Newspapers are like automakers - SUVs and hardcopy editions (updated)

NOTE: I am expanding this into a running post about problems with newspapers, both old and new.

And now, back to the headers.

Mathew Ingram has used this analogy before.

Although I think it's a good one overall, I don't think it's 100 percent right. Even more, to the degree that I do think it's right, it's frustrating that Ingram doesn't extend the analogy.

And I shall now do so.

Where the idea is right is that print newspapers are like full-sized SUVs.

Let's unpack that more.

American automakers got stagnant in the 1960s, other than running away from the big fins of the late 50s. Japanese cars were laughed at. So was the VW Bug. "Snooty" upscale European imports were accepted as a fact of life.

US automakers then had the two Arab/Iranian oil embargos of the 1970s to face. American automakers didn't lear from the first and still had little in the way of small cars, let alone quality ones, ready to compete with Japan, or with expanded offings from VW.

But, along came the 1980s. Then the 1990s. Oil prices not only stabilized, but after a short spike for the Gulf War, went downward, way downward. Down to around $10/bbl.

So, U.S. automakers, also buoyed by the EPA's CAFE standards stagnating, and knowing that the corporate fines for average fleet CAFE falling short of standards, and ignoring ideas of peak oil and the rise of car-driving classes in the developing world, said "What, me worry?" The Chevy Suburban had been around for decades, yes. But, none of the other SUVs had, by and large. So, with a variety of marketing angles, they pitched Americans on a bunch of low-mileage, high profit margin vehicles. (Japan followed suit, yes, but hedged its bets by not making anything as big as the Suburban and by keeping most of its SUVs on car chassis so as to help mileage by 1 or 2 mpg. But  I digress.)

Meanwhile, there's newspapers, with the timetable a decade or two later, but with parallels.

In the 1970s and 80s, TV has achieved near-total saturation of the US. Cable TV has helped make that happen, as well as allow for the rise of the early superstations like WGN and TBS. But, the industry has "held its own," at least in terms of keeping readership constant, although it hasn't quite kept readership percentage.

Then, along comes the Internet. Newspapers start to worry. They invest a lot of money in early websites, early digital baseplates for SLR cameras, and other things, in the early 1990s. However, the Net doesn't take off as fast as expected, so by the late 1990s, they figure why worry? Major media trade groups don't see the storm clouds ahead, like readily available broadband, etc.

Instead, they see the housing bubble inflate their real estate pages (even as Craigslist cuts into classifieds, though that hurts alt-weeklies more), and also their auto pages, as low post-9/11 interest rates combined with home refinancing lead to a spate of new auto purchases. (We even have a tie-in.)

So, the hardcopy newspaper with all the new ads became like the SUV. High-margin, as high of margin as newspapers had been for some time, as more and more big cities lost their second daily newspapers.

But, both sides ignored storm clouds.

For the automakers, it was Peak Oil. (And, for any deniers, King Hubbert wrote about Peak Oil *after* the first fracking for oil had been done. That's part of what figured in to his calculations of difficult-to-get oil. You can sit down again.) They also failed to address climate change concerns, and that that issue, along with newly skyrocketing oil prices, might lead a more liberal presidential administration to to address CAFE standards anew.

For newspapers, it was ignoring that Net 2.0 was on its way, leading to an explosion in company direct marketing, plus many more outlets for web ads. Both would drive online ad rates down even as more people went to the Internet. Ad-blocking technology and other issues would add further headaches.

Some of the two industries' problems overlapped. Despite warning signs, neither newspapers in general (though I'm focusing on US ones, and larger dailies, to be precise) nor automakers braced themselves for the possibility of a housing bubble bursting.

As a result, the Great Recession hit both hard, "demanding" that both turn on a dime, though the bulky SUV can't, and the US automakers' mindset behind it wouldn't easily. Ditto for newspapers. The only answer was to cut, cut, cut jobs in both places. The automakers at least had more reason; people were buying few cars in general, and fewer American cars and SUVs in particular. And, they didn't have fat profit margins tapering down; they had slim profit margins going negative.

In the newspaper world, people were still reading. They were just doing more of it online because it was free there in most cases. In a disaster as big as Detroit ignoring Japan in the 1960s, National Newspaper Association leaders, along with most board members of the Associated Press, etc., assumed a "TV model" would work for online newspapers, and made no backup plans to quickly move away from that if they were proven wrong. As part of this, the AP underpriced its product to news aggregators like Yahoo, followed by Google.

