WSJ:
GM’s CEO Rick Wagoner got the Presidential boot over the weekend, and GM was given two months to reorganize, or get forced into a “quick and surgical” bankruptcy. For once, we agree with Michigan Governor Jennifer Granholm, who called Mr. Wagoner “a sacrificial lamb.” The Administration needed someone to take the fall to sate the anticorporate furies it has helped to unleash. Mr. Wagoner wasn’t solely responsible for GM’s bad business decisions, but only recently did he promote the kind of radical restructuring the company has long needed. We only wish someone in Washington would also be shown the door, starting with those at the Federal Reserve whose oil-price bubbles also helped to break the car makers.
Sacking a CEO for appearance sake was the easy part. Good luck trying to get the unions to make concessions on wages and legacy costs, and bondholders to agree to reduce the debt burden. A senior Treasury official told us the Administration isn’t holding its breath and considers “surgical bankruptcy” the likeliest outcome. In that event, “a shiny new GM” would emerge, said the official, who didn’t want to be identified. Asked why GM wasn’t forced into Chapter 11 immediately, the official said the Administration wanted to avoid “years of uncontrolled chaos” and needed time to set the stage for “the more surgical process.”
Even the Treasury’s mention of bankruptcy counts as progress of a sort. President Bush did his legacy no favors by signing off on the bailout in December. Bankruptcy then would have saved taxpayers $17.4 billion (and counting), and started to put those companies or their assets to better use.
However, the United Auto Workers may take a different message from the firing of Mr. Wagoner and from Mr. Obama’s speech. To wit, that GM is now politically too big to fail. Listen to Mr. Obama: “We cannot, we must not, and we will not let our auto industry simply vanish.” No mention that Ford took no bailout. Or that a third of American auto workers, some 100,000, are employed by successful “transplant,” or foreign, car makers in dozens of U.S. plants.
Union leaders outlasted Mr. Wagoner, refusing even to make the kind of concessions that Ford has wrested from them. They’ll be even less likely to accept retiree contributions in stock now that the share price has tanked and they assume their Democratic friends will protect them.
Bondholders with $28 billion in GM debt are in for a rougher road. The Administration will offer them pennies on the dollar, nowhere near the 33 cents the ad hoc creditor committee has been seeking in a prepackaged bankruptcy. But Treasury figures the lenders may yet prefer something in a debt-for-equity swap, rather than little or nothing in Chapter 11.
Bankruptcy or not, the larger problem here is Washington’s industrial policy. Even if Chrysler merges and GM restructures, Mr. Obama wants the companies to make the kind of cars the political class favors, whether or not consumers want to buy them. “The United States of America will lead the world in building the next generation of clean cars,” the President said yesterday. He didn’t mention a goal of profitability. To that end, Treasury tapped Fiat’s know-how in small vehicles for Chrysler and wants GM to move in this direction.
Yet the Treasury’s own “viability summary,” released yesterday, points out that “GM’s product portfolio is more vulnerable to CAFE [fuel-economy] standard increases than the portfolios of many of its competitors.” Only nine of GM’s “top 20 profit contributors in 2008” were cars; the rest were SUVs and trucks, which are politically incorrect on Capitol Hill and with the green lobbies. Chrysler has a similar problem. Even GM’s much-vaunted electric Volt car is “too expensive to be commercially successful,” according to Treasury.
In other words, Mr. Obama’s industrial policy vision runs directly counter to a strategy that would get the companies back to profitability as soon as possible. To help them sell those unwanted cars, Mr. Obama yesterday was already pledging that taxpayers will cover new-car warranties. And he urged Congress to pass a new “incentive program” (read: subsidy) for “cleaner car” purchases.
All of which is to say that the taxpayer commitment to the Obama autoworks is only getting started. We’re glad the Administration is at least talking a tougher line on bankruptcy than Mr. Bush. But the better route would have been to use Mr. Obama’s political capital now, at the start of his term, to use bankruptcy to force the companies and their union to make the hard decisions that politics may still let them avoid.
From now on, GM and Chrysler are Mr. Obama’s companies, and taxpayers should hold him accountable for every dollar they are forced to spend to save jobs for the UAW and to make cars that Americans don’t necessarily want.
