The Important Thing Is that the Big 2.5 Automakers Should Get $25 Billion from Somewhere...

Nick Gillespie | November 17, 2008

This is what leadership in DC has been reduced to in the early years of the 21st century (the post-American century?): Congress demanding a bailout for the Ford, Chryler, and GM from the magical pool of $700 billion created just a few short weeks ago and the White House demanding that the bailout come instead from a Department of Energy boondoggle specifically designed to pad the carmakers' bottom lines.

Perino's early morning statement also made clear, however, that the administration steadfastly opposes drawing funds from the bailout plan to help Detroit. She said the $25 billion that Democrats favor taking from the rescue plan should come, instead, from a Department of Energy program previously approved and funded to develop fuel-efficient vehicles. The White House opposes the idea of automakers getting an additional $25 billion.

Democrats want to use part of the $700 billion Wall Street bailout for emergency loans to help prop up the Big Three carmakers. General Motors Corp., Ford Motor Co. and Chrysler LLC are seeking an infusion of $25 billion, a figure that several Senate Democrats embraced Sunday.

More here, via the Cincinnati Enquirer.

Purely rhetorical question: Have you driven a Ford lately?

Comments

Abdul|11.17.08 @ 11:55AM|#

Couldn't the Big 3 get the money the way Japanese carmakers get it? Namely, by making decent, reasonably priced cars that people want to buy?

|11.17.08 @ 12:03PM|#

Good question posed by Instapundit: leaving aside the question of whether the automakers should be bailed out, why are we talking about pumping $50B into companies with a market cap of around $7B?

Matt Welch|11.17.08 @ 12:03PM|#

Drove an '86 T-Bird until late 2007.... One of the worst cars ever, though it had a big-ass engine.

|11.17.08 @ 12:03PM|#

Purely rhetorical question: Have you driven a Ford lately?

I have; I own 2. I'll be buying Hondas next time, for reasons not directly related to the bailout, but related nonetheless: they don't outright suck (they come close), but boy, do they sure unimpress and annoy you.

Ford. Mediocrity is Job #1.™

|11.17.08 @ 12:09PM|#

I'm actually going to give Ford some praise here. I have an Explorer, and the thing has been zero trouble except for a transmission problem. It's the V8 XLT AWD model and gets terrible gas mileage but is incredible in the snow. It handles pretty well for a truck, too.

Now, it doesn't compare to a Toyota, but it's been pretty damn reliable.

|11.17.08 @ 12:09PM|#

Purely rhetorical question: Have you driven a Ford lately?

No I drive an xterra, And i bought it because it was the best value/need ratio, for myself at least. i did look at 'American" cars, they had either not enough tow power, too expensive for what you got, low relibility rating etc etc. I have owned a ford, chevy, nissian, chevy nissian in that order. i have been happy with my nissians, unhappy with the "american" trucks. Free market plain and simple we should not be bailing out companies due to thier own faliure to not end the unions and not keep up with the markets. dino's die and the big 3 are dino's, let them die, others will fill the void, and quickly at that!

KT|11.17.08 @ 12:13PM|#

The last (only) experience I had with Ford sucked so bad that I vowed never to buy one of their cars.

|11.17.08 @ 12:18PM|#

I have owned several Fords in my lifetime and all of them were actually quite good. In contrast, my wife owns a Honda Civic that constantly needs repairs, is rusting out and goes through at least one complete exhaust system on every even numbered year.

American cars have greatly improved in quality over the last 20 years and are very competetive with Japanese and European cars. The problem is that American labor costs are not competetive.

Worse still, the CAFE standards force American car producers to make small high milage, low margin vehicles to keep the overall average MPG of the cars the sell high enough to meet the standards. Cheap, high milage cars also are low margin cars. You can have the kind of union mandated overhead Detroit does and make high margin cars. But you can't have the kind of overhead and make cheap low margin cars.

People who don't know any better scream that Detroit should make more efficient cheap cars like the Japanese. They do. In fact they make some good small cars. I would take a Ford Focus over a Toyato Yaris any day. But, when Toyota sells a Yaris, they make money. When Ford sells a Focus, they lose money. Thanks to our new hairshirt religion called environmentalism, Ford has to produce and sell so many Focus's even though they lose money in order to be able to sell trucks and SUVs where they do make money. I mean hell, why not just have them send the money to the Vatican instead. At least the Vatican has decent art.

You can have the CAFE standards or you can have the union overhead. But you can't have both unless of course you just want to turn the Big 3 into welfare delivery systems that happen to make cars.

Jerry|11.17.08 @ 12:20PM|#

And because the American government is willing to fork over money, other governments are inclined to do the same for their local car makers.

|11.17.08 @ 12:21PM|#

why are we talking about pumping $50B into companies with a market cap of around $7B?

Because our elected overlords don't understand the economics of a paper route, much less a gargantuan manufacturing empire.

Yesterday, I saw a truly appalling post about GM's inventory buildup. They're fucked, and any money given to them which doesn't involve a breakup will be wasted.

