My Suggested Chrysler Ad

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The Copy Reads:

Mediocrity Reborn

Why bother to buy our cars?
You already bought the company.

Make no mistake.
We express sincere gratitude to the American taxpayer.

Your largess, with a little arm twisting by the President,
means it’s business as usual from one of Detroit’s Big Three.

Ditching our securitized debt, dropping Republican dealers
and generally blowing off any obligation we didn’t want to honor,
we are now free to return to the same bad habits
that got us into this mess to begin with.

Our factories are reopening, anxious to slap together
the poorly built cars and trucks that puts us at the bottom
of every quality survey ever conducted.

The same tired models that you wouldn't buy before,
will start languishing again on your local Chrysler dealer lots.

But there’s a difference this time.
With the UAW covering our back, Uncle Sam will continue
to fund our losses for years to come. Or someone else gets elected.

You may choose not to purchase a Chrysler product in the future.
But you’ll have no choice paying for it again and again.

Chrysler Group
Driving American Debt

Here We Go Again

At the start of 2008, gasoline prices were on their steady climb to $4.00 a gallon. Car buyers were clamoring for fuel efficient automobiles. The mad dash for 30 mpg or more was the mantra shoppers embraced. Hybrids sold like hotcakes. Toyota couldn't keep a Prius on the lot. Most people thought the era of cheap petrol was over.

It is.

Although we may witness a temporary decline in barrel prices now and again, the price of gasoline will return to the $4 gallon because oil producing nations in the Middle East, Russia, Mexico and Venezuela, to name a few, need the higher prices to fund their countries. And Washington will do nothing to boost domestic production.

You need look no further than the pump for evidence. In the last few months, crude oil prices have more than doubled — to $72 a barrel from $33.55. Gasoline prices have surged 62 percent to $2.62 a gallon from $1.62. After just a few months of relief at the pump, cheap gasoline is disappearing.

But what did people do when prices went down by January of 2009? They bought big. The mad dash became a major retreat. And the response? General Motors Corp. pulled the plug the hybrid-electric version of the Chevrolet Malibu sedan for the 2010 model year due to slow sales that led to a backlog of inventory of the vehicles on dealer lots. May 2009 sales of the Toyota Prius were off 30.2 percent from a year ago, to 10,091.

Where is the sense to it all? As a car buyer in June of 2009, do you really expect gasoline prices to remain low for the next ten years - the average age most Americans keep their automobiles before trading? If you aren't willing to educate yourself to the oil commodity market, than at least exert some old-fashioned common sense. Gas won't be cheap in the future. How could it be?

Investor's Business Daily had this to say (June 11, 2009) about current rising prices and what Washington is doing about it: "In a classic case of the doubletalk we've all become familiar with, the administration is moving in exactly the opposite direction. Its cap-and-trade plan punishes those who produce and use domestic energy. It has proposed eliminating all tax incentives to produce oil and gas, and has slapped a 13% excise tax on all energy coming from the Gulf of Mexico."

"Interior Secretary Ken Salazar has canceled 77 oil and gas leases that were assigned to Utah. He stopped plans to lease oil shale rights in five Western states estimated to hold between 1 trillion and 2 trillion (with a "t") barrels of recoverable oil. The Obama administration has decided not to issue leases for gas well drilling on the Roan Plateau in Colorado."

Ok, so not surprisingly, Washington will do the wrong thing. Where are we headed?

"I wouldn't be surprised if we're testing $80 in a week or two," said one oil analyst, while BP's chief executive, Tony Hayward, questioned whether $90 could be the "right" value.

Kuwait's oil minister, Sheikh Ahmad al-Abdullah al-Sabah, put some of the rise to signs of recovery in Asia, but warned that Opec would not raise supply at current oil prices unless "it reached $100", he said.

Alexei Miller, chairman of the Russian energy group Gazprom, raised the stakes further when he reiterated last year's estimates of $250 a barrel. "This forecast has not become reality yet, given that the [credit] crisis gained momentum and exerted a powerful impact on the global energy market. But does this mean that our forecast was unrealistic? Not at all."

So there you have it folks. While those about you continue to exercise bad decisions, you needn't. Just imagine $4 a gallon gas if you are shopping for a new car in the next few months. It won't take your imagination in the near future.