The future?

Both industries are likely to make future mistakes, as I see it.

Even though a 20-cent/gallon fluctuation is no more than 2 cents a gallon just before the first oil embargo, Americans, between expecting cheap gasoline as a God-given American exceptionalism birthright and seeing gas price signage every day (or being alerted by places such as Gas Buddy), are extremely sensitive to gas prices in the short term. And, since President Obama allowed loopholes for E-85 vehicles and other things (even though nobody will run them on E-85 and we can't afford to make that much ethanol anyway), and didn't seriously raise the penalties for failure to meet corporate CAFE, Detroit will follow suit on such sensitivities, while Japan and Europe will carefully hedge their bets. (Speaking of those two areas, why, why, why, won't somebody combine the best of both and bring a diesel-hybrid to market? Ford actually built a nice concept version, but won't sell it.)

For newspapers, it will be the belief that the bottoming out of online ad rates, like Herbert Hoover's expected economic recovery, is just around the corner. That will combine with a belief that ad dollars from mobile devices are part of the salvation, even though, as I have blogged before, digital dimes are likely to face an undercut replacement in mobile nickles. Smartphones aren't big enough to do a lot for either ad display or news story reading. And, the idea of creating two different versions of mobile-land, one for smartphones and one for tablets, surely makes newspapers, ad designers, web designers and others all cringe.

So, are we headed to Bezos' point of hardcopy newspapers being dead in 20 years? With rare exceptions of truly national papers like the New York Times, Wall Street Journal and maybe USA Today, I say yes. (USA Today, despite whatever hopes Gannett has for it, is a different kettle of fish. It's not a newspaper of news or financial record and most of its content is wire copy. That said, for older readers who see their  local daily go online-only in another decade or two, and want to hold a hardcopy paper in their hands, it will still have an audience of sorts.)

On the flip side, there is some truth to how going online only, and totally, not a hybrid like Advance Publications is doing with its major papers, frees up a lot of overhead. (And I'm talking about online-only as Net-HTML style only; no "e-editions" of PDFs of hardcopy newspaper pages.)

Obviously, pagination copy editors are gone. A small portion of them will be kept around for line-type copy editing, though I don't think it will be many; even larger newspapers will be cheap here. (And, with Adobe going to the cloud, on a subscription basis, including forced buys for updates, you escape having to have so many copies of InDesign, unless, of course, you dodge that by going back to Quark.)

As for a website? Teach the managing editor, sports editor and other guys who now paginate how to use Wordpress (the website version, not the blogging one). That way, you also dump TownNews or whoever else is providing your web services and likely overcharging you.

Printing press? If you're a daily of any size, you own your own. Well, now you don't have to pay pressmen, or press maintenance, or buy upgrades.

Those savings are known by all pundits. But, don't forget others.

You no longer need your contract carriers and paying all of them. Related to that, your circulation department gets whacked; assuming you have a paywall, you train a small bit of your old circ folks in the IT basics to manage online subscriptions. And, if you're a non-daily, and you go by mail? Going online avoids the overhead of the Postal Service, along with its increasing deterioration in and cutbacks of service. (That said, the old, largely white small town folks are the ones still most wedded to hardcopy newspapers, and with lesser rates of Internet access, let alone use, then the nation as a whole, so it may well be more than 20 years before the community non-daily paper in hardcopy is dead. But, given the rapidity of change, it may not be.)

And, per an end-of-October mass email by the National Newspaper Association, here's another reason for non-daily as well as daily newspapers to be thinking about an online-only future at some date:

On Capitol Hill, NNA opposes proposals by Sen. Tom Coburn, R-OK, to hand over authority to USPS—to set rates and to change service levels without—pre-review by the Postal Regulatory Commission. Coburn’s proposals are included in a the Postal Reform Act of 2013, jointly proposed by Coburn and Sen. Thomas Carper, D-DE, chairman of the Senate Committee on Homeland Security and Governmental Affairs. NNA believes handing unfettered authority over the government monopoly’s services and rates to the USPS Board of Governors would result in higher rates for Periodicals and more attempts at promoting selected direct mail products over newspaper advertising.

