It would be easy to dismiss today’s rant (however spot-on it might be) by New York Times columnist Thomas Friedman as yet another ideological tirade against the U.S. automobile industry. But based on the bad news coming out of shopping-mall owner General Growth Properties [GGP], it is no wonder Friedman is feeling crankier than usual. That’s because the author’s wife, Ann (née Bucksbaum), is an heir to the General Growth fortune. In the past year, the couple—who live in an 11,400-square-foot mansion in Bethesda, Maryland—have watched helplessly as General Growth stock has fallen 99 percent, from a high of $51 to a recent 35 cents a share. The assorted Bucksbaum family trusts, once worth a combined $3.6 billion, are now worth less than $25 million.
Now, Tom, imagine what it would be like without the $25 million you have remaining, and you will fully understand how the vast majority of Americans feel right now. Also, it will put a completely new lens on the bailouts of the past few months. You might even find yourself muttering “We are bailing out who? What? WTF?” several times.
Crusty Dem
I was just about to post this as OT.
This is testing whether there is a level of schadenfreude that is fatal. I’m smiling ear-to-fu**in’-ear.
Laura W
Dang. That was one Early Bird dinner party. Was no booze served?
Unless you’re live blogging from your host’s potty.
Semanticleo
In fairness to Friedman, he mea culpa’d on the runup to the war.
He’s a semi-honest broker…….
donovong
My heart bleeds….
John Cole
@Laura W: Turned out to be just a happy hour at the local pub. Had a few glasses of wine and shared a bar pizza and GTFO.
Comrade Reverend Stuck
@Semanticleo:
Not only that, He declared himself a fool that was going to quit inflicting the world with his scratchings. Guess he was just kidding. Too bad.
jenniebee
Let me guess – if we just give GM 6 more months, they’ll turn a corner?
John Cole
@jenniebee: Title of the post changed.
kommrade jakevich
Wait. My violin is around here somewhere. Shit, where’s my magnifying glass?
jenniebee
Actually, I saw Friedman on Hardball the other night, and he was talking about this article. It was weird, he took this big swipe at unions, and then he and Tweety settled down to agree that the real problem was that GM has made some pretty shitty management decisions.
I just can’t stand blaming the fucked up POS American auto industry on the fact that unions have managed to put their foot down and demand a decent living for their members. Detroit has been all short-term tactics and no strategy beyond buying pols and bashing unions for decades now. It’s not unions’ fault that Detroit bet the farm against the Prius and on the SUV. They’ve completely forgotten that Henry Ford got his start by paying his employees three times the median wage at the time, on the theory that by paying his people well, he was building a domestic market for his product. And it’s a piss-poor excuse, quite frankly, to whine that the German auto industry is kicking your ass because unions are holding you back.
The Pale Scot
Now all that needs to be done is to replace him with a immigrant so we can see how well he does at "reinventing himself to become a member of the new economy." Man never met a job that couldn’t be shipped overseas.
Dennis - SGMM
It’s also pretty piss-poor to cry about the German auto industry not having to pay health care costs when, for years, you’ve been bankrolling the U.S. Chamber of Commerce and other organizations that fought UHC tooth and nail.
Xecklothxayyquou Gilchrist
@The Pale Scot: Now all that needs to be done is to replace him with a immigrant so we can see how well he does at "reinventing himself to become a member of the new economy." Man never met a job that couldn’t be shipped overseas.
In that case, they should hire somebody in India and have them telecommute.
Ed Marshall
It was actually a pretty good article, and I hate Friedman. Those are decent ideas.
TheHatOnMyCat
Word up.
At least somebody is in touch with reality around here.
I’m Bill Frist, and I do NOT approve this message.
Tattoosydney
Not entirely OT…
I found this article in the Sydney Morning Herald interesting…
It describes a talk given to the Australian Press Club by Ken Henry, the Head of Australian Commonwealth Treasury.
