July 5, 2009

Burying the Lede: AP Report On Chrysler Board Questions At Very End Whether US ‘Allocation Will Be Enough’

ChryslerFiat0609Oh. So. Predictable – Both what is happening, and how it is being “covered.”

Chrysler is barely out of bankruptcy, and there is already concern as to whether the money Uncle Sam, (i.e., U.S. taxpayers) funneled into the company — while in the process of ripping off and intimidating its secured creditors, capriciously terminating plants and dealers, and running roughshod over long-held notions of fiduciary duty — will be enough.

Beyond that, how many people know that the magical technology its new owner Fiat, which put no money of its own into the deal, is “more than a year away” from making its way to Chrysler?

“Somehow,” the Associated Press’s Obamacized news prioritizers decided that the info nuggets contained in the previous two paragraphs should be relegated to the final paragraphs of an unbylined report (also saved at host) this afternoon. The report, including its headline (“Chrysler names remaining directors to new board”), appeared to be merely a droll recitation concerning certain Board members. Only readers getting to the last three of the report’s eight paragraphs would have any idea that Chrysler’s situation is already a cause for renewed concern about its viability.

Readers here can make what they will of the Board’s make-up, but, as noted, the real beef in the AP story is in those final paragraphs (bolds are mine):

….. Chrysler emerged from bankruptcy protection after just 42 days, cleansed of much of its debt and labor costs. But with sales down 46 percent from the first half of last year – a year in which Chrysler lost $8 billion – the company faces a huge challenge to make money again under its new Italian owner.

Fiat, which has taken over running Chrysler, will provide badly needed small-car and small-displacement engine technology, but that’s more than a year away.

Chrysler’s poor June performance also casts doubt on whether the U.S. government’s $7 billion allocation will be enough to get the automaker through the U.S. sales slump, which is projected to last into next year. The government has said it stress-tested the $7 billion figure and determined that it is all Chrysler will need to make it until Fiat products arrive and Marchionne can turn the company around.

At the tail-end of its effort to keep Chrysler’s emergence from bankruptcy intact, government lawyers shrieked that the company was losing $100 million “every day its plants are closed,” and that the courts had to set bothersome concerns like centuries of contract law and the U.S. Constitution aside because of the dire situation they had contrived. Assuming that the government’s $100 mil/day claim was a cash burn rate that won’t change, the company will go through its $7 billion “allocation” in less than 2-1/2 months. Even under a supposedly lower cost structure implying a smaller burn rate, it’s hard to see how the company gets very far into next year — let alone to the “well over a year from now” arrival of Fiat’s supposed magic, when Marchionne finally starts “turn(ing) the company around” (though he is on the Board, will he just let it sit there and rot in the meantime?) — while it sells over 60% fewer vehicles than it did just two years ago.

The Obama administration can talk about “stress tests” all it wants, but with an economy heading towards 10% or worse unemployment and a large portion of American consumers clearly shunning the bailed-out pair of Chrysler and General Motors, it looks more than a little likely that Chrysler will come begging for more taxpayer money in some form yet again, or yet again threaten to grind to a halt.

Oh. So. Predictable.

Exit question 1: Will a post-bankruptcy GM be Chrysler writ much larger?

Exit question 2: What are the chances taxpayers are going to get to see meaningful and timely financial statements from either of their new “investments”?

Smart-aleck question: How much more will Chrysler burn through every day once its plants reopen?

Cross-posted at NewsBusters.org.

In Light of What’s Ahead…

Filed under: Activism,Economy,Taxes & Government — Rose @ 9:17 pm

I can certainly appreciate these lighter and spot-on accurate moments from John Boehner.

Bloodhounds“:

Press Continues to Ignore the Public’s Shunning of Bailed-out GM and Chrysler, Part 2: Telling Details

NoToGMandChrysler0109Part 1 (“The Big Picture”) is here.

Quick:

  1. Which company sold the most light trucks in the U.S. in June?
  2. Which company came in at Number 9 in car sales in June, down from Number 7 a year ago?
  3. Aren’t smaller players in the auto industry obviously gaining ground on the big guys because of their small, fuel-efficient cars?

If you don’t know the answers to these questions, it’s because the press has been doing a poor job of covering what’s really been going on in the industry since the Era of the (Failed) Auto Company Bailouts began in December of last year.