Oh, I'm sure this is a possible outcome.

So, get ready to go online only. And, if this drives the cost of other second-class mail higher yet, and threatens the solvency of the Postal Service? Well, this is just like the situation with the AP. Newspapers as a business don't exist to keep the Postal Service in business.

And, per this post, re Adobe's future plans for cloud-based software, going digital-only lets one cut other overhead, too.

As for places like New Orleans, who saw the loss of a daily print newspaper as a blow to status? Well, if Advance didn't have such crappy websites, this could be spun into entering a brave new world and offering the best in all-digital daily coverage.

That then gets me back to Jeff Bezos.

The Newhouse kiddos at Advance, I think, simply want their "cut" from their family's legacy with the chain. (Having worked at a paper in the Freedom chain when it went into bankruptcy and then came out, I've seen the dynamic at play.)

Bezos has no such attachments, nor does he have such a chain of newspapers to work with. It's just the Washington Post and some Beltway outliers.

Now that a basic paywall is in place, I don't think he plans any major changes for, say, 3-5 years. Rather, he's going to do a LOT of brain work, and when he's ready, he'll make changes so wholesale, all at once, that Advance will look like pikers in contrast.

How well other papers will then emulate him remains to be seen.

To wrap up, here's why I say that the analogy isn't perfect.

Newspapers, at least theoretically, have more of this issue under their control on their side of the street. Detroit can't do anything about Peak Oil. It can appreciate the car market in developing countries, but it has to accept that a thin sliver of that, except in a country both totalitarian and inegalitarian like China, is for SUVs. Barring massive lobbying, it can't undo Obama's CAFE standards tightening, or block higher gas taxes in Europe, etc.

Newspapers? They can accept that Bezos' 20-year deadline is real, especially if they see him treat it as real at the Post. They can ignore people like Ingram and other Gnu Media gurus when they oppose paywalls. If the print paper doesn't quite totally die within 20 years, they can price it like an SUV.

And, Advance, while doing it the wrong way, is still better in some ways than other stopgap measures. From what I've read, pagination hubs in general are a nightmare. (The only way they might work is if more newspaper chains had developed better local or close-area regional hubs in general.) CNHI, now near the end of its fifth full year of a mandatory week of furlough every quarter, continues to blacken its own name and foul its own sheets.

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Meanwhile, I'm looking at "house" ads for National Newspaper Week from the Newspaper Association of America.

Two of them specifically talk about the sports section, which is arguably one of the more problematic spots in hardcopy in daily papers, especially larger ones. There's that massive amount of space demanded for agate for box scores. Then, most papers continue to have a page 2 box that lists sports on TV and radio, something that's not done for science programs, either classical or modern music programs or anything else. And, the biggest dailies, like the Dallas Morning News, have dumped almost all of their high school stuff on paywalled websites now, for that reason, on issue No. 1.

It's also funny in another way, and sad in yet another.

Funny? All the ads that show a newspaper still show the old hardcopy; not a one has a person at a computer, tablet, etc.

Sad? All the ones that have people in them? All white folks.

But, wait. Besides this misplaced nostalgia in ink, there are multiple op-ed columns. Some of them talk about online newspapers, even while ignoring most of the financial issues involved, or else engaging in major spinning. That's OK. National Newspaper Week is about what newspapers do right — local news, sports, features, holding governments to account ....

And, speaking of ...

The columns and op-eds?

Lamar Alexander? Puhleese. ANY U.S. elected official who has not robustly opposed the Patriot Act, NSA spying, etc., has no fucking business writing a column for this.

I am officially disgusted, and appalled that the National Newspaper Association gave him this platform. And, I counted at least halfway to 10, then emailed relevant officials. (And have yet to hear back.)

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Editor and Publisher now has a piece about newspapers and newspaper related companies with new effort to add value to their products.

It's kind of laughable.

One of the five listed companies is AdBlock, which is adding value by floating the idea of an individual user creating a whitelist of certain companies' ads to allow, as long as they'll agree to certain standards. AdBlock's whitelist could ding online advertising even more than the use of it already does. (Speaking of, if you're a user of AdBlock Plus, it now has an extension specifically for Facebook blocking needs.)