Dennis - SGMM
This still just floors me. The notion that everything was fine and then suddenly "Gawdamighty, we need 700 billion dollars, stat!" is just beyond my comprehension. I vote for connivance.
jenniebee
Well the auto industry is so big that, if the big three go down, 1 in 6 of American jobs goes with them. But I really don’t see why a bailout shouldn’t include measures to give the big three some real domestic competition. There are some great electric car companies up and coming in the silicon valley, but the big three dinosaurs have the distributorships all locked up to stop competition from getting a foothold.
If a judge could break up Ma Bell, I don’t see why Congress can’t break up GM into its separate divisions. Time to make room for Tucker, a man and his dream.
Crusty Dem
For the last 15 years, my dream job has been CEO of GM (or Ford or Chrysler). The management of the US auto makers has been pathetic for decades, at least since Iaccoca (and he was no genius), their only goal has been to expand their profits by leveraging credit and government regulations. It’s impossible to be more hostile to innovation that these sons of bitches. Throw in their complete idiocy of opposing UHC, which is exactly what has screwed them, and it’s a trifecta of stupidity. I can honestly state that the GOP has been run better than the US auto makers over the last 20 years.
And of course, note that, as always, Friedman had damn little to say about this until it was un-fucking-avoidable. Friedman is the most annoying, worthless shitbrain on the planet. He’s the idiot’s version of a genius; he spends great effort making the challenges we face easy to understand, but he dumbs down the potential solutions to the point where they don’t make any sense at all. If I have to hear him explain that we can solve our energy problems if only we can get more Americans in their garages working on the problem, I’m going to have to strangle him in his sleep. The reason no one has solved our energy problems in their garage is because it’s A FUCKING HARD PROBLEM, DOUCHEBAG!! The solutions are all expensive and difficult (although oddly, much easier and cheaper than spending 12 Friedman Units in Iraq).
But I guess it’s all ok, because the world is flat, if only that dumb son of a bitch would sail off the edge of it.
gbear
Thank you for making that point. I wish Freidman would get his nose rubbed in it somehow. Fucking rich clueless pampered bastards. Eat em’, I say.
bago
A billion here and a billion there, and soon you’re talking real money.
ninerdave
…and Friedmann, when he can’t cry into his 25 year old single malt, will have to use Pabst like the rest of us.
Brian J
It may be part of the problem, but it looks like it’s far from the only problem.
I just wonder, if the legacy costs are such a big problem, perhaps the federal government can assume them and then not offer any other financial support.
Chet
He declared himself a fool that was going to quit inflicting the world with his scratchings.
Apparently you checked neither the date nor the URL when you read that parody.
Comrade Stuck
@Chet:
Nope, I didn’t .Oh well. Got the link?
justme
Linky for Yesmen Times parody.
IIRC, the legacy costs started being a huge problem right around the time the management decided that the pension funds and such didn’t really need to be fully funded, and figured that that money could be used more productively as, say, executive compensation. Now, of course, as there isn’t the dough in the bank, it’s a problem.
UHC is about the only thing that might save them. Oh the irony.
Oh, and fuck Friedman. Waaahhh. Couldn’t happen to a nicer turd.
Crusty Dem
Seriously OT, I was just reading BTD’s brief post of buzzing excitement over Obama potentially picking Hillary as his Secretary of State. Utilizing BTD’s own standards, I find this highly objectionable, and potentially disasterous. During the campaign, Obama consistently attacked those who supported going to war in Iraq, a position with which many of us very strongly agreed. Picking Sen Hillary Clinton, who gave a speech demanding the passage of the AUMF, which led directly to the Iraq war, as his secretary of state demonstrates that Obama actually does support the Iraq war. I, for one, think the entire blogosphere should stand up to Obama and shout "NO to Hillary as Secretary of State!!".
Most amusingly, it now appears Obama may instead select Richardson, which would be a "slap in the face", particularly since he is "Dumber than a sack of hammers" (actually quote of BTD discussing Bill Richardson). Bring out the PUMA’s, baby!!!
Church Lady
It really is difficult trying to figure out why Detroit cannot seem to produce cars profitably. There are numerous foreign car manufacturers (Mercedes, BMW, Nissan, Toyota, etc.) operating here in the states that don’t seem to be in the same financial trouble as the Big 3.