Answers to the three questions are in the charts that follow:

CarAndTruckSalesDtlJune09and08

(Source Data: Wall Street Journal monthly Auto Sales Chart for June 2009 and June 2008)

The answers to the three questions are as follows:

  1. (in white on blue above) In June, Ford sold more light trucks than General Motors for the first time in many, many years. Just a year ago, GM had a lead on Ford of over 50%.
  2. (in black on yellow) In June, Chrysler was the Number 9 seller of cars in the U.S. Even a year ago, it was only Number 7, miles behind the top five in the category, and even badly trailing Hyundai. In the past year, Kia has passed Chrysler and established a bit of distance. VW outsold Chrysler during June, for the first time in probably forever — and remember that this was a month when the 25% of dealers that were terminated had going-out-of-business deals going. It seems more than a little likely that BMW will catch Chrysler in the coming months.
  3. (in white on green, for irony) While many of the larger makers have focused their efforts on smaller cars, the rest of the pack, contrary to established non-wisdom, has made significant inroads in generally higher-profit light trucks. While light truck sales at the six biggest players are off over 25% in the past year, the smaller players are down less than 9%.

If the establishment press was doing its job covering the industry, the first two items would be widely-known stories. The third, though a bit less obvious, certainly throws into doubt the conventional wisdom that going small is the ticket to success.

Other developments that bear watching include:

  • Given Chrysler’s dealer terminations, Toyota may soon overtake Chrysler in truck sales. Honda might catch up and pass both.
  • Ford has a shot at overtaking Honda in car sales.
  • Toyota is perilously close to surrendering its lead to GM as Number 1 in monthly car sales.

The last item just noted is the only one in either of the two posts about the industry situation that is even remotely favorable to GM. If it comes to pass accompanied by heavy press coverage, it will be further proof (as if we really need any) that the press is firmly on the side of the failed bailout attempts, never mind the wreckage they have inflicted on the economy, the rule of law, and on people who didn’t deserve it.

Cross-posted at NewsBusters.org.

Tech’s Repressive Dark Side Threatens Us All

ObamaSymbolGreenDamChineseSoftwareGraphic0709Khamenei0609Note: This originally appeared at Pajamas Media and was teased at BizzyBlog on Friday.

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What do Iran, China, and the U.S. have in common? More than you might think.

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How’s that “The Revolution will be televised, blogged and twittered” thing going in Iran? Or the “Web 2.0 will us set free” mantra?

Oh. I see. Not so well.

Supreme Leader Khamenei, who really runs everything in that country, and his pseudo-”elected” lackey, Mahmound Ahmadinejad, have gained a firm upper hand in putting down the Iranian resistance to the rigged election in particular and its repressive society in general.

It turns out that the bad guys know technology, and, when threatened, can be particularly adept at thwarting their opponents’ use of it.

The first and most obvious strategy is to keep pictures out of the news. The Associated Press reports that “Iranian authorities have barred journalists for international news organizations from reporting on the streets and ordered them to stay in their offices.” Another tactic is to hinder the opponents’ organizing efforts. While Iran’s opposition leader and putative election loser is putting on a brave face, the Supreme Leader’s thugs “have arrested most of his inner circle and made it progressively harder for him to communicate with his followers.”

Meanwhile, the death of Neda has been swept from American and world viewers’ short-term memory banks, replaced by almost pathologically obsessive coverage of the death of “Nada,” (as in, “nada in the way of meaningful musical accomplishments since 1982“).

Perhaps President Barack Obama, assuming he even cares, is among those swept up in the absurd notion that solely with the help of technology, oppressed people will rise up, throw off their shackles, and be free, while all we have to do is watch. If it were only that easy.

Take China. For decades, the elitist notion has been that if the Chinese get a taste of and grow to relish the benefits of economic freedom, they will also clamor for and achieve personal and political freedom. The Chinese Communist government will simply one day capitulate, and all will be sweetness and light.

The government has had a different very different idea. There has been no significant sign of a legitimate change in outlook since Tiananmen – which, by the way, was also televised, with little real-world effect.