I recognize the practical impossibility of throwing Wagoner off the roof of the GM headquarters building, but that dumb son of a bitch should be escorted off the property with nothing but the shirt on his back and the change in his pockets.

kinnath|11.17.08 @ 12:22PM|#

I just pray that GM dies before 1/20/09.

|11.17.08 @ 12:25PM|#

My only Ford worked just fine until a guy tore it in half with his Lexus (a cardiac specialist who had a heart attack behind the wheel.) But then, it was one of those Fords actually built by Mazda.

I have a 2002 Honda CRV and haven't had any trouble since I bought it in 2006. (New cars are for suckers.)

Eventually, I will only drive German.

|11.17.08 @ 12:25PM|#

P Brooks,

Ford is by far the most efficient and competetive of the Big 3. So what is the theme of the bailout talk? Punish Ford. In the end, this is going to be an excuse to let the envirowackos get ahold of our auto industry. The big 3 will be told to make the specified eco penality boxes and the rest of us will be told through protectionism and the planned per mile tax on cars to buy said eco penalty boxes. I hope you enjoy your 2012 model Obama mobile.

|11.17.08 @ 12:27PM|#

I just pray that GM dies before 1/20/09.

That is not dead which can eternal lie...about their long term financial viability.

|11.17.08 @ 12:29PM|#

I have a 2002 Honda CRV and haven't had any trouble since I bought it in 2006.

HAHAHAHAHA...NutraSweet drives a girl car. I should have guessed.

kinnath|11.17.08 @ 12:29PM|#

That is not dead which can eternal lie...about their long term financial viability.

If they run out of cash in 08, they won't be there to lie to the new administration.

|11.17.08 @ 12:31PM|#

the CAFE standards force American car producers to make small high milage, low margin vehicles to keep the overall average MPG of the cars the sell high enough to meet the standards. Cheap, high milage cars also are low margin cars.

I had a really really good Managerial Accounting professor in business school who taught me to call bullshit on assertions like that. If you want to say they have no idea what it actually costs to make their products, and consequently have no idea whether their product mix is the right one, go right ahead. And if you want to say government regulations add cost and complication, I would happily agree.

|11.17.08 @ 12:32PM|#

At least I don't subconsciously jack off the shifter when I drive. (Yeah, I bet you thought she wouldn't tell me, didn't you?)

The Wine Commonsewer|11.17.08 @ 12:33PM|#

And in line right behind those bastards is Arnie Schwarzzengroper, arguably THE WORST California governor ever, and 40 other state governors, all with their hands out. Gimme my bailout, Uncle Sugar.

|11.17.08 @ 12:34PM|#

You know when they die, and they should (no more of my money for failed buisness. The chapter 11 or whatever bankruptcy they go through , they will sell off thier assets. Who will Buy! Well there are many smaller car companies in the US that would fill the void and be able to compete. WE shgould not be propping up old outmoded companies that are going to fail, because of thier old time buisness model. We should be letting them die thier natural death and letting the FREE MARKET AND COMPETITION FILL IN. (yes i know i mispell, but i am dyslexic, deal)

The Wine Commonsewer|11.17.08 @ 12:34PM|#

and the rest of us will be told through protectionism

It worked for Harley Davidson.

|11.17.08 @ 12:36PM|#

I hope you enjoy your 2012 model Obama mobile.

Please direct your attention to Sugarless: (New cars are for suckers.)

|11.17.08 @ 12:37PM|#

What next, NutraSweet? A pastel-colored Sebring convertible? A Red Volkswagen Cabrio?

rhywun|11.17.08 @ 12:37PM|#

But, when Toyota sells a Yaris, they make money.

So, isn't the greater problem the unions, not the CAFE standards as you imply?

TallDave|11.17.08 @ 12:38PM|#

Let's be realistic: this is a bailout of the UAW, which is going to die without it.

If Bush doesn't do it, you can be damn sure The Fresh Prince of Bill Ayers will.

|11.17.08 @ 12:38PM|#

I have owned several Fords in my lifetime and all of them were actually quite good.

The 2 Fords that I own currently are my 3rd and 4th Fords respectively: a 2005 Five Hundred and 2007 Freestyle. I wanted tanks for the kiddies to ride in. Just the same, these are unimpressive cars for the money. (Even though I bought them both at substantial discounts.) The 500 has already developed transmission problems at 34K and the warranty is out.

The 2 Hondas I owned, an 82 Civic and 93 Accord Coupe, engineer rings around the Fords. Hell, the Civic's intake and exhaust system had been altered by an idiot who thought he was a mechanic, but it ran like a top otherwise.

|11.17.08 @ 12:38PM|#

It worked for Harley Davidson.

That must be it!

Harley Davidson's market cap was more than double GM's when last I looked.

kinnath|11.17.08 @ 12:39PM|#

(New cars are for suckers.)

My last 5 cars have been brand-spankin new Nissans.

TallDave|11.17.08 @ 12:40PM|#

So what is the theme of the bailout talk? Punish Ford.

Exactly. This is the function of every bailout, and more broadly of every socialist policy: punish the successful and productive, reward the incompetent failures.

