Floyd Norris had an interesting article in yesterday's New York Times about the state of the auto industry.  He notes that car buyers in general are coming back and, as he shows in the second graph, there's been a sharp uptick in consumer purchases.

But I'm not one of these buyers, and am not going to be for quite some time in spite of the fact that my current car is almost seven years old and that I've never had a vehicle this long before.  The reason?  Somehow the experience of buying a new car has become even worse than it was before the economy in general and the auto industry in particular tanked and it's simply not worth my time or frustration.

So I'm voting with my feet...and wallet.

Full-page, full color ads in major newspapers are very expensive.  Depending on the paper, it costs between $50,000 and $100,000 per ad.

So what was Chrysler doing running a full-page, full-color ad in today's Washington Post and New York Times (I assume it was in other major papers as well but those are the only two I've seen so far today) saying "Thank You America" "for investing in Chrysler"?

First, this wasn't an investment, it was a loan.

Second, if it was in such desperate shape that it needed a loan from the U.S. government, why the hell was Chrysler spending any of that loan on a full-page add that doesn't sell more cars or help restructure the company?

My guess is that this was a multi-million dollar ad buy across the country.  What else that was more productive or would have better helped the bottom line so the loan would be repaid could Chrysler have done with this money?

The real question is whether Chrysler officials flew in a company jet to the ad agency to approve the copy.

P.S.  Before anyone accuses me of being anti-US auto manufactures...I drive a Chrysler.

In his column today, Nicholas Kristof makes the pragmatic case for a bailout for the Big 3 auto makers.  It's hard to make the argument against pragmatism, so let me just insist in this post that those who are being pragmatic drive the hardest possible bargain.  Kristof sets up his column as replies to those who are against bailing them out.  Consider this reply:

A bailout is hopeless: This is a bridge loan to nowhere.

Yes, the Obama administration will have to come back in January with a full rescue package. The package should focus on saving jobs, not stockholders or bondholders. Shareholders should lose most of their investments, bondholders should get a haircut, managers and board members should be ousted, autoworkers should have their pay and benefits trimmed to market levels, and taxpayers should get an equity stake that they could profit from.

That's not nearly good enough.  Here's why:

Here's my "Fiscal Fitness" column from today's Roll Call.

The Big Three Bailout Is 21st-Century America’s Sputnik
December 9, 2008

The world changed suddenly and dramatically for Americans in October 1957, when the headlines screamed about the Soviet Union’s successful launch of Sputnik I, the world’s first man-made satellite. That change became even more real for Americans a month later, when the much larger Sputnik II, which carried what to many is still the classic U.S. pet — a dog — into orbit.

Sputniks I and II may have been historic human achievements, but they were deflating events for Americans, who had become accustomed to their country being unchallenged at the forefront of technological advancement and leadership. Sputnik meant that Americans had to wake up to the fact that what had been a largely unquestioned belief in U.S. innovation, daring, smarts and accomplishments had been not just matched but also eclipsed.

The Big 3 are back on Capitol Hill today, making their case again for access to taxpayer funding.  There are likely to be many ridiculous statements made, but even this crew will have trouble matching George Fisher, G.M.'s leading outside director.  Here's what I read in my local paper yesterday:

Fisher said that GM's 13 outside directors were in agreement with the automaker's chairman, Rick Wagoner, that bankruptcy would ruin the company's reputation.

"We are pretty convinced as to the serious damage to the brand from bankruptcy," he said. "We do not consider it to be a viable approach."

Fisher, the retired chairman of the Eastman Kodak Company, said the GM board would confront the possibility of a bankruptcy filing only if Congress turned down a loan package for GM, the Ford Motor Company and Chrysler.

Interesting discussion over dinner last night: Why is anyone surprised about the increasingly obvious opposition to a bailout of Ford, GM, and Chrysler?

The talk had little to do do with the incredibly poor peformance of the CEOs when they testified before Congress a week or so ago.  To say they got bad marks from the anything-but-scientifically-selected sample of people around the table would be a gross understatement, but that wasn't the point.

Instead, the prevailing opinion was that, long before a bailout was seriously discussed on Capital Hill,  Americans had already passed judgment on the Big 3 by not buying their products and, in effect, by voting with their dollars.  At best, they had already decided they didn't care whether these companies stayed in business.

Capital Gains and Games three days ago:

Would Congress this week have approved assistance for the auto industry had the CEOs of the Big 3 carpooled to Washington for the hearing in a hybrid vehicle instead of flying to DC in separate private jets?

Try to imagine the positive publicity of the trip as they drove through the towns and cities between Detroit and Washington.  Instead of the anything-but-friendly welcome they received by the committees, by the time they arrived in D.C., how many senators and representatives might have been waiting for them in a ceremony on the Capitol steps?

The Associated Press yesterday:

I can't help but wonder: Would Congress this week have approved assistance for the auto industry had the CEOs of the Big 3 carpooled to Washington for the hearing in a hybrid vehicle instead of flying to DC in separate private jets?

Try to imagine the positive publicity of the trip as they drove through the towns and cities between Detroit and Washington.  Instead of the anything-but-friendly welcome they received by the committees, by the time they arrived in D.C., how many senators and representatives might have been waiting for them in a ceremony on the Capitol steps?

Continuing the series, I could spend a lot of time trying to articulate why the Big Three automakers should stop receiving federal funds to resolve or reduce their financial troubles.  But I wouldn't be able to say it any better than Declan McCullagh in his column yesterday. 

There are two misconceptions that are well addressed in the column.  First, saying "the U.S. auto industry" is not the same as saying "The Big Three" automakers.  As McCullagh points out, there are plenty of people employed in the U.S. auto industry who work for foreign car companies operating plants in the U.S.  (My Subaru was team crafted in Indiana a decade ago.)  Second, and more importantly, the absence of a bailout means bankruptcy, not the shuttering of factories.  In bankruptcy, the company is reorganized.  As McCullagh explains:

The Washington Post's Steven Pearlstein wrote a particularly good column on the looming auto industry bailout this morning.  He cites the auto industry as one of the least deserving of a bailout, but concludes a bailout is necessary.  This is beginning to look like how Washington policymakers see it too.