Its economic model is decidedly not based on free markets. In publicly traded Chinese corporations, the government is almost always the dominant or by far most influential owner. It is naïve to believe that the Party isn’t making or approving the vast majority of meaningful decisions at these enterprises. Oh, and by the way, they sort of own us, and they’re starting to throw their weight around.

Meanwhile, the Party has “progressively” tightened its grip on information. Since 2005, outrageously assisted by U.S.-based high-tech companies, the government’s smiley-faced police-state apparatus has clamped down on blogs, Internet news, web sites, hosting companies, and search engines. Yahoo!, Google, MSN, and others filter searches at their Chinese affiliates. Google’s agreement to censor Chinese search engine results in early 2006 ended the credibility of that company’s signature claim that it would “do no evil.” Additionally, companies like Cisco and Fortinet have helped the government prevent access to disfavored sites.

The tech-sector protested at the time that the government’s controls would gradually go away as China’s economy and the people’s desire for freedom grew. Several years later, it’s clear that this is not happening. Instead, the government has intensified its demands for further controls. Though its plan to require the installation of censorship software on every new computer has been “delayed,” there’s little doubt that it will continue to pursue the effort. With the precedent of the search engines’ sellout, it’s hard to have any confidence that Dell, HP and others will resist.

Well, what about Web 2.0? Won’t that get around the statists in Iran and China? The Financial Times summarizes the grim situation:

That (government) stifling of web freedoms that many people around the world take for granted are being accompanied by more novel means of combating cyber opponents. Those methods range from directing stealthy technological attacks that shut down dissident websites to unleashing swarms of paid commentators to argue the government position on supposedly independent blogs.

Both carry the added attraction of deniability: many regimes are employing advanced repressive techniques that are hard to identify in action, let alone circumvent. At a time when new communication technologies, from text messaging to Twitter, promise to put greater power in the hands of the individual, these techniques are having a chilling effect. Internet experts from more open societies fear that this will lead to greater self-censorship by organisations and individuals, which they see as the most effective tool of all.

If some of the techniques described seem strangely familiar to some U.S. readers, it’s probably because they’re here – and not necessarily always in light form.

Isn’t a leftie troll in a do-nothing government job or on a “community organizer’s” payroll, with plenty of time to comment or blog, for all practical purposes a de facto “paid commentator”?

Isn’t taking in millions in small, deliberately untraceable contributions during a presidential election campaign, in clear violation of established laws – contributions that arguably enabled that candidate to drown out his opponent — eerily close to an “advanced repressive technique”?

Finally, our president and Congress are clearly attempting to move the U.S. economy sharply away from our leaning-towards capitalist model –- never mind that it is the one that it has rewarded innovation and enterprise, and has been, for all its faults, the greatest wealth creator and living standard-raiser in human history. Instead, the Obama economy is evolving into one of “gets vs. get-nots.” It benefits soulless glad-handers who can work a government-dominated patronage, grant, loan, and reward system through personal connections and/or payoffs, to the detriment of those who simply want to make a better mousetrap and better serve customers. The get vs. get-not model is one that is all too often divorced from the need to actually accomplish or build something of value. The money keeps flowing, and the accomplishment seldom if ever arrives.

As the get vs. get-not model becomes more dominant, one’s very success, failure, or even existence in business will become ever more dependent on the whims of the visibly powerful, as well as their invisible bureaucrats and apparatchiks, any one of whom might be offended by someone’s expressed opinion, political preference, or even their personal acquaintances. Isn’t the prospect of “greater self-censorship” in the name of continued business just around the corner?

Americans, and especially their political leaders, need to remind themselves that freedom isn’t free; that its triumph and preservation are not guaranteed; and that technology isn’t automatically going to make getting or preserving it any easier.

Press Continues to Ignore the Public’s Shunning of Bailed-out GM and Chrysler, Part 1: The Big Picture

NoToGMandChrysler0109We are now six months into the failed Auto Bailout Era. Looking at the industry’s four biggest companies, it has become clear that Ford is on the rise, General Motors continues to slip badly, Chrysler is fading into minor-player status, and Toyota’s ongoing struggles continue.

In May, after April’s sales results came out, two Associated Press writers noted Ford’s ascendancy and uniquely hinted at its likely basis:

Detroit’s Big Three is becoming Ford and the other two.

While its rivals stay afloat with billions in government aid, Ford grabbed a bigger slice of the American car market in April …..

