This guy should be on everyone’s radar in Detroit, the Midwest and taxpayers in general.
Dr. Zandi broke it down in simplist terms: the bailout loan will be pricey, and could be even as much as $75M to $125M . . . but letting GM, Ford and Chysler slide into oblivion will cost taxpayers much, much more.
It’s that simple.
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There are a couple points of failure among business journalists on this story. Zandi, and most economists, approach this dispassionately and see quite clearly what the Big Three are.
Warren Buffett once said the Big Three are not car companies, but health care companies that happen to sell cars. This is what our economy has turned them into and letting them go only opens the gov't and taxpayers to foot the bill for those benefits.
But it just goes to show what the irrelevance of Detroit for the past 25 years has led to. News orgs don't have Detroit bureaus anymore, they don't cover the UAW talks, they don't consider the brands or leaders relevant. And now the story is covered with all the sophistication of the OJ Simpson trial. But, as we've discussed before, I blame Detroit for letting itself get sucked into that bubble it built for itself...operating unlike any other companies in the nation off the radar from where the rest of the country was going...that goes for all brands and the union and the political leadership of the region.
That said...time heals all wounds. And they will thrive going forward. It's still a great industry for making large sums of cash on investment...just need to fix the model once and for all.
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