While Detroit has produced a lot of gas guzzlers, they do also make smaller cars. Unfortunately, those just didn’t seem to sell as well as ones produced by their foreign competition. Also, don’t forget – Americans seem to prefer big cars (when gas isn’t too expensive), and Detroit was producing what the consumer was demanding for many, many years.
Although I have no doubt that management probably screwed up royally in some fashion, it does seem to be the general consensus among those seemingly in the know that UAW demands over the years have also played a large part in the current troubles. If your costs to produce something run around $73/hr in wages and benefits and your competition produces their product for around $48/hr in wages and benefits, the playing ground doesn’t seem very level.
What’s the answer? I don’t think anyone really knows. Yes, bankruptcy would have a ripple effect throughout the economy, causing financial pain to tens of thousands, but would giving Detroit money do anything other than delay the inevitable at great taxpayer expense?
CIRCVS MAXIMVS MMVIII
Foreign cars tend to break down less, usually last much longer and aren’t ugly. Oh, and they usually have much better gas mileage too.
I won’t even look at an American car anymore (I personally swear by Mitsubishi products myself). The last American car I had was back in 1989.
Make cars that are more in line with the quality of cars coming from foreign car producers.
David Schraub
No shots at Mr. Friedman’s wife. She’s an unbelievably nice person — so Iowan it’s almost intimidating when you come across it in Maryland.
MH
The next six months will be absolutely key to reviving Mr. Friedman’s fortunes.
Phoenician in a time of Romans
Foreign cars tend to break down less, usually last much longer and aren’t ugly. Oh, and they usually have much better gas mileage too.
Also, you might want to consider comparative advantage as well as absolute advantage.
slightly_peeved
A video that explains some of the problems with US cars sent to the English market:
Top Gear – Cadillac CTS
I realize the comments about build quality are pretty insubstantial, and I apologise in advance for Jeremy Clarkson’s continual use of US stereotypes (he does that to everyone, including the English). The reasons that US cars do badly in the UK, let alone Europe, are still valid: Cadillac are attempting to sell a left-hand drive car in Europe for 16,000 pounds more than a right-hand drive car with better handling, better looks for the European market and the same engine. And the fact that the Cadillac handles well is a surprise to everybody concerned. There’s a reason for that.
(Side note: the Vauxhall the Cadillac is compared with at the end of the video is available in the US as the Pontiac G8. Australia may not make many cars, but they have the good sense to make them in the appropriate drive configuration for the country they’re being sold in).
Even if the US start making cars with build quality and handling comparable to European cars, it will take a while for opinions in the rest of the world to change. Until then, they’re going to have to undercut on price.
dewberry
I realize that this is the American dream, to live in the most humongous house you can manage, but it slays me that you would then run around decrying climate change created by other people.
ksmiami
GGP was so overleveraged and the Buxbaum brothers listened to their aggressive CFO who really screwed the pooch without recourse. The good news is that their properties are VERY valuable and so bankruptcy filing will probably work out in the long run. But it is funny to think of Friedman as one of us commoners!
Phoenician in a time of Romans
So Friedman, the guru for modern capitalism, turns out to be… an aristocrat…?
Don’t worry about the global financial crisis. I have it on good authority from a Pakistani taxi-driver that there’s an endless supply of billionaire heirs and heiresses to marry.
JGabriel
Vanity Fair:
Another lesson in the need for stock portfolio diversity.
Diversify, people, diversify!
.
El Cruzado
This needs an update for the XXIst century.
"A trillion here, a trillion there, and soon you’re talking real money"
Better.
maxbaer (not the original)
It’s off 99%. Thanks, that makes me feel better about my portfolio. Of course, I’d feel even better if it was at $25 million.
Observer
Bankruptcy means restructuring, something Detroit has needed for thirty years.
These companies won’t go away in restructuring.
Giving their executives money just means the golden parachute gets that much shinier. We’re seeing that right now with the financials. (At least Paulson finally came clean about his real goals)
If Detroit’s real problem is cash burn and liquidity than restructuring is exactly what they’d be seeking. That their first reflex is to beg for money shows the real motivation: personal greed. And the workers / taxpayers can fend for themselves.