coin twice and the result is heads both times. What does this tell me?
Well the null hypothesis is that the coin is fair and the equilivant to the p-score is 25%. In other words, there's a 25% chance that two flips of a fair coin would result in two heads.
Hedge Zero's analysis on the best regression is 12.5%. What does that mean? Essentially nothing. If I told you a coin was biased because I flipped it twice and got heads twice, you'd laugh at me. Well Hedge's p-score would be the same as saying the coin was biased based on only THREE flips and getting heads on all three!
Now Nate's criticism is a bit more subtle, say I suspected that your quarter was biased...but when I flipped it twice I got one heads and one tails. That's consistent with an unbiased coin! So I then go hunting in your pocket doing two flips on each coin I find until I find a penny that gives me two heads!
Basically, if you go flipping coins you'll eventually come up with a result that would be unusual but not impossible for a fair coin. Likewise, if you keep regressing variables you'll end up with a result that has a 12.5% chance of happening even if the underlying data has no real correlation.
So instead of asking me who am I to declare the idea dead at the moment maybe you should ask the reverse question. To be alive means to be breathing. How is this idea breathing now? What merit does the charge have right now? Go ahead and see if some other evidence supports the charge but unless and until someone actually finds some it's as much of a myth as saying maybe you're the 'real killer' behind the murder of OJ's ex-wife.
Requiring overwhelming proof is all very well for the courtroom, but this is still the investigative phase. Hot leads aren't discounted just because they aren't definitive.
This idea is still breathing because people are still running the numbers, developing the hypotheses, and figuring the angles. It's only been a week. What's your rush?
Also, you need a better analogy for your argument. OJ was found not guilty in court -- obviously the burden of overwhelming proof of guilt was not met. Are you telling me that I am stupid or nuts to still think that he did it?
You and Obama are chatting and get into an argument. You and he agree to settle it by flipping a coin. Obama wins and you lose but he lets you have the coin.
You flip the coin two times and get heads. Ah-HA you declare. Obama cheated you with a coin that was fixed. It came up heads 3 times in a row therefore couldn't be a fair coin! Correct or incorrect?
This idea is still breathing because people are still running the numbers, developing the hypotheses, and figuring the angles.
The numbers have been run and they went against the lead. 'Figuring the angles' means either trying to pretend that is not a fact or trying to figure out odd variations on the hypothesis to make something that isn't there (notice the original story was GOP donors were punished, Obama ones rewarded....then it became GOP donors & non-Obama democratic donors were the ones punished....now its Obama donors slightly punished, GOP donors slightly rewarded and Clinton donors slightly rewarded)
It's only been a week. What's your rush?
There's no rush. The analysis has been done. What analysis is still 'in play'? The data that is out there and the analysis that was done on it has been published and I've presented the logical conclusion to draw from that. I was a lot less "rushed" than those who jumped to point the finger and accuse Obama of corrupting the list.
More briefly, if there's something there then present it otherwise the issue is closed from the POV of an honest evaluation. We don't hold the issue open becuase *maybe* someone out there will come out with something. Dig through the data if you wish. I'm sure there's lots of interesting things in it. Figuring out what dealerships to close or keep alone would probably make a fascinating Harvard Case Study. But this aspect of the story is dead for now.
You are acting as if all reasonable hypotheses have been evaluated and discarded. I don't see it.
As an example, there has been no statistical analysis of the relation between distance between a closed dealership and an open dealership owned by a Democrat donor. Anecdotal evidence, yes.
And zero hedge has stated that the data should be refined.
There are many other considerations beyond these two examples.
Here's a problem with your more localized hypothesis. If there was a local bias, say closing Republican dealers within a short distance from a Democratic one....that should show up in the total numbers. Remember the number of Democratic dealerships is very low (90% don't donate, 10% of those who do give to Dems). Even just favoring a handful of Dems will throw off the statistical analysis of the entire population of closed dealers.
This would hold *unless* the nefariously biased manager at Chrysler offset his pro-Democratic bias with a pro-Republican one in other areas. Then your overall numbers will stay clean. But what would the point be then?
A more reasonable strategy might be to favor Democratic dealers by taking it out on non-donor dealers. But Hedge's analysis showed no favoritism or disfavoritism for non-donating dealers.
Here's the other problem, you're just fishing the data now. If I think you are holding a biased coin, flipping one coin 3 times and getting 3 heads is only an 87.5% confidence level. If I keep fishing coins out of your pocket and flipping them sooner or later I'd get a series of heads that would meet a 95% confidence level, even a 99% one. Even though all of your coins are 'fair', sooner or later I'd get a really out of the ordinary result for a fair coin.
So if you have more refinement to do the data or more considerations to consider then please do so. Otherwise the issue is dead.
Didn't think I was doing anything with the data, let alone fishing it.
You seem eager to dismiss potential downside. I hope you are right, but all the same would prefer not to start a minefield-clearing business with you.
"Didn't think I was doing anything with the data, let alone fishing it"
Ohhh ok. Just let us know how long the we must place the world on pause while we wait to see if anything interesting is ever discovered in the data.
The world pauses for no one. That's my point.
Not to hog the last word but....
The SC has not stopped Chrysler's bankruptcy and dealers didn't even try to stop it in court. AS I indicated early on, a good sign of how serious this really is would be to see if any of the allegedly vicitmized dealers put their money where their mouths were and actually tried to bring a case.