[my emphasis]
Unfortunately (well, for all of us, not necessarily for the President), the Administration seems ready and willing to show themselves “successful” at “fixing” the auto industry by forcing up gas prices to $4 and more per gallon, a move that will coerce more Americans into buying the kinds of cars Obama and the green lobby would like to see us driving.
This “manufactured consent,” to borrow a phrase, will have the effect of stripping many Americans of choice, driving more workers who can’t afford to purchase newer “green” vehicles back toward the cities (effectively driving them towards heavily-Democrat controlled voting precincts), and creating a gap between the rich and poor — with those wealthy enough still publicly spouting the green line at us while privately they continue to enjoy their towncars, hummers, private jets, ATVs, boats, and SUVs.
This is not fiscal responsibility, nor even real fiscal policy; instead, it is social engineering enacted under the cover of a “fixing” a financial crisis, one that the government itself has been instrumental in creating. And I’m the kind who resents being socially engineered.
— Which won’t make a difference, sadly, until at least several million others of voting age remember to resent it, as well — and until we all begin insisting on rejecting candidates from either party who would have us surrender our freedoms to their bureaucratic ambitions.
(h/t Terry H)
This is why I expressed at the end of this post my disgust with Obama emphasizing the symbolic importance of the American car manufacturers.
So … would you say, Jeff, that you are unhappy and concerned about the direction Obama is taking the country?
Have you listened to him speak? He is, in fact, eloquently and cleverly centrist and sober.
People what listen to NPR need to understand that this is not something our slavering piece of shit hungarian butt-boy president did reluctantly.
3
Not if I have anything to say about it.
Oh, and fuck Hewitt for whining about Newt’s use of the word “dictatorship”. Sorry, but when a goddamned politician can order the firing of the employee of a private company, when goddamned politicians decide to set the pay of employees of private companies, then what the fuck is it?!
Which translated, means, the administration is hard at work devising ways to eliminate those cars and trucks that Americans do want, thus helpfully aiming said Americans in the direction the administration would like them to go. You can thank them later. Or not.
Tryanny works. But I guess that’s sort of an hysterical word.
Who ordered another Texan?
Comrade Hewitt was right about the map being red I think.
*Ricardo Montelban*
“Look what they’ve done to my Obama………soft Corinthian vinyl, rrrrugged window handles which let the frrrresh airrr blow thrrrough my curly toupee. Cup-holderrrrs evairy wherrre I turn. And and overrrrsiced ash tray made of beautiful chrrrrome-like plastic. Theeece ees luxurrry at ees fine -esss.”
What they are telling us here from behind their mirrored sunglasses is that what we have here is a failure to communicate.
I work for GM and the indicator that an individual has no working knowledge of General Motors is when they say “They need to start building cars people want to buy”. If you hear that come out of someone’s mouth you should disregard anything else they might say. GM has a lot of structural problems, but they have nothing to do with teh quality of the cars.
If the poltroons in DC weren’t running roughshod over the Constitution on their efforts to get their greasy fingers wrapped around the levers of corporate power, GM would have filed already and be coming out of bankruptcy without the unsustainable labor contracts it had accrued over the years.
Now every time Mr. Present opens his mouth (Which: Is it me or is he on television A LOT) you can see the traffic in the showroom drop. I grow more confident every day that there is more than a litlle bit of intentionalism there.
Waggoner’s firing offense was to let the Congressional camel get it’s nose into the tent.
11
You are welcome. :)
Barack is simply showing his superior grasp of the problems facing the auto industry. I, for one, have absolute confidence in his abilities in this arena. He is a moderate after all, not like you ignorant hicks from flyover country.
Now, somebody get me a chardonnay, quickly!
This is “Crisis Management” progressive-socialist, will-to-power style. Different ends. Different means. Different dictionary in use now. Old, sad story.
Somebody boil a few dozen eggs, let’s get this thing on.
This ought to make lots of friends in the UAW as “Turbo-Tax” Timmy sets their pay.
Does anyone have a way to compare what Hugo Chavez nationalized vs what Obama has nationalized in GDP or dollar terms? Somehow I think our auto and banking industries are worth more than Venezuala’s oil business.
Oh, Mr. Pink, now you’re just getting hysterical. Centrist and sober. Peggy, CALL ME!
