Why are the auto company CEOs getting so much grief from the press, pundits and Congress, while the Wall Street and banking CEOs are getting so little? Because the critics are gutless and self-serving. Financial organizations give out far more PAC money than the auto companies, and, being primarily New York-based, have a much cozier relationship to the media, who tend to be star-struck by the power and fabulousness of the masters-of-the-universe-types at Goldman and Citi.But who really deserves the scorn? Running a car company is one of the most complex tasks in business. You must market and sell a very expensive consumer product to a very fickle consumer. You have to design those products for where the market will be in five years. You have highly sophisticated competitors from at least six foreign countries. You have to deal with massive numbers of employees and several very powerful unions. The products you make require the very latest in sophisticated engineering and production techniques, combined with outstanding design. The fluctuations in two very volatile commodities (oil and credit) can make or break you. Oh, and just to keep it interesting, by law, you must sell your products through 10,000 independent businesses, each run by a hoople who is sure he knows more about the car business than you do.
To be a successful banker you have to lend money at a higher interest rate than your cost of capital, look good in a suit, and be able to show the yokels a good time when they visit New York. To be fair, you must do all three of these things well. Two out of three is not good enough, as we are learning in an oh-so-painful fashion now.
Two of the three men running the Detroit auto companies have been there short times and came from other industries, and all three are struggling to overcome the big mistakes that were made over decades by their predecessors.
And yet turn on CNBC or any other news program and you will surely see some pretty face explaining in 90 seconds what Detroit needs to do to fix itself. Like they know. And of course the politicians are all shocked to discover that the auto execs make millions and don’t fly coach.
What stunning, self-righteous, hypocrisy. I never dreamed I’d be writing a post defending auto CEOs, but if they are the Three Stooges, then Lehman, AIG, Goldman and Fannie Mae were led by the Four Horsemen of the Apocalypse.
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24 comments:
Well stated. Its back to the trough.I guess if I were them I would ask for a bailout too. The big three, as you pointed out committed no less crimes than wall street. No mention of debt forgiveness like citi group today. I really don't see them coming out of this. They get the loan, they cannot sell that many cars unless, they come up with something spectacular.They will default or need to refinance at some point in the future. Your right, I see big time media bias. Consumers who buy american will have less options,
There will be no more Buick, no more GMC pickups, no more Mercury and Chrysler? who knows. We need a program to buy American and especially drive the point home with women.
Louis Farrakhan said during the campaign that it didnt matter who got elected,when they'd get to Washington they would find out who really ran things. I guess its not the Big 3. A bailout for the auto industry is Democratic Party smoke up yours for "caring for Main St."
I say print phony money, loan it to everyone with only one guidline. Payback by a certain date or the government takes over. Its the correct business move on the way to socialism.
BTW, Suzuki will be huge very soon.
First, none of the wall street gurus had to sit in front of a committee. Paulson has carried their water for them.
Second, Wall Street doesn't make anything tangible, so we have no strong opinions about the quality of the product.
Also, we have been lead to believe that without a wall street bailout the economy would collapse and we bit. That bailout sure hasn't saved my portfolio, so why will giving more money to the Big 3 accomplish anything beyond making sure more people don't get laid off?
Many people without pensions and health care get to pay money to insure that those who have them don't lose them. Wow, that sure is a deal few could refuse.
Why?? As KGWHIT said -- Paulson. He's one of THEM. Plus the car industry is only second to Bush on who the media/population hates.
BUT, we forget. Some of the financial guys (O'Neal, Prince and Mozilo) were also raked over the coals-- Dennis Kucinich did an awesome job on Fuld last month (it seems like years ago!).
The difference with the auto guys was their friggin' arrogance -- that even made the financial guys look like recalcitrant school boys by comparison. Forget the private jets -- it was their attitude of "How dare you ask us for how we'll use this money!" "We know how to run our business...stay out of it!!"
Now Congress knows squat about building/selling cars, and a number of their questions were off-the-charts. But when you're asking for a second loan (months after getting $25 billion in guaranteed loans) -- a hint of humility goes a long way!!
