There are winners in every financial disaster. There are always a few folks– heroes or scoundrels depending on how they make their profits– who understand that the Chinese symbol for danger and opportunity are one and the same. GM’s impending bankruptcy (and likely Ford as well) will produce some winners. But not without serious financial and psychological risk to those who seek their fortune from misfortune. For those of you with a robust constitution, here’s one potential game plan for GM’s C11. First, some background for those uninitiated in the ways of the American automobile business…

The new car business has always been a boom or bust industry. There’s no such thing as steady growth; sales go up or down in multi-year cycles. During the last decade, Detroit’s fobbed-off excess production on rental car companies, commercial fleets and retail buyers. The strategy helped maintain cash flow. But it distorted sales levels and became a pattern of value destruction. Worse, the automotive sales cycle is now at new lows, with as many as four million units sliced off a “false” peak of nearly 17 million units just a few years ago.

The car business depends on the availability of credit at every level. GM will have to obtain new financing– either from the government or private debt/equity–- to remain in business in North America. Its dealers will need floorplan and buyers of retail paper. It’s a chicken or egg scenario. No one will lend to GM-brand dealers and customers if there’s any question of whether the parent company can stay in business.  Even then, it’s still riskier than lending to Toyota dealers and customers. The only variable will be product pricing; GM’s vehicles will have to be priced accordingly to make up for the extra cost of the financing and bankruptcy risk.

And that’s the opportunity. Buy Chevrolet and Cadillac (and Ford) dealerships now and into 2009 at fire sale prices from distraught dealers. It’s the bottom of the sales cycle and credit is not available. A firestorm of distress that will pass. One just needs the capital to survive the first few months after the filing. New car sales will still be depressed overall, and even worse for GM and Ford due to consumer and lender uncertainty. But that’s temporary– especially if GM follows the previously predicted prescription and launches a series of massive TV advertising and cut-rate pricing (like distress sale levels). Honor the warranty. Keep the flag raised – don’t surrender.

Within eighteen months or so, the recession will end. Banks will again lend and get greedy to find new revenue streams. GM will still be around, producing fewer cars only for its two remaining brands. But those brands will have the best vehicles from across the entire GM lineup.

Chevy will offer the following: Aveo, Cruze, Malibu, Impala, Lucerne (nee Buick), Camaro and Corvette. And maybe a Volt or two. Its Traverse, Tahoe, Avalanche, and Suburban models also remain. But the truck business– that’s where GM will still score (as will Ford) big profits. The housing business drives the pick up truck market and it still belongs to the domestic brands. Housing will come back and so will the truck market. Chrysler will no longer be alive to bother anyone. Chevy will still fight with Ford for light pickups, but at least GMC down the street will be boarded-up and closed.

Likewise, Cadillac will remain as a luxury brand incorporating the best in engineering and design from Detroit. No corners are scrimped, no more Cimmaron mistakes. Rededicated to its roots as the “Standard of the World,” GM’s ability to reshape its mark will continue, especially free from the distraction of the GM dysfunctional brand family.

The surviving GM dealers will have two brands offering complete and distinct vehicles without suffering from internecine warfare. GM, under new executive management and with new owners (maybe even private equity players) will be smaller in North America. But they’ll have products that meet or beat the foreign competition. And with its restructuring, GM can again be profitable at smaller volumes.

It’s a classic “buy low, sell high” strategy. There will be no shortage of Chevrolet and Cadillac stores for sale soon, most for real estate value only or less. Better stores, within markets having significant units in operation already, have a base of customers needing warranty work and service that can keep a store alive. And the used car business, when run right, provides a stream of profits as well.

Assuming GM it makes it through Chapter 11, avoiding Chapter 7 liquidation, the value of remaining Chevrolet and Cadillac stores will soar. Easy money– if you know how to run a car dealership and can stomach the risk. Anyone ready to bankroll me?

Whatever the qualifications and diplomas accumulated by auto executives, it’s a pretty safe bet that they failed mythology. Automobile names are a silly subject already, bring in some of the poorer choices, and you have the makings of high comedy.The assorted Zodiac names are harmless, if a bit silly. I’ll accept that no one at Chevy realized that Cobalt is a poisonous metal named for a demonic imp. But really, who green-lighted “Gremlin” back in the day? Odyssey is a cool-sounding name, but really, shouldn’t it be some sort of mid-life-crisis car? Well, maybe it’s a car for a “homer”. What would Oedipus drive? That’s easy: a black 300 with tinted windows cause he’s one baaad.. OK, I’ll stop. But mentioning the poster boy for tragic screw-ups reminds us of something that does have relevance for today’s auto market, the riddle of the Sphinx.

Just as man has three ages, you can easily divide a car’s age into three: New (just out of the factory), middle-aged (when it is “sold on” for the first time), and old age (when it enters beater-hood). Interestingly, the age of the customer tends to work in reverse. This is both helpful and worrisome for the domestics.

There’s no doubt that Detroit sees new car sales as the purpose of their business. While overall quality is still a bit… worrisome, “off the lot” quality has improved dramatically from the nadir (Nader?) of the 70s and 80s. The only remaining lagging part of the off-the-shelf equation: interior appointments, which are still bad enough to make poking your eyes out sound like a plan. Memo to Detroit, the owner sees a LOT more of the inside than the outside.

While interior quality and option packages are still a negative factor, on price “actually paid,” the domestics are in the ballpark. The real issue is too much “empty” volume, cars that won’t see a “real” owner until their next stage. Like many of their owners, cars can also have mid-life crisis. The dynamics of domestic “new” cars, quite often see their customers passing like ships in the night.

Even at their most arrogant, no domestic honcho will claim quality “parity” after three to five years. Truth be told, it’s usually not that bad. Aside from Toyota, Honda and perhaps Subaru, GM and Ford can claim at least parity with the competition (and parts are usually much cheaper). Given those facts, the re-sale value of the domestics (especially cars) comes as a shock.

The culprit is all those “extra” sales, especially the rentals. This lack of “trade-in” power could well be the single largest factor in the domestics’ failure to retain their customers. Horror stories make better copy, but they are comparatively rare. The bright flip side of this “problem:” the domestics can attract quite a few “value” shoppers, who are much more forgiving of “issues;” they didn’t (wouldn’t and can’t) pay full price.

Unfortunately, for these sorts of customers, upgrading them to a “new” version of their favorite grocery-getter is a BIG step. Buying “off the lot” can mean paying twice or even three times what their old vehicle cost.

By comparison, the Dai-sans’ high retained value keeps buyers in. To combat sticker shock on the old whips, they have emphasized “certified used” programs (Honda’s trailed only Jaguar’s in one satisfaction survey). While it may be harder to sell a 50k mile car with only 25 percent savings, it’s a much shorter step to get such a buyer into a brand-new one later.

If the early stage is full of promise that leads to the conflicts at mid-life, the end-life of the domestics raises a good deal of hope. When you enter the realms of “beaterdom,” one of the most important factors is the cost to keep it running. As our Steven Lang has said many times, the domestics’ relatively simple mechanicals, long model runs (can you say “pick and pull?”) and cheap parts make them compelling proposition.

The Dai-san depend on robustness to offset their more expensive parts. Most of the remaining competition may come cheap, but often becomes a “money pit.” Buying an old Merc/Volvo isn’t too hard, it’s the parts’ cost that kills. This is important because “beater” drivers often move on to something better, especially the teens.

Whether they get them hand-me down, direct from their folks, or purchased with the receipts of some job they’d rather forget, teens are the customers of tomorrow. The single biggest issue for “converting” teen drivers is the disconnect between your father’s old wheels and what is likely to be available when you have a real job.