I am sorry for being hysterical Carin but what does this sound like?
http://en.wikipedia.org/wiki/Bolivarian_Circles
This ought to make lots of friends in the UAW as “Turbo-Tax†Timmy sets their pay.
If yesterday was any indication, the UAW has nothing to fear from this administration.
Or this.
“Chavez was given special powers by congress in January to issue laws by decree for 18 months to enact sweeping changes to government institutions, local elections, finance and taxes, banking , national defence, and the energy field as he attempts to establish a socialist system.”
Read more: “Chavez signs decree to nationalize foreign oil companies” – http://www.monstersandcritics.com/news/americas/news/article_1269801.php/Chavez_signs_decree_to_nationalize_foreign_oil_companies#ixzz0BLUf4CRf
http://www.monstersandcritics.com/news/americas/news/article_1269801.php/Chavez_signs_decree_to_nationalize_foreign_oil_companies
I can’t rhink of a more economically frightening concept than the Federal Government designing compensation packages and marketing plans for American businesses.
At that point, the only “warranty” that the American taxpayer can expect is a failure to turn a profit anytime before the next millennia. Agian I have to say: How can anybody expect a good result from forcing companies to be run by the same organization that so effectively manages Social Security, Medicare and The Veteran’s Administration?
It’s mind boggling.
Peggy, CALL ME!
Call you? An have my name stricken from the White House cocktail party invitation list? No chance! One must keep one’s priorities straight.
Jimw has it- the union contracts and environmental requirements are killing the American car industry. Chapter 11 WAS the solution but I honestly think the politicians, both Bush and Obama, figured if government handled the situation without forcing the unions to make concessions, they’d garner good will with working class folks, as well as shareholders in GM. I’ll admit Bush should never have agreed to the first bailout. Now, however, we have Obama who, with pushing this “clean car” thing, is essentially shooting GM in the head. My understanding is the ridiculous environmental regulations required the car companies to put too much money into R&D to develop cars that complied with these regulations.
Unions have always been a huge problem- they’ve pushed and pushed for more benefits and apparently refused to realize those benefits will drive the cost of cars up and make their own companies less competitive. The car company managers are just as guilty, as they should never have agreed to many of the union demands and by doing so, drove a nail into the coffin of their own company.
Its obvious its going to take a bankruptcy judge to make sweeping changes to GM, Chrysler because a judge is the only one who can change the company without worry about political considerations. Well, in a perfect world anyway, but its probably safe to say a bankruptcy judge will be less inclined to play politics than say, Obama’s car czar.
You know, it’s like folks didn’t even read Horowitz’s article.
What are the foreign owned competitors thinking now that the finger of god has writ and the writing is on the wall? How about you American employees of those foreign owned competitors? Are you looking with a bit more uncertainty at your future as employees of those competitors? Look to it.
But Matt, over and over yesterday Obama said it wasn’t the worker’s fault! Your dissent will be noted.
The auto industry is not building cars that some people want you to buy.
Now they are free to build a People’s Car.
Or as the say in Germany, Volksvagen.
Any colour you like as long as it’s green.
It can and will be used as a means of funneling and laundering taxpayer cash into the pockets of Democrat politicians.
Actually Kevin B I am pretty sure the amount of cars they sell to be pretty comparible to Honda and other car companies but their labor and healthcare costs end up crushing their profit margin. I do not have a link though so I can not say this for certain but it is what I have heard when talkin to people knowledgable about the car industry.
Obama motors: combining the efficiency of Lada with the cachet of Renault.
GM- a good man/that obama man
I knew if I waited long enough, my shares in British Leyland would be worth something again.
“Obama motors: combining the efficiency of Lada with the cachet of Renault.”
Topped off with the dashing elan of a Yugo.
Mr. Pink, you are correct sir. I think it was Ed Morrissey (too lazy to check) that quipped the other day, “GM is an upside down retirement benefit & healthcare concern that also sells the occasional car.”
I’m still confused tho.
Obama now runs GM. So… I shouldn’t buy that sweet 1971 El Camino?
And we take another step toward proving Iowahawk’s prescience. This seem like a good time to buy Ford.
I was so ready to get the new 2010 Camaro but am now having serious second thoughts. I do not want to put a dime in this socialists hands if I can help it.