It may save some short-term pain, but in the long run it just makes things worse.

rhywun|11.17.08 @ 12:41PM|#

Let's be realistic: this is a bailout of the UAW, which is going to die without it.

I misread that as "UAE" at first... but it still kinda fits.

|11.17.08 @ 12:41PM|#

Actually, the wife is trying to find a BMW that suits her. She's extending picky and has been at it for months.

Additionally, a car is just a point A to point B machine for me and not some penis substitute. Therapy. Look into it.

|11.17.08 @ 12:42PM|#

When the question is "Should we subsidize X?" the answer is always no. Don't get into whether X makes a shitty product compared to Y, or X's employees are hard working or useless sloths.

If you start talking about how shitty X's products are, you will hear a story about X's next product which will be totally awesome and they just need another $100 billion to bring it out.

|11.17.08 @ 12:42PM|#

And, speaking of idiots, David Bonior, auto industry spokesperson propagandist, was on CNBC touting both the virtue of the bailout, and the necessity of the card-check law. I wanted to leap through the teevee screen and stab him in the eye with my mechanical pecil.

|11.17.08 @ 12:43PM|#

mechanical pecil

The most Freudian of slips...

|11.17.08 @ 12:43PM|#

Oops, Edna was me...

|11.17.08 @ 12:44PM|#

"I had a really really good Managerial Accounting professor in business school who taught me to call bullshit on assertions like that. If you want to say they have no idea what it actually costs to make their products, and consequently have no idea whether their product mix is the right one, go right ahead. And if you want to say government regulations add cost and complication, I would happily agree."

Why is that bullshit? There are fixed costs of making any car. The costs of the tooling and dyes for making a Focus or a Lexus are not that different. Further, the labor hours it takes to make a Focus versus a Lexus are not going to be that different. Yet, you can charge $50K for a Lexus and have to keep the Focus under $15. That $35K difference gives you a lot of room to play with higher labor costs and fixed overhead than you would have otherwise. It is not a very complex idea. Further, since you sell fewer $50K cars than you do $15K cars, the margin on each $50K has to be higher. That is true of any company that makes them.

|11.17.08 @ 12:44PM|#

peNcil

stupid keyboard

Sigmund Freud|11.17.08 @ 12:44PM|#

Additionally, a car is just a point A to point B machine for me and not some penis substitute.

A CRV is more of a pussy substitute, really.

Vagina envy?

|11.17.08 @ 12:45PM|#

The most Freudian of slips...

Okay, okay! I wanted to skullfuck the useless bastard!

|11.17.08 @ 12:46PM|#

Actually, the wife is trying to find a BMW that suits her. She's extending picky and has been at it for months.

Uhh...M5, dude. Don't let her be stupid and get anything else.

Additionally, a car is just a point A to point B machine for me and not some penis substitute.

How is the vagina substitution going, then? CRV? What, you couldn't handle a RAV4?

|11.17.08 @ 12:46PM|#

I'd rather be in a pussy than nestled snugly in a gas-guzzling penis. It reeks of unfulfilled potential.

The Wine Commonsewer|11.17.08 @ 12:47PM|#

yes i know i mispell, but i am dyslexic, deal

Yep, gotta watch for the Spelling Police (and the Grammar Police) which are disproportionately over represented amongst libertarian types. ;-)

My son is dyslexic and he can't spell his way out of a paper bag. Spellcheck doesn't even work because it can't figure out what he's trying to spell either. If the terrorists captured him and told him to spell C-A-T or they'd boil his mom in oil, she'd die a hideous death.

Other than that, he's overcome it and reads like a madman. I can't figure out how he manages it, but he does. You test him for comprehension and it's all there.

|11.17.08 @ 12:47PM|#

"So, isn't the greater problem the unions, not the CAFE standards as you imply?"

Depends on how you look at it. We can have the unions if we want an automobile industry that is small and makes only high margin vehicles. I think that is a pretty crappy option, but it is an option. The best option would be kill off both the union contracts and the CAFE standards and let the auto industry make and sell whatever car they think they can make money selling.

I, Kahn O\'Clast|11.17.08 @ 12:48PM|#

I drive a 2001 Toyota Rav4 and the missus has a 2007 Subaru Forrester. I've driven plenty of fords and gm models... I have to say that ever since my 1988 Honda Civic it has been Japanese only for me..... (The wife had a New Beetle and the sister-in-law a 2001 Jetta they were such lemons I have written off Volkswagon entirely)

|11.17.08 @ 12:49PM|#

I wanted to skullfuck the useless bastard!

Now ve we ghettink somevhere. Tell me vhat you wemember about your mudder.

TallDave|11.17.08 @ 12:49PM|#

The costs of the tooling and dyes for making a Focus or a Lexus are not that different.

This is less true than you might think. Mfg cost can vary by 10x for virtually part of a car.

The additional utility is more arguable, of course. Are hydroformed panels really necessary? At some point, you are probably paying for status rather than performance or comfort.