The real answer to the riddle of ages is: The Big 2.8 will always be creating new customers. It’s keeping them past their first trade-in that’s the problem.

Last night, the New York Times “broke” the story that General Motors and Chrysler/Cerberus were discussing a merger. The report lacked only one crucial component: facts. As RF reported in his initial blog on the subject, the story unravels by paragraph two. We learn that the entire story is based on “two people close to the process.” While anonymous attribution is common new industry practice, a story without independent corroboration is a nothing more than rumor— especially when it defies common sense. General Motors’ assertion that they routinely talk to other manufacturers about collaborative efforts doesn’t count. But it does reveal the truth of the matter.

In fact, the GM – Chrysler/Cerberus meetings are an open secret. As The General’s spinmeister intimated, GM regularly engages in tech sharing discussions with a wide range of carmakers. Given Chrysler’s yet-to-be-realized tie-up with Nissan, its decision to provide re-badged minivans for VW and ongoing attempts to create a Chinese hook-up, GM is a logical “partner” for Chrysler ongoing campaign to outsource product development. And cut costs.

GM and ChryCo could be discussing rebadged Malibus. Or a Chrysler badged Cobalt. With materials costs soaring, the two ailing American automakers might be examining the possibility of sharing resources. Or looking for economies of scale re: suppliers. And, lest we forget, General Motors owns 49 percent of endangered auto and mortgage lender GMAC; Chrysler’s masters hold the other 51 percent. If GM and Chrysler are NOT talking to each other about GMAC’s future, there’s something seriously wrong (more wrong?) with both companies’ executive management.

It’s no wonder Times scribes Vlasic and Sorkin backpedal on their GM – Chrysler merger story. They tell us that their two sources estimate chances of a merger are “50-50.” There could be “significant roadblocks,” not including the fact that sewing two losing companies together merely makes a bigger losing company. But the real argumentative implosion comes buried in the story: “neither side has yet to dig into each others’ private financial books and records.” How serious can the merger talks be if the lawyers and accountants haven’t even begun diligence? Answer: they can’t.

Clearly, the providers of “all the news that’s fit to print” didn’t give the merger story a fitness test. In fact, this is a classic example of what GM shill Rush Limbaugh calls “drive by media.”

The 24 hour news cycle (of which this writer, typing after midnight, is a member) was quick to pick up the story and discuss all the implications. The CNBC network, “the recognized world leader in business news,” called in the big guns for comment: Ray Wert of Jalopnik. While we understand the mainstream media’s ongoing fascination with the “new hotness” of blogs, Wert screwed the pooch on this one.

Wert claimed that GM and Chrysler “have two different lineups that actually are very complementary.” This is just wrong. GM and Chrysler have nearly identical lineups, with some niche-product distinctions. Recognizing this, Wert contradicted himself in his next comment. “They’re both looking to sell a lot of large trucks and large SUVS, and it makes sense for them to manufacture them on the same platform.”

The CNBC hosts ask Wert about the financial issues in a merger. His vaguely dishes “My assumption is that Cerberus has probably bit off a lot more than they can chew, and with credit kind of crunching in right now it makes a lot of sense for them to try to jettison a company that isn’t providing something that isn’t to their core business plan.” Except that’s not what anyone is talking about. The story from The New York Times: Cerberus would end up with an enormous stake in the hypothetical GM-Chrysler firm.

CNBC concludes by asking Wert about potential issues with a merged GM-Chrysler and organized labor. “I think it’ll be easier for them to get some economies of scale on UAW talks. It’ll be easier to work out one deal as opposed to two deals.” Efficiency in labor talks is a secondary goal (talking for less time, paying fewer labor lawyers). The actual issue is concessions. There is no quantitative academic evidence to suggest that it would be easier for a gargantuan company to negotiate with the UAW and CAW than two very, very large companies. In fact, odds are good the negotiations would be even stiffer.

CNBC failed in its background research. They should have read the editorial Wert published the same day: “GM Will Go Bankrupt: Why That May Actually Be Good For The General.” Considering Wert’s previously held belief that GM would benefit from Chapter 11 filling, why did he suddenly decided that a GM-Chrysler merger be well-advised? Something to do with publicity perhaps?

All of this discussion blatantly ignores the glaring issue: a GM-Chrysler merger would be a disaster. And that’s the truth.

I was walking the dog the other day when I heard a V8 bellow. I turned around to see a perfect example of a latter day muscle car: a Chevy Silverado pickup truck. I was surprised by my surprise. Although the Northeast represents Middle America’s automotive tastes about as well as Harvard professors reflect conservative political values, I wondered if society has reached the point where the sound of unabashed engine power has become, well, boorish. Has the average American automobile, once a symbol of status, virility and pride, been castrated? And is that a bad thing?

Focus on the word “average.” Yes, hundreds of thousands of enthusiasts continue to bask in the aesthetic, accelerative and aural afterglow of octo-cylindered SRT8, SS, GT, M and AMG-branded products. Widen the remit to include the tuned-four cylinder machines favored by the ricer set, and it’s clear that American car culture is alive and well and living in a comments section near you. But these vehicles cater to a relatively small subset of American consumers.

By the same token, you have to discount the eco-whips favored by equally passionate “green” car enthusiasts. In a recent study re: popular attitudes towards mass transit, four percent of respondents said they’d consider switching to mass transit on environmental grounds. While the survey methodology wasn’t entirely reliable, it supports a common sense conclusion: auto-oriented environmentalists proselytize from outside of the American mainstream. The media may swoon over hybrids, PHEVs, hydrogen fuel-cells and the like, but the average American aspires to a plain Jane Toyota Camry.

Or not. Post-September sales results, the general decline in vehicle sales (their lowest level in 15 years) and Detroit’s disastrous truck sales slump (down by 20-plus percent across the board) received the ink it deserved. Meanwhile, according to the American International Automobile Association, the Chevrolet Silverado and Ford F-Series scooped the top two sales slots.

Startling discounts may account for the fact that two American-made pickups edged-out the Toyota Camry in last month’s new car showroom hit parade. And there’s no question that the U.S. automobile market is undergoing an epic, convulsive shift, as hundreds of thousands of Americans abandon their SUVs (if and when they can) for more fuel efficient vehicles. But you have to wonder if falling gas prices and, more importantly, long-standing consumer tastes, mean that the death of the Great American Land Yacht has been greatly exaggerated.

Consider the much-lamented– if only by enthusiasts– “bloat” of the average American automobile. And by that I mean, of course, the Honda Accord and Toyota Camry.

In their early iterations, these Japanese cars were relatively diminutive compared to their American counterparts. Consumers chose the transplants for longevity and frugality and put-up with relatively tight packaging (especially when compared to their aging American counterparts and gas-guzzling SUVs). Today, numbers three and five on September’s sales chart are significantly larger than their predecessors. And they’re bisected by the Impala, an older Chevy that outsells its smaller and more modern “replacement.”

High gas prices or no, the automotive up-sizing trend continues. Even the new Mazda6 has traded zoom-zoom for elbow room. But something has been lost. (Don’t say handling, ‘cause that’s just you, a pistonhead, talking.) Thanks to mechanical and ergonomic improvements, the idea that a small-engined car is, ipso facto, a penalty box has left the building. While there’s some V6 up-selling down at the dealership, the vast majority of these popular cars are four-cylinder automobiles. More importantly, there’s no apology needed.

Mpg bragging rights have replaced engine envy. In a few short years, “That thing have a Hemi?” has gone from a come-on to a turn-off. At the risk of contradicting myself, the Toyota Prius has almost single-handedly made it “cool” to save gas. You can no more imagine the average American car buyer showing off his new car/truck by revving the engine than you can image a Dodge Challenger SRT8 driver whipping out his gas receipts.

