Wednesday, December 10, 2008

this IS your daddy's Oldsmobile

The wonderful intro to Gary North's most recent piece at

On April 29, 2004, the last Oldsmobile rolled off the assembly line in Lansing, Michigan.

The Olds Cutlass had been the #1 selling car in America in the mid-1970's. In the 80's, Olds did well. But in the 90's, it became a stodgy, nothing-special vehicle, stuck in between Pontiac (youth) and Buick (successful middle age). I knew it was not long for this world when an ad agency introduced this slogan: "This is not your father's Oldsmobile!" This immediately popped into my head: "Is it my grandfather's?"

Do you miss the Oldsmobile? Have you given it much thought?

Fast forward to today. Imagine a TV film clip of President-elect Obama. "Oldsmobile is the backbone of American manufacture."

You would think he has gone nuts. Who cares about Oldsmobile? It's gone. Forgotten. Unlamented.

Obama said this on Sunday's "Meet the Press": "The auto industry is the backbone of American manufacture."

That sounded plausible, until we recognize the context: a proposal to bail out GM, Ford, and Chrysler. Not under discussion is a bailout of Toyota, Honda, Nissan, BMW, and other automobile companies that produce cars in the United States.

This is a proposed bailout of the equivalent of Oldsmobile. It is a bailout of firms that could not meet the test of the competitive marketplace. Ford is the best of the bunch, and its share price says, "Oldsmobile!" It was over $35 in 1999, $6 in 2003, $17 in early 2004, and then down, down, down. It is under $3 today. This is Detroit iron's "giant." This is its showcase.

The Big 3 automakers are not the backbone of the American manufacture. Rather, they are located just below the backbone.


At December 10, 2008 at 11:27 AM , Blogger William Lang said...

>Not under discussion is a bailout of Toyota, Honda, Nissan, BMW, and other automobile companies that produce cars in the United States.

Please note: Compuware CEO reminds Senator of Alabama's aid to foreign automakers

At December 10, 2008 at 12:07 PM , Blogger Bob G. said...

"Just BELOW the backbone"...ROFL.
Well stated!

I said the EXACT same thing to my wife the other night...
Seems THEY'RE doing OK, hmm?


At December 10, 2008 at 1:55 PM , Blogger Eric Schansberg said...

William brings up a smaller but still significant point-- the state and local subsidies to the car industry in particular, or to selected businesses in general.

Such subsidies are troubling both ethically (e.g., why them and not others?) and practically (e.g., why would one think the govt will be good at picking winners?).

At December 10, 2008 at 4:54 PM , Blogger William Lang said...

Now it appears that the bailout is in trouble because of strong GOP opposition. But Ford now says they might not help. The one thing no one seems to be talking about is the ramifications of the three automakers not failing at the same time. GM and Chrysler are said to be in danger of collapsing by year's end. But not Ford. If GM or Chrysler to go under first, I think that would help Ford survive because patriotic Americans will only have Ford to choose from, for domestic nameplates. We'll end up with the Big One instead of the Big Three, and that will be Ford.

At December 10, 2008 at 4:59 PM , Blogger Eric Schansberg said...

Remember too that bankruptcy does mean they go away. The most likely outcome, from what I've read, is Chrysler disappears or is absorbed-- while GM and even Ford would restructure and emerge healthier.


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