BDB|11.17.08 @ 12:50PM|#

Are Sweden, Japan, and Germany really less regulated in terms of their automotive industry than the United States?

|11.17.08 @ 12:50PM|#

This is just a guess, but it seems to me that your typical middle to upper middle class member of the Obama Cult is pretty likly to drive some kind of foreign car. I wonder what they are going to think when the they are told it is their patriotic duty to buy American?

|11.17.08 @ 12:51PM|#

I, Kahn O'Clast,

I had an '85 Jetta that I drove for 300K before I gave it to a friend of mine and it is still running today. The decline in VW standards has also lead me to never want another one again.

|11.17.08 @ 12:53PM|#

"Are Sweden, Japan, and Germany really less regulated in terms of their automotive industry than the United States?"

In some ways yes. I know for a fact the emission standards are lower in Europe. The Clean Air Act revisions in the early 1990s killed off the grey market and make it virtually impossible to import a car from Europe made to European standards. Our safety standards are also tougher. For several years smart cars could not be sold here because they didn't meet safety standards. Europe also has less strict standards on diesels, which allows them to have some really kick ass efficient diesels that Americans can't buy. I also don't think Europe has CAFE standards.

I, Kahn O\'Clast|11.17.08 @ 12:53PM|#

TWC

it deos not mtater waht odrer teh lteters are in ocne teh wrods are mmerorized beucase teh barin taeks care of teh rset.

BDB|11.17.08 @ 12:54PM|#

Well John, define "foreign" car. Which is more foreign: a Ford Fusion bolted together in Mexico, or a Toyota Camry assembled in Kentucky?

IOW, does the place where the CEO lives make it more foreign, or the place it is assembled?

BDB|11.17.08 @ 12:54PM|#

I didn't know that John, thanks. Sometimes the assumption Europe=more regulated is wrong, I see.

|11.17.08 @ 12:56PM|#

"My mother? Lemme tell you about my mother."

|11.17.08 @ 12:56PM|#

"Well John, define "foreign" car. Which is more foreign: a Ford Fusion bolted together in Mexico, or a Toyota Camry assembled in Kentucky?"


After the federal government spends $25 billion and effectively takes over the Big 3, American will mean a car produced under Union Contract. Yes, you are right, the US has a great and very profitable auto industry. It is just owned by foreigners and not unionized. This bailout is not for the "auto industry", it is for the UAW and the execs at the Big Three.

|11.17.08 @ 12:56PM|#

Toyota Camry assembled in Kentucky

I will always love Toyota for the sheer number of sushi restaurants it has brought into my life.

|11.17.08 @ 12:57PM|#

A gold star for P Brooks.

|11.17.08 @ 12:57PM|#

Europe also has less strict standards on diesels, which allows them to have some really kick ass efficient diesels that Americans can't buy

They have turbo diesels all over the place there. And everything is manual transmissions.

BDB|11.17.08 @ 12:58PM|#

One of the companies that has been screwed over unfairly is Chrysler. Mercedes just raped them after the merger, neglecting the entire line save for maybe Jeep. In the late 90s Chrysler had a great lineup and had really come back from the first bankruptcy in the late 70s with a lot of good cars--the K-Cars, the minivan, cab forward, etc. The merger with Mercedes ruined them.

|11.17.08 @ 12:58PM|#

And everything is manual transmissions.

I'm pretty sure I already covered your predilection for those...

Cool Cal|11.17.08 @ 1:00PM|#

I must take umbrage with Matt's comment. American cars, while generally well, we all know, do have a few diamonds in the rough. And as a pistonhead, I have a serious appreciation for the early eighties Fords, particularly the revolutionary 4 cylinder used in the thunderbird that Matt described as well as certain Mustangs. Ford was revolutionary itself back then in many ways that many non-car enthusiasts would not appreciate, and lord knows a poorly maintained Ford would be anything but impressive 20 years down the road, as it were. But I currently drive what they were giving Ford executives in Dearborn during the late 90's. One of the last "personal luxury coupes", the sublime 1997 Lincoln Mark VIII. In good condition, it is a dream - suspension like a warm marshmallow, all the fixin's, and it's design is reminiscent of the long, elegant Zephyr of 30's vintage Ford. BTW, it gets 24 mpg ... not bad for a car the size of Shamu.

BDB|11.17.08 @ 1:01PM|#

Cool Cal, this article sums up what went wrong with Ford since the 80s, using what they did to the Taurus as an example:

http://www.thetruthaboutcars.com/ford-taurus-oedipus-wrecks/

The Wine Commonsewer|11.17.08 @ 1:01PM|#

Harley Davidson's market cap was more than double GM's when last I looked.

It's the protectionist model, not the market share. Twenty five years ago Harley was bankrupt and going out of business. The feds slapped huge tarriffs and restrictions on big Japanese bikes and voila, Harley was given a new, artificial lease on life.

With no competition and a reversion to the old company ethic (after Voit let go) plus a bunch of boomer guys who couldn't be Peter Fonda when they were 25 but now can cuz they're lawyers and doctors and such, Harley LIVES!