Supreme Court to Drive Decisions

It was bound to happen. A secured bond holder in Chrysler is contesting the sale of "good" assets to Fiat and aims to block the transaction. Indiana pension funds, which contains retirement savings for the state's teachers (among others), filed papers Saturday (June 6) seeking a Supreme Court review allowing the sale. The funds have asked Justice Ruth Bader Ginsburg, who handles emergency requests, for an order blocking the scheduled transfer of assets on Monday, June 8 to the Italian automaker until the high court decides whether to hear the funds’ appeal.

Ginsburg's decision could seriously complicate the "fast track" bankruptcies of Chrysler and GM. If she deems the claim worthy of consideration, it will derail the reorganization process and could potentially throw both car companies into liquidation instead. We may well know the outcome before the end of today.

Let's analyze the suit. Indiana pension funds lent Chrysler $42.5 million. They want their money back! They will get nothing if the deal with Fiat goes through. They may not get much more in liquidation. The funds suit, however, is hedging on a technicality in the law that may not pass muster: Indiana pension funds contend the Fiat deal is a misuse of the Troubled Asset Relief Program (TARP), which they say was intended for financial institutions, not car makers.

What does TARP allow? It provides United States Department of the Treasury to purchase or insure up to $700 billion of "troubled" assets. "Troubled assets" are defined as "(A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and (B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress." No mention of car makers there!

That would appear to favor the funds. But here's the fly in the ointment. On December 19, 2008, President Bush used his executive authority to declare that TARP funds may be spent on any program he personally deems necessary to avert a financial crisis, and declared Section 102 to be nonbinding. This allowed Bush to extend the use of TARP funds to support the auto industry, a move applauded by the United Auto Workers.

That the Act’s criteria for participation remains very unclear has been recognized from the outset of TARP. Yet, there is a provision for a judicial review of Treasury activity. Specifically, Treasury actions may be held unlawful if they involve an abuse of discretion, or are found to be “arbitrary, capricious . . . or not in accordance with law.”

My prediction? Indiana pension funds will lose. The political momentum for both Chrysler and GM's fast track bankruptcy will not be hindered by any one force: judicial, legislative or executive. The cards have already been dealt by a corrupt dealer: the U.S Government. The rule of law was trounced way before this suit when the bondholder's rights were thrown under the bus at the outset of the Chrysler, and later GM, bankruptcy. Strong-armed by the thugs in the Fed, those sweet little old retired teachers in the mid-west understood math and science, but didn't bother to learn the history of Washington politics. Their loss.

Tweeble

Bird Droppings are No Laughing Matter

You might find "Tweeble" a humorous, even innocent, cartoon. But bird droppings are one of the most serious setbacks to car-cleaning enthusiasts the world over. Here's why.

Bird poop is literally a chemical cocktail that can seriously damage automobile finishes. Composed of fruit acids, bacteria, urine condensed to white crystals, and intestinal parasites, this deadly combination can begin etching a clear coat finish in as little as 15 seconds! If not promptly dealt with, the harm can be permanent.

There are several suggestions that car-cleaning connoisseurs follow to minimize the catastrophic consequences of a bird dropping incident.

When returning from a drive, even a short jaunt, inspect the car completely for any evidence of "fowl" play. Birds can be quick and crafty. Pay particular attention to the center of the car's roof, as many novice inspectors, especially short ones, overlook this desirable target. A mirror attached to a pole, often sold to airport security for bomb-searching on the underside of trucks, is a perfect addition for the height-impaired. If you discover a dropping, apply copious amounts of cool water from a spray bottle. The object is to soften the stool and prepare it for removal. Follow with a gentle wipe of a lint-free cloth. Never use paper towels as they can scratch the surface of the finish. Saturate and repeat the process until all visible contaminants are removed. You are now prepared for Step Two, neutralization. Many amateurs believe that simply removing the stool is sufficient, but the Ph levels can remain destructively high. One of my favorite neutralization tools is Griot's Car Care "Speed Shine" in a spray bottle. Simply apply to the contaminated area and carefully wipe. Presto, you are good to go.