This transition in the American automotive psyche– from a passionate lust for sheer horsepower to a profound admiration for fuel efficiency– is far from complete. But when a “car guy” like GM Car Czar Bob Lutz, the man who helped unleash the Dodge Viper and the Pontiac Solstice, spends his days touting the plug-in electric – gas hybrid Chevy Volt, you know which way the wind’s blowing.

In short, the bellowing, brash automobile, the car as a symbol of virility (a.k.a. penis substitute) is destined to become an increasingly obscure concept, even within the mucho macho pickup truck fraternity. BUT– automobiles are still, and will always be, a status symbol. And Americans will always love their faithful steeds, for one reason or another. Whether or not this petro-chemical reliant relationship (for now) is a good thing or not is irrelevant. It just is.

Doesn’t the human race EVER learn? Why must we continually have to go through the same pains, trials and tribulations that our parents, grand parents and great grand parents went through? Same with the automobile industry. Same with how our nations handle their affairs– economics included. Even politics. Forever, politics.

1928: Times were “Terrific”. The “Roaring Twenties” they called them. After a short, sharp, 18 month long economic recession in 1920 – 1921, where the deadwood and dry brush was cleaned from the U.S. economy by an economic forest fire, new growth came along and prospered.

Even so, Chevrolet had come in at number one, selling 1,193,212 cars against Ford’s slow ramp-up of production of 607,592. Willys-Overland and sub-marque Whippet were third at 315k cars, with Hudson and sub-marque Essex at 282,203 following at number four. The total new vehicle market in the United States was 4,361,579.

Henry Ford finally listened to his son, Edsel, replacing the ubiquitous Model T “Flivver” with a new Model A car styled somewhat like a shrunken Lincoln. Yes, the great Henry Ford nearly destroyed his own nascent auto company with his stubborn demand that no change be made to what had been successful for so long. The Model T was his alter-ego, emphasis on ego. Finally, the market spoke and he at long last heard – at huge cost to his son who possibly alienated his father from that time on.

By August 1929, car sales dropped precipitously – even prior to the Great Depression which began on October 29. Even so, 1929 new vehicle sales amounted to 5,337,087. August car sales gave a warning that nobody heard.

1930 sales: 3,510,178 (a 34.2 percent drop year on year).

1931 sales: 2,472,359 (a 29.5 percent drop year on year)

1932 sales: 1,431,469 (a 42.1 percent drop year on year, a 73.2 percent reduction in sales compared to 1929. An auto market only a quarter the size of four years before).

1933 sales: up 38.7 percent year on year, to 1,447,018. (Still only about a third of the size of 1929).

1934 sales: up  45.5% year-on-year, to 2,669,963 (a 45.5% increase year-on-year). An auto market less than ½ the size of 1929.

The Great Depression dragged on until 1942, only interrupted by the great build-up of war materiel for America’s entry into World War II. Recently, only a year or so ago, people in charge of “The Fed” reluctantly admitted that the actions – or inactions – of their forbearers had not only caused, but exacerbated the Great Depression. “We’re sorry, we won’t do it again.”

So what are they doing now? Pretty much the same lever-pulling “never mind that man behind the curtain” antics that caused the ruination of the nation some 79 years ago. Throwing more paper money into a fire does nobody any good.

And things in 2008 are moving much faster than 1929. We have mountains of cash being thrown into a fire. The bail out with taxpayer money is for the sole “benefit” of the elite wealthy bankers.

Reminiscent of the Titanic, but instead of ladies and children getting the life-boats, it’s first class male bankers passengers, only, thank you – and the rest of you get locked into the hold to go down with the ship. Tough shit. We’re suddenly aware, as a people, that the politicians sworn to protect and “serve” us all have just locked us into a doomed ship and given the life rafts to others.

Are bank holidays next? Iceland’s economy has totally collapsed just within the last few days, the world’s economy is ever more interwoven. Messrs. Smoot and Hawley are ghosts now, but they are likely to begin haunting us again with protectionism rearing its head, further exacerbating the depth, length and longevity of the oncoming tsunami, just as happened in the 1930’s.

Much like our current “choices” between Presidential candidates, we can choose protectionism and certainly wreck our country, or choose a free market and watch it continue to be wrecked as it has been over the prior 40 years, when corporate managers began to decide to export jobs overseas in earnest. Is there a third way?

Yes. Ron Paul and others have been warning about the possibilities of all of this happening, and was ignored or received derision.

The underlying problem? As always, with humanity: a lack of morals. Corporate managers wanting more power and money at the expense of others. Union leaders and members wanting more power, money, less work and more influence at the expense of others. Politicians wanting more of everything and no accountability. Likewise bankers and financiers.

So how will this all affect Detroit, Inc? We’ll surmise about what might be happening very soon, in our next installment.

Hear that sound? It’s the fat lady singing a dirge for $7.5b of taxpayer money ($25b at risk in total). It’s now as good as spent on a few undeserving automakers. Industry executives and union bosses alike are celebrating their lobbying victory, ignoring their still-dire position for the glorious moment. Congress may have made with the cash in short order, but they aren’t rid of the freeloaders just yet. In fact, no sooner had the ink dried on President Bush’s signature on HR2638 than industry backers were telling the media what TTAC has surmised all along: $25b is only the first step. In its first story on the new law, the Detroit News reports that “Michigan lawmakers plan to return next year to seek another $25 billion in loans for 2009 and 2010, and more flexibility in how the funds can be used.” And why wouldn’t they?

Last year, Congress passed the Energy Independence Act (EIA), directing the Department of Energy to supervise a $25b low-interest loan program to “retool” 20-year-old American factories to build fuel-efficient automobiles: vehicles that must be at least 25 percent more miserly than “similar models in their class.” Since then, with increasing desperation, Motown has been agitating for fewer and fewer strings attached.

Thanks to tireless industry lobbying efforts (and the electoral clout of Michigans pols), it looks like Motown will get its way. This bailout is shaping-up to be the least accountable giveaway since the 1993 Partnership for a New Generation of Vehicles– which ended-up costing taxpayers $1.25b and produced sweet F.A. for American consumers.

Now that the appropriation has been signed, the law goes into the part of the government that School House Rock didn’t tell you about: the regulatory process. Designating the loan program an “emergency requirement,” HR 2638 gives the Department of Energy 60 days to write the specific rules under which the loan program will be administered. This despite Energy Secretary Samuel Bodman’s assertion that it could take “six to 18 months” to award the loans.

To help Bodman draft regulations on such a short time frame, legislators have appropriated a further $10m for “outside consultants” and other professionals. (The EIA originally requested $100k to be spent on administrative costs, but Congress decided to multiply that number by 100.) In essence, American taxpayers will be spending the money to hire industry lobbyists to ensure that that the loan program rules are as weak and Detroit-serving as possible.

Not that there are even that many preconditions for the industry to gut. Other than the hundred-fold increase in administrative expenses and shortened regulatory period, HR2638 doesn’t add any caveats or terms. And lawmakers are already sending messages to regulators, going on the record to say that loans should not be capped at 30 percent of a given plants retooling cost, as originally written.

The upshot of this bailout: it’s custom-built to the needs of only three companies. Sure, there’s money set aside for companies employing fewer than 500 workers. But only ten percent of the total loan package. By not including the 30 percent project assistance cap, lawmakers have ensured that taxpayer funds will pay the entire retooling cost for several factories. This lack of diversification means the Federal Finance Bank will be heavily exposed to the success or failure of a few products and even fewer companies.