And it lives for one reason. The protectionism that John is forecasting that will go with the bailout of the auto industry.

|11.17.08 @ 1:02PM|#

I wonder what they are going to think when the they are told it is their patriotic duty to buy American?

Volvo = Owned by Ford
Saab = Owned by GM

|11.17.08 @ 1:03PM|#

I also don't think Europe has CAFE standards.

"Europe" doesn't need CAFE; they (wisely, in my estimation) have OMG!! astronomical!! fuel taxes. We should slap an additional dollar tax on fuel right now.

*hides under desk*

|11.17.08 @ 1:04PM|#

I am taking back that gold star.

|11.17.08 @ 1:06PM|#

"It's the protectionist model, not the market share. Twenty five years ago Harley was bankrupt and going out of business. The feds slapped huge tarriffs and restrictions on big Japanese bikes and voila, Harley was given a new, artificial lease on life."


Even with the tarriffs, the Japanese Cruisers are about two thirds the price of a Harley. Hell, my BMW is still cheaper than its Harley equivilent and that is paying the "German Engineering" surcharge. I think Harley made a comeback because they were so bad in the early 1980s that even the average bikes they make now look fabulous in comparison and because most people who buy them buy them to look at and talk about rather than ride them. They sell and image more than a product. I don't think the protectionism makes that much of a difference.

Geoff Nathan|11.17.08 @ 1:07PM|#

the CAFE standards force American car producers to make small high milage, low margin vehicles to keep the overall average MPG of the cars the sell high enough to meet the standards. Cheap, high milage cars also are low margin cars.
Maybe I'm wrong on this, but don't all automakers have to meet these standards? So presumably Honda Nissan and Toyota (not to mention VW/Audi) also have to meet them, yet they seem to make a profit. Or at least not lose as much money per year as the GNP of a small country...

TallDave|11.17.08 @ 1:08PM|#

the Obama Cult is pretty likly to drive some kind of foreign car. I wonder what they are going to think when the they are told it is their patriotic duty to buy American?

Oh no no no, they won't be told that at all. They'll be told that UNFAIR FOREIGN LABOR PRACTICES ARE HURTING OUR UNIONS!!!11!! and we need massive protectionism. Other countries will then follow suit, global trade will collapse, and thus begins the Second Great Depression.

The Wine Commonsewer|11.17.08 @ 1:08PM|#

This is just a guess, but it seems to me that your typical middle to upper middle class member of the Obama Cult is pretty likly to drive some kind of foreign car.

Don't forget the Buy Local bumper sticker.

SpongePaul|11.17.08 @ 1:09PM|#

Other than that, he's overcome it and reads like a madman. I can't figure out how he manages it, but he does. You test him for comprehension and it's all there.
_____________________________________________
Tell him to keep at it, dyslexia is a hinderance not a failure. Most dyslexics are very intelligent. I am a university educated 156IQ dyslexic who is a manager and does well. I say its like a vista OP with a DOS recall. everything goes in just fine, recall is broken, LOL its there, but must be teased out.

|11.17.08 @ 1:09PM|#

Twenty five years ago Harley was bankrupt and going out of business. The feds slapped huge tarriffs and restrictions on big Japanese bikes and voila, Harley was given a new, artificial lease on life.

It was also owned by AMF for a spell, which did nothing for it health.

FWIW, the tariff really only created the market for the 600cc sport bike, since the tariff kicked in at 750cc's. I would credit the resurgence of Harley more with better management than the tariff. Trust me, no one who was going to buy a wrapped-in-plastic riceburner was going to just trade in their racing leathers for fringe and head on down to their local hog dealer.

|11.17.08 @ 1:09PM|#

a lot of good cars--the K-Cars

BDB, you are going to need to explain how the abominable K-frame cars were "good".

One of the last "personal luxury coupes", the sublime 1997 Lincoln Mark VIII

A friend of mine in high school had a Mark III. That thing was a boat. However, you could lay down your skis in the trunk with room to spare, which was pretty damn cool.

BDB|11.17.08 @ 1:09PM|#

"Maybe I'm wrong on this, but don't all automakers have to meet these standards? "

Yes but most of their factories are located in the non-unionized south. The costs to assemble the cars is a lot cheaper because of that.

BDB|11.17.08 @ 1:10PM|#

"BDB, you are going to need to explain how the abominable K-frame cars were "good"."

Good in terms of it turned a profit and saved their ass from bankruptcy.

|11.17.08 @ 1:10PM|#

"Maybe I'm wrong on this, but don't all automakers have to meet these standards? So presumably Honda Nissan and Toyota (not to mention VW/Audi) also have to meet them, yet they seem to make a profit. Or at least not lose as much money per year as the GNP of a small country..."


Yes they have to meet them as well. But they make money selling small cars so it doesn't hurt them. The Big 3 could make money selling them to, if they could ditch their union contracts. Indeed, their European subsidiaries, who have more competetive labor costs, do make money selling small cars.

|11.17.08 @ 1:10PM|#

Harley also didn't get suckered into trying to be all things to all people. They found their niche and stayed in it. You couldn't give me a Harley Ferguson, but they sell enough of them to actually turn a profit.

