Obama and GM: Just Say No
Reacting to the administration’s defenestration (read: canning) of General Motors CEO Rick Wagoner, Roger Kimball opines today in “Tectonic change,” Barack Obama and You: “it was an introduction to life in the brave new centrally-planned world with which the United States of Bailed-Out America is flirting.”
Well put (as usual).
But the problem, comrade, is “What is to be done?” Ironically, the best answer to Lenin’s famous question was championed by Nancy Reagan years ago in a very different context: “Just Say No.” Companies like GM can change (note the word) the growing government intervention in our lives by “just say[ing] no” to a government bailout, as Ford did. Sometimes that will mean swallowing the bitter and embarrassing pill of bankruptcy (already a government bailout of a sort) and restructuring. But so what? Business failure means you needed to be restructured. Do it yourself.
After all, giving Obama his due, he isn’t the first investor to demand his pound of flesh when rescuing an economically fragile company. Usually, however, it’s a private investor. This is our government with its own agenda. What is needed here is a Corporate Tea Party movement, which encourages the leadership of companies to find financial backing outside the state. It’s called capitalism.
“What is needed here is a Corporate Tea Party movement, which encourages the leadership of companies to find financial backing outside the state. It’s called capitalism.”
I don’t expect that from this ilk. They are already far down the road to corporatism. A couple of weeks ago, during the congressional “outrage” of the AIG bonuses, the new head of AIG was called out by congress to explain the bonuses. Now you and I know that those bonuses were put into the stimulus bill directly by members of congress. Then they got ‘caught’ and feigned outrage over them as a purely political stunt.
I hoped at the time that the AIG executive would forcefully and directly let congress know what he thought of their phony outrage and their inept handling of the economic crisis. This was before I had heard of Daniel Hannon. But that is what I was hoping for: a direct, clear, forthright drubbing down of our feckless political class. But no. What we got was supplication and handwringing.
Nope. I don’t expect our business ‘leaders’ to do anything but grub around for money, and when Obama says “jump!”, to ask “how high?”
George Bush should have pushed GM into receivership months ago–he had nothing to lose. That would have helped everyone, including Obama.
There is a thing called “bankruptcy”, and that thing was already in existence when the first bailout largesse was indulged last year. Bankruptcy is not something you wish ever to need, but when you need it, there is nothing better, until someone comes up with a political claim of “something better”, which in reality could only be some lame excuse for avoiding bankrupcy. Bankruptcy is a very civilized method for salvaging whatever is salvageable when an organization fails its expected participation in the fabric of trust which call “economy”.
A trainload of billions later, the government (at the helm of GM!) is going to have nothing better than bankruptcy proceedings to get the monkey off their back.
Boy, is education ever expensive!
Attempting to preempt financial bankruptcy with anything other than sound business practices can only precipitate moral bankruptcy. Remember, it was not that long ago, when ambitious and talented people used to find CEO positions attractive…
The US government was designed in a minimalist spirit. If we are really uncapable of stopping its runaway bloat, it will soon be the universal solvent that dilutes all human resources.
Talent, diligence, responsibility? What for? Are we going to allow mediocrity to become so alluring and entreprise so punishing? What were the bolshevicks saying?
“It’s called capitalism.”
Which is precisely what this gang of radicals are out to destroy, and they’re off to a fine start.
Actually I believe “What is to be done?” was Tolstoy’s question (after he had given away a large part of his fortune to the poor without discernible impact) not Lenin’s. His answer, advocated by his wife, was to give up the rest of his fortune, and reputation, supporting the Bolsheviks.
I could be misremembering though. It happens.
Oh, this is funny. Corporations showing honour, hilarious. Big business saying no to money, you might as well tell the other type of whores not to buy crack!
Exguru:
I am sorry, but it was not Bush’s place to push them into bankruptcy and it was not Obama’s place to take out Wagoner either. Bush gave them some breathing space, they should have used that time to restructure, even file bankruptcy on their own.
I have never seen a President do something like this and it just sort of gives me the willies.
“I have never seen a President do something like this and it just sort of gives me the willies.”
It should. This has very little to do with GM proper and *everything* to do with the UAW. Obama is just underwriting their program (pensions, health care, anything else not nailed down), under the rather pathetic guise of “guaranteeing warranties” or somesuch.
Hey, they got him there — it’s simple payback. The trial lawyers and teacher’s unions are next, if they weren’t covered well enough in the first trillion.
In this case, Roger, I think ‘defenestration’ is better than ‘canning’–fenetre is French for window; according to my dictionary, a sash window is fenetre a guillotine. ‘De’–out of. I’m sure Wagoner would agree with that defenestration is exactly what happened to him.
Would you buy a used car from a guy who never held a real job and pals around with the likes of Rezko, Wright and Ayers? No? How bout a spanking new Caddy right off the production line?