Russ Roberts fisks Obama’s auto company speech. Roberts is generally as calm and even-keeled a person as one could hope to meet, but it is clear here that he is seething with anger at the condescension, arrogance and stupidity born of that arrogance he sees placed before us.
If you have children make sure they pay attention!!! They will be able to witness, see and maybe tell their kids what it was like when we turned into a socialist powerhouse, and so many people were happy — at the time!!!
This isn’t a big deal.
For all the “too big to fail” companies, it’s a marginal shift in function from business to bureaucracy. They were already more bureaucracy than business anyway, or they wouldn’t be “too big to fail”; that’s what the phrase really signifies. The big banks are enforcers of financial regulation, suppliers of Democrats’ campaign contributions, etc.; carmakers are big banks, enforcers of “energy policy,” suppliers of Democrats’ voters, etc. Their business isn’t business, much.
(The ridiculous dissonance between WSJ/Financial Times/Forbes/et al market rhetoric and revealed business-class anti-market political preference arises from their lying about this, however un/knowingly.)
Only the President’s c’est moi is a new bad sign. But he does that with everything, because he’s like that. And it’s not really new. There was a promising absence of it in the Reagan years, and a lot of our Presidential memories start there, but it was our standard until then, and it’s been fading back in ever since.
This is America, kids.
And I hated it first.
Mr Pink @31:
You probably need to parse what I tried to say.
That is the some people who think you should have a low carbon, light weight car to get you, your partner and your single child from your efficiency housing unit to your designated leisure spot on your one day off a month.
(Travelling to and from work is by super efficient public transport. Or shanks’ pony as it used to be known.)
GM management sucked. Obama tossed the CEO.
GM bondholders are fighting and delaying the inevitable. Obama is speeding up their inevitable loss.
GM needs a working capital credit facility. Obama is making sure they get it.
The success of American capitalism has historically been based on the speed in which American companies and the American economy could adjust to the always changing world economy.
Barack Obama is a good capitalist. He’s much better at capitalism than bitter wingered weenies who know nothing of capitalism yet pretend they do.
O! Money.
Except for how the new CEO knows if he doesn’t bend over daily for our dipshit socialist president he’ll be out on his ass and dutifully smeared as incompetent by NPR and MSNBC and Newsweek. That fuck up what’s never run so much as a Take the Dirty Socialist Pepsi Challenge booth at the goddamn mall is in charge of General Motors now. How silly is that? A lot silly.
Obama wouldn’t know capitalism if it were given to him as a 25 DVD set.
thorknob shit his pants again. Call the orderlies.
one eight seven cars for kids
one hum hum hum for kids
one hum hum hum hum hum for kids
donate your car today
The irony of an American government official firing a private citizen is lost on brother thor. I’m sure he’ll be at the theater tonight crossing his arms and shouting B-O and calling Wagoner a traitor as he confesses his crimes. Will he cop to the syphilis?
one hum hum for hum
hum hum hum hum hum for hum
hum hum hum hum…hum for hum
donate your hum for hum
Which article of the Constitution permits the President to fire CEO’s of private companies? I’m no constitutional scholar, like Obama, but I was forced to study that tedious document as a part of my legal education (/sarc).
I imagine its being kept in a secure location in the 57th state.
*How silly is that? A lot silly.*
Happy I wish I had your light hearted take on it. Scary is the word I’d use. A lot scary.
Why the hell do you think O! knows more about the auto industry with out previous experience???? That is like taking a lawer and politician and telling them to fix the space shuttle with out ever even looking at one????… wait that sounds kinda…
Until the companies are completely destroyed and no one is around to pay them anymore, you mean?
On what authority?
On what authority?
On what authority?
The sad truth is that they probably will be forced to file bank… and what pisses me off is the fact that we paid billions of dollars for what was probably going to happen any way. The people in power see an oportunity to tell us WHAT we want to buy and KNOWS better than the public.
the time line for the gov’t to recall the loans are unrealistic no matter what universe you are from. This is just an opportunity to push the far left agenda and if it fails…. Remember — It is the fault of the auto companies (just forget the tiny little BILLIONS of asterisks that are from the people the gov’t shelled out and is gone forever!!!)