GM should be broken up. I pegged GM as a lost cause when they caved to the UAW and folded Saturn into the corporate megalith.

TallDave|11.17.08 @ 1:11PM|#

Even with the tarriffs, the Japanese Cruisers are about two thirds the price of a Harley.

This is partly because Japanese have engaged in massive currency manipulation for decades; more recently the Chinese have picked up on it as well. Our consumers benefit and theirs are hurt, their businesses benefit and ours are hurt. That's a major reason why Americans have such a high PPP GDP per capita compared to most of the rest of the world.

BDB|11.17.08 @ 1:11PM|#

GM should just scrap all their divions except for Chevy (entry level), Pontiac (sports), and Cadillac (luxury. A simple, three-tier step up. Right now it is difficult to tell what brand is supposed to be catering to who.

|11.17.08 @ 1:12PM|#

I'll add that I can recall a couple Japanese bikes that had their displacement dropped from 750 to 700 to skirt the tariff.

|11.17.08 @ 1:13PM|#

P Brooks,

If not for CAFE standards, GM could have done what Harley did and just make pickups and SUVs. Chrysler could have just made minivans and Jeeps. But thanks to CAFE they couldn't do that. Harley wouldn't be profitable either if the govenrment mandated that they make one 650cc sprot bike for every cruiser they sold.

The Wine Commonsewer|11.17.08 @ 1:14PM|#

I don't think the protectionism makes that much of a difference.

Not today, but when Harley was bankrupt and literally going out of business it made all the difference in the world. The large bike market was all Rice Burners. Harley was made by AMF Voit. When Reagan was done, Japanese bikes cost considerably more than Harley Davidsons.

Yes, I did say Reagan, because it was his watch.

|11.17.08 @ 1:15PM|#

Even with the tarriffs, the Japanese Cruisers are about two thirds the price of a Harley.

The Vmax being the exception to this rule. I want one!

Don't forget Victory bikes! Fucking gorgeous bikes, but they start at $15K.

|11.17.08 @ 1:16PM|#

"The large bike market was all Rice Burners. Harley was made by AMF Voit. When Reagan was done, Japanese bikes cost considerably more than Harley Davidsons."

That is true I guess. Back in the day, no one would be caught dead on a Harley. As I child I dreamed of owning a KZ1000 or a V-Max. Amazing to think 1000 and 1200 bikes were considered "big bikes" back then. Now anything under 1300 CC is midsized.

|11.17.08 @ 1:18PM|#

JW,

Why anyone who just had to have an American Cruiser would buy a Harley over a Victory is beyond me. Victorys do kick ass. I am not a cruiser fan, but if you told me I had to own one, I would buy one of the Big Hondas and if you told me it had to be American, it would be a Victory hands down.

TallDave|11.17.08 @ 1:21PM|#

I misread that as "UAE" at first...

This made my morning, btw.

CUT THEM OFF AT THE BANK: "In the United Arab Emirates (UAE), where much of Iran's foreign trade is handled, local banks are refusing to do business with the 10,000 Iranian trading firms based there. This has caused delays and cancellations of Iranian imports (over $9 billion worth from the UAE last year) and exports. This is being felt by the rule elite in Iran. There, the large extended families of the clerical leadership live the good life, and the goodies come in via the UAE. The sudden shortages of iPods, flat screen TVs, automobiles and bling in general, has been noticed in Iran, and is not appreciated. The falling price of oil is producing another problem, national bankruptcy."

Rofl.

http://www.strategypage.com/qnd/iran/articles/20081116.aspx

BDB|11.17.08 @ 1:24PM|#

Well, that probably means Iran's President won't be re-elected.

|11.17.08 @ 1:25PM|#

If not for CAFE standards, GM could have done what Harley did and just make pickups and SUVs.

COULD have; I agree. But the procession of idiots who have occupied the top spot at GM would never have considered trying to limit their product range.

BDB|11.17.08 @ 1:26PM|#

Isuzu manages to make only pickups and SUVs.

Mike M.|11.17.08 @ 1:28PM|#

If you think Detroit, the UAW, and the Big 2.5 have it tough now, just wait a few more years until China starts to break into the U.S. automotive market, backed by their massive pool of peon labor.

|11.17.08 @ 1:32PM|#

Well, that probably means Iran's President won't be re-elected.

Like the president actually matters in Iran. Or something.

BDB|11.17.08 @ 1:33PM|#

"J sub D | November 17, 2008, 1:32pm | #
Well, that probably means Iran's President won't be re-elected.

Like the president actually matters in Iran. Or something."

He will cease to matter once a moderate is in power instead of a hard liner in the eyes of many. Then he is back to being the powerless figurehead he was from 1997-2005, instead of TheNextHitler.

|11.17.08 @ 1:35PM|#

BDB,

In Iran a moderate is someone who thinks that homosexuals should be stoned as opposed to the hardline traditional view that they should have a wall dropped on them and that Jews should be killed quietly without comment rather than anouncing it to the world in triumpth. I beleive also the moderates think that the streets need not be widen for the entrace of the 12 Imam since they antipate him flying in rather than driving.

