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Tuesday, May 5, 2009

Thoughts on the Chrysler Bankruptcy, Steven King and Vegetable Stands

I was driving on April 30th and listened to the President’s announcement about Chrysler almost completing a deal to avoid filing chapter XI, if not for a couple of hedge funds (notably Oppenhiemer, Xerion Capital Fund, and Stairway Capital Management). I was astonished by a couple of things:
  1. That the President of the United States (rather than the CEO of the company, a spokesman for the President or even the Secretary of Treasury) would announce a bankruptcy;
  2. That the President of the United States would do a commercial for a private corporation;
  3. That the President of the United States would out a hedge fund.

I’m not surprised in the least that the hedge funds would buy Chrysler debt and hold out for more money, they are called “Vulture Funds” after all. This is what they do.

I’m not surprised by the bankruptcy (in the light of the hold-outs), but I’m relieved we don’t have liquidation. I’m hopeful (and probably right) that this will be a fast, businesslike affair, like the airlines (I don’t think anyone ever missed a flight in the airline bankruptcies).

What I got to thinking about (it was a long drive) was that what Chrysler, GM and Ford need more of are car sales, not money. And that got me to the Presidential ad to buy American. I’m an outspoken advocate of ‘Buy American’, and have argued, cajoled, and even beseeched my friends and clients to buy a Ford, Chrysler, or GM product. We drive a Yukon (2009), Sierra, and Jeep. To be sure, there’s a blurry line on the actual manufacturing of American cars (the awesome Ford Fusion Hybrid is assembled in Mexico). But the engineering, the shipping, the dealers, and the headquarters are in the US. The people affected by the construction of cars are the people whose kids play soccer with our kids, who go to our daughter-in law’s store, who dine at the local restaurant.

Don’t get me wrong; as Americans, we have the absolute right of freedom of choice and free-market economies. I am the last person to ever deny the right of the consumer to be able to buy and choose what they want. If their determinant of purchase is quality, so be it. If their determinant of purchase is sustainability, so be it. In Japan, countless studies have shown that in blind taste tests, Japanese consumers’ actually prefer the taste of California rice over Japanese rice. Yet when presented with the purchase, the Japanese consumers will always opt for the Japanese rice. Sustainability versus taste preference. What a concept.

In Steven King’s monstrous series The Dark Tower, the main character, Roland, is the last gunslinger in a very bizarre apocalyptic world (it is Steven King). When telling his newly found companions about the fall of his society (in the story, the gunslingers are basically knights or samurai), he states “They had forgotten the face of their father”, a reference to giving up on the values that the traditions had built. I was going through some of my Dad’s stuff this weekend and found his Dodge Main badge (it’s cool, and is in the shape of a Star of David). Dad worked all over Detroit, at Dodge Main, at the Book-Cadillac hotel, at Packard, at Burroughs and finally at GM. Dad lugged a BAR though Europe in WWII. He was a machine repairman with a finicky perfectionist streak, and respected quality.

When we would go on road trips (always in an aging American car with a big engine, like a ‘64 Ford Galaxy with a 392 Police Interceptor), Dad would stop at the vegetable stands to get vegetables. He’d peel each ear of corn, inspecting for worms, and heft the tomatoes. But he’d always buy something. “Fresh is best, and the local guys don’t spray that junk all over their vegetables (probably not necessarily true). Besides, if we don’t take care of each other, nobody will.”

I could tell you American cars are as good as or better than imports; and they are, in my opinion. I could tell you that American cars get better gas mileage, and for the most part they do (by the way, despite the view of Congress and the President, I don’t really give a damn about gas mileage, compared to being able to get all the junk I haul around in my truck.)

But I have an interesting reason: Buy American to sustain your community, and your country. If you shop on the internet, get the price and buy it locally. If you pass a roadside stand, buy the American tomatoes instead of the Chilean tomatoes. Remember the face of your father. He made enough to get you here because someone hired him to work. Sustainability is a valid version of consumerism. We’re all in this together: let’s take care of each other.

Peace,

Leon