No bailouts, Let 'em sink. Nobody too big to fail

Dear old Uncle Sam has gotten into the habit of bailing out big companies that get into trouble.  GM, Fannie Mae, Freddie Mac, and AIG are the most flagrant examples.  The usual excuse is that allowing a big boy to go belly up will scare the market, causing a lot of other big boys to croak.  Causing a lot of money to be lost. 
   And, we passed a law, Dodd-Frank, which makes bailouts policy.  Dodd-Frank  sets up which companies will get bailouts, how much.
   The real problem with bailouts, is they urge on crazy behavior.  In no-bailout world, company management is pretty careful about the risks it runs.  If they do something really risky, and it fails, the company is toast, they and everyone in the company are out of work, the investors loose everything.  All around badness.
   But when Uncle Sam says he will bailout companies, all bets are off.   Now management can do all those crazy things, and if they fail, the company survives, they keep their jobs, and the investors are untouched (mostly).  No pain.  And without pain, nobody learns anything.  No pain, no gain.
    We ought to repeal Dodd-Frank.  We ought to make it real clear world wide that we don't bail out nobody, and we need to carry thru, and actually flush some loser down the drain, just to make the point.
     To run a capitalist society, which has made us all rich, you need capital.  We cannot afford to flush capital down the drain doing mortgage backed securities, credit default swaps,  futures trading, derivatives trading, and all those other risky gambling games they run on Wall St.

We need some scalps

Great Depression 2.0 started six years ago.  I know there was some malfeasance, skullduggery, and just plain stupidity in the big banks.  That crashed the world economy and threw millions out of work. But nobody has gone on trial let alone gone to jail. 
The IRS scandal.  Lois Lerner got retired, she keeps her pension.  Nobody else has been prosecuted or gone to jail.
The VA scandal.  The head of VA retired.  Nobody else has even got their name in the papers, let alone prosecuted or jailed. 
   I say Obama is going easy on this slime.  The banks, the IRS and the VA would work a lot better after jailing their top three levels of management.
   Even GM canned 8 people over the ignition switch disaster.  Are we saying that GM is more hard core than DOJ?

It's acceptable even if it doesn't meet spec.

This from Mary Barra, new GM CEO to a Congressional committee investigating the GM ignition switch failures.
  In all my career in engineering, I never heard anyone ever say anything like that.  The rule anywhere I ever worked was simple, if it doesn't meet spec, back it goes and we don't pay for it.  That's what incoming inspection is about.
  To hear the CEO of GM, a long time engineer there, say that GM would accept parts that don't meet spec means that GM doesn't believe in written quality standards.  Apparently GM will ship anything, whether it is any good or not.
   Talk about a dysfunctional corporate culture.
   Mulally at Ford would never say anything like that. 
   My next car won't be from GM.  

Beating up on GM, some more

The get-GM crowd is in full cry.  Defective ignition switches on a huge batch of GM cars.  The switches would occasionally fail and kill the engine.  This has been talked up as a lethal safty hazard with 12 deaths claimed over 10 years.  Wow!. 
   Now I am not a big fan of GM, they have done plenty of stupid things over the years.  But to call engine failure a lethal safety hazard?  Over the years I have experienced sudden engine failure on the road, maybe three times.  Last one, ten years ago,  was a Dodge Caravan that broke its timing belt on the way to Blind River Canada.  But you know, the engine just dies, and you pull the car over to the shoulder, and pop the hood, get out some tools, and try to fix it.  Twice before I got her going again, but the timing belt breakage was beyond my side-of-the-road repair abilities.  This sort of thing is a major pain in the tail, but I never considered it dangerous. 
   Oh well,  GM bashers have to get their kicks somewhere.

What's good for General Motors?