BDB|11.17.08 @ 1:37PM|#

John--

I'm just saying, when Khatami was in power, neoconservatives assured me that the President of Iran was a powerless figurehead and the real power lay with the Supreme Leader. But once Ahmadenijad was elected, he was an all-powerful dictator and TheNextHiter.

Nothing in their Constitution actually changed, of course, they just had someone with a bigger mouth.

dhex|11.17.08 @ 1:40PM|#

If Bush doesn't do it, you can be damn sure The Fresh Prince of Bill Ayers will.

if you came up with this yourself, dave, color me super impressed.

Peon|11.17.08 @ 1:49PM|#

backed by their massive pool of peon labor.

More work?

|11.17.08 @ 1:51PM|#

Back of the envelope calculastions reveal that labor cost for the big 2.5 are $965 higher per vehicle compared to Toyota.

All things being equal, would you cross the street to the Toyota dealer to save a kilobuck?

But the UAW has nothing* to do with the big 2.5's difficulties.

* Don't scream. I know the UAW is not the only problem. Organized labor's and Dem leadership's refusal to acknowledge this inconvenient truth™ kinda pisses me of just a little bit.

TallDave|11.17.08 @ 1:52PM|#

neoconservatives assured me that the President of Iran was a powerless figurehead and the real power lay with the Supreme Leader. But once Ahmadenijad was elected, he was an all-powerful dictator and TheNextHiter.

No, he was still a figurehead, just one more aligned with the real powers in Iran than Khatami, and therefore more powerful.

For example, Khatami didn't talk about wiping Israel off the map. That was a bit Hitler-ish and worried people a bit.

TallDave|11.17.08 @ 1:56PM|#

Heh, I remember when Khatami's faction tried to pass a law telling the clerics they weren't in charge anymore. I bet the mullahs had a good laugh over that one as they drew up the list of who wasn't allowed to run for office anymore.

BDB|11.17.08 @ 1:56PM|#

"For example, Khatami didn't talk about wiping Israel off the map. "

Like I said, Ahmadenijad has a much bigger mouth. But tell me again, who is the Commander-in-Chief of the Iranian armed forces? It isn't the President. He couldn't wipe Israel off the map anymore than Nancy Pelosi could send American troops to Darfur.

kinnath|11.17.08 @ 1:58PM|#

Last time I drove a Ford it was in the UK (a Mondeo I think). Great car.

There are only three minor problems with the Big 2.5: bad management, bad engineering, and bad production. Other than that, no real problems.

BDB|11.17.08 @ 1:58PM|#

And people saying he is a "dictator" is a hell of a misnomer. The dictator is Ali Khamenei. They don't call him the "Supreme Leader" for nothing.

Turtles|11.17.08 @ 2:02PM|#

Follow the money:

Carmakers funnel more funds to Democrats

|11.17.08 @ 2:03PM|#

J Sub D,

The other inconvienent reality the Dems don't want to face is that cars last longer so we need to produce less of them. You are a sucker if you buy a new car these days. You can buy a great used car that is two or three years old for 3/4 of the price of a new one. You can also keep a car for 10 years or more. Back in the day, people bought a new car every couple of years because the things didn't last very long. All of that means less demand for cars and smaller car companies. But why face reality when you can have big daddy government come and make it all better?

|11.17.08 @ 2:05PM|#

Last time I drove a Ford it was in the UK (a Mondeo I think). Great car.

Heck, even the boys on Top Gear think the Mondeo is a decent car.

*One* of Ford's problems is the sheer boredom of the cars they market to Americans. The Euro Fords and especially the Aussie Fords are much better looking than anything they have here. The 2010 Focus will be a Euro model.

Most of the new GMs that I thought actually looked halfway decent are all re-badged Opels.

TallDave|11.17.08 @ 2:06PM|#

Well, he's considered second only to the Supreme Ayatollah, so dictator is not that inaccurate if their interests are conjoined.

http://en.wikipedia.org/wiki/President_of_Iran

is responsible for the "functions of the executive," such as signing treaties, agreements etc. with other countries and international organizations; the national planning and budget and state

TallDave|11.17.08 @ 2:09PM|#

And, of course, Ahmadinejad was not fairly elected.

CrackerBarrel|11.17.08 @ 2:12PM|#

"Breaking up" any of the big 2.5 won't have much effect, unless it can be accompanied by breaking of union contracts. When you hear about the fringe benefits that the unions have won, such as safety net job banks, wherein employees are paid to do community service work, or in some cases to do nothing,is it any wonder that the US companies have trouble competing?

The unions also won sweet deals on pensions and medical insurance. Ironically, many companies in other countries don't have those costs, at least not directly-- their governments assume them.

The companies that can't make a go of the current situation should be allowed to fail. Their assets and many, if not most of their employees will get picked up by the companies that buy up the remains. Most people quoted in the media seem to think that if the Big 2.5 fail, the US will stop making cars. I doubt it.

