(h/t Tyler Cowen)Many of GM's dealers will receive lavish buyouts as an inducement to close their doors, for a total cost in the billions of dollars. That's disgusting, but it's required both by GM's contracts with them and by the welter of state laws that protect the dealers. (If you want to know who the political power brokers are in any given city or town, look for the car dealers.)
This is going to be kept scrupulously out of the news, because car dealers contribute huge sums to every last man and woman in Congress and the Senate. The public was ready to torch the private residences of AIG executives, but they won't make a peep about paying billions of their own hard-earned dollars to provide a cushy retirement for thousands of already-rich auto dealers.
Copyright © 2010 by The Atlantic Monthly Group. All rights reserved.
Killer Monsoon strikes again!
"This is going to be kept scrupulously out of the news, because car dealers contribute huge sums to every last man and woman in Congress and the Senate."
Car dealers also are a key source of revenues for local newspapers.
Dave in Hackensack and Yancey Ward
I think the tense (and maybe anoun or two) is wrong. Shouldn't it read 'GM and Chrysler dealers WERE a key source of revenue for local media.?
Indeed, Dave is correct. Car dealers are probably the biggest buyers of newspaper ad space, and probably the biggest buyers of ad time on local television and radio.
Why would it matter if they are the biggest buyers of local advertising? These auto dealerships that are being bought out aren't going to be buying ad time anymore.
See this article about state auto dealership laws.
Another reason why the Japanese auto manufacturers are doing better is that they have far fewer dealers, as they got in the game later and were more careful about expanding their dealership network, because the state laws make it impossible to get rid of a dealer once you sign them up!
How about a little insightful commentary to go along with the RedState blockquote? You know, 'Heh. Indeed.' or something.
Car dealers are "power brokers"???
Tell that to Wally McCarthy, who lost his very best dealership location to Eminent Domain abuse, when the city of Richfield, MN decided they would rather have Best Buy's corporate headquarters on the very spot where his lot was.
Or to Denny Hecker, who used to specialize in getting the underprivileged financed for reliable cars, and is now facing bankruptcy (with no chance of any sort of bailout heading his way.) Guess he's not "too big to fail" like certain other over-extended lenders out there.
Car dealers are, for the most part, small-potatoes entrepreneurs. Those who get rich do so by spending a lifetime building up their businesses.
I think this would be a good issue for a bankruptcy court. When I covered the second Continental bankruptcy, I seem to remember that the airline spent a lot of time in the court room on motions to "reject" contracts. Couldn't GM ask the judge to "reject" the contracts with dealers?