This is exactly what Detroit wanted. With the lions share of $25b invested in only three companies, the U.S. government will become a major stakeholder in three highly troubled firms. If those loans “work,” the D2.8 will come back for more. If Detroit’s woes deepen, the U.S. government will have no choice but to step in to further protect their our investment.

And the possible negative consequences are not limited to taxpayer liability for the success or failure of the D2.8, or even the opportunity costs of $7.5b. The loan program is so uniquely tailored to the needs of American firms that a free-trade dispute is not outside the realm of possibilities. There were distinct rumblings coming out of Paris last week, as European automakers intimated that their tolerance depended on a similar bailout across the pond. After another $50b of “more flexible” loans, and European Union intransigence, the other shoe will drop.

There is considerable irony here. As Rep. Sander Levin (D-MI) puts it, “it’s been a struggle here in Washington to secure acknowledgment that a domestic-based auto industry is vital for America.” If Detroit backers are complaining that there was significant opposition to this bailout, then where’s the beef?

Any number of conditions could have been attached to HR2638 to improve accountability, diversification of risk and economic benefits, or even limiting CEO pay during the loan term. Instead lawmakers tailor-made the loan program to Detroit’s specifications while complaining that nobody cares if the automakers live and die.

The chilling reality laid bare by this bailout is not that automakers can already get exactly what they want from DC. It’s that from here on out the going only gets easier. For Detroit, anyway.

Back when The Big 2.8 were fighting the United Auto Workers (remember them?) for contract concessions, the automotive press considered it the battle to end all battles. Once the New Deal was ratified– courtesy gi-normous union bribes and epic deferred costs– the pundits proclaimed themselves satisfied. It was time for Detroit to roll-up its sleeves and compete. No more excuses! Well, it’s been exactly a year since the UAW OK’ed the GM deal and we’re [still] hearing nothing but excuses. Oh, and the sound of your tax money lighting CEOs’ cigars.

Let’s face it: federal loans will do fuck-all to save the domestic auto industry. Even if you’re not a student of TTAC’s Chrysler, Ford and GM Death Watches, the idea that The Big 2.8 will resurrect their fortunes by sharing $25b+ of your hard-earned tax money is completely, utterly, mind-blowingly preposterous. To even CONSIDER this boondoggle, your elected representatives had to ignore a prima facie case that these companies are past saving.

The single most important and [you would think] inescapable fact arguing against the loans: lost market share. In 2004, ChryCo, FoMoCo and The General accounted for 60 percent of all vehicles sold in America. Just three years later, that number dropped by more than 12 percentage points, down to 47.7 percent. J.D. Powers’ most recent stats on consumer preferences indicate that the domestics’ slide into the heart of darkness (or at least relative obscurity) is set to continue, if not accelerate.

Why wouldn’t it? As America switches to more fuel-efficient vehicles (a.k.a. cars), Detroit simply doesn’t have the kind of frugal machines that consumers want to buy. Notice the qualifier: “the kind.” Even if Motown (via Korea, Mexico, Canada, etc.) offered class-leading vehicles, decades of brand dilution, lackluster models and dealer shaftage have created a built-in barrier to sales success. If not for fleets, flag-waving and force of habit, The Big 2.8 would already be dead in the water.

So how can Uncle Sam’s handout– I mean, “hand-up” reverse the curse?

It can’t. Think of it this way: no one in Detroit wakes-up in the morning and says “How can I create a crap car today?” What you see at the dealership is the best they can do. Ford, GM and Chrysler aren’t dying because a lack of funds. (Lest we forget, they were RAKING it in during the SUV boom.) They’re on the ropes because of their greed, sloth, arrogance, stupidity and insularity. Your $25b+ ain’t gonna change that.

Common sense says that The Big 2.8 can’t compete in the future because they haven’t been able to compete in the past. If they could have, they would have. And if they had, or even looked like they could in the future, someone other than you and me would have been happy to lend them the money to do it.

Oh wait! They already did! Look how THAT turned out. GM has burned every stick of furniture in its corporate house– and it’s still paying over $250m in interest on its debt. Ford has hocked everything up to and including its logo. Chrysler is on private equity life support, only a RAM away from total collapse.

Throwing federal tax money at this situation is worse than pissing in the wind; it’s like buying an alcoholic a brewery.

Please do NOT tell me that the plug-in electric – gas Chevy Volt will reinvent the automobile for all time and, by the way, save GM from bankruptcy. Or that a hybrid Chrysler minivan will end our dependence on foreign oil and breathe new life into ChryCo’s rigor-ridden corpse. Or that the Ford Fiesta will usher in a new generation of high margin small cars for the Blue Oval Boyz, and keep Bill Ford from taking the bus to work. Hail Mary, schmail Mary. It’s too little, too late.

While Motown’s planning on using our taxes to try and reinvent itself as a profitable maker of something other than large SUVs and pickup trucks, its competitors are busy reinvesting their profits, creating new and/or improved non-truck vehicles that sell in sufficient quantities (at enough of a price premium) to maintain the profits so they can reinvest enough money to maintain their lead over Detroit and (they hope) everyone else. Funny how that works. Or, in Detroit’s case, doesn’t.

No matter. Detroit’s short-term future doesn’t depend on its near-future products. Chrysler, Ford and GM’s survival now depends on their ability to convince the Department of Energy (DOE) to change the rules for their share of the $25b low-interest federal loans, so they can somehow use the cash to keep the lights on.

Good luck with that. Contrary to popular opinion, I predict that the Department of Energy will not bow to political pressure and hurry their due diligence for Detroit. The Big 2.8 may not run out of excuses. But they will run out of time.

Halleluiah! Oil prices are falling. Despite Nigerian revolutionaries attacking Royal Dutch Shell facilities. Despite hurricanes Gustav and Ike disrupting gulf production. And despite all of the hysteria of the last six months trumpeting the end of the era of cheap oil, oil prices have fallen as much as $55 per barrel after being pushed to a peak of $147.27 in July. Once the residual shock to gasoline refining by Ike dissipates over the next couple of weeks, consumers will begin to see a substantial difference at the pump. So is it safe for Americans to recommission their mothballed SUVs and muscle cars? A close look at financial events in recent days indicates otherwise.

First, let’s recap what we’ve seen.

Beginning in 2004 the price of Light Sweet Crude on NYMEX began an almost uninterrupted ascent that added more than $100 to the price of every barrel. A circus ensued. Consumers swooned (precipitously). Automakers faltered (dangerously). Speculators hyped (aggressively). News media sensationalized (despicably). Inflation grew (corrosively). Environmentalists cheered (quietly). Politicians protested (hypocritically). Oil company execs defended (piously). Saudi’s pumped (merrily). Oil peaked (allegedly). Demand evaporated (predictably). Prices fell.

A more revealing analysis shows that the surge in prices was the result of two seldom mentioned factors: a weakening dollar that required that Americans spend more of them to get their fix of black gold. And index fund managers discovered that the commodities market was a good place to shelter their money from falling real estate and stock markets. In May, BusinessWeek summed the market distortion this way:

“[Commodities] are experiencing demand shock from a new category of speculators: institutional investors like corporate and government pension funds, university endowments, and sovereign wealth funds,” said Michael Masters, managing member of Masters Capital Management, a Virgin Islands-based hedge fund.“Index speculators are the primary cause of the recent price spikes in commodities.

Speculative activity in commodity markets has grown dramatically over the last several years. In the past decade, the share of long interests – positions that benefit when prices rise – held by financial speculators has grown from one-quarter to two-thirds of the commodity market. In only five years, from 2003 to 2008, investment in index funds tied to commodities has grown twentyfold, from $13 billion to $260 billion.