….. Most of ….. (Ford’s) gains came at the expense of General Motors and Chrysler, which unlike Ford are dependent on federal help.

Other than that, there has been virtually no press recognition of what has to be seen as the most likely reason for the shift: Enough consumers to matter are continuing to shun the unsuccessfully bailed-out.

In an industry where rivals have traditionally fought tooth and nail to pick up a point or two of market share in a full year, the changes in the industry landscape in the six months since Washington began its failed attempts to bail out now-bankrupt GM and just-emerged, absorbed-by-Fiat Chrysler have been stunning, as seen below in this comparison of the industry’s Big Four:

VehicleSalesOfBig4June07toJune09

(Source Data: Wall Street Journal monthly Auto Sales Chart for June 2009 and June 2008; USA Today for Dec. 2008 and Dec. 2007; Web-Archived WSJ Auto Sales Chart for June 2007)

Here’s what the graphic and the accompanying numbers show:

  • GM, for all its considerable cost problems and in spite of steep sales declines, actually improved its market position relative to its three largest competitors from June 2007 through December 2008. That improvement ended and went sharply into reverse when the government began its failed bailout effort, putting the company back to where it was two years ago and trending in the wrong direction.
  • During most of 2006, all of 2007, and early 2008, Ford’s share of Big 4 unit sales suffered. The company was in the midst of pretending to ignore what I have called “the biggest boycott never reported” by a pro-family group. That boycott began in March 2006, and ended in March 2008. After that and until the end of 2008, Ford’s situation relative to the other three companies improved a bit. But in the six months since failed bailout money has freely flowed to GM and Chrysler, Ford has cut GM’s Big 4 market share lead from almost 14 points to a mere 5.
  • Chrysler, which was sold to a private equity group in March 2007, and suffered terribly at the hands of Bob Nardelli, whose stated mission was to cut costs and dress the company up for sale. With the help of high gas prices in early 2008, he only succeeded in making the company look unappealing. In the last half of 2008, the hemorrhaging of the company’s market share at least slowed down. But the decay accelerated again once government’s bailout money began to flow. Chrysler is less than 40% of the company it was just two years ago.
  • Toyota began having problems of its own in mid-2008 — its market share loss during the second half of the year appears to have been GM’s gain — until the bailout money began to flow. Toyota still has significant challenges. But while it has seen Ford reclaim second place among U.S. sellers, it has gained overall Big 4 market share thanks to GM’s and Chrysler’s steep declines.

Not shown in the interest of avoiding over-complication: The rest of the industry has picked up about 5 points of market share at the expense of the Big 4 since the government’s failed bailout efforts began. If this development had been incorporated into the graphic and stats above, the results would have shown GM’s and Chrysler’s situations as even more desperate, Toyota treading water, and Ford making a bit less positive headway.

There’s even more to the “shunning of the bailed-out” story the press has ignored since the government’s failed efforts began. Part 2 will deal with that.

Cross-posted at NewsBusters.org.

Positivity: Rescued fisherman recounts 24 hours adrift on Lake Erie

Filed under: Positivity — Tom @ 6:37 am

From Monroe, Michigan:

July 4, 2009

….. (Roy) Letson, on his first venture onto Lake Erie for walleye, had left Sterling State Park in Monroe at 8 a.m. Thursday with his father-in-law, Douglas Whittaker, 76, of Eaton Rapids, and Whittaker’s friends, Larry Vert, 64, a retired Lansing accountant, and Ronnie Miller, 63, also of Eaton Rapids. All four are in Mercy Hospital in Monroe today in stable condition, hooked up to IVs to replenish fluids lost during their Lake Erie odyssey.

They’d hauled in their limit of fish, 20 fat walleye stored in coolers as they headed back to port Thursday evening.

And that’s what they think was their downfall.

“Maybe we had too much weight on the front of the boat, we had our fish up there,” Letson said. “We were all done, coming in. It was real fun, we were having a good time.”

The first wave hit, drenching the front of the boat. Then the second. And the third. The boat capsized — and took their radios and safety equipment underwater. Letson, pulled out his cell phone and held it in the air as the waves hit, trying to keep it dry. But it was either save the phone, or save himself.

He pulled himself onto the hull, what became the men’s floating island through Thursday night’s darkness.
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