Two others are Gatehouse Media and Digital First Media. They both seem to be touting their own versions of something like product-placement-based advertorial content that I can find for free elsewhere. Given that Gatehouse just filed Chapter 11 and portions of Digital First have done so in the past, why does this not surprise me? Also given that a lot of DFM's products are cheap, and that CEO John Paton is a paywall-hater, his advertorial content is likely to be cheap, anyway.

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And, see this new post of mine for how expecting video, "2.0" ideas, or going down the Buzzfeed route, let alone the Daily Mail route, isn't likely to bring serious new money in the traditional newspaper coffers.

Volt doesn't make a lot of sense

That's the word of Consumer Reports, which notes that the model it bought for testing, after a $5K GM markup (which eliminates federal tax breaks — way to go, company that's been on the federal dime!) costs twice as much as a Toyota Prius AND, if driven enough to have to switch to its gas motor, can actually get lower mileage.

The new GM? A lot like the old GM

And, like The Who, we won't be fooled again.

Living off SUVs? Check.

Not that "green"? Check. (See Volt, the hybrid that Chevy said wasn't, and that costs $8K more than the Nissan Leaf.)

Relying on rebates more heavily than Japan? Check.

None of this is surprising to those of us who raised our eyes at the bailout of GM and Chrysler, as well as raising our eyes at Obama's bloviating claims for what this means.

As Mr. Niedermeyer points out, Preznit Kumbaya has gone silent on "green" GM in a big way, now touting only the profit bottom line. That said, Niedermeyer also points out that bottom line is being short-term inflated so GM — I'm sorry, the "new GM" — can get off the government dole.

Of course, that may not happen quite so quickly. Besides, the detritus of old GM, while technically not "bankrupt," has gone to die the death of a thousand limbos.

Timothy Egan's man crush on Obama

Dude, Obama did NOT reform capitalism, despite your claims.

Egan's specifics of his man crush:

The three signature accomplishments of his first two years — a health care law that will make life easier for millions of people, financial reform that attempts to level the playing field with Wall Street, and the $814 billion stimulus package — have all been recast as big government blunders, rejected by the emerging majority

.
The health care law won't provide universal coverage, or that near it, does nothing to regulate health insurance companies and will probably lead to more companies dropping coverage of children rather than extending it to age 26, among other things. Many of its provisions, just like the GOP did in the days of Newt Gingrich's House majority, were written by industry insiders; its implementation is now being overseen by an industry insider.

Financial "reform" isn't. Not really. It was largely gutted by Democrats as well as Republicans - Democrats like Barney Frank and Chuck Schumer who are in thrall to Wall Street. Elizabeth Warnen could have been appointed to oversee the regulatory board, but instead, was just appointed to oversee its being set up.

The stimulus was a blunder. Beyond being too small, as Krugman and many others note, Rahm Emanuel compromised down its size before the time for compromise had come.

And, don't get me started on GM, a fourth point of Egan's. Corporate claims for how high stock will price at IPO time are inflated, and that's just "new GM." Old GM is still bankrupt and theoretically still on the government dime, if push comes to shove.

Why GM isn't really out of bankruptcy

So-called "old GM," now known as Motors Liquidation Company, is dumping the costs of numerous abandoned plants on the hands of local governments. And, using a Treasury loan, not likely to be repaid for years, to finance the cost of trying to dispose of these plants, while still waiting for a bankruptcy reorganization to be approved.

So, got that, bailout boosters? GM isn't out of bankruptcy; just a small part of it.

And, judging by the confusion involved with some shuttered plants, the lackadaisical attitude of new GM, and the sucky economy in Michigan, old GM will be in limbo or worse for some time.

Chevy Volt: An electric lemon

I knew it was priced more than the Nissan Leaf. I knew it was late to market. I knew it was a bit dowdy. What I didn't know, until now (gee, GM, hide this under a bushel basket), is that the miniature gas engine that recharges the battery needs premium fuel. Throw in the fact that the Volt's lease terms compare quite unfavorably to the Leaf, and, you've got problems galore, GM.

China wants to build high-speed rail — in US!

If anything illustrates the United States' collapse into a post-manufacturing nation, per Paul Kennedy's "The Rise and Fall of the Great Powers" and previous post-Renaissance nation-states (and get a CLUE, David Brooks, "emotional experiences" do NOT "sell"), it's the idea that that China now wants to build high-speed rail in the United States.

