What's on Kushibo's iPod: the Newshour economic reader

I'm still in the process of clearing out my SAVE list on iTunes. These are podcasts — almost all of the Newshour pieces — that I think are worth a listen (or a viewing, since they're actually original from television). The first few are very recent, although toward the bottom some of the are from much earlier in the year, when Obama's presidency was just around two years old but the Republicans were already beginning to say he'd been in charge for "almost three years." 

• What Happens if Lawmakers Don't Reach Debt-Ceiling Deal by Deadline?

• Obama's $86 Million Haul Leaves GOP Competitors Far Behind

• Strategic Default: Immoral or Not?

• Is a College Diploma Worth the Soaring Student Debt?

• 'Last In, First Out' Among Teacher Layoff Policies Under Scrutiny

• Chrysler Pays Back Billions in Bailout Loans: Is the Comeback Complete?

• Rand Paul: 'Our Whole Economy Is Equal to Our Debt Now'

• Tax Breaks for Oil Companies: Good for Business or Unfair Advantage?

• Oscar-Winning 'Inside Job' Director Attacks Economists' Ties to Financial Sector

• Ode to Germany: Merle Hazard, Backed by Beethoven

• Making Sen$e: 'Feelin' Lousy' - Financially Groovy In Song

Chrysler announces profit for first time since 2006

I'm a big fan of Kia and Hyundai (and the former GM Daewoo, for that matter), but I also get excited when American car companies do well. And the good news is that Chrysler registered a very modest profit — but a profit nonetheless — and that may signal that the beleaguered Detroit automaker is truly on the mend.

Of course, a lot of this turnaround still comes from the sale of large gas guzzlers, and Chrysler must work to provide more efficient but still fun vehicles for the American market which could also resonate with car buyers in places like, say, South Korea. I would love to see the occasional Chevrolet-versus-Chrysler race on the streets of Seoul.

PBS Newshour gets it wrong on the KORUS FTA

I've made no secret that I love PBS's Newshour and I recommend it as the single best layperson's source of comprehensive, objective, nonpartisan, and dispassionate analysis of the important political, economic, and social issues facing the United States and much of the world (that, Sesame Street, and low-calorie cranberry-walnut muffin recipes is why we should support public broadcasting).

But every now and then they do get it wrong, and this "News wrap" piece mentioning the FTA, I feel, was a misrepresentation of what's actually going on:

The U.S. and South Korea have reached agreement on the largest trade deal in more than a decade. The announcement today said the U.S. will lift a tariff on Korean autos over five years. In turn, South Korea will allow imports of thousands of American-made cars. The South Koreans also agreed to lift a heavy tariff on U.S. beef.

Listening to that, someone otherwise uninformed about ROK-US trade might get the impression that prior to now, the import of American-made cars is simply not allowed. In fact, there are loads of American cars on the streets and highways of South Korea — they are imported with an 8% tariff — though they don't do nearly as well as Lexus, Honda, Volkswagen, BMW, and Volvo.

What Kwame Holman should have stated was that the pact would allow each US automaker to export 25,000 cars that do not meet ROK safety standards but do meet US safety standards.

Quoting the Los Angeles Times article about President Obama's praise for the deal:

South Korea would allow the U.S. to lift a 2.5 percent tariff on Korean cars in five years, instead of cutting the tariff right away. Each U.S. automaker could export 25,000 cars to South Korea as long as they met U.S. safety standards; disputes over safety standards had effectively stood as a barrier to U.S. auto exports into Korea. A U.S. tariff on Korean trucks would be phased out and South Korea would eliminate its tariff on U.S. trucks immediately.

Ford and Chrysler have claimed that ROK safety standards amount to a non-tariff trade barrier, even though Japanese, German, and Swedish automakers have had no real trouble meeting them. Detroit, for all practical purposes, wanted special consideration for US-made automobiles: Let American-cars into the South Korean market based not on South Korean laws but on American laws. I can imagine the outcry from Detroit if Hyundai and Kia were to have done the reverse with their cars (although actually, Hyundai and Kia are making most of their cars for the US market in the US).

The idea behind the 25K-per-automaker deal is for Chrysler and Ford to be able to break into the South Korean market without making expensive adjustments for which they don't know if there is going to be a payoff down the road (if the cars meet ROK safety standards, there is no limit).

If the South Korean public decides they want F150s, Mustangs, Escapes, and Equinoxes, then it will be worthwhile for Ford and Chrysler to retool some of their output specifically for the South Korean market, just as South Korean automakers (and everyone else) do for California. (I suppose this benefits GM, as well, but since GM already has a sizable presence in South Korea with ownership of GM Daewoo, it's not exactly the same situation).

