Economic Outlook: Doing God's work

By ANTHONY HALL, United Press International
Anthony Hall
Anthony Hall

The chief executive officer at Detroit's third largest automaker is, apparently, not doing God's work: He is, instead, building and selling cars.

That's a tall enough order for mortal men. Kicked to the proverbial gutter by a slump that bumped into a long recession, Chrysler went into bankruptcy in 2009, emerging with a stigmatizing and expensive government loan and a new controlling partner, Fiat Spa of Italy, managed by CEO Sergio Marchionne.


To keep the company alive this long has been Herculean at the very least, especially as the company endured painful months of patience, holding back on any new releases while rivals General Motors and Ford Motor Co., kept marketing at a fevered pitch (or something close to that, considering they were also recession-weary).

Hercules, however, was mortal and at last year's North American International Auto Show it looked as if Chrysler would play its funeral dirge. There wasn't much new -- not much moving forward.


At this year's show, Ford and GM have already taken their bows with the Ford Explorer named Truck of the Year and the Chevrolet Volt given honors as Car of the Year. What happened to Chrysler?

It hung in there.

Chrysler has yet to pay the government back and is aiming to begin doing so by the end of the year with a $2.1 billion installment. But even to get this far was an accomplishment.

"There's not a guy in the auto industry who thought we could do this," Marchionne said in an interview at this year's show, which opened Monday in Detroit.

"If I can't sell these cars, I can't sell anything," he said in a Washington Post report.

"This industry breeds cocky people. We should sell humility pills."

To do God's work, you have to be on Wall Street. Reminiscent of a toss-off comment by the late John Lennon, who said the Beatles had become more popular than Jesus, Goldman Sachs Chairman and Chief Executive Officer Lloyd Blankfein said last year the bank was "doing God's work" and had "a social purpose," which would have likely resulted in an album-burning party had the bankers been musicians rather than financiers.


This week, Goldman said it would take a more humble approach by releasing financial information it has never revealed before: a report that shows where it makes its money and specifying what bets it is making with clients' money and with its own, The Wall Street Journal reported.

The move is an attempt to repair distrust the bank found among its own clients in an in-house survey. Last year, while doing God's work, the bank paid a $55 million settlement to the Securities and Exchange Commission, which charged the bank with packaging securities to sell to investors, even though the bank was betting against them.

As part of its kinder and gentler approach, Goldman said it would begin evaluating clients to assess their level of "sophistication." That would determine what types of securities the client would be offered, a program that is supposed to sound friendly but rather falls back on the frequent legal argument that clients should be aware of the risks they are taking. If a client takes a wild gamble and loses money, Goldman can now categorically say, "Well, this client is a hedge fund manager; he should have known those derivatives were risky" or "This client can't tie his shoes; let's make safe bets for this guy."


How that plays out remains to be seen.

"Let's hope that this is more substance over form. The question is, are they changing the culture or is it a forum to respond to public concerns? If there is a substantive change, that's great," said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.

In international markets Tuesday, the Nikkei 225 index in Japan lost 0.29 percent and the Shanghai composite index in China added 0.44 percent. The Hang Seng index in Hong Kong rose 0.99 percent and the Sensex in India lost 0.14 percent.

In Australia, the S&P/ASX 200 was flat, falling 0.03 percent.

In midday trading in Europe, the FTSE 100 index gained 1.18 percent while the DAX 30 in Germany rose 0.73 percent. The CAC 40 in France gained 0.94 percent and the Stoxx Europe 600 tacked on 1.04 percent.

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