Beyond our increasing collapse as a manufacturer, including both GM and GE making more money off credit than products (note that GE wants the Chinese company as a partner), this story illustrates so many other things:
1. The gutting of manufacturing companies for stock $$;
2. The refusal of the government to invest in infrastructure;
3. The Chinese using govt money to boost private companies like this;
4. The cluelessness of U.S. conservatives to all this, and the drag-along factor of neoliberals.

‘New’ GM looks a lot like ‘old’ GM II

Beyond making global warming denialist Bob Lutz a centerpiece of its executive team, beyond not being like to actually come out of bankruptcy for a full year or so, remnant GM has many other problems.

First, that touted plan to sell cars on eBay? The online auction site says it has no agreement with GM at this time. And, with Lutz specifically designed to head GM’s marketing department, what will we see on eBay even if there is a deal? Suburbans and Tahoes?

And, if you believe CEO Fritz Henderson that he intends to repay all government loans by 2015, then I have a brand-new 2009 Chevy Volt to sell you.

That’s still not all of GM’s woes. Or, rather, it’s not all the woes of you or me, the U.S. taxpayer. Per my poll on this subject, below and in the right-hand rail, “old” GM may take a number of years to clear bankruptcy.

Meanwhile, it looks like the government hugely overvalued “remnant” GM, judging by putting an equals sign between the government loan amounts and the equity stake percentage, then converting that into stock value.

And, CNN has an explainer on what “remnant” GM will look like.

Free polls from Pollhost.com

How long will a GM bankruptcy take?

Three months Sixth months Nine months Twelve months Eighteen months

GM selling cars on eBay?

If this is another example of “new” GM brilliance, I’ll pass. It’s been done for years, so this is so non-new to be a yawner. Besides, nobody sells new cars on eBay, of those who do it.

So, we will see brand-new GMs next to 2002 Camrys, with about the same sales value, right?

Oh, and that touted plan to sell cars on eBay? The online auction site says it has no agreement with GM at this time. And, with global warming denialist Bob Lutz specifically designated to head GM’s marketing department, what will we see on eBay even if there is a deal? Suburbans and Tahoes?

‘New’ GM sounds a lot like the ‘old’ GM

Per General Motors CEO Fritz Henderson’s news conference, the “new GM” sounds a lot like the old GM. Global warming denialist Bob Lutz “unretiring” to become a vice chairman responsible for creative elements of products, marketing and customer relationships? Yep, that’s got “change” and “creative” written all over it.

Henderson goes on to say this:

“If we don't get this right, nothing else is going to work,” Henderson said at GM's Downtown Detroit headquarters. “Business as usual is over at General Motors.”

Yeah, and your Internet customer interfacing sounds about 10 years out of date, too.

The New York Times has more on old vs. new GM, including things related to MY definition of GM coming fully out of bankruptcy, since the new GM is 61 percent government owned and is not expected to escape that until sometime next year — at earliest.

That then said, CNN has an explainer on what “remnant” GM will look like.

But, even it’s not entirely accurate. It still lists “old” GM’s Hummer division as a tentative sale when the Chinese government has pretty much put the kibosh on it.

Oh, and that touted plan to sell cars on eBay? The online auction site says it has no agreement with GM at this time. And, with Lutz specifically designed to head GM’s marketing department, what will we see on eBay even if there is a deal? Suburbans and Tahoes?

Things like that are another reason why I have a pessimistic personal answer on my poll.

I have yet more on old vs. new GM here.

Per my poll in the right-hand rail, and below, GM is not out of bankruptcy per my terms, as a taxpayer of the United States. Only when all of old GM is sold to private parties and the government of the United States is officially off the hook for any part of GM, “old” or “new,” does it cross the finish line I determined.

Free polls from Pollhost.com

How long will a GM bankruptcy take?

Three months Sixth months Nine months Twelve months Eighteen months

GM clearing bankruptcy – on paper

Update, July 11: I have yet more on old vs. new GM here, and here.

A federal bankruptcy court has officially OKed an old GM-new GM split for the formerly Big Three carmaker General Motors.

But, per my poll in the right-hand rail, GM is not out of bankruptcy per my terms, as a taxpayer of the United States. Only when all of old GM is sold to private parties and the government of the United States is officially off the hook for any part of GM, “old” or “new,” does it cross the finish line I determined.

