Bailout Watch 158: Plan B is Now Plan A. Or Is That Vice-Versa?
As we’ve just reported, Senate majority Leader Harry Reid has pretty much written-off the possibility of passing another bailout economic stimulus package before President-elect Barack Obama moves into the White House. Which leaves Motown SOL, in terms of their planned mega-suckle. And now that GM has publicly admitted that they can’t make it past December without some kind of public funds, Senator Reid and House Majority Leader Nancy Pelosi have changed tack. Automotive News [sub] reports that the dynamic duo have sent a letter to Treasury Secretary Henry Paulson asking for $25b worth of “emergency loans” for GM, Ford and Chrysler. “We must safeguard the interests of American taxpayers [!], protect the hundreds of thousands of automobile workers and retirees, stop the erosion of our manufacturing base, and bolster our economy,” the letter, uh, suggested. As TTAC predicted, “The letter… recommended ‘strong conditions’ [for the loan] possibly equity stakes and limits on executive compensation, in return for any help. The government is requiring similar steps in its rescue of banks.” Equity stake? Nationalization by any other name would still smell like an old cadaver.
Today, while walking through a nearby apartment complex, I noticed a Maytag washer placed next to a garbage dumpster. From the looks of it, it was probably about 5 years old, certainly less than 10. My guess is that in 2028 they won't say that they'll never buy another appliance from Maytag because of the unreliable, unrepairable junk they bought back in '02. Cars, somehow, are different. I'm sure some will say that's because they are the second largest purchase most folks will make. Well the largest purchase most folks make is a house and while some mechanical aspects of home construction have improved (joist hangers, engineered wood composites, subfloor heating, nail guns, advanced adhesives), the quality of the workmanship, particularly in finish and detail work, has deteriorated. I've seen work on mcmansions that wouldn't have been acceptable in a tract home in the 1960s. Does anyone even notice? Nowadays, most mass consumer electronics are not repairable at the component level - with the proliferation of surface mount components and multilayered pc boards the most you can hope for is that the manufacturer has made boards and modules available as replacement parts. And if they are available, except for warranty repairs is anyone going to repair a $100 iPod when minimum bench charges can start at $50? Such abysmal customer service has not only become commonplace but it's become acceptable to most consumers. They don't complain about having to buy a new MP3 player because the old one stopped working (and rationalize the purchase based on the new model having an improved feature set), but they'll never buy another Ford/GM/Chrysler because a 1985 model had a bad window motor. Management at the domestics has hardly been stellar, but it's not as though consumers always act rationally either.
Well, Mahindra is going to sell pickups in the US starting next year (at least in theory), so maybe there will be some M&M reviews here shortly.