GM "Car Czar" Bob Lutz Vs. CFO Fritz "No Recession" Henderson

Robert Farago
by Robert Farago
gm car czar bob lutz vs cfo fritz no recession henderson

"If everything goes well in the rest of the world, we can take a couple hits in the U.S. and still be okay." Bob Lutz, GM Vice Chairman of Global Product Development. [via TTAC]. "Those emerging markets can't carry GM. We've got to get the job done in all markets." Fritz Henderson, GM Chief Financial Officer [via Automotive News, sub]. Given GM Car Czar maximum Bob Lutz' reputation for "shooting from the hip" (a.k.a. making shit up as he goes along), I'm going with Fritz' analysis. Oh wait, "Henderson also said the U.S. economy in general is faring better than the financial markets. He said he doesn't think the nation is in a recession, thanks to strength in certain sectors of the economy, such as exports." Holy Cruising Down Denial Batman! If anyone is in a recession– you know, other than the housing market– it's the U.S. automobile industry. On the other hand, Fritz also told the assembled car hacks "In terms of what we have to do — profits, cash flow, market cap — we're not the world's largest automaker." So he's down with that. But– "That's what I'm spending 100 percent of my time trying to figure out." Hmmm. Maybe it has something to do with, I dunno, product, or, I'm guessing here, branding. Anyway, if it's not a recession, what is it? Downturn? Market correction? Help Fritz out here guys; what euphemism should he use?

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  • Phil Ressler Phil Ressler on Jan 30, 2008

    Jurisb, PLEASE find your carriage return key and use a little more punctuation! Or write in an editor and cut/paste into TTAC. US composite of GDP being 13 trillion is an illusion, it rather represents credits allotted all the services and manufacturing combined. Imagine if you buy a house for 100k and then sell for 150K, 250 K is added to GDP. GDP is measured the same way for everybody. GDP is the amount of goods and services measured at market prices, produced within a country's borders during a specific period, usually an annual measure. You don't like the value assigned to services and investment. But the EU, Japan and even India and China are mixed economies that have service and hard production components. Software might be shipped via a 60 cents CD or downloaded at nil cost via the internet. Same with music, movies and money. But that doesn't mean their market value isn't much higher. We're all measured by the same rules. If our wealth is an illusion, so is everyone else's. By the way percentage of manufacturing in GDP is shrinking very fast, and a nationwide cancer of low paid service jobs march is accelerating. Manufacturing shrank as in relative terms for decades and then grew again in the 1990s. I'd like to retain more manufacturing jobs, as I've made clear here in prior writing. But manufacturing as a relative presence in our economy will inevitably decline, but in a growing economy its absolute size can still be quite robust. The acceleration of low-wage service jobs is accompanied by an acceleration of high wage creative and service jobs, especially if you ignore the short term flutters. Some people are in low wage service jobs because they lack the initiative or training to change their circumstances, some are in them voluntarily because they value their immediate community and won't move to a city with better jobs, and some are just in unfortunate circumstances that require very high initiative to escape. As I've said before, manufacturing jobs are one of the key underpinnings of the middle class, but retaining those jobs requires Americans to take an interest in other Americans. That's one reason I buy competitive American cars. If you are so happy about demography, take into account that negative balance is avoided only because of growth of non-caucasian immigrants. You want to live in a multiracial culture, don`t you? What a joyful parade of colours!? I grew up in an area that was 99.9% Caucasian. You were a "minority" in my high school if you were Catholic or Jewish. Now I live in Los Angeles, where Caucasians are a plurality, no longer a majority. I'm completely comfortable with my multi-cultural city. Moreover, I live in California, a state where no ethnicity is majority. There is a Caucasian plurality. In 2006, California was the 8th largest economy in the world when compared with countries. This mixed-race immigrant economy of 36 million people was in 2006 almost equal to Italy's and less than 25% smaller than the economies of the UK and France -- countries with nearly twice as many people. America is an idea, not merely a politically-bounded territory. It was created on the principle that freedom and opportunity will attract talent, and talent will create wealth. Cultures that haven't been culturally productive nevertheless include individuals who are creative, expressive, innovative and aggressive about pursuing their imperatives. We have Muslim painters, musicians, architects, technicians, software developers, entrepreneurs. Same for just about every culture around the world. Your dystopian view of ethnicity doesn't play here. when will you understand that you should bombard Africa with fishing rods, not fish We do both: food grants to ward off immediate crisis; technical and financial aid for skill transfer. The agricultural "Green Revolution" that averted famine in the 1960s was birthed in the US and disseminated around the world, for example. India became a food exporter. Even Tanzania does software, so US makes less and less things that world couldn`t live without or couldn`t find a cheaper substitute manufacturer. That's by design. Since 1945, the United States has executed a sustained policy to spread the instruments of wealth, foster trade and improve chances of economic success the world over. After WWII and the debacle of the post WWI reparations, we said, "enough." Poverty breeds political desperation, which resorts to military aggrandizement. Japan lunged for resource control using her army, navy and air forces. They unsuccessfully attempted to neutralize their only effective blocker at Pearl Harbor. Germany overran Europe for similar and additional ideological reasons. We wanted a trading world with multiple successful economies. We humped it to life and subsidized the reality we have today. It worked. Now we have to compete. It's the world we wanted, and it's a better one than we had in 1939. However, even at that, we export food, prodigiously. Our software and communications innovations are essential to the world's continuing development. Our financial, distributional, aeronautical, medical and even automotive innovations are vital. And there's always what's next. Gold. Gold or other valuable commodity can be used as counterweight guarantee to national currency, while US has quit the standard by assuming that trade of oil in dollars will be enough powerful. Yet oil extracting countries rapidly start to divert from dollar to other currencies. China is also dumping US dollar and obligation holdings, while accumulating gold reserves. As there is no commodity to cover dollar`s white ass, it just tumbles down the rabbit hole.negative trade balance is created by exporting less than importing. How do you think they cover the difference? simple! they borrow money from china and also print additional dollars. How can a country become richer by printing money? The floating dollar is underpinned by both the value of what's produced and the dependency producing countries have on exporting to our economy. Every government is guilty of printing money. The key is having discipline on the intervals and retaining ability to grow your way out of the devaluation and reflate the exchange. We've done that multiple times. We will again. Do you believe that MS Clinton having gulped 60 millions in her private net wort, as a president she will stop caring about herself and start giving damn about the nation? I'm a registered Democrat, but Mrs. Clinton will not get my vote, neither in the California primary nor in the general election if she wins the nomination. The entire world has an array of thorny problems to solve. The US remains resilient and resourceful so that our problems are addressable. We're not the source of the world's emergencies. Phil