The New York Times has more on old vs. new GM, including things related to MY definition of GM coming fully out of bankruptcy, since the new GM is 61 percent government owned and is not expected to escape that until sometime next year — at earliest.

Update:Well, per CEO Fritz Henderson’s news conference, the “new GM” sounds a lot like the old GM. Global warming denialist Bob Lutz “unretiring” to become a vice chairman responsible for creative elements of products, marketing and customer relationships? Yep, that’s got “change” and “creative” written all over it.

Oh, and that touted plan to sell cars on eBay? The online auction site says it has no agreement with GM at this time. And, with Lutz specifically designed to head GM’s marketing department, what will we see on eBay even if there is a deal? Suburbans and Tahoes?

Will GM clear bankruptcy in just 90 days?

First, the General has to go through the process of being separated into “good General” and “bad General,” the process that big, bad hypocritical Treasury Secretary Tim Geithner refused to consider for his banking best buds. (One more sign, per Paul Kennedy’s “Rise and Fall of the Great Powers,” that the U.S. is now a financial nation, not an industrial one, and therefore on the downslope.)

Next, there’s the “little” hurdle of getting some sucker enterprising business to buy “bad GM.” Of course, if no enterprising business is out there, President Obama may decide to go the sucker U.S. taxpayer route.

Meanwhile, you have bullshit public relations like this:

“It’s going to be a much smaller, leaner company but the industry in general is going to be a far more profitable industry with all the capacity that's been removed,” said David Cole, chairman of Michigan's Center for Automotive Research.

GM has the opportunity to “be profitable really quickly” once auto sales recover and has a solid plan and strong product portfolio, Cole said.

Solid plan? GM has done everything BUT that for 35 years now, since the first oil embargo. (Actually, before that, but, who’s counting?)

Strong portfolio? You mean like the Volt that it’s too broke to roll out? Or the Volt that probably would get swamped if it were rolled out? Or the pseudo-hybrid SUVs that some auto writers continue to tout?

Beyond that, though, Cole admits that “Calm Sea and Prosperous Voyage” isn’t playing on the stereo:

“The way they are managing this, this is probably going to be very clean and neat but there is a finite risk that it goes out of control,” Cole told AFP. “If one or a few of the key suppliers collapse, then everything is over with and we're in for a really serious problem.”

Really?

And, although much of David Brooks’ newest column is just stupid, he’s right about how GM’s corporate culture could make the bankruptcy process worse.

That said, per my poll on the issue, and contra the caveats here, I won’t personally consider GM to have “cleared” bankruptcy until the “bad GM” is sold – to the private sector.

So, when you hear Obama claim GM’s restructuring plan is “full of promise,” take that with a whole shaker of salt.

Free polls from Pollhost.com

How long will a GM bankruptcy take? (As of June 1, 2009)

Three mths Six mths Nine mths Twelve mths Eighteen mths

GM to whack 1,200 dealerships ASAP

The Morning News claims Texas may not be as badly hurt as some states, due to Texas’ size, the large territories of some dealers and the strong sales here. That’ in context of GM’s ultimate plan to whack 2,600 dealers by the end of next year.

OTOH, as central and east Texas’ larger cities develop more exurbs connected to them, if tenuously, some of those dealers may be big enough to push some small-town dealers out.

GM could shrink to 10 pct of peak size

To avoid being dismembered, GM could wind up with just 38,000 employees, or a little less than one-tenth of what it had at peak employment in 1970.

It all won’t matter, though, if the General goes bankrupt without a structured bankruptcy. That looks more and more likely. Bondholders simply won’t sign on the bottom line; reportedly, many have credit-default swap “bets” against GM’s future, anyway.

At the same time, the grousing by both bondholders and GM dealers who may get shut down indicates they still don’t get it.

For all we know, GM or its remnants may, by no later than 2015, have no more employees than Toyota does. In Toyota’s U.S. operations alone.

GM, trying to get out of hole, still using shovel

Ahh, brilliance, thy name is General Motors. In an attempt to get more people to buy cars, GMAC will start again making loans to subprime buyers.

So, you’re going to try to sell cars to people who may already be upside down on home loans, or else are upside down on the loans for cars they want to trade in and which will be worth nothing?

