The Inquiring Manatee

Chrysler's Bankrupt: What Next?

    

As President Obama properly chastises the greedy hedge-funders who forced Chrysler into Chapter 11 by refusing to reduce the company's debt, car buyers and the automotive world wonder what sort of future the automaker will have in partnership with Italy's Fiat.
     I don't see the late Walter P. Chrysler's creation having much future at all unless it starts building cars that people want to buy. The Dodge Viper is a neat-looking car, but with a limited market. The giant Dodge Durango is an abomination. The Chrysler product lineup is nothing but a few nondescript Jeeps, mommish minivans and gas-guzzling pickup trucks.
     The jury is out on whether small, imported Fiats rebadged as Dodges (there are no more Plymouths) will sell. Chrysler imported little Mitsubishis and called them Dodge Colts, but they weren't much help. Fiat makes some good-looking cars, but I can't believe the hype about this great technology they're supposed to have. Americans remain skeptical about Fiats, which, like the infamous Renault Dauphine and the Peugeot 404, were driven out of this country by public scorn.
     What Los Angeles Times auto writer Dan Neil was saying on NPR-affiliated KPCC-FM in Los Angeles this morning was that no automaker knows what to build because gasoline prices are too volatile. Presumably that means Americans are itching to get back to giant SUVs and will start doing so as soon as they think they can get away with it.
     The answer for Chrysler and other automakers is to increase fuel economy for all types of cars, including SUVs. With decent mileage, Chrysler could build anything; it could even bring back the DeSoto. Getting there means more hybrids or all-electrics, and soon. Carmakers are moving too slowly to get more out of conventional gasoline engines. Look at the ridiculous 23 mpg in the city that the otherwise attractive Mini Cooper S gets; that car should be getting at least 35 mpg. If Fiat can bring in some reasonably sized cars with great gas mileage, Chrysler will be better off. But I haven't heard that they have a lot of these models above Topolino size.
     One reason for Chrysler's bankruptcy is that it was way behind the curve on hybrids; it stuck with Jeeps and pickups way too long. Now, with its heavy debts lifted in bankruptcy, another $8 billion in federal bailout money and alleged technological help from Fiat, Chrysler has a chance to finally get it right for the first time since its peak year of 1957. (Remember those wonderful tailfins?)

Throwing Bonus AIGs at the Malfeasors

   

Sen. Chuck Grassley, R-Iowa, was being too kind to the AIG bonus-winners when he suggested in an Iowa radio interview Monday that they follow the Japanese model by bowing deeply, apologizing humbly and then either resigning or committing suicide.
    (The Japanese, by the way, describe the act as hara-kiri, not "harry-carry," as the American news media frequently mispronounce it. The ritual act of running a sword across one's midsection also is known as seppuku.)
    Why ask them to commit suicide? Why not take matters into our own hands by boiling these incompetent, greedy morons in oil? Or feeding them to the sharks off Isla Morada? Or parachuting them into the tribal areas of Pakistan?
    In truth, nothing is too bad for these AIG financial executives who have earned bonuses -- bonuses! -- of up to $1 million for running their huge company into the sewer, and taking the world's econony with it.
    No matter whether the taxpayers ever get the $165 million back -- and I favor a 91% special excise tax to be passed by Congress aimed squarely at these jerks -- let this become the death knell of the way the financial sector compensated its traders and managers. No more of this outrageous compensation. The people were helplessly angry and increasingly bitter for years as they witnessed these yearly bonuses and these stratospheric CEO salaries and options. Now, as owners of these companies, taxpayers aren't about to put up with a continuation of the status quo.
     These guys should be fired and perhaps prosecuted, certainly not rewarded.
     Enough.

Win Bernie Madoff's Money

   

So Bernie Madoff is close to making a plea bargain with the feds, choosing no doubt to do a little jail time in return for saving the government the expense of a trial over allegations to be submitted in a criminal information that he defrauded investors of as much as $50 billion.
    One pending question about the deal is how much money Madoff's wife will be allowed to keep. At last report she was sitting on many millions of dollars, most undoubtedly funneled to her by her crook husband, the "affinity group thief" who focused on Jewish victims.
     Let's leave her with just enough to make visits to Bernie in prison -- by Greyhound bus. It's time to blast her out of that Upper East Side penthouse apartment and let her see what life is like for the people losing everything they have in the Great Recession.
     As for Madoff himself, $50 billion did not just vanish. He spent big, but not that big. He gave generously to charities, and it would be unfair to ask the charities to give all the money back. But the feds should make no plea bargain with him unless he consents to tell the government where all the money is -- numbered Swiss bank accounts? The Caymans? -- and exerts maximum personal efforts to give it back to those who were gullible enough to trust him.
     There is an argument, on the other hand, that the people who gave him money -- or even those who dealt with him only indirectly, through financial advisers who gave money to Madoff -- may not be deserving of restitution. Didn't it strike them that consistent returns of 12%, year after year, were too good to be true?
      Well, maybe that's a question for another time. For now, let's make Bernie disgorge as much of his stash as can be found, including money he may have lavished on friends and relatives to keep it out of federal clutches. It's time to come forward with the truth, Bernie, at long last.
    