According to a Wall St Journal op-ed, retreating from the car market and specializing in SUV's and pickup trucks is the way to go.  Going head to head with Toyota, Honda, and Ford with the Chevy Malibu is a bad idea.  Or so says Holman W. Jenkins Jr in a Wednesday op-ed.
  I disagree.  GM is a huge company; it once commanded better than 50% of the entire US car market.  To remain a big company, you have to make a mass market product, selling in the millions, to stay in business.  Right now the high volume car product is a smallish four door sedan.  GM cannot survive on niche products like Corvette.  There simply are not enough guys with Corvette money to keep the lights on at a behemoth like GM.  There are more enough people who just need a plain old car to get to work, bring home the groceries and take the kids to school.  Like a Malibu, or (the competition) a Camry, an Accord, or a Fusion. 
   GM needs to make a Malibu that is just plain better than the competition.  They can do it.  They did it in the good old days.  In the '50s and '60s GM owned 50% of the market because their cars were better looking, better handling, and more dependable than Ford, Chrysler, or American Motors.
   They could start with better styling.  The 2012 Malibu is bland, with bulbous front and rear ends.  Then they could find a car salesman to redo the marketing on the web site.  To attract customers GM lists desirable features of the Malibu.  These turn out to be 33 mpg (fair), fancy sound  system (do I care when I have an Ipod?) , a computerized backseat driver with "Turn by turn" voice navigation, and Bluetooth.  None of which I care about either.
  What about engine power, trunk room, interior size (how many kids can I fit into the back seat?) brakes, cornering, roof racks for skis and bikes, transmission options, miles between oil changes, front or rear wheel drive, you know, those car things.  GM is trying to sell the car on MPG and vehicle electronics alone.  They don't seem to care about making a decent car, which can take the curse off a day long drive with kids on board.

"A Fire Brand Departs From GM"

Headline in yesterday's Wall St Journal.  From the headline one can see that the Journal is not in favor.  The firebrand in question, Joel Ewanick, was GM's global marketing chief.   He had a $4.5 billion dollar ad buying budget at GM, which is not chicken feed.  According to a GM press release, he "resigned".  GM claims that Mr. Ewanick "failed to properly vet financial details of a European soccer sponsorship deal."
   Sounds like office politics stabs again.  Mr. Ewanick was lured to join GM only two years ago.  GM managed to hire him away from top marketing job with Nissan North America, a job he held for only 6 weeks.
    Looks like bankruptcy hasn't taught GM's suits much.  They still don't have any cars that people want to buy, customers deride them as "Govt Motors",  their sales are down, and  their stock is in the tank  But they have plenty of time for back biting.
  

Light Duty Trucks or Light Trucks

Just watched a GM ad on Fox. Camera pans across a car showroom full of shiny pickups and SUV's. The voice over describes them as "Light Duty trucks". Not good. "Heavy duty" is good, "Light Duty" says the truck is gonna fall apart upon hitting its first deep chuckhole. The voice over should have called 'em "light trucks" which is good. Heavy trucks have 18 wheels and won't back into your garage which doesn't help sales appeal.
I can understand the ad writers making this goof, but how do it get by all the suits at GM?
Or are the GM suits as clueless as the admen?

Putting a Little Pizzazz in the Family Sedan (WSJ)

The article leads off with an attractive picture of a bright red '08 Chevy Malibu.
"The everyday family sedan is undergoing a transformation from stodgy to stylish as drivers begin to demand more from their basic transportation than a nondescript appliance on wheels. "
"Industry research indicates that consumers care more about styling than they used to, whether they are buying an expensive luxury vehicle or a bread and butter sedan."
Actually, real car people know that styling is, and always has been, extremely important to all car buyers. When Detroit suits say "consumers care more about styling than they used to" it tells you why the Detroit big three are being driven out of business. The suits running them know nothing about selling cars.
Before the Katrina gasoline price shock, the big three had retreated to the niche market of big pickups and SUV's. Three dollars a gallon killed that market. The suits didn't understand that the real automobile market is for small-to-medium size four passenger sedans. Drive Rt128 and just look at what folk drive during rush hour. Mostly four passenger sedans with a just a sprinkling of pickups and SUV's. Big companies like GM cannot survive on market niches, they have to serve the mass high volume market to generate enough cash flow to keep themselves afloat. The pickup and SUV market niche isn't big enough to support a GM. Let alone a Ford and a Chrysler.

Styling sells, and what's better, good styling comes free. It costs the same to stamp sheet metal into stylish shapes as it does to stamp it into boring and dowdy shapes. You want to make money on Chevy Cobalt and Impala? Give them good exciting styling. A well styled car sells better, and sells for more money than a plain-to-ugly one.

The Detroit big three have a lot of other problems, but the lack of well styled cars is a big one, and one that real car guys might be able to fix. Chevy's problem is, out of the six sedans and six SUV's on their website, the only one I'd care to own is Corvette. Corvette is a great car, but it's a niche market, there aren't enough guys with Corvette money to support the GM behemoth. Used to be, Impala was an exciting car that everyone wanted to own. GM has to make Impala, Cobalt, Malibu, and Aveo into desirable cars or Toyota and Honda are gonna turn the General into roadkill.

GM needs to focus on restyling the bread and butter cars and stop wasting money redesigning pickups and SUVs.