Additionally, hedge fund director Masters points to data showing that over a five-year period, China’s demand for oil has increased by 920 million barrels, while over the same period, index speculators’ demand has increased by 848 million barrels.”

Whew! So it is safe to say that if you are invested in any of these index funds or if you are due a pension, you likely benefited from the higher commodity prices at the same time you are paying higher prices at the pump.

Since that time, we have seen the market peak followed by a rapid deflation in prices. While it can be argued that demand destruction accounts for some of the effect, it alone cannot approach the 37% fall in price. Rather, the dollar has strengthened (erratically) and investors have stampeded out of the notoriously risky commodities market.

This is good news, right? The bubble, which energy economist Edward Morse calls it the “Oil Dot-com,” has burst. Now consumer prices can be restored to normal supply and demand price points. Yes, but… (There’s always a big but and I cannot lie.)

Monday morning financial markets were ambushed by the announcement that troubled investment bank Lehman Brothers, a 158-year old fixture on Wall Street, has folded. The big B-K. Horrified, the Dow Jones industrials plummeted more than 500 points, the worst day of trading since terrorists slammed hijacked airliners into the World Trade Center.

What of oil futures? Based on recent history one would think that fleeing investors would seek refuge for their money back in the commodities market. Didn’t happen. Instead it followed the trend of the broader market. The inverse relationship between the markets appears to have broken. Which is a good thing – I would rather index fund managers look elsewhere when stocks falter so energy prices that directly impact my pocketbook don’t become unnaturally inflated.

But this is a dire indicator. Rather than the correction of an over-inflated price (I still believe that oil is overpriced and has room to fall further before it achieves an undistorted equilibrium price), this week’s decline shows that investors well and truly have lost faith in the economy. Rather than divert their funds to alternate investments they sold off for cash or stayed pat and suffered a loss in equity.

In other words, factories will idle, business will stop growing, and the transport of goods will slow because no one is buying. All of this points towards corporate downsizing and layoffs.

B&B, be advised: keep your gas guzzlers parked.  It’s going to get worse before things start to get better.

Driving well has nothing to do with how well we late-apex Oaktree Corner at VIR, how cleanly we rev-match a heel-and-toe downshift or how much we know about F-bodies and Kappa platforms. It’s all about simple movement and complex congestion, intuition versus intelligence, myth versus reality. Why We Drive the Way We Do by Tom Vanderbilt is a shot across the bow of the typically clueless, not very competent, generally thoughtless, surprisingly unsafe, unjustifiably over-confident average driver. In other words, you and me.

Take the common task of merging from three lanes into two. Polite drivers will segue into the next lane as soon as they can. Jerks will stay in the closing lane all the way to the end, then force their way in. As Vanderbilt correctly argues, these “jerks” actually help traffic move faster. If a larger number of motorists simply followed their lead, stayed in the “open” lane to the bitter end and THEN alternate-merged into the funnel, everyone would get where they’re going more quickly.

Or say you’re in a line of fast-moving cars following somebody in your lane who slows quickly— maybe he’s been cut off, or is about to miss an exit. You’re third in line and so skillful a wheelman in your Brembo’ed BMW that you can follow the car ahead pretty closely and still brake safely. Unfortunately, the six cars behind you each progressively uses up the rapidly closing gaps that you have single-handedly created, and the tenth car in line has a huge and unavoidable rear-ender that you caused.

Traffic driving is filled with visual illusions and sensory tricks. SUV and pickup truck drivers tend to go faster without knowing it, because they’re just that much farther above the road. They’re just like early 747 pilots who tended to taxi at speeds that could damage the landing gear, because they’d never sat that high above a taxiway.

Traffic has many facets. We communicate in traffic with bumper stickers announcing that we’re religious, liberal, ex-Marines, whale-savers, parents of teachers’ pets. Yet the little billboards are counter-communicative. Beep to try and say Semper Fi and you’ll get the finger. (I was leaving the gym in our Boxster awhile ago and found myself right behind a woman in a near-identical Boxster, waiting to enter the highway. I gave her a “Hi, Porschie fan” toot and got, yes, the deadly digit.)

Parking is an inevitable part of driving. Why do many people park substantially farther from the big-box store if they have a sightline to the front entrance, even if there are closer spaces off to either side? Some drivers are active parking searchers, endlessly cruising to look for a spot, like an orbiting hawk. Few can bear to be owls, perching in wait for a shopper to come out of the mall to follow them and take their spot. In one survey of a 15-block area near UCLA, a survey discovered that people looking for parking drove 3,600 miles a day.

Driving involves not just seeing but knowing what to do with the information you thus collect. A driver in Maine will brake immediately for a moose but less quickly for a zebra, since he has to process an unfamiliar situation. When the light turns yellow, you need to quickly make the correct decision: push through and run the slight risk of getting heavily T-boned by a green-light jumper, or stop quickly and run the more substantial risk of getting into a minor rear-ender.

Traffic is stuffed with seemingly random but always instructive factoids…

We constantly see other drivers making mistakes but are unable to see ourselves doing so.

We often drive at a distance behind the vehicle ahead that far exceeds our ability to avoid a crash, because we have blind faith that the driver in front of us will never, ever need to stop quickly.

Drivers prefer waiting in a single long line than in multiple shorter lanes, because they hate the stress of worrying that the other guy has chosen a faster lane.

Rubberneckers create the perfect self-generating traffic jam, and people slowing to look at an accident get into accidents themselves.

If you drive an average of 15,500 miles a year, there is one chance in 100 that you will die in a fatal car crash over a 50-year lifetime of driving.

The most dangerous vehicles on the road are… pickup trucks. More people die in pick-’em-ups per 100m miles driven than in any other vehicle.

Stirling Moss once said “There are two things no man will admit he cannot do well: drive and make love.” But then smarter Albert Einstein said, “Any man who can drive safely while kissing a pretty girl is simply not giving the kiss the attention it deserves.” Go figure.

The great Detroit bailout of 2008 will not be debated in terms of economics. Free market considerations will take a back seat to the “consensus” on what’s good for our “national interest.” But Detroit is just one among many industries now nuzzling towards the warm embrace of a federal bailout. So what makes the American auto industry more equal than say, the mortgage sector or the airline industry? Not much, as it turns out.

In fact, mortgage giants Fannie Mae and Freddie Mac are already suckling upon the federal teat. Financial analysts say that taxpayers are facing a $300b bill for that already-underway bailout. Or more. For now. The staggering size and indeterminate endpoint of the terrible twins’ predicament creates the possibility of Motown-scuppering “bailout fatigue.” Meanwhile, the emerging details of the deal are sending Detroit a message: if you want public money, management must change, investors will take a bath and you’ll be placed under federal “conservatorship.”

This not what Detroit wants to hear, never mind experience. Hence the Big 2.8’s relentless “not a bailout” rhetoric. But even the most devout industry backers have to understand the populist appeal of “letting Detroit choke on its own SUVs” rhetoric. America does not love a loser, let alone a litter of them.

And push come to [unexpected fiscal conservativism revival] shove, D.C. will back the financial giants before Detroit. In fact, much of The D2.8’s recent financing came from the very structured investment vehicles that the Fed is propping-up by backing Fannie and Freddie. Every Detroit exec worth his country club membership would prefer $300b in bailout fatigue over a post-F&F credit market.

But yet another hungry mouth looms over the government trough, anxious to secure patriotic assistance in hard times. The airline industry is on course to lose $5.2b this year, and another $4.1b in 2009. Another flagship American enterprise, and the source of much national pride could just need our collective help… again.