Obama’s little show of power cost the taxpayers 20 million bucks! Yep, by shoving Wagoner out the door, the GM retirement package kicked in, giving Wagoner a nice little payday. If Obama had left GM alone and allowed them to declare bankruptcy, the payout would’ve had to been settled with all of GM’s other liabilities and contracts.
So, Obama demands his pound of flesh. But the money given to GM wasn’t really his–it was in turn borrowed from the Communist Chinese.
What pound of flesh will they be demanding?
Whatever the merits of demanding changes by GM for money, but the process and manner by which it is happening as a very Latin American feel. Obama says the government doesn’t want to run GM, but it gets harder to believe that sort of thing day after day. There is a fantasy that government intervention will “save” people. The same folks who complained about the government’s response to Katrina pine for every more government intervention. They actually believe it is simply Bush and that changing parties will result in uber efficient government. Yet they also snicker about the US Mail, the department of motor vehicles, the police, … well you get the idea.
David Levavi: “Would you buy a used car from a guy who never held a real job and pals around with the likes of Rezko, Wright and Ayers? No? How bout a spanking new Caddy right off the production line?”
It’s funny that you mentioned this, because when I heard BO saying in his speech that the gov’t would back their (GM) warranties, he sounded exactly like a used car salesman.
Ugh…
Hopefully this will serve as a warning to other corporations thinking about taking govt money. Too bad for those taxcheat Tim decides to take over by force. Exxon’s next, I’d be willing to bet.
In the grand scheme of the porkulus bills, TARPs and such, it might provide some much needed and relatively inexpensive comic relief to see BO actually try to run GM. Even with an 18-wheeler full of 100 dollar bills at the loading dock I bet he can’t make it turn a profit by re-election time.
Talk about a lawyer’s lips moving–firing the CEO and saying “we don’t want to run the company” in the same week is classic.
It will be interesting to see how well Obama does at running both GM and Chrysler while also being President of the United States. Such a task would be daunting even to a person with a broad depth of management experience.
I agree with Rush Limbaugh, that eventually the two car makers will be turned into some type of collective run by the labor unions with the White House providing guidance.
No doubt, there will be a lot of help from the government in eliminating competition. In other words it will be illegal to sell the types of cars in the USA which the public actually wants to buy.
I imagine this will set off a huge trade war with Europe and Japan, which will be happy to sell us SUVs, trucks and vans while GM cranks out golf carts.
I’m almost glad that I am too old too drive. This will be fun to watch.
I agree with tumbleweeds’ sentiment, but Tolstoy died in 1910 in a train station, trying to get away from the missus. I don’t know about the quote, but it was Edward VIII who said, “Something must be done!”
I’ve seen some positive comments about the GM move. It may be an actual receiver who is running it and bankruptcy is the game although the politicians are muddying the waters so the unions don’t figure out they’ve been had.
Widely maligned for its lack of auto expertise and an unwieldy, 25-member task force made up of an alphabet soup of Washington regulatory agencies, the task force did its homework, received solid leadership from Wall Street financier Steve Rattner, and issues a clear-eyed report. Its conclusion: GM and Chrysler don’t have a clue.
To that end, the task force did what a bankruptcy judge would do: It fired GM CEO Rick Wagoner and his board (opening the door to a workout specialist who will put its bloated labor and dealer costs through the shredder). Step two, the task force moved to reassure customers by promising that their purchase of GM cars will come with government-guaranteed warranties. Step Three, it made steps to reassure suppliers that their contracts would be honored so that parts keep flowing to assembly lines.
From Larry Kudlow today: I’ve got two quick additional questions if I may sir. Did President Obama’s actions today, the actions of the auto task force, did they forget to include Mr. Gettelfinger, [president] of the UAW?
It was clumsily done but it might turn out to be the best plan.
I am looking forward to purchasing a new car covered under the “Obamaplan”. I will never have to worry about filling the gas tank and with the premium plan, my house mortgage will also be paid.
Hermie was right in that Bankruptsy holds presidence over bonuses, and 20 million would still be in the drawer. And just how is OB going to subsidize the parts and repairs companies if GM & CHRYSLER fail, send them all to FORD service centers if they are still around?
Looking at the crowds in London this AM reminds one of the French Revolution, it is starting all over again, “History” repeating itself, only this time the whole world is in action. Pres. Obama needs to recognize he is now the focal point of all the lenses and his actions are not invisable, as they were when
in the Chicago political game, he is not in the back or middle of the line, he is the front man and thus responsible for all his action as to how he leads the parade, and as of now his actions are taking this parade right into the ditch and if not the ditch then into a stream going down with the only outlet being the ocean. Right from wrong should be taught in the home and in our school system, it is too late once we reach adulthood. Only the courts should be deciding the guilt, not elected officials in the political game of politics.
If a CEO & board decided to take their company into bankruptcy, with wipeout of shareholder value…and there had been an alternative of receiving government financing, with at least some prospect of saving some of the shareholder value…then they would be sued for violation of fiduciary responsiblity.