I think to some extent these douchebags on CNBC and elsewhere actually feel as though just because they can drive a car, they know how to make one. They also don't really understand what's going at Goldman, Citi, and JP Morgan and therefore it must be more important. Afterall, they couldn't get jobs there because they didn't have the right skills or the right juice. Therefore the guys that did get those jobs must really be smart. The blind leading the blind. I'm not sure Citi et al have any clue what's going on either. They just know that for some reason all their money's gone. They got caught at the ass end of their own Ponzi scheme.
None of these numbers actually make any sense to tell you the truth.
Wow, I feel like odd person out. I was only for the financial bailout because I felt we had no other options to save the infrustructure of our country. So much for deregulation. I am so confused about how it was finally set up, but hopefully it was not a hand-out and that there is some accountability, giving up of ownership, monitored accounting, or something to make sure they do what they say they will with the money. I am against the bailout of the car companies for a couple of reasons. I get the ripple effect, but that hasn't changed. There is a ripple effect in all commerce. What I am opposed to is bailing out for profit companies that have had years of warning that they needed to change their product mix. It seems that they delayed addressing that until the public stopped buying their cars and switched to more fuel efficient vehicles. Those cars unfortunately were not American made. Yes, there is a market for the gas guzzlers, the big dudes, the kid haulers. But it is arrogant for a company to pander only to that group and think that the energy crisis evident for so many years would not catch up with them. Warrenout, I am a woman and buy American whenever I see it as the best option. Personally, I think a better option for the car manufacturers would be to strike a deal with Japanese and let them come in to help Detroit design and manufacture cars that people will buy. Cars that will help minimize the disinegration of our environment. They can still employ Americans and get our economy on the road to recovery. Or how about the way Pittsburgh handled the waning of the steel industry? They took those factories and made them into computer factories. Same workers, different products. If the automobile factories can't make it with the cars they have been building, then how about putting people to work in those factories making wind generators or solar collectors. No more bailouts. Make CEOs accountable for doing the job they are paid to do.
Very well said. I thought it a bit hypocritical for congressional leaders to blast the CEO for flying to Washington on private jets when Nancy Pilosi had a fit when she became Speaker and was told she wouldn’t have unlimited access to the VP’s 767 to jet back and forth to her home district. I must admit the PR departments with these three companies should all be fired. They could have “jet pooled” to get the crap beat out of them.
I find it interesting and scary at the same time that Chris Dodd and Barney Frank are going to review the auto company’s plans to determine if they are viable. Weren’t these two guys on the banking committee who for the past 6-8 years watched Fannie Mae and Freddie Mac go down the tubes?
The one entity that seems to be standing on the side lines and not willing to participate is the UAW. The leadership has said they will not give any additional concessions. While the contracts the “Big 3” work under, most of the expensive provisions where written in 30 or 40 years ago when the only foreign competition was the VW Beatle – the original one. It’s time they come to the party as well and protect their membership’s future because the politicians will only stand for something as long as the public is behind them, and they aren’t on this issue.
O great d'b you are so prescient. This very topic was brought up by Chuck Todd this am on Morning Joe: "the financial institutions are along the Amtrack corridor where the media live and they're getting bailed out. I can't help but think if some of us lived in the mid-west the car companies would not be treated as they are . . . . " I am in awe, O Great One. Another point made by Dillon Rattigan (sp? Mr. Money Party on CNBC): banks and other financial institutions are not supposed to BE the hyper-growth of the country, they're supposed to be funding ideas and things (internet, light bulbs, fashion, automobiles etc) that fuel the economy. That model needs to shift back. Repeating: I am more realistically optimistic with every statement BHO makes.
Again – I never thought I’d be defending Detroit management, but I’m just dumbfounded at how little gas the leaders of the financials are taking. Many of these people should be in jail.
AY – you mistake a lack of media smoothness for arrogance, and if you want to see what lengths GM is going to to save itself, see the link to the right “GM cost savings” from yesterday’s WSJ.
DB, I did read that WSJ article on GM's cost cutting. That's what made me cuckoo -- stopping escalators after 7PM, cheaper pencils, paper towels, elminating voice mail at plants, and not replacing clock batteries!!! This nickel and diming won't make a dent in their operational costs.
But when all 3 CEO's were asked to work for $1, only Nardelli agreed. That was their moment to shine. It wouldn't have been binding and it would have won them some good PR.
I listened to them for over two hours on C-Span. It was arrogance.
Wagoner's been CEO for over 8 years; he should have learned the art media smoothness.