And if I may rant a bit, I'm gonna scream if I hear another lament about companies that are too big to fail. No such animal, in my book. End rant.

projecthappy|11.17.08 @ 2:15PM|#

Had an Explorer that crapped out. Replaced it with a Civic and not looking back.

BDB|11.17.08 @ 2:18PM|#

I don't think Ahmadinejad and Khameneni are "aliagned" is a bit much at least in foreign policy. The latter has slapped down the former before when he runs off at the mouth about Israel or holocaust denial.

I actually think he might be LESS hawkish than Ahmedinejad, not that that is saying much. Ahmadinejad is a more of loud-mouthed idiot than an all-powerful threat, one that probably won't make it to a second term (his unpopularity is such I don't think they will be able to fix enough ballot boxes).

BDB|11.17.08 @ 2:21PM|#

"Less hawkish" here means "not suicidally insane".

Butch|11.17.08 @ 2:24PM|#

My 03 Focus is one of the best cars I've ever owned. Remineds me of my old Golf, but with more power, better handling, and not a lick of trouble after 65K miles.

Ska|11.17.08 @ 2:40PM|#

Butch, just watch out for when the key no longer fits in the ignition and you can't turn it any longer. Happened on my gf's '02 Focus and is a common problem. She had to drive around with a hammer to knock the key into place before having the whole shit changed.

My first car was a '78 T-bird -- in 1995. I gave it to charity in 2000, and it still ran fine. I currently drive a Japanese car; I had to pay extra for manual transmission. WTF.

|11.17.08 @ 2:46PM|#

BDB, whoever runs Iran just had their ass handed to them over the weekend. Iraq's cabinet overwhelmingly approved the security pact, despite fierce lobbying against it by Iran. It still has to be voted on by the parliment, but this was a very positive development. Don't look for a post on it here at Reason, it doesn't fit the plan.

BDB|11.17.08 @ 2:48PM|#

James Ard I read about that and it is a good development. Really, hawkish politicians in every country are losing big time right now.

|11.17.08 @ 2:50PM|#

My 2000 Expedition, bought used in 2001, rolls over 100,000 this week. It has been very reliable, but I think I'd be more comfortable owning a 2000 Toyota at this point. Hopefully this post doesn't piss it off.

Paul|11.17.08 @ 3:09PM|#

$50B into companies with a market cap of around $7B?

I'm guessing they have unfunded debt burdens in the form of union and pension benefits?

Paul|11.17.08 @ 3:10PM|#

You know... like governments have unfunded debt burdens in the form of union and pension benefits?

Paul|11.17.08 @ 3:12PM|#

You are a sucker if you buy a new car these days. You can buy a great used car that is two or three years old for 3/4 of the price of a new one.

Unless you can get one of those 0% interest deals on a new car. Then you get a new car, full warranty and don't pay a dime of interest on the loan. That often ends up being cheaper than the slightly used car with a scaled back warranty (if any at all).

Paul|11.17.08 @ 3:16PM|#

I have an Explorer, and the thing has been zero trouble except for a transmission problem.

Interesting, you name one of the biggest, most expensive things to go wrong on a vehicle, and put that in the same sentence where you report "zero trouble".

|11.17.08 @ 3:31PM|#

"BDB, whoever runs Iran just had their ass handed to them over the weekend. Iraq's cabinet overwhelmingly approved the security pact, despite fierce lobbying against it by Iran. It still has to be voted on by the parliment, but this was a very positive development. Don't look for a post on it here at Reason, it doesn't fit the plan."

No it doesn't. One of the things I really fucking hate about Reason is their behavior on Iraq. They didn't support the war and that is their right. But, they ran any number of smug, gleeful posts about how bad things were going. But now that things are doing well, they don't say a damn word. How many of the Reason staff thought the surge would work? Michael Young? All of them poo pooed the surge and sat around like snotty teenagers when it started. Now that it appears to have worked, they won't talk about it. You would think Reason would want to write and think about the realities in post war Iraq and the long term legacies of the war. If they were anything better than a good college newspaper they would. But alas they are not so they just pretend the surge never happened.

|11.17.08 @ 3:33PM|#

I have an Explorer, and the thing has been zero trouble except for a transmission problem.

I have 70K on my Explorer and have had zero (as in zero) problems with it.

Paul|11.17.08 @ 3:34PM|#

Good in terms of it turned a profit and saved their ass from bankruptcy.

It turned a "profit" because the government bought all the cars. Everyone who had a government job in the eighties remembers driving one of those horrible lime-green things.

|11.17.08 @ 3:48PM|#

I have an Explorer, and the thing has been zero trouble except for a transmission problem.

Interesting, you name one of the biggest, most expensive things to go wrong on a vehicle, and put that in the same sentence where you report "zero trouble".

But- Ford transmissions hardly ever don't break.

|11.17.08 @ 5:14PM|#

It turned a "profit" because the government bought all the cars.

I had forgotten about that.

For the bail-out, why not have the government buy all the excess inventory, and then have a lottery to give them away?

You could even sell tickets to help fund the bail-out. At least that way I'd have a chance at getting a car from one of the companies that just got their mitts on my money.