  • Landcrusher Landcrusher on Jan 30, 2008

    I like a lot of what Dr. Paul stands for, but I don't agree with all of it. Libertarians all too often forget that they should not talk about things that are not going to change anyway. There are several topics that Libertarians should avoid as if they were the abortion topic, but they know they are right so they open their big mouths. The other problem they have are their supporters who should REALLY keep their mouths shut if they can't really understand and articulate the policies and/or believe we should all be worried about black helicopters (or other conspiracy). The result is that the other parties, who know they are wrong, simply dismiss the Libertarians as nut jobs. They get away with it because the Libertarians seem happy to help them make the case.

  • Jthorner Jthorner on Jan 31, 2008

    Let's start by telling Japan and Europe that they have 10 years to pick up their own defense obligations and that in the meantime we will be removing 10% of our forces and equipment from their countries per year to get it done. Why on earth did we close so many military bases in the US while adding them around the world? Now we are positioned to defend South Korea from invasion but have no defensive forces in the San Francisco or Monterey Bays. In fact, most of the western coastline is undefended. The many WWII bases along it have mostly been shut down while new bases have been built in Kuwait, Bosnia, Afghanistan, Iraq, etc. Base the troops here in the US and spend the money it takes to support them here instead of all over the world. Does anyone know what saved Toyota's financial bacon in the 1950s? Yep, US purchases of Land Cruisers for the Korean war. "When the Korean War broke out in 1950, Japan’s economy was still weak. Once the War began, United States flooded Japan with orders for equipment and material ranging from gunny sacks for rice (for sandbags) to Toyota vehicles, to chemical products. In addition to purchases, Americans brought American technology and capital to Japan and introduced American management techniques notably those of quality control expert, W. Edwards Deming" Ron Paul has a good point about the direct and indirect consequences of the US playing policeman to the world.

  • Landcrusher Landcrusher on Jan 31, 2008

    J, Isolationism. Seriously? How about we apply that strategy to your house. Let's let the criminals take over the entire city, until they come to get your house. Then, you start shooting from behind your walls. Good luck with that. If you want to win people over to libertarianism, try sticking to lower taxes, less regulation, less government intrusion in to our lives. If you get drawn into a talk on foreign policy, then you argue that we should be more concerned with domestic issues, and meddle less in the concerns of other countries that don't affect us. But don't go straight to isolationism. There are no votes there. I believe, until recently, that most people in this country were economically conservative and socially liberal. The liberals seem to be winning back a lot of people on the economics side because the social conservatives have run them out of the camp. Once again, instead of recruiting those folks though, the Libertarians want to stand up shouting some of the regular idiocies. Good Grief! Toyota's in 1950? Just because it's a fact, doesn't mean anyone cares. Even if we did save the Japanese economy by buying a bunch of jeeps from them, so what? Good for us. Good for them. Are you saying that we should have let their economy fail? That would have been a great idea. Then who would have ended up in charge over there? I suppose we would be better off with Kim running the whole Korean peninsula? Maybe let him take Sakhalin too? Brilliant. I can see a millions of Americans going for that pitch. I am done on this one, you may have the last word if you wish. Somehow, I don't think it will help you.