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You Know You Are In Trouble When...

December 26, 2008, 8:46 am

You know you are in trouble when a guy who made his fortune in the early Internet boom (which featured companies like Pets.com using the last of their cash to put put sock puppets on the Superbowl) has to lecture you on making a profit.  From the always quotable Mark Cuban via TJIC:

For those in Detroit who have never operated a lemonade stand, or any other business, the way profits are generated is by making products at a price people want to buy them for, and then producing them, with all costs allocated, for less than you are selling them for. It's not apparent that this is a principle that Detroit understands....

You Know Chrysler is Toast Because the CEO takes out a fullpage ad in the Wall Street Journal today to thank the American Public for "investing" in Chrysler.

Lets see, is there anything more idiotic than spending more than 100k dollars on a full page ad "thanks for letting me waste your money " ad ? Does it make it worse that its a business publication where the readers might just recognize the stupidity of wasting money on ad dollars that doesn't even try to sell the product ? How does it make the next unemployed Chrysler worker feel that their entire year's salary just went for a single, ridiculous ad ?

Just one more example of how poorly run the car companies are. Note to the Big 3, spend money to make money. These types of ads have as much value as a Bernie Madoff account statement.

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Category: General Business
  • http://www.tinyvital.com/blog John Moore

    Seems like a rational expenditure to me. They are engaged in rent-seeking, and that requires propaganda.

  • Yoshidad

    Another reason for the "propaganda" is that it buys some silence from the media. This conspiracy of silence masks the amplitude and frequency of corporate crime.

    One further point: the Senator from Alabama rose to protest the Detroit subsidy (actually a loan), but neglected to mention that while Detroit got roughly $5,000 from government per job maintained/saved, Alabama subsidized their Mercedes plant to the tune of $250,000 per worker (and that was a gift, not a loan).

    Gosh! Could the swirling controversy about Detroit have anything with union busting?... I wonder!

    Oh yes, and the UAW's give-backs already in their current contract exceed the requested Federal money requested, which is a small percent of the $700 billion already authorized for the financial bailout(s).

    Is it true that bankers are just better people than assembly line workers, so we need to cut them a break?

  • HS

    The assumption here is the price people are willing to pay exceeds the price to make it; sometimes, this is not the case. What happens when people are not willing to pay more than the price of producing?

    Competition needs to be reduced which hurts comsumers. Let's look at the most extreme case... 1 in 25 people in India have a car, used or new. What would happen if we went back to 1 car per a family of four? Or anyone making less than, let's say, $250k a year can't afford a car. Hopefully, you make more than that or you're taking public transporation.