Even the most seasoned of us has had a bird dropping experience while driving. More terrifying than a high-speed tire blowout, this circumstance requires absolute composure and complete concentration. Just like any accident situation, immediately remove your foot from the accelerator and began to coast towards the right shoulder of the road, or if you are lucky, an immediate exit from an interstate. While time is of the essence, the welfare of passengers takes precedence. Once safely out of traffic's way, assess the situation. If the hit was to the windshield, a very common occurrence, DO NOT apply the wiper wash. That will only spread the contaminant. While the steps outlined above are the preferred antidote, I have witnessed situations where a bird dropping removal kit was absent from the trunk and you must innovate on your own. Purel anti-bacterial waterless hand sanitizer, sodas or beer, even you own urine or saliva will do in a pinch for the stool-softening procedure. Fast food napkins, newspaper, or a sock or t-shirt from your own person can substitute for a lint-free cloth. A thorough and immediate car wash is recommended following the incident.

Of course, there will always be the occasional carpet-bombing of a vehicle. This is a near purposeful vendetta against car owners and, while rare, is a reminder of nature's ferocity and awe. I would like to share with you a picture (above) taken shorty after such an attack. The owner of the Chrysler minivan, Mr. A. Douglas Allison, brought the van to me for an analysis.

I must say I was stumped at first, but The Bristol Stool Scale (a handy reference guide for any bird-dropping expert) identified the culprit as a Laughing Gull (inset). These intelligent birds have an aggressive side to their personality. Mr. Allison's vehicle is a testament to that, as well as to this bird's repeated assaults. Unfortunately, the damage done occurred 24 hours earlier and the minivan will remain forever disfigured. It is a lesson learned for all.

So remember, until we live in a bird-free world, get those droppings addressed as soon as possible... it's no laughing matter.

High Hopes for Higher Milage

In yet another remarkable undertaking for change, Obama announced this week stringent new fuel and emissions requirements that mandate a Corporate Average Fuel Economy (CAFE) of 36 mpg within the next 7 years. Just more cheery news for our beleaguered domestic automobile manufacturers of which 2/3rds are on the government dole. Perhaps that explains the forced smiles and phoney congratulations from the heads of Ford, GM and Chrysler at the announcement, instead of their customary pre-bailout whining that the goal is unreachable and expensive with current technology (which it is).

To achieve the nearly 10 mile per gallon improvement, look for a drastic reengineering of the cars and trucks sold in the United States. Passenger automobiles will become lighter, smaller and much less powerful. They will cost anywhere from $1,300 (Obama estimate) to $3,000 (industry estimate) more than a comparable compact today (sans inflation). We may save the environment, but more people will die on our highways every year. Small cars are still at a disadvantage over larger ones in a collision.

You will read, with great hand-wringing and trepidation in the auto press, that there is a more sensible approach to gains in fuel utilization "if only we had a coherent national energy policy". Wake up! The CAFE requirement, however bone-headed, is our policy and has been since 1975. Instead of working to stabilize gasoline prices and moderate consumption with a rational, measured approach to volatile commodities, we will do the exact opposite, control the individuals and regulate the machinery that consume the commodity. That this strategy of governmental-contrived manipulation will solve what a free market economy could have done on it's own is a testament to the fact that people never learn (Sorry, it must be my pesky history degree rearing its ugly head again).

You might argue what difference does it make if the end result is the same. But which would you rather have, stable gas prices via taxes at (a hypothetical) $4 a gallon and buy what you want, or drive a government-designed clown car and watch gasoline prices gyrate between heaven and hell? Oops, sorry, there's that word "choice" again.

Don't get me wrong. As a nation I believe respect for our environment and conservation of resources is both necessary and practical. That's just common sense. That same common sense could also allow auto manufactures to build what the public desires to drive and pay the price at the pump. Economics appears to work for other choices we make in our life. Tell me, did the price of your new home influence your selection to buy it? If we use the current administration's logic, won't we be better off if home builders construct only 600 square foot houses for you to live in? I don't see the difference.

How fitting that a week before Memorial Day 2009, Barack announces a policy which will mark the end to what millions of U.S. military men and women died to protect and preserve... our culture of freedom and choice.

A Bird in the Hand...

