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The [Tuesday] Papers

Several readers thought I made a bad analogy yesterday when I suggested that folks wouldn't shy away from buying cars from American automakers if those automakers happened to be re-organizing themselves in bankruptcy court. After all, I wrote, who among us hasn't flown on an airlines in bankruptcy?

The readers who called me out all made this point: an airline flight is a one-time deal, a very short-term relationship with a company requiring no further commitment. Purchasing an automobile, on the other hand, generally requires that you will be able to act on a warranty in the future and, for example, that parts will be available when needed. If a company's longevity falls into question because not everyone emerging from bankruptcy survives, sales may fall.

And the truth is, financially strong companies inspire confidence.

Point taken. I tossed off my point without really thinking it through. I'm still undecided about an automaker bailout, mainly because I haven't had the time and energy to research the issue sufficiently and also because the practical answer - yes, at least to get us through the short-term - is so offensive.

The car companies - like newspapers - have been in trouble ever since I can remember. Don't forget, America's manufacturing base started eroding in the 1970s. Bruce Springsteen's "My Hometown" was recorded in 1983 ("These jobs are going, boys, and they ain't comin' back" referred to a textile mill in particular, but factory jobs in general ) and Roger & Me was released in 1989.

As far as I can tell, the fault lies with three parties. First, greedy and recalcitrant management utterly unable to innovate. Second, greedy and recalcitrant unions utterly unwilling to innovate. Third, politicians like the Family Dingell and "free-marketers" whose stance on trade puts American companies on an uneven playing field - not because they have to abide by silly things like living wages and environmental and safety standards, but because our trading partners don't.

Anyway, I'm still not convinced consumers will be fearful of auto companies in bankruptcy. Deals may abound, and I don't see the supply of parts needed to service autos from those companies disappearing from the planet. (And plane tickets are often bought in advance, with confidence an airline will still be around, as well as the additional safety concern that a plane in bankruptcy might fall out of the sky because it can't afford nuts and bolts anymore.) But it's a mess, and you have to wonder if a Gore administration would have nudged us further down Bill Clinton's "bridge to the 21st century" and in some way staved this off.

Maybe that's a role Gore can still play: energy czar, including the remaking of our auto industry. Many pundits now are talking up the opportunity Barack Obama has to make a new New Deal that is a Green Deal. Perhaps.

In the meantime, we'll probably have to bite the bullet to keep the auto industry on life support. But it's not clear that that is really doing anyone any favors in the long run.

Get One Free
The Sun-Times republishes a small portion of a SouthtownStar story today about Mancari's Chrysler-Jeep selling slightly used PT Cruisers for $1 to anyone paying full sticker price for a new Pacifica SUV.

Sounds like a great deal, right?

I mean, why wouldn't you? You could turn around and sell that PT Cruiser for a nice profit, right?

Well, once you learn more in the full SouthtownStar story, maybe not.

First of all, you have to calculate how much more money you are paying for the Pacifica by agreeing to the sticker price (more than $39,000) instead of the negotiated price you would usually pay. And then you have to figure in that the PT Cruisers available were previously used as rentals or driven by Chrysler employees; they normally retail for about $12,000.

So the gap is closing.

Let's say you end up paying $40,001 for both vehicles. Now let's say that you could get the Pacifica under normal circumstances for, say, $32,000. And the PT Cruiser for, say, $8,000. See what I mean?

Then it turns out the the car dealer, Frank Mancari, only had five Pacificas to put toward the promotion and expected those to be gone within two days, though he said he would make more available at another location.

"While Mancari said he's losing money on the deal, it has brought him plenty of publicity," the SouthtownStar reports.

I wonder if the amount he's losing when all is said and done equals how much he would have had to spend on advertising if the newspapers hadn't given it to him for free.

CSI: Crime Stats
"Police: Bad Economy May Breed Crime."

May?

Every study known to man shows a correlation between the economy, crime and poverty. It's a little hard to understand, I know, but good-paying jobs and optimism about future opportunity tends to dampen the motivations of many a criminal.

Inside the Outsource
"In 2005, 40 aldermen co-signed an ultimately unsuccessful ordinance that would have required an analysis of financial benefits - and Council approval - before the jobs of any more city employees were farmed out to private contractors," the Sun-Times notes.

So at least 16 aldermen backed down at the mayor's behest.

Maybe that's what Berny Stone really was referring to when he said "Nobody has any balls around here."

The Beachwood Tip Line: A bailout for your mind.




Permalink

Posted on November 18, 2008


MUSIC - The Week In Chicago Rock.
TV - Trump FCC Opens Corporate Media Merger Floodgates.
POLITICS - Offshore Leaks Database.
SPORTS - Beachwood Radio: Broken Bears; Cubs' 7-Year Itch.

BOOKS - Inside The Book Of The Dead.

PEOPLE PLACES & THINGS - Lakes, Cheese & You.


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