All in all, despite Montana's Democratic US Senator Max Baucus being "deeply disappointed" that beef was not addressed, the end result isn't a bad one. I don't like the idea of big, polluting vehicles roaming Seoul streets, but I think the "streamlining" compromise sounds reasonable.

Ben Muse of the Korea-US FTA Blog has more on the details of the re-agreement of the FTA.

Democrats want more, more, more negotiations on KORUS FTA

More FTA news. It looks like Democratic members of Congress are taking advantage of the post-G20 lull in negotiations to twist President Obama's arm in order to get him to demand more changes to the KORUS FTA, beyond the beefs about cows and cars. And Obama says he'll listen, then think about it, and then maybe say "Screw it, I've got Republican votes now."

From Reuters:

President Barack Obama told congressional critics of a free trade deal with South Korea he would consider asking Seoul for changes to labor, investment and financial provisions of the pact to help win approval of the deal in Congress, a lawmaker said on Thursday.

"He wanted us to give him a list of what our other concerns were," Representative Michael Michaud, a Maine Democrat, told Reuters after he and eight other lawmakers met with Obama.

Obama said he "is willing to go over that list and see which ones they agree with, and the ones that they do (agree with) they'll try (to pursue) when they continue the negotiations with the Koreans," the Maine Democrat said.

But Michaud, who is chairman of the House of Representatives Trade Working Group, said also Obama made clear finalizing the trade deal was a priority and "he definitely does not want to start from scratch" to get that done.

There is still a lot of upbeat talk about the FTA:

Despite the setback at the G20, U.S. business have tried to remain optimistic that a deal is still possible and could be sent to Congress for approval early next year.

Tami Overby, president of the U.S.-Korea Business Council, said Deputy Trade Representative Demeterios Marantis told her on Wednesday he still believes it is "matter of days and weeks" before a deal is sealed.

Obama knows he has to fix his screw-up, and I think that means he'll go it alone (party-wise) if he has to. After all, he's got the Mama Grizzly on his side, and she's working on the Tea Party wing of the GOP.

Oh, and speaking of the the Republicans... Remember all those disgruntled voters who were out of work or underemployed or had lost their homes, and so they voted out the Democrats en masse because President Obama couldn't fix in two years what it took the Republicans eight years to muck up? Well, the GOP gave them a big fat thank you by blocking the extension of jobless benefits for 2 million Americans beyond November 30.

WaPo whops Obama on KORUS FTA "setback"

It looks like the failure to get the KORUS FTA agreement done has put the FTA more in the spotlight than it ever was. The Washington Post has some somewhat harsh words for the President:

For those who believe, as we do, that free trade can help fight global recession and prepare the U.S. economy for a new, more competitive future, President Obama's trip to Asia was a disappointment. In particular, Mr. Obama's negotiators were unable to agree with their South Korean counterparts on revisions to a much-delayed U.S.-Korea free trade pact, as Mr. Obama had promised in June. Though both countries insisted the talks would continue, it's anyone's guess when Congress and the Korean National Assembly will finally get to vote on free trade between Korea and the United States.

This setback has many authors, including Korean protectionists who stoked a public overreaction to a long-ago mad-cow disease outbreak in the U.S. cattle herd. But Mr. Obama and his fellow Democrats in Congress have the most to answer for. ...

The vast majority of U.S. business sectors favor the deal, and it would help both economies to grow. However, congressional Democrats blocked it, arguing it would cost American jobs, and as a candidate for president in 2008 Mr. Obama rejected the deal as "badly flawed." In office, he dithered for months, before finally declaring himself in favor of moving forward with a revised treaty.

In opposing the deal during the campaign, Mr. Obama echoed claims by the Ford Motor Company and the United Auto Workers. Under the agreement, Korea and the U.S. would end their respective tariffs on autos and light trucks; Korea additionally pledged to reduce tax and regulatory obstacles to imports, and accepted a mechanism that could permit the US to reimpose tariffs if Korea tried to reestablish non-tariff barriers. Ford and the UAW say that isn't enough, insisting on guarantees that Korea won't use environmental and safety standards as a de facto bar to US vehicles. In the most recent talks, Mr. Obama has been trying to get the Koreans to meet him halfway on this point.

My disappointment with the article is their repetition of the Big Lie:

It's true, as Ford says, that, before the recession, Korean companies sold more than 700,000 cars per year in the US, about 100 times as many as U.S. companies sold in Korea.

Not quite, WaPo. Last I checked, General Motors is a US company, and they are the owners of GM Daewoo, which sold nearly 60,000 cars in South Korea in September alone. When GM's Daewoo vehicles are added to the US side of the calculation, the numbers are far more balanced.

