The Vig

I know I swore I wouldn’t do this anymore, but whatever.  A post at TPM got me to thinking.  Talking about the state of the auto industry, a veteran of the wars made a couple of fascinating observations.

I was meeting a friend in the GM building in downtown Detroit about 18 months ago and was astounded to learn how few people there were actually involved in making cars and how many were involved with other GM business interests.

GM got out of the car business long ago. Oh sure, they still make cars. But is that their business? Heck no. For the last two decades GM’s business has been buying dollar bills for a buck and selling them for a buck-fifteen. That’s what GMAC was all about. Cars, if you’ll pardon the pun, were just one vehicle toward that 15% or more they were making. It didn’t matter whether they were quality or not, only that they were financed. They were also heavily into real estate and credit cards.

Their problem isn’t so much that no one wants their cars.  It’s that no one is willing to pay such exorbitant prices for money anymore.  Mitt Romney can stomp up and down all he wants about how the unions killed GM.  It isn’t so.  It was the money men.

The guy continues:

In Chrysler’s case, this was a weak company driven into the ground and thoroughly looted by it’s “merger” with Daimler-Benz. It was funny going to hotels around the Chrysler headquarters in Auburn Hills and thinking you were in Germany due to the huge number of German speaking guests. Each staying for long periods of time on the company dime and all being charged to Chrysler.

Aha! Suddenly those frequent Lufthansa flights between PDX and Frankfurt make a whole lotta sense. Are they really about boosting our local economy? Or are they about corporate big wigs coming out here and bleeding a once proud local company dry? I think we know the answer.

The more I think about it, the more I think Obama needs to just cut the auto makers loose.  It’s over.