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.

I’ve long been a critic of Israeli policies regarding the Palestinians, and of America’s slavish support of those policies. I think they regularly violate international law and are a source (although far from being the only source) of violence and instability in the Middle East. I also believe that the conflict with the Palestinians has had, and continues to have, a corrosive effect on the Israeli society and its institutions such as its armed forces. None of these things are good for the U.S.

So it was disappointing, but perhaps wholly predictable, when a nominee for a top intelligence post in the Obama administration was essentially ousted from the nomination by the “pro-Israeli” lobby. Their opposition seems to be based on the fact that the nominee does not have a history of rubber-stamping whatever Israel does, no matter how outrageous or ill-advised its actions. This resulted in a concerted effort to cripple the nomination, resulting in the nominee’s withdrawal.

Having said all this, the BBC had a more nuanced analysis, which seems to suggest that the candidate may have been undone not only by the opposition of the Israel lobby, but also by other qualities which proved controversial.

Since I am not already versed in the minutia of the history of this man, it would take me hours and hours to sift through records to figure out whose story is the more accurate portrayal. It’s time I don’t really have. So it’s hard for me to say if the man really did say things which put him in a poor light, or whether his opponents have misrepresented his record for their own purposes.

One thing does seem clear, however. While I don’t know that I necessarily agree with the concluding analysis of the BBC piece about the Arab-Israeli issue being a zero-sum game, it does make a very good point about diplomacy and analysis.

Even if this candidate is accurate in his portrayal of his past statements, it seems clear that he had been, and continues to be, somewhat tone-deaf politically. As an adviser, his jobs have been, and would have been in intelligence, one that is not only objective, but also political. He should have been mindful of the profile of his audience and couched his analyses accordingly.

More broadly, people should be mindful of the greater goals of what they are doing. People sometime lose sight of what their goal should be, instead focusing on making a point or about “being right”. In this case, the person’s job wasn’t to be right (well, actually it was, but that wasn’t the point of his jobs); it was to convey the correct analysis and to get his point across to his audience.

A while ago, I had an experience where a co-worker got into an argument with our boss. He was trying to get our boss to do something which we all knew he did not want to do. The co-worker finally said something which, while he had a point, caused the boss to yell at him. As I said, the co-worker had a valid point, but he was missing the bigger picture. The point wasn’t to be in the right, the point was to get our boss to do this thing, and at that he failed. So really, he got yelled at for no gain or good reason on his part.

A lot of the time, that old cliche that, “you should work smarter, not harder,” is a load of condescending bollocks. You would be working “smarter” if you knew how! Most of the time, you have no choice but to work harder. But sometimes, you really can, and should, work smarter.

Every time I hear about Bernie Ecclestone’s silly idea about medals in F1, I wish a bus would hit him.

It imports an idea alien to F1 and it is totally unnecessary. You can achieve the sort of goal Ecclestone keeps banging on about with a revamped points system, which has the added bonus of not effectively ending a F1 season prematurely. (After one of the drivers has won enough races.) I’m not sure there would be much excitement in races toward the end of the season when the “champion” is already effectively crowned and doesn’t even need to start his engines to win.

While that could still happen with a points system, it is much less likely than with medals, and it rewards consistency. Bernie might not like it, but there are fans like me who don’t think you necessarily deserve the championship because you won the most races, if you crashed in all the ones you didn’t win. There is something to appreciate in watching a consummate driver who is driving a controlled race.

The sort of system being proposed also inherently encourages more recklessness. This can make for more exciting racing, but it can make for more dangerous racing. It will probably also lead to more accidents. Aside from the greater danger, more accidents mean more costs to the teams.

In fact, the system would encourage a perpetuation of an existing team performance hierarchy. If you are a good team who have won the driver’s championship early in the season, you can then shift more resources to developing next season’s car. This will mean you get a jump on your rivals, practically guaranteeing you will repeat your success the following year.

Sure, there is the contructor’s championship, but that usually gets much less press, meaning it is probably not as valuable in attracting sponsorship money for your team. And with more money, you can keep spending on this year and start spending on next year’s car. A win-win for you. Too bad if you’re another team.

Some commentators have cited the example of the night race in Singapore as an instance where everyone said Bernie was off his head, and that was a great success. So maybe we should give him the benefit of the doubt.

I don’t buy that. The “success” of that race seems much more dubious in the current economic times, since Melbourne refused to run a night race on the grounds that it would costs too much to light the race. (I forget how much lighting for Singapore cost last year, but it was a ridiculously large sum.) And the environmental impact made the sort of headlines car manufacturers don’t want.

I think the proper measure of the success of the Singapore Grand Prix would be after several seasons, once the novelty has worn off. I suspect it won’t really be all that interesting, and the finances only make sense in a place like Singapore where a day race, thanks to the humid weather, would be almost impossible.

I think this exemplifies the sort of thing you sometimes see in successful people like Bernie Ecclestone. People like that have been successful, and right, for so long, that they are lulled into thinking they can do no wrong. And like the original Peter Principle, where a person is promoted to their level of incompetence, people like Bernie keep making decisions which become more and more outlandish, until they make a monumental error in judgement. And then it may be all over for them, and those around them.

I’m really hoping that’s not what happens in F1.