And once again, the parallels to Detroit are eerie. A rapid rise in fuel costs that “nobody saw coming,” perennial legacy costs and crippling labor relations bind automakers and airlines in common misery. What’s more, both trumpet their necessity to the American economy while consistently having their lunch eaten by lean, mean competitors.

The airlines are not currently proposing bailout schemes with the “no bad publicity” shamelessness of Detroit. But when automakers come a-begging, the airline industry parallels will (or should) be brought up by los federales. Why? Because the major airlines are the living dead of corporate welfare necromancy past.

From the $15b “great patriotic bailout” post 9/11, to ongoing “reserve air fleet” payments, from protectionist ownership laws, to Reagan’s infamous strike-busting, the feds have done much to assist the airlines. And what do the taxpayers get for the trouble? Giant firms, dead on their feet, slouching towards bankruptcy court. Or, yet another bailout.

The travails of the airline industry and the F&F unraveling are not the only potential roadblocks to Detroit’s campaign on the Potomac. There’s even a chance that lawmakers might hold American automakers to account– not only for its poor business practices– but for its profligacy with pork long since digested.

The New Chrysler of today is hardly a ringing endorsement of the kind of “loans for retooling” bailout being shopped around. It’s hard to draw causal links between the bailout of ’79 and Auburn Hills’ current plight. Too much water has flowed under the bridge for such a sweeping claim. But, Chrysler’s precipitous downfall proved (if nothing else) how fleeting a bailout can be.

Detroit has also handily proven that government handouts given to the industry as a whole are even more wasteful. In 1993, the government created The Project For A New Generation Of Vehicles (PNGV) to help Detroit build 80 mpg sedans for everyone. Eight years and over a billion bucks later, Ford, GM and Chrysler had each built one “working prototype,” capable of 72 mpg or better.

This was the chance for Detroit to invest intelligently in R&D to prepare for a fuel price shock it “never saw coming.” Instead, $1b+ bought Americans three unobtainable diesel-electric hybrid cars. PNGV research helped clean-diesel and fuel-cell development, but where are these cars of the future?

The pressure is on politicians from all sides to protect their nation’s economy. Since Freddie and Fannie have been deemed too big to fail, the others must wait in line. But Detroit is no more deserving of federal loans than anyone else, but presents a poor track record and little hope for the future. When all is said and done, there’s still a chance that DC could just say no.

Selling eight brands’ worth of vehicles under the “Employee Pricing for Everyone” banner does nothing to reassure jaded “I won’t ever buy domestic” car shoppers that GM isn’t Wal-Mart. Even so, GM makes some great– well very good anyway– rolling stock. But a quick bailout from the Feds won’t fix the cash-burning automaker in time for consumers to discover this fact. It will simply prolong The General’s “we’ll muddle through” mess until the next crisis. What GM’s North American ops really need is a full, head-on crash into the wall of bankruptcy, followed by private DIP (debtor-in-possession) financing. Meanwhile, it’s a real Saab story.

News flash! During the last GM fire sale, I bought a 2007 Saab 9-3 2.0T. The 9-3 offers a great combination of comfort, handling, performance and decent fuel economy. Safety? Top pick of the IIHS. In an era of high gas prices, when every automaker scrambles to make small cars “cool,” GM’s got a darn good one.

Only no one knows about it. Instead, The General is busy trying to convince the public that the electric car of the future is on its way. Wake me up when the Volt arrives. Until then, why bother? What IS the point, especially when it comes to Saab?

GM began its Swedish odyssey in 1990 (with 50 percent ownership). The takeover reached fruition in 2000, with complete ownership. GM’s thinking at the time: Saab would provide the company with a Euro entry lux vehicle for the U.S. market. GM would gain sales by expanding the Saab offerings upwards, fending-off rising competition from both the new Japanese and stalwart Euro lux brands.

Wait. Wasn’t Cadillac supposed to be GM’s upmarket brand? Did GM really need Euro-badged vehicles? Perhaps Saab’s takeover was an admission of the damage already done to Cadillac. Or maybe it was reverse badge snobbery from the Powers that Be. No matter how you look at it, GM never figured out what to do with Saab.

Saab launched its volume leader, the 9-3, in 2003. It had a host of problems, mostly electronic. Vehicle testers/raters like Consumer Reports ranked the 9-3 as “problematic,” giving the brand a black eye. No one really expected a Saab to be as reliable as a Toyota; the car’s quirkiness, Swedish design elements and turbocharged engine offered a trade-off. But for a company (GM) as supposedly committed to vehicle quality to build and sell a modern era car that didn’t work well (to put it mildly), well, the damage was done.

In subsequent model years, the problems were mostly resolved. But Saab’s sales never recovered. They declined from 2003’s peak of 48k units to last year’s 30k last year. Sales in ’08 are set to be much, much worse. It’s been widely reported that GM’s lost money on Saab for all of the years it’s been involved.

During this decline, RenCen decided to expand the Saab lineup on the cheap. It looked to leverage its investment in Fuji Heavy by rebadging a Subaru WRX as a Saab 9-2x. No one was fooled; the small Saabaru never sold more than a few hundred units a month, and the experiment quickly ended. GM also decided Saab needed an SUV on the other end. The General repackaged it’s less-than-stellar Chevy Trailblazer as a Saab 9-7x. Same result. Like anyone really thought this vehicle-– built in Ohio– had any linkage to the brand? Where was the true Euro-flair, the ride, the design? Gone.

To make matters worse, GM launched a new tagline for the brand in the fall of 2005 with a massive (for the brand’s size) media campaign: “Born from Jets.” Ok, like anyone in the USA had any clue that Saab started life as an airplane company? Can anyone name a Swedish jet? Did anyone care? Suffice it to say, as mentioned above, the campaign failed miserably.

Strangely, the Saab 9-3 today could be the right car for times. But GM bungled the handling of the brand from the beginning, and then compounded mistakes. It’s too late to breathe fresh life into this dead brand.

Think of other GM brands where this exact pattern has been repeated. GM’s mistakes with the Saab brand reflect the problems GM faces with consumers across its entire vehicle line-up: poor build quality and mechanics (now mostly resolved), lagging technology, stale designs (much improved today), overlapping vehicles (still an ongoing problem) and weak brand equity (getting worse all the time).

I want GM to make it. I’m an American. But why should the Feds give money to a corporation that’s done such a piss-poor job handling its North American business, such as selling one of its only competitive cars? What makes anyone think GM will do better with a bailout? No, GM needs to crash in North America and then rise from the ashes. It’s the only way.

Detroit refuses to contemplate the only possible savior for their broken businesses: bankruptcy. Unless Chrysler, Ford and GM use Chapter 11 protections to kill products, spike brands, close factories, “renegotiate” labor agreements, terminate dealers and generally reinvent themselves, they will continue to die by a thousands cuts. The automakers’ pride– and their belief that “no one buys cars from a bankrupt automaker”– prevents this radical move. So, instead, they’re pursuing a federal bailout. Only they don’t call it that. And therein lays the seeds of their final destruction.

Motown’s federal bailout is set to arrive as $50b worth of low-interest federal loans. The money is a [now-inflated] part of a $25b provision in last year’s Energy Bill, disguised as an attempt to “help” Detroit retool 20-year-old factories for a fuel-efficient future. TTAC and other commentators immediately identified it as a bailout. Simply put, the 20-year caveat restricts the loans to Detroit.

Thanks to the very public Bear Stearns bailout debacle, and the even more prominent Fannie Mae and Freddie Mac “rescue,” and The Big 2.8’s increasingly obvious financial distress, the convenient falsehood of Detroit’s “green” federal assistance has lost currency. Hence Bill Ford, Alan Mulally, Mark Fields, Rick Wagoner, Bob Lutz, Jim Press and the rest of the Motown elite are busy denying that the money is a bailout. As Queen Gertrude remarked about her evil doppelganger in Hamlet’s play-within-a-play, “The lady doth protest too much, methinks.”