Obama’s federal-level version of what Texas does, and Europe, the clunker buy-up, I’m OK with. But, GMAC trying to do it on a private dime without such a program?

More insanity.

‘Controlled’ GM bankruptcy could be uncontrolled disaster

Word is that the Obama Administration is looking at driving GM into a controlled bankruptcy to then split the company into two parts, with the more desirable parts being sold to a government-financed company.

Sounds good at first, no?

But…

Who decides what is “more desirable”? Who prices this stuff?

If you’re thinking this sounds like Treasury Secretary Tim Geithner’s TALF idea, well, you might not be alone.

Theoretically, it should be easier to choose winners and losers within a traditional manufacturing industry, but who knows?

Will Obama intervention let GM off hook?

That’s the worry of David Brooks

The most likely outcome, sad to say, is some semiserious restructuring plan, with or without court involvement, to be followed by long-term government intervention and backdoor subsidies forever. That will amount to the world’s most expensive jobs program. It will preserve the overcapacity in the market, create zombie companies and thus hurt Ford.

I’m not as alarmist as Brooks, but, let’s just say this opera isn’t 100 percent over yet.

Right now, I’d put the odds of any GM bankruptcy at even. Within in that, I’ll give 1-2 on a “very quick rinse” of no more than 30 days, even on a “quick rinse” of 30-60 days, and 1-6 on a real, actual bankruptcy.

Obama beats up GM for faux populism

That's the argument the Detroit News strenuously makes about Obama forcing out Rick Wagoner as GM CEO, and putting the company on the clock, so to speak. And, the paper has some good points, above all, wondering if Obama is not creating a deliberate distraction from Wall Street issues.

He can portray himself as being tough on the corporate executives who are ruining America, without having to draw blood from the bankers.

That is at least possible, Obama killing two birds with one stone.

Details of the Obama ‘nyet’ to GM emerge

Besides dinging GM, and Chrysler, for being too reliant on trucks and SUVs, Obama Administration documents to the two automakers fault their vehicle quality, among other things.

It’s also clear that, with publicly-traded GM, the administration is making clear this is a wake-up call to bondholders to give more in negotiations with GM.

Also, more people besides CEO Rick Wagoner will be leaving GM, too.

As for the UAW, though not specifically mentioned, it’s going to have to wake up on both car quality and vehicle size mix, too.

That said, the Detroit News unloads with both op-ed barrels on this issue. And, they have some good points, above all, wondering if Obama is not creating a deliberate distraction from Wall Street issues.

He can portray himself as being tough on the corporate executives who are ruining America, without having to draw blood from the bankers.

That is at least possible, Obama killing two birds with one stone.

GM stupidity alone is death-deserving

GM, I guess, just can’t help being GM, management idiocy and all, as it cannibalizes itself in a last-gasp attempt to get gussied up for either a structured bankruptcy, more sucking at the government teat, or a free-fall funeral in style.

For example –

Phasing out Saturn, GM’s red-headed stepchild? That shows, in a capsule, or under a microscope, the history of GM’s short-sightedness with the once free-standing car line. The GM brand name that probably STILL has the most customer loyalty of any GM nameplate, or at least, of any GM nameplate below Cadillac, and one individual car, the Corvette.

That all said, the Wall Street Journal notes some Saturn dealers are trying to keep their brand alive by selling Indian or Chinese cars under that nameplate.

Carmakers in both those countries are surely salivating at the idea.

And, if you’ll look at the WSJ graphic, it’s perplexing as to why GM would ax Saturn; it’s sales, like all carmakers not named Hyundai, are off, but they’re better than any other GM division except Chevy. And, outside the aforementioned Corvette, and trucks, which tend to have higher brand loyalty, is there any Chevy product which jumps out at you, or the general public?

This looks like the EV-1 all over.

Instead, kill GMC Trucks. Yes, trucks are a big moneymaker, still, but irrationalism of a nameplate aside, it is a tweaked-out Chevy, for doorknob’s sake! Kill Pontiac rather than just cutting it back. Tweak Buick more. Throw Pontiac's edgier vehicles to Saturn.

But, noooo ...

So, maybe we need to kill GM off. The government pension plan insurance hit would probably be less than the bailout hit. As first creditor, take GM physical plant and resell it. Use the bankruptcy for further pension plan reform.