But wait, I thought that all of GM’s problems would be gone once Wagoner was gone. Hasn’t GM stock shot through the roof?
scrambled eggs
all my troubles seemed so far away
but i remember
scrambled eggs
[served w a limp]
GM is history. Their only hope is to file for bankrupcy and start selling off divisions, if anybody wants them. Should the government continue to subsidize GM their eventual collapse will only be more collosal. No state has ever manufctured cars anybody has wanted to buy, by choice. GM won’t be any different. GM. The New ZIL!
“legacy costs”
haha. Old people and their contracts.
Every time I see the name meya in the sidebar, I just know that some idiocy is sure to follow.
Is this an expression of your previously revealed hostility to contracts or do you now intend to convey support for some contracts?
Social Security is a contract, but that one is super special and can not be broken.
Damn. Some of the best cars ever, were GM branded. The ’69 Camaro SS, one of my favorite rides. I wish I still had that one. Even instead of the Blazer I still have, the 4.3L 4X4 that still gets my boat to the lake on time.
What, I’m supposed to buy Fords now?
“legacy costsâ€
haha. Old people and their contracts.
That attitude is gonna play real well with the UAW>
i have a gm astro [ASTRO]
van
should i just pppphhft/ fuck it/ are they gonna repossess?
btw/ my credit/ ha haha
not worried/ worried about big companies fuckin/ me
my ass hurts
`
You’re catching on B.
Catching on to what?
That you are a lying crapweasel?
We all knew that months ago, meya.
SBP, join the blowhard and I in the pub for a moment, won’t you?
should i be telling u this
uncle earlk/navigated sidewalks’ he be drunk[ should i be telling u this?]
and he came home and put german marchng [ i don’t think i be saying’music on
and when the side be done [can i testify?]he wave dollar bill
and say [can i …tell u… i need a hug]
change the album BOY![ i was 8]
so i pur tended to put german marching mooozic side two
but… hee hee
i fucking put sousa on
and pissed in his face…
jeff/ march madness..
april fool
If they were, they’d all be for Zone 2 and he woudn’t be able to watch them anyway.
And would it be capitalism or socialism to make it illegal to break that zone coding?
And would it be capitalism or socialism to make it illegal to break that zone coding?
Why would either intrinsically make it legal?
the price of pickles
‘sgot some wicked banter
she went to risd[ rhode island school of design]
talking head mo
so/ u take pickles/ take the jam jam u code…
it will fuck up the system
man
place the code/ over/ under/ the machine!
stab the system/ it be a turtle my time is wrong… 9 am est?
oh demon alchohol
sad memories i….recall
white wine/ pink gin
……
anything
thanks p w
Every time I see the name meya in the sidebar, I just know that some idiocy is sure to follow.
I figured out it’s cause of she’s stupid, JD. And fascist, but it’s weird. Mostly she’s only fascist if you read her.
i like chocalate
i will
assume vanilla
but when they try to make strawberry the weak sister
don’t like
You want to know why I don’t talk politics at work?
Casual political talk at work today had one numbskull going on about how Obama “fired the head of Chrysler, just like Reagan did.” (WTF?)
Then they said that “Chrysler” should give every American a new car every year until “they get this mess sorted out.”
Then three other numbskulls piped up about what a great idea that was.
So, first of all, I didn’t even HAVE a sledgehammer, and second, even without a sledgehammer or a two-by-four, how the FUCK are you supposed to politely and respectfully deal with such abyssal stupidity?
We Are Well And Truly Fucked, thanks 52%. Thanks a whole fucking lot.
Hope and fucking change. We’ll be lucky if we have any change left after this.
Comment by meya on 3/31 @ 10:33 pm #
And would it be capitalism or socialism to make it illegal to break that zone coding?
It’s not illegal now.
[…] them into unions? Why are they promoting an agenda that crushes small business innovation while propping up old-line corporations that can no longer survive on their own? Why are they trying to strand them in government-run health care? Why are they imposing on young […]
[…] them into unions? Why are they promoting an agenda that crushes small business innovation while propping up old-line corporations that can no longer survive on their own? Why are they trying to strand them in government-run health care? Why are they imposing on young […]
the hard decisions that politics may still let them avoid.