There are a couple of simple reasons why Detroit won’t come clean about their need for a taxpayer-sponsored financial infusion. First and foremost, personal power.

As Edward Niedermeyer observed in his Aporkalypse Now editorial, we’ve been here before. The last automaker “bailout” was bestowed up Chrysler. It was, in fact, a federal loan guarantee program (this time it’s actual loans). Uncle Sam demanded an executive shakeup and enough management-related strings to turn the Pentastar Pinocchio back into a marionette. If any of the current players admitted to the feds that the $50b was a bailout, they’d lose their autonomy (i.e. power) and, most probably, their jobs.

If you wanted to be more charitable about Detroit’s craven denial of their position at the head of shit creek sans paddle, you could say that Ford, GM and Chrysler don’t want to destroy their [remaining] customer loyalty. (Never mind potential conquest sales, we’re moving beyond that now.) They recognize that the word “bailout” and “bankruptcy” are virtually interchangeable in the public mind. And for good reason. It’s the truth.

While Motown’s moguls deem this prevarication necessary to shield the buying public from the heretofore under-the-radar realization that one, two or all three Detroit automakers are in real danger of going bye-bye (say sayonara to your vehicle’s resale value), the lie puts The Powers that Be in a ludicrous position. Even as they hustle over to Capitol Hill to secure their piece of the multi-billion dollar public pie they must pretend that everything’s hunky dory.

“Ford CEO says effort to regain profits going well” today’s Detroit News headline blares. Yes, OK, if everything’s going so well, why does Ford and friends need $50b of our money to fund their recovery? Bill Ford trotted-out the new party line: it’s all about the SPEED of bringing green machines into the supposedly free market. If the money is denied, “It would just make everything more difficult, and we may have to go slower, and that’s clearly not what society wants.”

Sure, I blame society. But it’s hardly likely that society will blame society. Despite the fact that bailout bucks are free-flowing at the moment, despite the fact that Michigan is a key state in the upcoming presidential election, despite Detroit’s cunning plan to avoid speaking the word “Voldemort” in public, The Big 2.8 are not going to have as an easy time of this as they think.

The “bailout by any other name would still be so green” ruse may fool willfully ignorant Big 2.8 dependents– execs, union workers, suppliers, dealers, etc.– but the “change Washington” election rhetoric circulating through the rest of the country indicates a growing Pink Floyd mentality: “keep your hands off of my stash.” During these times of pseudo-austerity, telling the people’s representative that $50b in federal funds is “nice, but not REALLY needed” is not going to be a particularly convincing strategy.

This whole boondoggle is just another in a long line of half-assed, boneheaded decisions that reflects Detroit’s ongoing inability to fully face their actual, honest-to-God brand, product and profitability problems and develop a viable strategy– now involving Chapter 11– to overcome them.

There is but one word that truly suits this $50b federal loan guarantee/bailout program: enable. Even with some pertinent strings, the money will simply enable Detroit to continue its addiction to stupidity, sloth, greed and arrogance. And that’s why I believe Detroit should not receive the funds.

Discuss Detroit's bailout plans with one of its well-informed backers, and they will inevitably bring up the Chrysler bailout of 1979. Chrysler's near immediate return to profitability after receiving low-interest government loans is considered proof that U.S. government intervention in the American auto industry can work. After all, Chrysler paid back all its federal loans seven years early. But this comparison doesn't hold water. If anything, the bailout of '79 points out the many reasons for opposing the next big Detroit giveaway.

Bailout backers claim that low-interest federal loans helped Chrysler turn its business around. But there are loans and there are loans. Detroit's lobbyists [correctly] call this year's Department of Energy funding “an incentive to help the country meet its energy goals.” Back in 1979, Uncle Sam's money was universally and unashamedly acknowledged as a bailout.

Bottom line: the forthcoming $50b in low-interest government loans will arrive with far fewer and less powerful strings attached than the $1.5b lent to ChryCo back in the day.

When Chrysler came begging to congress in '79, it was in the midst of massive restructuring. The automaker had already sold or shuttered huge portions of its business, laid off workers and extracted then-historic concessions from the UAW. Even so, Congress was in no mood to give without asking. Our legislators placed significant conditions on the eventual bailout package.

To qualify for loans, Chrysler was forced to raise another $1.5b in private capital, present a convincing plan to return to profitability, and accept Treasury oversight of its implementation. This included the ability for the treasury to shuffle Chrysler's leadership in order to provide "a sound managerial base."

Needless to say, the “un-bailout” of 2008 is unlikely to include any such conditions.

The first $25b which has been authorized– but not yet appropriated– will be used to retool plants to build more fuel-efficient cars. But Detroit is transitioning to increased fuel-efficiency anyway, thanks to both market demand and beefed-up fuel economy regulations. And though final rules for the loan program have not yet been drafted, Washington doesn't appear to be asking for any more than business as usual from Detroit.

Considering the risk to taxpayers, Detroit needs to prove there is at least a chance it will be able to pay these loans back.

The key to Chrysler's post-bailout success was a well-grounded turnaround plan rooted in solid products. The K-Car and minivans were the right products at the right time. The government could invest in Chrysler with some confidence that it would return to profitability. Especially with Treasury officials closely monitoring the turnaround. Not to mention the salutary effects of a little job insecurity among Chrysler's execs.

Today, the federal government has no such grounds for optimism in Detroit's short-term future. Chrysler's new-product pipeline is a wasteland as far as the eye can see, with only the Hornet compact standing out from the Nissan re-badges and mild re-skins.

GM is banking on the Volt EREV to turn its fortunes around, but without inexpensive, fuel-efficient options in the meantime, the General won't survive to see the [initially] low-volume Volt turn a profit. Nothing minivan-like looms on GM's horizon to justify a huge, public money investment.

Ford alone shows signs of the kind of across-the-board revamping demanded by the dire times, bringing proven, paid-for and popular European models stateside over the next several years.

But congress won't be in a position to bail out specific automakers based on their turnaround plans; The Big 2.8 are approaching congress as a single block. What's more, they're framing the bailout in terms of environmentalism and nationalism (i.e. an entire industry in decline). This plan seems specifically designed to shield individual automakers from scrutiny and accountability whilst manufacturing a atmosphere of crisis.

Though rationales for the bailout are expressed in terms of decreasing America's dependence on foreign oil, this is a red herring. As Farago points out, consumer tax breaks make far more sense as a means of approaching this problem. And contrary to the all-for-one talking points, the American auto manufacturing segment is not in ruins. Transplant factories still build high-quality, profitable products across the land.

This bailout then is a political decision, motivated by political goals and wreathed in nationalist rhetoric. It seeks to collectively rescue several failing firms in a rapidly-changing industrial landscape.

As such, its closest comparison is to the British Leyland debacle of the 1970s. Then, an emotional attachment to failing British car brands cost UK taxpayers billions before the whole mess fell apart in a pile of rust and faulty electrics.

Without principled political resolve from Washington, Detroit faces a similar fate. Even with appropriate terms and conditions, Chrysler's return to the brink of bankruptcy– via a series of bone-headed product decisions and executive greed– demonstrates conclusively that, ultimately, no amount of money can save an automaker from its own incompetence.

The auto industry's $50b bailout plan should, by all  accounts, be a fairly controversial issue. Detroit wants a re-do after chasing SUV profits off a cliff, but can't even guarantee that $50b will be enough. So why are industry pundits so unified in their support for the industry plan? To be fair, there is some opposition to the bailout plan among the chattering classes. Curiously it seems to be limited to John McCain, SUV-haters and everyone on Wall Street. Oh yeah, and TTAC. Meanwhile  every buff-book columnist and "car-guy" commentator worth his junket airfare is parroting the same two basic arguments. First: it's not a bailout. Second: America, Fuck Yeah.