Still, the WaPo redeemed itself a bit by pointing out some other points to consider, mainly that car markets of wildly different sizes will not have car sales parity even if all other things were equal, plus there are all those US-built Hyundais and Kias:

But the US market is 16 times larger than Korea's; and about a third of Korean cars sold in the U.S. are built in U.S. plants, not imported. Maybe what really worries Ford is not the lack of US access to the Korean market, but the potential for increased Korean access to the US market.

All in all, a good article, and I hope more people will realize how many billions of dollars in economic growth the US is missing out on because of the temper tantrums of Ford, Chrysler, and Senator Max Baucus.

Chrysler joins Ford in opposing free trade agreement with South Korea

On the heels of Ford's very public effort to block the KORUS FTA, and with some sort of agreement possibly coming in the next few days so that ROK President Lee Myungbak and US President Barack Obama can shake hands on it, Chrysler has voiced its opposition.

From the Detroit Free Press:

In a statement, the Auburn Hills carmaker – which is owned by Italian automaker Fiat, the U.S. government, and a health benefit plan created by the company and the UAW – said while the company “has supported every free trade agreement” the government has negotiated it can’t support this one “in its current form.”

The article doesn't give any of Chrysler's reasons, but we can assume that they are similar to Ford's. General Motors, meanwhile, owns one of South Korea's main automakers, so they aren't likely to complain.

PT Cruiser rides off into the sunset

This news makes me sorta sad. Chrysler is discontinuing the PT Cruiser. I don't own one, but I always thought they looked kinda cool, and last September I had a chance to rent one for a week when I visited the Mainland.

It was a fun ride, and surprisingly affordable. It was aimed at young people who wanted something different but retro, I guess. It was pretty fun to drive, though a bit of a gas guzzler in the days of $4/gallon gasoline, which is why the folks at Enterprise probably offered it to me as an upgrade.

I'm always thinking of what my next car will be, not just in terms of dream car but in realistic terms of what I can afford. As a grad student whose wealth is mostly in Korean won, that's not a whole heck of a lot right now, unless I buy used. 

If I were to buy new, I might actually consider a Hyundai Elantra like the one I rented this past Christmas. It was fun to drive, comfortable and zippy, and got great gas mileage. It had loads of buttons and whistles, too. And it didn't look like I was poor. That's bonus points when you're in the 30+ age bracket, since not everyone you pass knows you're a grad student. 

I'm not sure if I would have bought a PT Cruiser, because I began to notice more than a few 50-or-over types who looked like they were trying to relive their youth. And although I have nearly the same physique I did when I was in college, I'm not so sure I want to be associated with that kind of Peter Panism. 

Anyway, I'm disappointed to see the PT Cruiser go. Who knows? Maybe this anchor of Chrysler sales will make a comeback, much like the Ford Taurus, which will return later this year as a 2010 model. It's pictured below, with Peter Horbury, Ford's chief of design in North America.

Frankly, I think it looks kinda cool. If I trusted its quality (like if it had the long reputation of a Honda or Toyota or the uber-comprehensive warranty of a Hyundai or Kia) I might consider it, though if I were in the market for that kind of vehicle, I'd be looking primarily at the Honda Accord (but the sporty Coupe model), the Toyota Camry (which I almost bought in senior year of college, but opted instead for an Acura Integra), or the Hyundai Azera (or possibly the Hyundai Sonata). 

Since I've lived in Seoul off and on since I was a teenager, I'm old enough to remember when the imported Ford Taurus was considered a luxury vehicle in Korea. That was for two reasons: back in the early 1990s Ford was considered to be more reliable than any Hyundai, Kia, Daewoo, or Ssangyong (Samsung wasn't around just yet), and the nearly 100% markup due to tariffs and other fees associated with foreign cars put it in the luxury price bracket. 

Obama keeps harping on how Koreans (and Japanese) don't buy American cars, but one major reason is that there are so few cars from Detroit that fit into the Korean lifestyle. But I think that is changing. Smaller cars (that's hella important for the Korean and Japanese markets, Detroit!) with power and prestige are what a lot of slightly upscale buyers are looking for in a foreign car. 

They want something different but recognizable as prestigious, not too big but with power. I think the Cadillac CTS commercials feature Kate Walsh from Grey's Anatomy are right on the money. I'm not in Korea at the moment, so I'm not sure if this isn't already in the works, but if General Motors if NOT selling the Cadillac CTS in Korea (and Japan) and running the Kate Walsh ads, get with it pronto.

What has been working to attract younger people to Buick and Cadillac will work with a large segment of the middle-class and middle-aged population in Korea. But make sure you don't get a verbatim L1 translation for Kate Walsh's text. "When you turn your car on, does it return the favor?" doesn't translate directly.