Swiss Cheesiness: Secret Bank Accounts Under Threat

   

On a day of riding Switzerland's crack trains around that small country in 1989, I stopped off to tour a little-known city called Zug, which means "train." I was astounded to see a skyline of modern office towers, an unknown New York in the Alps. What was going on?
    The buildings were there because Swiss banks were overflowing with money in secret bank accounts set up under Swiss laws for tax-evading Americans, kleptomanic African strongmen and Mexican drug bosses. The banks, paying little or no interest on this ill-gotten money or even charging the depositors for the convenience of keeping their stashes hidden, had to do something with the inflows. So they lent it out for the benefit of the prospering Swiss economy, building those towers to house all the lawyers dealing with the rich and secretive.
     What brings all this back to mind is a lawsuit announced by the U.S. Internal Revenue Service seeking to force the United Bank of Switzerland (UBS), Switzerland's biggest bank, to disgorge the names of 300,000 Americans allegedly dodging American taxes by maintaining those famous, numbered accounts.
     UBS had offered some concessions, paying a multimillion-dollar fine and yielding 300 names of big tax cheats to the feds, but doing even that much has enraged Swiss politicians and in turn much of the yodeling citizenry. All the Swiss are nationalistically up in arms over this attack on the foundations of their prosperity: their chosen profession as money-launderers for the world. And in other offshore tax havens such as the Cayman Islands, there's a lot of trembling these days. If the IRS gets its way, bank secrecy will be a thing of the past. To me and to other U.S. taxpayers, that would be a good thing.
     Public radio's "The World" program on Wednesday ran a voice-doctored interview with an anonymous American millionaire who acknowledged having placed $900,000 in a Swiss account (later moving the money among several other countries) to escape U.S. taxes. The guy didn't say so, but his nest egg might well have been amassed in an illegal way -- in pimping or illegal bookmaking or even kidnapping.
     Without regard to how such a sum was amassed in the first place, earnings on the money wouldn't necessarily be taxed in the U.S. Americans can avoid federal and state taxes on the earnings on their money simply by investing in state and municipal bonds, particularly those issued in their own states. So there would be no reason to hide money abroad, particularly at no interest or low interest, unless the money originally had been piled up by evading due taxes on it as it was being earned. These are bad guys who have been cheating their government for years. Now the government is coming after them, and hard, needing its revenue more than ever.
     If the Swiss lose the cachet of the term "Swiss banker," supposedly standing for probity and canniness, I won't mourn. On a 1964 trip around Switzerland on a Vespa motorscooter, I found the Swiss to be cold, money-grasping and inhospitable. After a hard morning on the scooter I stopped off for lunch at an outdoor cafe in Lucerne, overlooking the beautiful Lake Lucerne. I guess that as a road-grimy American student tourist I didn't meet the place's dress code, because the waiters resolutely refused to approach my table for 45 minutes until I got the message and left. I've never forgotten the snobbish snub. So don't ask me to feel sorry for the Swiss if their corrupt economic foundation crumbles.
     Taking some of the jobs from people in those bizarre Zug edifices would mean more jobs in the office buildings of America. We need that these days. Sorry, Zug.
     
     

    

Save GM -- But Kill Buick

    

Tiger Woods can take his GM money, go home and screw off. Buicks suck through their portholes.
     It's well-known that the Chinese character for "crisis" is the same as the one for "opportunity." This crisis for GM is a heaven-sent opportunity for the world to send the Buick the way of the Oldsmobile, not to mention the LaSalle (though our old LaSalle ran great -- those were the days).
     Kill the Buick. Keep the Saturn.
     The Buick has always been a fat, sloppy car for old guys -- golfer types who are the perfect target for those Tiger Woods ads. Nobody with any taste or brains would buy one in the United States. GM is keeping the Buick on its survival list because the Chinese import them, perceiving them as prestigious. China is different because they don't know any better; I'll bet a two-ton Buick, as useless as it is, is better-built than the Chery. But the Chinese can switch to other GM brands.
     Buick hasn't done anything right for years. Remember the Reatta? What a pile of junk. I never even understood why critics said nice things about the Riviera. As for the Park Avenue and those ridiculous, ugly SUVs or crossovers, that's the very point I'm making.
     But I see where GM would rather kill the Pontiac (as they quite properly move to get rid of the Hummer). Bad move. Pontiac, with the Solstice and the imported, Holden-made G8 from Australia, was just beginning to seem hip. No Buick will ever be hip in a zillion years. And Saturn is full of possibility and promise.
     If we're going to restructure the overloaded GM product line, let's do it right. Bye-bye, Buick. And, Tiger, you'll hardly miss this sponsorship check when you have so many more.
     