But I agree with you about those financial weasels. They've gotten a huge pass.
Much of the gains since 2003 have been illusionary. I mean that the markets grew but employment did not grow nearly as much. There were some 5 million jobs created during the Bush years...not counting what has been lost in the last few months. from 1993-2000there were 23 million created.
The financial sector was creating an illusion of great wealth but it was not backed by anything but cheap money allowing people to buy houses they couldn't afford and run up credit card bills they couldn't pay. I, for one, do not have a clue who is to blame except ourselves. It is as Pogo said, we have met the enemy and he is us.
You may have seen that GM dropped it’s endorsement deal with Tigers Woods as it was too expensive, while Citibank is going ahead with its plan to have the naming rights for the Mets’ new field. That will cost them $400 million over the next few years. This is understandable because Citibank has such low name recognition, of course.
The Chinese, who own citi, are great baseball fans and always have loved the Mets. The other principal owners, the Saudis, are trying to buy the naming rights to Saratoga and Belmont.
Fistinyoface can't argue with any of the previous comments.
Fistinyoface will hereby compliment blogmaster on one of his best posts ever. In fact, whenever blogmaster rants about wheels, his prose sparkle and his logic is adamnatine.
Blogmaster, in a world of automotive poseurs and cretins, you are a rara avis -- TRULY a car guy. Three blasts of my claxon to you!
Oops. I forgot about Fenway. Just when I thought we were in lockstep, she had to gush over Hussein again.
Puh-leeze!
A commentary on NPR this morning asked why we are bailing Wall Street and not Detroit. He explained the impact in America of the demise of the Big 3. He then said that he knows foreign investors are demanding we save their investments in our banks and on Wall Street. We must have foreigners pouring their dollars into the US. Unemployment and the demise of our car industry just does not rise to the level of crisis as the loss of foreign investment. It sounds just like what happens to third world countries from the World Bank. We debtor nations must be more concerned about the interests of our investors than our own people.
to FIYF: as of this mo the market is up 4th day in a row. for this I do credit BHO . . . . at long last someone's in charge. this am on Morning Joe the great Peggy Noonan told us whenever Reagan's helicopter would touch down at the White House after a trip one speechwriter would say 'daddy's home'. That's how the rest of us feel now - someone's taken charge after this long national nightmare! So fistinyo face, FIYF!
Fenway believes BHO has the power to make the market bounce? Wow.
Fascistic worship of a complete unknown, untested stranger really makes you wonder. Why would any adult crave a surrogate daddy or mommy?
Momeee! Dadeee! Help meeee! Save meee! Spend my money for me. Pay my bills for me. Defend me from bad people. (I’m too wittle to handle guns). Make my decisions for me. Tuck me in. Read me a story. Wipe my butt. Goo-goo-gah-gah!
My father told me that the most important thing FDR did was make the people believe that someone actually cared about their lives. He couldn't give the okies back their farms or the deposits lost when the banks closed. He could not give them their foreclosed homes back or even their jobs. He only promised to try anything to stop the freefall and provide hope that things would get better.
If the Big O only does that, he will have made a difference.
FISTY -- from Forbes (that bastion of Republican Conservatives):
"Word came in the final hour of trading on Friday that President-elect Obama would tap New York Federal Reserve Bank President Timothy Geithner to be his Treasury secretary. One hour later, the Dow Jones industrial average was up roughly 500 points.
Part of the spike was due to the removal of uncertainty, but we think part of the gain was also due to whom Obama picked."
HAPPY THANKSGIVING EVERYONE!!
welcome to the next chapter of government controled fear, new york trains being targeted. if you dont have plans to ride on the train atleast be scared while your in the air for that matter consider the turnpike boothes getting blown up just as you pay your toll. however you travel during the holidays be scared but know that homeland security is working for you.
How many favorites can you have in one video?
http://www.youtube.com/watch?v=KtaZOPcJixE&feature=bz301
AY...
Forbes? Did they claim that when the Dow peaked at over 14, 000, it was due to some spell cast by “W?"
Was the October ‘87 crash a result of some manipulation by Ronald Reagan?
This cock-eyed clairvoyance is typical of the same 15-watt, B-school boobs who loved Enron, the Yugo and declared there was a “NEW ECONOMY” seconds before the dot-com bust.
They know… nothing.
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