The year was 1983. I had just taken a job in ad sales for a new Hampton Roads city weekly called PortFolio Magazine. While I was optimistic about my new employ, I was recovering from the failure of my own city monthly called the Bay Area Review. For the previous year I had slaved 24/7 in an effort to make the publication work. Not only had the experience taken an emotional toll, but financially I was exhausted as well.

I was driving a 1972 Opel 1600 that had seen better days. Most distressing, it lacked air conditioning. In a sales position, you need to arrive at a prospect's business alert and refreshed. As we were coming into the humid summer months, the need for a new car became apparent.

As I mentioned, I was broke. But I never stiffed anyone and my credit was still good. I visited my old friends at Cavalier Ford (I was a salesman there in summers during college break) and laid out the cards. I drove away in a new dove gray Ford Thunderbird. The Thunderbird was completely redesigned in '83 and it turned heads. Breaking from the square look that it, and most other cars on the road, had previously embraced, the new 'Bird made everything else on the road look 10 years old.

My 'Bird had a 232 cid Essex V-6. But it was the style that hooked me. The rounded corners and slopping lines married to an egg-crate grille was about as fashionable as you could be in '83.

I suppose it sounds shallow, but that car did more for my self-confidence at the time than anything else I could have envisioned. Hey, you are what you drive, right?

A GM Bailout? Why bother.

They say all good things come to an end. Surprisingly, the end for General Motors came in the mid-70s. Hopelessly mired in the "GM Way", the corporation began to suffer the effects of an insular management team, substandard quality control, uninspired styling and a total indifference to the rising tide of imported Asian cars and contentious, overcompensated UAW workers.

That GM managed to survive until now had everything to do with their sheer size and cheap gas, and the delusional belief that they would always be king of the American highway.

The unthinkable, however, is happening. On June 1st of this year, GM will file bankruptcy. Despite a recent renaissance of styling and build quality, the sudden, and now horrendous, decline of auto sales proved to be the straw that broke the camel's back.

Using Chrysler's strategy, GM will mimic a similar course of bankruptcy. They, with presidential authority, will trample over dealers and secured bond holders, and any other obstacle that threatens to derail this governmental fantasy of "easy in - easy out" receivership.

That's what we can expect for the immediate future. But what's beyond? I believe I know.

CHAOS AT THE CORPORATE LEVEL
Unlike Chrysler, GM has interconnected manufacturing interests worldwide that will complicate the reorganization of it's North American operations. It wants to shed Opel and Saab as well as Hummer and Saturn. But until it does, these orphan brands will only distract from the immediate task at hand, which is reviving the four viable marques that GM believes is its future: Chevrolet, Buick, Cadillac and GMC trucks. Other interferences will abound. With no manufacturing for months while in receivership and a tainted retail reputation, GM's share of the domestic market will fall from 20% to 10%. Morale will collapse and many of the brightest engineers, designers and managers will simply leave. The contraction on every level will most likely be mismanaged, with false stops and starts that will delay the 2010 model introductions. "Oh, and by the way, have you met your new owners?" With the Obama administration's micro-managed meddling and the UAW's bloodsucking mindset, GM will never realize any sustainable recovery. Still think the economical Chevrolet Aveo import from Korea stands a chance with UAW board members?

COLLAPSE OF THE SUPPORT SYSTEM
No surprise here. With both Chrysler and GM taking a summer vacation, what are the vendors supposed to do? This event alone will trigger a chain reaction of failures among auto parts suppliers - critical to the immediate return of manufacturing for GM's resurgence. With the chopping block massacre of their dealer network, down by half to 3,000, the misery will spread to cities and towns across America. Industry downsizing will add 250,000 to the unemployment roles in short order. And what about GMAC Financing? GMAC is already insolvent, having borrowed $5 billion from TARP funds. Won't Barack get tired feeding this beast play money every quarter?

ECONOMIC EFFECTS ON THE COUNTRY
Think you've seen all the bad news there is to see in our current economic meltdown? Just wait until the newly emerged GM, and ugly sister Chrysler, continue to lose money. I'm certain the placid taxpayer won't mind fronting a few extra billion to get them over another rough patch. With the current economic climate still in the basement, and possibly for years to come, consumer's won't be buying new cars in numbers large enough to guarantee a profitable GM. The nasty PR that GM will undergo will also alienate million of buyers, forever. Which all leads to a further erosion of market share.

