The Wondering Mind

There’s been lots of press over the Chrysler and GM bankruptcies. Only time will tell how they will work out.

My personal view is that buying Chrysler is a mistake for Fiat. Chrysler has done much over the years to destroy the brands it owns. So much so that Jeep is about the only brand with any kind of goodwill of value left. (I realise that there are undoubtedly fans of various Chrysler brands still out there, but I suspect the benefits they bring to owning the company is easily outweighed by the negatives.)

And for that prize, Fiat is taking on a company whose problems are legion. As many commentators have pointed out already, Fiat has pulled off a remarkable turnout of its own in the past few years, but it still has a long way to go to finish the job. There are arguments to made that if Fiat really wanted to enter the U.S. market for the sales volume, they may have been better off purchasing Saturn for the dealership in the U.S. They could have supplied the excellent and relatively new dealership network (probably much better than Chrysler’s), with vehicles from existing factories, or from greenfield sites which do not suffer all the issues of legacy, both good and bad, that come with Chrysler plants.

As for GM, being unburdened of some of its debt will help, but it needs to start producing better products or it will fail. The reason not enough customers bought GM cars wasn’t because they didn’t like the fact that GM workers supposedly got better pay than those in a Toyota plant (why does the customer care, as long as the price is right?); it was because they did not design and build sufficiently attractive cars.

What I really hope GM does in bankruptcy though, is to treat its dealers better than Chrysler has. While they did need to shed dealers, and they did need to do it far more drastically than the dealers would have liked, many of the tactics smacked of callous opportunism. Pressuring dealers to take on excess inventory, with promises that they would then survive the coming dealer cull, literally days and weeks before they were axed was clearly cynical and dealing in bad faith. Refusing to take back inventory while hiding behind bankruptcy is just pathetic.

What I didn’t know, and what many people probably don’t, is that the axed dealers only have a short time to sell their inventory of new vehicles. After a deadline, it is illegal for them to sell those vehicles!

This only adds to my opinion that those running Chrysler are scum and bad enough things cannot happen to them. And just to confirm the righteousness of that stance, I noted this in the last paragraph of the article referenced above.

Chrysler points out that since it hasn’t produced vehicles since May 1, many dealers are hungry for inventory, and they’ve been buying vehicles from the soon to be closing retail stores.

What a load of crap! The reason Chrysler hasn’t been producing vehicles since May 1 is that it’s been months (actually, more like years) since they’ve been able to find enough people crazy enough to buy their horrendous products! They still have inventory built only God-knows-when, sitting on their lots waiting for a buyer. The only reason anyone seems to be buying Chrysler these days is the dealers who were canned by Chrysler are practically giving them away to get rid of them.

If these vehicles really were in demand, there is no reason why the company could not take them back from the closing dealers and simply send them to the dealers who are still open.

The other possibility is that the vehicles are in demand, but this way Chrysler can give a bonus to the remaining dealers of bargain-basement deals on their inventory. It’s at the expense of the closing dealers, but Chrysler has already demonstrated they don’t actually care about those dealers.

I used to find Frank Rich’s columns a bit too ranty for my tastes. So it worries me that I seem to find them more and more reasonable and in agreement with my own views. Either Rich is getting “better” in his columns, or I’m starting to lose it. Probably a bit of both.

So I was a little cheered to read his latest column and find that I didn’t agree with everything he said. I generally agreed with the bits which were for tarring and feathering the CEO-class. It was this little bit of aside in the middle of the piece I didn’t agree with. The question he asks us, and himself, is,

But even as that unanswered question hangs in the air, a more revealing inquiry might be this: Why is there any sympathy whatsoever for a Detroit C.E.O. who helped wreck his company, ruined investors and cost thousands of hard-working underlings their jobs, when there is no mercy for those who did the same on Wall Street? Might we, too, have a double standard? Could we still be in denial of the reality that greed and irresponsibility were not an exclusive Wall Street franchise during our national bender?

The answer he suggest is “yes”.

Perhaps we’re tempted to give Detroit a pass because it still summons nostalgic memories of “American Graffiti,” “Little Deuce Coupe” and certain things we used to do in the back seat of a Chevy. Wall Street and bankers are the un-aphrodisiac: “Bonfire of the Vanities,” Old Man Potter of “It’s a Wonderful Life” and, of course, Gordon Gekko of Oliver Stone’s “Wall Street.”

Though Gekko’s most famous line is “Greed is good,” even more emblematic is his defiant summation of his brand of capitalism: “I create nothing. I own.” At least Wagoner, unlike the sultans of finance, created cars, clunkers though they often were. The politically conservative Nashville star John Rich draws this moral distinction in his powerful new hit single “Shuttin’ Detroit Down.” Motor City is “the real world,” he sings, unlike those big shots “living it up on Wall Street in that New York City town.”

I’m not sure that’s entirely correct. I’m sure there is a certain level of class-ism in a country which loves to see itself as classless (a self-delusion which has always made for good PR, not so much as penetrating political and social analysis). This is helped quite a bit by the fact that GM and Chrysler factory workers did not get into their careers to get rich by not giving a damn about anyone else but themselves. (Well, they might have, but in that case they are very stupid and made a very poor choice of careers.) I think any apparent “sympathy” for Rick Wagoner et al. is only collateral sympathy which is held for the workers. (Firing Wagoner is not a vote of confidence for GM, which is bad for the GM workers.)

No matter how much the banking cabal bleat on about their their (non-existent) innocence and decency, most sane people recognise that anyone who thinks they deserve, because they own, so much more than others who work is possessed of gargantuan arrogance and some level of misanthropy. To varying degrees, these are people who are culpable in any sticky end they come to, and they got very (in some cases obscenely) rich in the process. Why do they need, never mind deserve, our sympathies?

And yes, there are and were plenty of people in finance who did not get rich who essentially got done in by “friendly fire”, but in most cases these people did not fail to get rich for want of trying. I’m not sure you deserve sympathy when you wanted to be one of the “masters of the universe”, but never got there because you just weren’t good enough.

Personally, I don’t think GM should be bailed out. Not because I don’t have sympathy for the workers. I do, and I think the government needs to do much more for them, and for the millions of others who have been made redundant. But the size of the failing business should not justify propping up a company which would be allowed to fail if it was only smaller and less politically sensitive.

But by the same token, I think the government should have, and should now be, scything through the ranks of the finance sector. (I refuse to call finance an “industry”. That’s just insulting for people who do actually work in industry.) They should be allowing many, many more financial institutions to fail and firing a lot more “executives”.

The failure to root out the cancer that these institutions and individuals represent to the rest of society has huge costs, both financial and social. The insistence on trying to repair a rotten system speaks volumes of the lack of imagination and courage on the part of the people involved. (We can start with Larry Summers and Geithner, but it’s a long list.)

More to the point, it won’t work. Even before the current crisis is over, news papers are writing about how executive pay is still not seriously curtailed, or the fact that many expect any reversal in fortunes to be temporary at best. (Not really surprising when you think of the sorts of “heroes” who make up the highly paid boards at many companies.)

And it’s this double-standard the people are railing against. Between those who are at the top who don’t think they should be held accountable for anything, and the rest of us who are always held accountable for everything. Wall Streets is in the cross-hairs more than Detroit because the hypocrisy is on a larger scale and so much more obvious.