News Roundup

With US automakers scoring a big FAIL!, the Detroit Free Press has made it into my news reading lately. Today’s Freep frontpage story implies that the Obama administration wrote off automakers for bankruptcy months ago, despite whatever happened those following months.

As details emerge in bankruptcy proceedings, it is clear Rattner has both the president’s absolute trust and a go-for-the-jugular instinct. He was not interested in a mundane, outpatient treatment for suffering Chrysler. The president wants major surgery on Detroit’s auto industry, and Rattner is running the operating room. […]

Not since President Harry S. Truman seized the American steel industry in 1952 has America seen such a bold exercise of federal power over a vital organ of the U.S. economy.

Of course, one could point to the fact that US automakers have used the past two decades to dig their own graves, and blaming the current president in office for pushing them into bankruptcy is a bit disingenuous. A frontpage story in today’s Washington Post questions how seriously GM is taking it’s recovery, noting that GM is still heavily advertising its gas guzzling muscle cars. This part about GM business decisions in the late 1990s, though, is more telling:

If any moment presented GM executives with an opportunity to overcome the unfavorable perception of the corporation, Lutz thinks, it came on the eve of the Prius’s arrival in the American marketplace. The Prius was already a moderate success in Japan, where Toyota had introduced it in 1997, and GM executives had to decide how, if at all, to respond to a competitor’s hybrid in the United States: Should they enter the hybrid competition, too?

Lutz and other GM executives met at the company headquarters in Detroit to ponder the matter. “Somebody said, ‘Do we have [hybrid] technology?’ ” Lutz remembers. ” ‘Oh, yeah,’ was the answer. ‘Oh, yeah, we got the technology. We’ve been building hybrid prototypes since the late ’60s.’ “

Given that GM has had hybrid technology since the 1960s, you figure it wouldn’t cost that much to roll out hybrid models, right? Errrnt!

“Well, the answer was: No matter how we twist the numbers, we were going to lose a couple of hundred million dollars a year,” Lutz recalls. “And Rick Wagoner quite rightly, along with the finance people, said, ‘We can’t do that. We can’t go to the board of directors and come up with a program [for hybrids] costing the bigger portion of a billion dollars and when the board of directors [asks] why are we doing this, we say, ‘Well, we’re going to lose money on it, but, well, we’re doing it to show that General Motors is technologically advanced and environmentally aware.’ You know, back then, that wasn’t going to receive a very warm welcome.”

The decision was made not to go forward with a hybrid program.

What actually happened is that GM grossly underestimated the amount of units hybrids would sell on the US market, so the supposed $200 million loss probably would have become a profit — if GM’s executives had any foresight to not place all their eggs in one basket.

Ironically, around this time GM was selling the all electric Saturn EV1 in California. In yet another nifty-patented GM move, the EV1 was scrapped because of costs. The car has now been resurrected as the Chevy Volt — the electric car that is supposed to save the company. Sure, more research and development was needed, but GM had a great prototype for this car 15 years ago — and a market of rich Hollywood environmentalists willing to foot the bill for the cost. So when my buddy Sine.Qua.Non “Why not us?” in reply to news about Toyota Prius plug-ins coming next year, my reply is everything above. Despite what their Free Press says, Detroit is to blame for Detroit’s own problems.

Meanwhile, Ralph Nader in his corporate watchdog role (which, really, is the best role for the man), points out that US automakers could be using bankruptcy and bailouts as an excuse to use taxpayers dollars to shift production out of America, hence killing American jobs. File that one under “non-shockola!”

And if you’re expecting to run your conventional combustion engine on something other than gasoline anytime soon, forget it: The recession is killing the biofuels industry.

Moving onto Middle East news, there are elections happening in the Middle East this week, the first of which happens today in Lebanon. The Washington Post highlights the importance of this vote, saying it’s essentially a Christian Lebanese referendum on how much power Hezbollah should have in Lebanon’s government.

In a twist of Lebanon’s sectarian politics, a split among Christian candidates into pro- and anti-Hezbollah slates has turned the campaign into a broad referendum about whether the Islamist party should have a more influential role in the country’s future. […]

The contests for many of the 128 parliamentary seats to be filled on Sunday are not considered competitive. Lebanese political analysts say the outcome in a handful of mostly Christian districts, accounting for fewer than two dozen seats, will determine whether either faction wins enough of a majority to claim a mandate.

Given the pro-West/anti-West polarity of this vote, the Lebanese election may be looked upon as the first real test of Obama’s popularity in the Middle East.

The same cannot be said about Iran’s presidential election later this week, on June 12, since Iran is a much less open society than Lebanon. Nobody would be surprised if Ahmahdinejad gets reelected. There’s not much information about Iran’s election right now, but I expect Radio Liberty’s blog about the Iranian election to become very interesting this week.

Another item from the Muslim world: With Pakistan continuing to be mired in civil conflict between government forces and the Taliban, have you wondered how big its refugee crisis is? Writing for the Huffington Post (I’m persistently amazed at who HuffPo can get to write for them), Queen Noor of Jordan gives you an idea:

One challenge to the world’s capacity to care for its citizens is taking place right now in Pakistan, where the conflict between the government and militants in the northwest has forced almost three million people from their homes. According to the UN Refugee Agency, this is the most rapid large-scale displacement the world has witnessed since the movement into the Congo after the Rwandan genocide.

If you want to meet the challenge of helping these refugees, Her Majesty suggests going to

2 Responses to “News Roundup”

  1. GM’s most profitable vehicles are the SUV’s and Trucks you call gas guzzlers. Where’s the evidence that people want small cars? Toyota does not make money on the Prius. Only when gas prices skyrocketed artificially last year were more people looking for fuel efficient cars. That’s why Algore and Co. want a higher gas tax, it will force more people to buy smaller, more fuel efficient cars and offset the extra cost of a Hybrid. Not necessarily a bad thing, but again SUV’s are not the reason for GM’s failure. They invented the SUV, one could argue that the SUV kept GM in business longer …

    GM suffers from the negative effects of Unions, high taxes and Unfair trade practices. South Korea slaps a tariff on US cars, high taxes and Union Labor costs drive GM to manufacture more overseas, for every GM worker there are 3 retirees receiving pensions, healthcare, or “unemployment”, Michigan taxes the nutz off GM … now for sure GM has made its share of crap cars over the years so they’ve lost brand loyalty. Some people refuse to even look at an American car. In my view they’ve made great products the past 10 years, but still more expensive than foreign competition due to (see above). I’m not against Unions, but when Unions become too powerful they hurt the Companies they feed of of.

    If gas prices rise again it will drive the economics towards smaller, more efficient cars. Hybrid technology is indeed excellent, other options like Vaporizer Technology and New Electric cars are in the pipeline … made in America!!

  2. Anyone here wanna comment on the European Elections?

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