THE END OF THE ROAD
I am not a GM basher. I have owned dozens, most recently a 2007 Pontiac Solstice and 2007 Cadillac CTS... both outstanding automobiles that were leading the rebirth of a new General Motors. But GM remained a bloated behemoth and the collapse of the housing market and the associated credit crisis in late 2007 signaled insurmountable problems for the world's largest automobile manufacturer. Latest figures from CSM Worldwide project total unit sales of all makes in the USA at just 8.1 million units in 2009. That's half the number bought in 2007! How can GM, even after bankruptcy, make a profit in 2009? The answer is they can't, and sadly won't for years. How long will the current administration continue to fund GM? The answer, again, is they can't for much longer. Other entitlement programs and obligations by the government will compete for the billion dollar prizes our treasury so casually doles out every month. Where does that leave GM?

The advanced 2010 Chevrolet Volt, a technological tour de force, will most likely debut as planned. But this halo car costs more to produce than it's selling price. How long can GM afford that with the end of funding from Uncle Sam? The new Chevy Cruze (pictured above) and Buick LaCrosse are winners, but will anyone notice? I believe you will see GM continue with a dwindling market share. Once it reaches 4% in North America, they will fold.

There will also be another high-profile vacancy on the American scene. Inextricably associated with the failed GM bailout by taxpayers, Obama will be a one-term president.

The End of Chrysler

This is one damn mess and it's going to get worse. Now that this corpse of a car company is in bankruptcy, terrifyingly bad decisions are being made by the Obama administration. Most offensive is that the senior secured debt holders (such as Oppenheimer Funds), who should be at the top of the receiving end, have had their arms twisted to settle for less, much less. Ridiculed as financial scavengers and parasites by the president, their corporate bond holdings were reduced to pennies on the dollar. That this doesn't get challenged in court will surprise me.

And guess who gets 55% of the newly emerged Chrysler... the UAW! Apparently the unfunded pension obligations that would have vanished under a typical bankruptcy are now worth over half of the equity in the new corporation. Of course, the UAW performed a lot of heavy lifting for Obama's election and this is the apparent reward.

Don't forget, Uncle Sam gets a slice of the reissued stock. I guess that for the billions we will waste on this colossal mistake, we as taxpayers should be grateful. I'm not. The first 8 billion from the TARP money we loaned Chrysler will never be repaid. That's a given. So is the unfortunate reality that Chrysler will be on the tit of the US Government for years to come.

That egregious outcome, alone, will prevent me from ever purchasing a Chrysler product again. I wonder how many other Americans agree with my viewpoint.

Speaking of repayment, or the lack thereof, how does Chrysler make any money once out of bankruptcy? Their passenger cars are poorly made and unpopular. Even the Chrysler 300, a reasonably good looking sedan, is getting long in the tooth - it was introduced in 2004 as a 2005 model - now 5 years old. About all they have going for them are the minivans, Dodge trucks and Jeep franchise. Will buyers have any confidence that these brands are still viable... even with the US Government standing behind their warranties (how that's going to work is any body's guess)? Fiat, who built such unremarkable cars that they had to leave the American market in 1984, is volunteering technical and manufacturing expertise. For no cash investment, they are getting a minimum of 20% stock and most likely, the unenviable task of managing this newly emerged Frankenstein of a car company. Oh, and they also have to manufacture a 40-mpg automobile in America... most likely the Fiat 500 I mentioned in an earlier post. How many American workers will they need for one bombed-out plant in Detroit to build an Italian automobile?

All that, in an automobile market that has yet to recover any sales momentum in the current economic downturn. Where is there any chance for success in this boondoggle?

Perhaps it is unfair of me to ridicule the efforts some good people are putting forth to save an American icon. So I offer this plausible alternative. Chrysler goes into bankruptcy just like hundreds of other companies over hundreds of years have, and takes it chances. No more bailouts. No phony partnerships. No disregard for the lawful obligation of debt.

That's the formula to save another American icon: Capitalism!