Despite talking a tough line today, Washington seems determined to bail out Detroit, despite the objections of the public (61% opposed it, according to a CNN poll in February). The public is correct. Money diverted to a dying industry is taken away from areas with better prospects.
Unfortunately, changing the chairman is only window dressing at this point. Carlos Ghosn succeeded in turning around Nissan (NSANY) because the problem was only stodgy styling and high component costs - consumers knew the engineering, assembly, and dealers were terrific.
Detroit's problem is not just health care and retirement "legacy" costs. There is another legacy cost that is just as important – decades of bad cars and trucks. Does anyone remember Schlitz? It was the second-largest selling beer in the country as recently as 1976. Then the formula was changed so that it didn't taste as good. Schlitz restored the original formula, but it was too late. Consumers were unwilling to spend a couple of bucks to see if Schlitz was back to premium quality. Budweiser was good enough.
Anderson Cooper goes beyond the headlines to tell stories from many points of view, so you can make up your own mind about the news. Tune in weeknights at 8 and 10 ET on CNN.
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