Bail Out Detroit?

  

   If you are of a certain age, you remember Dinah Shore signing off her singing TV show with a little ditty for Chevrolet: "See ... the ... //U// - S-A in your CHEV-rolet, America's asking you to call. Drive your CHEV-rolet through the //U//-S-A, America's the greatest land of all." And then she would put a kissy-kiss hand to her lips and give her audience a big "MWAH!"

   Is it now the turn of the American people to give a big MWAH to Chevrolet -- that is, to General Motors, Ford and Chrysler?

   If there's anybody who doesn't deserve an air-kiss, it's the Big 3. I would have much more sympathy for the automakers if they had only made decent cars, hadn't wasted so much time offering humongous SUVs and hadn't fought with all their might against increased fuel-economy requirements and reducing greenhouse gases.
   Let's face it: These guys have been bad news for decades. Largely a bunch of smug, weak-chinned, country-clubbing anti-Semites from Bloomfield Hills, Detroit auto executives have been in their own little bubble of pig-headed denial. GM put big bets on the stupid Hummer, the ridiculous Cadillac Escalade and the egregious GMC Suburban. Ford screwed up the redesigned Thunderbird, turned out the rollover-prone Explorer and outrageous Expedition, and with amazingly poor timing brags about its new F-150 monster truck. Chrysler? Let's not get started on their low quality and their clueless product line.

   Even now, when all that's selling are so-called economy cars (and fewer of those every month), the carmakers boast about the few cars in their fleets that get 30 miles per gallon on the highway. Big f---ing deal, 30 miles a gallon. What that means is that these cars get maybe 23 in the city, where most Americans drive. That's lame. Some British imports 60 years ago, such as the Austin, were getting 40 miles per gallon. Of course, Americans made fun of these little cars, so far ahead of their time. There was one limerick that went:

   There was a young fellow from Boston

   Who bought himself a new Austin.

   There was room for his ass

   And a gallon of gas

   But his balls fell out, and he lost 'em.

Even the old Nash Metropolitan got 40 miles per gallon. Why can't Detroit engineer that much economy after all this time?
   Faced with the Big 3's beggarly whining, Congress recently voted $25 billion in bailout money to help the automakers modernize their plants and finally design the cars of the future -- hybrids, plug-in hybrids, straight electrics, fuel-cell hydrogen cars, whatever emerges as the winning technology. I'm not holding my breath in expectation that they'll actually produce cars that do the necessary job of forcing OPEC, Iran and Hugo Chavez to drink their oil. The auto industry can't seem to develop a battery that does better than 40 miles on a charge. Why should this be so impossible? Again, a pretty lame performance.
    And how much will you bet that the Chevy Volt, if it indeed comes out in 2010 at a list price of $40,000, looking much less cool than the intriguing, bait-and-switch prototype, will even go 40 miles on the battery before you start burning gasoline? Odds are that real-world drivers will be lucky to get 20 miles.
   But the $25 billion is not enough for Detroit. Now the companies want hundreds of billions more. And as shrunken and near-bankrupt as they are, they're still too big to fail, because if they go insolvent they'll take an entire industry of suppliers down with them and hundreds of thousands of jobs will be lost in Midwestern states that have lots of electoral votes. So the Big 3 will probably get the extra money. After all, another argument goes, the Chrysler bailout worked out OK.
   Nevertheless, I'm ambivalent about throwing more billions in taxpayer dollars to these automakers. My feelings have nothing to do with socialism, though a form of socialism it is. First, Lee Iacocca is gone. I don't see a truly talented successor as a current industry leader putting the money to good use. And what would be so bad if market forces, meaning the Big 3's own mismanagement, put them out of business? The Japanese automakers, who make much better cars and have even better ones in the technology pipeline, would take over. They'd keep building factories here and employing Americans.
    Still, a huge bailout is inevitable. At least the feds should demand either a stake in the auto companies or guaranteed repayment if and when profits return. Let's force Detroit to remember that these are loans, not rewards for incompetence.
    

Will Warren Buffett Save the World?

  

As the stock market was crashing in 1929, the legendary, 90-year-old John D. Rockefeller weighed in with a reassuring message.
   "My son and I are buying stocks," said Rockefeller, referring to his son, John D. Rockefeller Jr.
  Well, we know how well that worked. But Warren Buffett is attempting to be the Rockefeller of the Great Panic of '08.
    In a New York Times op-ed piece today, Buffett writes: "I've been buying American stocks. This is my personal account I'm talking about, in which I previously owned nothing but United States government bonds .... if you wait for the robins, spring will be over .... Bad news is an investor's best friend. It lets you buy a slice of America's future at a marked-down price."
    I am too terrified of the volatile market to act on the fatherly Sage of Omaha's advice, but I hope everyone else will swallow hard and take his courageous, counterintuitive course. Thank you, Mr. Buffett.