The "it's not a bailout" meme began when Jalopnik's Ray Wert went on CNBC's Street Signs and argued that the proposed plan was "just" loan guarantees. As in "not exactly the same as Bear Stearns." Within days of Wert's Clintonian parsing, Danny Howess of the Detroit News penned a column titled "Big 3's $50b Plea Is No Bailout".

Howes even lets an unnamed "industry executive with intimate knowledge of the policy discussions" make the crux of his argument. "We're not saying give us money. We're saying give us a reasonable cost of capital to invest in the United States. This is not a bailout."

In reality, the distinctions between Bear's "emergency line of credit," and the low-interest loans that Detroit is requesting are largely academic. Detroit is joining Bear, Fanny and Freddie in requesting that American taxpayers invest in their future when Wall Street won't.

Wall Street makes decisions on dollars and cents, but Washington runs on emotion and spectacle. A day late and several credit-ratings short, Detroit and its apologists fled for the last refuge of the scoundrel: blind Patriotism.

For Angus MacKenzie of Motor Trend, propping-up Detroit is nothing short of a matter of national security. "Think about it," writes MacKenzie. "If you know how to make a car, you know how to make a lot of other stuff — everything from air-conditioners to aircraft carriers." Later he dedicates an entire paragraph to straight-out assertion that "Manufacturing — auto manufacturing — is a strategically important business." In short, Detroit must be sheltered from competition, whatever the cost.

And with that, MacKenzie weaves Detroit's woes into the fabric of American economic decline. Like the subprime mortgage crisis, the downfall of America's "manufacturing– auto manufacturing" sector was the result of an economic "imbalance" he argues. Besides encouraging a blind investment in auto builders, this narrative also conveniently absolves Motown's CEOs of all responsibility for their situation.

This isn't overly surprising, as MacKenzie tends to side with Detroit wherever possible. After all, when times are bad, ad budgets get cut first. When Detroit does well, Motor Trend does well. But there's a big difference from reading MT fawning over sub-par Detroit iron and reading MT suggesting that taxpayers hand over $50b to the sub-prime auto business. Especially when we're told that if "even one" of the once-big three make it, "it will have been worth the investment. For America's sake."

Peter DeLorenzo of Autoextremist notoriety isn't afraid to call Detroit's predicament like it is. But when he's done admitting that even $40b worth of bailout is "mind numbing" and undeserved, he can't help but cop out.

Like MacKenzie, the specter of a general malaise– this time as a cultural decline– takes center stage in DeLorenzo's analysis. "We cannot come to the table in this new global economy only as… a people who have completely lost the ability to create or manufacture things… because once we lose that, then the day we lose touch with the basic fabric of our nation won't be far behind. "

But clearly we haven't lost our ability to create or manufacture things. After all, auto factories in America build competitive products for profitable companies every day. They just happen to have names like Toyota, Honda and BMW.

It's easy to equate giving Detroit money with helping America, but what exactly are we trying to save? These three companies which have struggled to make competitive products or turn a profit for decades. A $70m lobby gorging on federal pork, from the $1b PNGV boondoggle to the ethanol lunacy. The Chrysler Sebring.

The American "automotive sector" has not failed. Nor have Americans forgotten how to make stuff. The Big 2.8's plight is the simple, inevitable result of tragic mismanagement. Using tax money to enable them, promoting this policy, is not patriotic. It's a complete betrayal of the principles of hard work and fair competition, and the necessary balance of risk and reward, that made this country great. 

Psychologists tell us it's important to vent, so every so often I have to clear the air and discuss what really grizzles my gristle. I can't take it anymore, and it's possible– even likely– that I'm not alone on this. So, without further ado, you know what really grinds my gears?

For starters: Edmunds' Inside Line. While all the rest of us in the internet-car world (by which I mean all of us– TTAC, WorldCarFans, Jalopnik, Autoblog, whoever) are busy posting pictures of some car released at 12:01 AM, EIL already has a review of that car up. I mean, for heaven's sake, even Pulitzer Prize-winner Dan Neil is often stuck waiting behind them in the queue. Just yesterday, for example, InsideLine posted a drive of a Camaro mule and reviews of the Cadillac CTS-V and the new European Ford Fiesta. They can go straight to hell.

The upshot, however, is when Edmunds described the 2008 Lancer: "This weightiness similarly describes the car's ride quality and chassis reactions, but in a good way." I more candidly reported that "Mitsu has fitted the base car with a suspension made out of Twinkies." I'll always take free market capitalism over a well funded command economy.

You know what else really grinds my gears? The lack of good seat coverings in cars. If you're buying a regular car, you can choose between cloth and plasticky over-treated leather. On the other hand, in nearly all luxury cars you're limited to Dow Chemical leather– or the occasional cheap-ass vinyl posing as leather. Where is the nice cloth in a luxury car? Especially the cushy cars that deserve cushy cloth seats. You wouldn't wrap yourself up in a leather blanket when you're cold, and I'm not sure that leather chairs in the car are much different. Hot in the summer, cold in the winter, they seem to be frequently uncomfortable. What they do have going for them is that they're pretty stain resistant and take longer to show wear. But can't they do something about the hide? If they have to use leather, at least use quality leather. I'd pay more money for a car with leather seats if they felt like my girlfriend's Coach purse.

The next issue that's been grinding my gear this week is crummy car websites. It seems like the manufacturers have no interest in leveraging the benefits of the internet at all. The web interface on so many manufacturers' sites appears to have been designed by a ninth-grade kid. Bandwidth is apparently so expensive that we are limited to only 6 photos, including an obligatory picture of the plastic shroud that covered the engine.

This last one is even more useless than when the dealer tries to show you the engine, as if it means anything at all to see "Honda V6" under the hood. The "estimate payment" functions tend to be so useless that it's better to leave them off entirely. What I want in a manufacturer's website: easily accessible stats (which aren't buried in sub menus), tons of photos, and a functional inventory locater.

Special tuner-edition German cars also grind my gears. Every day we learn about yet another ABC Tuninghaus that has a new version of the Audi A6/Mercedes SL/BMW 5-Series that has 904 horsepower and a tragically ugly bodykit. And, it's only $100,000 more than the original version of the car, which the manufacturer spent billions developing. But hey, a few guys say they can crank your new German sports saloon up to methamphetamine levels.

You know what I want to see them tune? My Volkswagen GTI. I want it to drive exactly the same, but to get 80 miles per gallon on regular 87 octane (on the tow truck on the way to the mechanic doesn't count).

I close by giving a nod to all the "midsize" luxury SUVs out there– the Mercedes ML, BMW X5, Audi Q7, Acura MDX, and all their cohorts. They all grind my gears. I don't care how carlike their are to drive, or how decently they handle, or that when equipped with the optional $10,000 V8 (sorry Acura), they can out-accelerate a Honda Accord, ten year old Porsche or attack helicopter.

I don't care because they are ugly. They are not as good to drive as sedans and wagons. They are not ideal off-roaders (in spite of gadgets) because the bodywork costs trillions to repair, and because they all weigh 15,000 lbs. And they are all chasing some holy grail of the most sports car-like SUV. I like sports cars too, which is why if I wanted one, I'd buy one. I wouldn't buy Pringles Pizza Flavor chips because they taste "just like pizza"; I'd buy a pizza.

And that, ladies and gentlemen, is what grinds my gears. For now, at least.