Michael Rainey
-

Our introduction to the Treasury Department official in charge of the $700 billion bailout fund -- Who will spend our $700 billion? Meet 35-year-old Neel Kashkari -- generated a lot of interest and commentary. Many of the comments have been negative and cover a wide range of fear and loathing, from cracks about Goldman Sachs (NYSE: GS) running the country and stealing all the money, to insults directed at Kashkari's lack of hair and ethnic background. (For the record, his family is from India, not Iran, and Neel is apparently a Hindu name, not a Muslim one, although I haven't found any definitive proof of his religious background.)

Looking around the web, I found lots of talk about Kashkari, including one curious comment at Huffington Post that Kashkari has a special arrangement with respect to his salary. Somehow, according to this commentator, Goldman Sachs is paying him billions of dollars to do his job. He will supposedly collect these riches when he steps down, presumably after having rendered super-secret services to the financial oligarchs who apparently own our country.

The writer of the comment offered no proof, and I have to admit that I'm a little skeptical (about the salary, not the oligarchy). But it did get me thinking about how much government officials are being paid to handle all this bailout money.

According to this Bloomberg report, Kashkari earned $738,000 in salary and bonus at Goldman before joining his former boss Hank Paulson at Treasury in July 2006. His title is now Assistant Secretary (Assistant Secretary of the Treasury for Financial Stability and Assistant Secretary of the Treasury for International Economics and Development, to be precise) and he is, obviously, a federal employee now. So he must earn the standard salary for an Assistant Secretary.

This is part of a weekly series about the car business. The auto industry plays an important role in the global economy, and record-high oil prices and a global slowdown have contributed to a crisis in the sector. This column will highlight some of the interesting stories that emerge as that crisis plays out.

"These are truly unimaginable times for our industry."

This is part of a weekly series about the car business. The auto industry plays an important role in the global economy, and record-high oil prices and a global slowdown have contributed to a crisis in the sector. This column will highlight some of the interesting stories that emerge as that crisis plays out.

Last week, I suggested that the auto industry was ripe for consolidation (Car Biz: Look out below!). The very next day the potential merger between General Motors (NYSE: GM) and Chrysler hit the news.

I can't claim that I'm clairvoyant. I just read the news like everybody else. And overcapacity is old news in the car business. Even in good times, there are too many factories producing too many cars and trucks for too few consumers who can afford them. Some estimates put overcapacity in the industry in the tens of millions of vehicles per year. The burgeoning recession just makes this basic fact impossible to ignore any longer.

Now Chrysler CEO Bob Nardelli is joining the chorus. He recently said that the rapid and dramatic decline of sales in the American auto market "certainly creates an environment for consolidation." He also spoke about "synergies of productivity" but of course he has to say that. CEOs involved in merger talks always talk about 'synergies' even though they are rarely generated in practice.

I guess people aren't drowning their financial sorrows with cola. And now PepsiCo Inc. (NYSE: PEP) shareholders have plenty to be sorry about.

The perennial silver medal winner in the great cola olympics announced weaker than expected sales in North America for the third quarter. Sales were down by 3% and profits down by 9% as consumers presumably reacted to worsening economic conditions by cutting back on everyday luxuries like sugar water in its myriad forms.

In response to the poor results, PepsiCo announced that it will cut 3,300 jobs from its global workforce of 185,000. It will also close six plants. Savings from the cuts and closings were estimated to be $1.2 billion over three years.

Pepsi also said that it will get back to the basics of selling relatively inexpensive bubbly soda to consumers. This is a reversal of its recent emphasis on more expensive juices and energy drinks. As the economy worsens, consumers will presumably cut back on such items.

PepsiCo closed yesterday at $61.77 and is trading at $56.13 as of 1:10 pm, down 9%.

This is part of a weekly series about the car business. The auto industry plays an important role in the global economy, and record-high oil prices and a global slowdown have contributed to a crisis in the sector. This column will highlight some of the interesting stories that emerge as that crisis plays out.

And I thought things looked bad last week (Car Biz: Dark days in Detroit and beyond). The skies do indeed look dark in Detroit and the auto industry as a whole. But now instead of weak sales and slow growth, we are looking at plummeting sales and the very real possibility of bankruptcy and further consolidation throughout the industry.

It's no surprise, of course, that a Bush administration official would describe himself as a free-market Republican. But it does suggest that Kashkari may have trouble figuring out how to restore confidence in those supposedly free markets.

This is part of a weekly series about the car business. The auto industry plays an important role in the global economy, and record-high oil prices and a global slowdown have contributed to a crisis in the sector. This column will highlight some of the interesting stories that emerge as that crisis plays out.

September car sales reports are due this week, and no one in the auto industry is looking forward to the monthly numbers, especially no one in Detroit.

Expectations are that car sales will be lower once again. According to analysts quoted at Bloomberg, sales at General Motors (NYSE: GM) and Ford (NYSE: F) will be down over 20%, while sales at Chrysler will be down over 30% from last year. Japanese producers also are expected to see lower sales, with the Japanese Big Three Toyota (NYSE:TM), Honda (NYSE: HMC) and Nissan (NASDAQ: NSANY) all down in the 20% range.

The industry is sliding down toward the magic number of one million cars sold in the U.S. for the month. The last time fewer than a million cars were sold in a month was February 1993.