Why Detroit still makes gas guzzlers Alex Taylor IIIFortune
It’s one of the “hoariest myths” about U.S. automakers, said Alex Taylor III in Fortune. The industry is going broke, we are to believe, because it is building gas guzzlers instead of the small, fuel-efficient vehicles that consumers really want. “That’s wrong … and wrong.” The fact is, Americans “like their big pickup trucks, SUVs, and V8 engines,” and Detroit makes a lot of money catering to that taste. Where Ford, Chrysler, and GM lose money, actually, is on those small, fuel-efficient cars—which they make not to satisfy consumer demand, but rather to boost their government-mandated average fuel economy. If consumers were really clamoring for fuel-efficient mini-boxes, would Ford have to offer cut-rate financing on its 2008 Escape Hybrid? Would GM have to offer incentives to move its smallest car, the Chevy Aveo? Expecting people to buy more efficient cars “by ordering car companies to make them” is like expecting people to lose weight “by banning food companies from selling Big Macs and pizzas.” It won’t work.
The analyst who came in from the cold David WeidnerMarketwatch.com
“The media-sponsored Henry Blodget Redemption Tour is in full swing,” said David Weidner in Marketwatch.com. Blodget, you may recall, was a star Merrill Lynch stock analyst during the dot-com boom. Until, that is, he admitted in e-mails to friends and colleagues that he’d recommended stocks to the public that he knew were worthless. Eliot Spitzer, then New York state attorney general, published those e-mails, and in short order, Blodget was out of a job. He escaped worse trouble by paying a settlement to the Securities and Exchange Commission and agreeing never to work on Wall Street again. But five years later, Blodget is back, offering his financial insights in the pages of The New York Times, Slate.com, Newsweek, and the Financial Times. What’s next? “Britney Spears writing about good parenting?” In his defense, Blodget’s editors argue that his career as an analyst gives him a special perspective on the markets. Actually, “if Blodget has anything special, it is the knowledge of conflicts of interest on Wall Street.” Too bad that’s “the one subject he agreed not to talk about as part of his settlement.” It’s easy to understand why editors turn to Blodget: He’s famous, smart, and a good writer. Whether he’s credible, though, is another matter.