Two Drunks Leaning on Eachother
October 11th, 2008 by Jon Taplin
Another brilliant idea from Detroit–lets take two car companies–GM and Chrysler, both on the edge of bankruptcy–and merge them! In a week of financial insanity, this has got to rank as Looney Tune number one.
Perhaps a measure of how far we have come from a culture of investment rather than quarterly returns bean-counting.
This dinosaur-mating approach to fixing Detroit is broadly parallel to the initial TARP approach to fixing our banking sector. Merging big players reflects a cost-cutting instinct — pool resources and make people and plants redundant. It’s a strategy of shrinking our capital base. Likewise, the original TARP was another in a series of moves having the net effect of shrinking the banking industry. We probably have too many banks, so this isn’t entirely a bad thing. But the direction again reflects an instinct to cut costs rather than expand the top line through investment, innovation and entering new markets.
Fortunately, the banking rescue effort is already starting to steer towards a more forward-looking — and more effective — approach of adding capital. Maybe it will occur to someone that reinvesting in Detroit might make better sense, too.
Sounds familiar. Where might I have heard about this before? I remember, it was the “Healthcare for Hybrids” proposal offered by the junior Senator from Illinois. I wonder whatever happened to that idea?
Perhaps a measure of how far we have come from a culture of investment rather than quarterly returns bean-counting.
This dinosaur-mating approach to fixing Detroit is broadly parallel to the initial TARP approach to fixing our banking sector. Merging big players reflects a cost-cutting instinct — pool resources and make people and plants redundant. It’s a strategy of shrinking our capital base. Likewise, the original TARP was another in a series of moves having the net effect of shrinking the banking industry. We probably have too many banks, so this isn’t entirely a bad thing. But the direction again reflects an instinct to cut costs rather than expand the top line through investment, innovation and entering new markets.
Fortunately, the banking rescue effort is already starting to steer towards a more forward-looking — and more effective — approach of adding capital. Maybe it will occur to someone that reinvesting in Detroit might make better sense, too.
Sounds familiar. Where might I have heard about this before? I remember, it was the “Healthcare for Hybrids” proposal offered by the junior Senator from Illinois. I wonder whatever happened to that idea?
“Two drunks leaning on each other” was the first phrase out of my mouth when I heard about this story. So apparently it wasn’t that original of a thought.
I think we’re seeing the effective end of American car manufacturing. Well, except for “imports” that are manufactured here. Ford, GM and Chrysler have been demonstrating for 50 years that they’re always three steps behind, and we’re now at the point where you can’t survive if you’re only a single step ahead.
Look for Bush to propose a $500 billion bailout for Detroit on top of the $25 billion they just got.
“Two drunks leaning on each other” was the first phrase out of my mouth when I heard about this story. So apparently it wasn’t that original of a thought.
I think we’re seeing the effective end of American car manufacturing. Well, except for “imports” that are manufactured here. Ford, GM and Chrysler have been demonstrating for 50 years that they’re always three steps behind, and we’re now at the point where you can’t survive if you’re only a single step ahead.
Look for Bush to propose a $500 billion bailout for Detroit on top of the $25 billion they just got.
I’m with you Seth – this is not one of the proudest planks in Obama’s platform.
The fact is that people have been investing in research and development, along with the manufacturing infrastructure needed to substantially more efficient cars that are well build and fairly priced.
They’re just not trusting those investments to GM, Ford and Chrysler. They’re making them with Honda and Toyota, and are being rewarded well.
Meanwhile, Obama is offering to spend taxpayer money on stuff that’s been passed over for a good reason. I mean, if he’s going to invest public funds with private companies, he could at least pick competent organizations, instead of some of the worst run companies on the planet (I mean who but GM can loose $10 billion for three years running before announcing they plan to plan a turnaround?)
Honda is the smart, cute girl you actually want to take to the prom. GM is the hard-drinking slut with tattoos in all the wrong places. Nobody with any sense would want to date GM, let alone take her home to that parents. Obama, however, is ready to get the shotgun, and force a marriage.
My question is this – given the choice, would Warren Buffett put his money into this deal? If not, why does Obama think it’s okay to force taxpayers to do so?
Wouldn’t it be smarter to invest the money in more fundamental developments like the creation of a patent pool? These would be similar to what the government did in 1940 (or thereabouts) when it needed the nascent aviation industry to stop fucking around suing each over over details, and start building some damn planes.
They would also address the single largest impediment to rapid development, which is the suffocating effect of market giants that go out of their way to shut down, buy out, kill and / or destroy any policy, development, or creation that could threaten their market dominance.
I’m with you Seth – this is not one of the proudest planks in Obama’s platform.
The fact is that people have been investing in research and development, along with the manufacturing infrastructure needed to substantially more efficient cars that are well build and fairly priced.
They’re just not trusting those investments to GM, Ford and Chrysler. They’re making them with Honda and Toyota, and are being rewarded well.
Meanwhile, Obama is offering to spend taxpayer money on stuff that’s been passed over for a good reason. I mean, if he’s going to invest public funds with private companies, he could at least pick competent organizations, instead of some of the worst run companies on the planet (I mean who but GM can loose $10 billion for three years running before announcing they plan to plan a turnaround?)
Honda is the smart, cute girl you actually want to take to the prom. GM is the hard-drinking slut with tattoos in all the wrong places. Nobody with any sense would want to date GM, let alone take her home to that parents. Obama, however, is ready to get the shotgun, and force a marriage.
My question is this – given the choice, would Warren Buffett put his money into this deal? If not, why does Obama think it’s okay to force taxpayers to do so?
Wouldn’t it be smarter to invest the money in more fundamental developments like the creation of a patent pool? These would be similar to what the government did in 1940 (or thereabouts) when it needed the nascent aviation industry to stop fucking around suing each over over details, and start building some damn planes.
They would also address the single largest impediment to rapid development, which is the suffocating effect of market giants that go out of their way to shut down, buy out, kill and / or destroy any policy, development, or creation that could threaten their market dominance.
…needed to offer
…needed to offer
…needed to offer
I agree. Putting government money in GM or Ford would be a disaster. The idea will slowly fade after the election.
I agree. Putting government money in GM or Ford would be a disaster. The idea will slowly fade after the election.
I agree. Putting government money in GM or Ford would be a disaster. The idea will slowly fade after the election.
Oh this idea seems awful. It sounds like a joke. The “big three” need to die gracefully and let Honda, Nissan and Toyota pick up the pieces. This idea sounds like is a prelude to the eventual end of these companies.