Irony is the discrepancy between expectation and reality. Hypocrisy is the discrepancy between publicly stated intention and privately implemented execution. I’ll let you decide where President Obama’s statement on the federal government’s intervention in the “U.S. car industry” falls. No matter what you call it, there’s a huge disconnect between the President’s assertion that “We have no interest in running GM; we have no intention of running GM” and the fact that Presidential Task Force on Automobiles (PTFOA) is running GM. I mean, you can’t get much more interventionist than forcing the automaker’s CEO to resign and moving to replace the entire Board of Directors.
If you wish to be charitable, you could say that the PTFOA’s plan to provide GM and Chrysler with a still-unspecified amount of federal money (a.k.a. “adequate working capital”) for the next 60 days is a reflection of the administration’s short term plan to achieve its long term goal of NOT running GM. But am I the only one not feeling that one? Especially as the Prez is promising to restore GM to its former glory with messianic fervor: “GM can rise again.” Ooooohh kay. Meanwhile, there are other, um, “anomalies.”
The President went out of his way to kiss the UAW’s ass—I mean, absolve them of blame for Chrysler and GM’s insolvency. Well, not the union per se. The letters “UAW” never crossed the President’s lips. I mean the workers. “It’s not the fault of our (our?) workers,” Obama soothed. “It’s the failure of leadership from Washington (need I mention any names?) to Detroit (we just fired the bastard).” Yes, about that bastard . . .
After laying the blame squarely on GM management’s doorstep, Obama picked it up and threw it in the bushes (so to speak). He pointed out that Wagoner’s summary dismissal was “not meant as a condemnation.” No, of course not. It was a compliment. In disguise. As predicted, Obama deployed the clean slate metaphor with characteristic zeal, and promised that his new Motown WPA would insulate the common man from the fallout from the shakeout to follow.
Switching into car salesman mode, Obama also said the new government’s warranty program would protect consumers during this non-government run transition period. And don’t worry so much about bankruptcy (which is definite maybe), ’cause it won’t mean GM will disappear or “get stuck in the courts for years.”
My, aren’t we the lucky ones?
More interestingly, he talked about a Euro-style cash-for-clunkers program retroactive to today.
Text of the speech: http://adjix.com/gsy6
It was a decent speech, really, it’ll be interesting to see how it plays.
p.s. Props to Ford for keeping clean so far.
Early early edition?
Obama’s best line:
“…failure of leadership, from Washington to Detroit.”
So, the Board-of-Bystanders is out? That’s news… To be replaced with, what?
So, another 60 days until Chapter 7?
At any rate I can see why Obama (and the media for that matter) will avoid the B word at all costs; no one will buy from a company who is publically declared bankrupt, justified or not. And I’m not surprised that Rick Wagoner is finally gone; after all, he took this aforementioned avoidance one step further, and determined that merely considering bankruptcy wasn’t even an option – that hopeless denial is ultimately what led to his firing by the White House.
No matter how many things they get right, firing the CEO and board are probably a good start, the fact is that the whole process is wrong, and it will be doubly bad down the road.
I will give the administration a pass if they come out and actually say that those folks deserved to lose their jobs because they missed their chance to file bankruptcy and instead came to the government for special treatment.
No, I am not worried I will have to compliment them and give them a pass.
I am worried that this will lead to a sea change in the boardrooms across America, and that it won’t all necessarily be good. While CEO’s should be getting the message that they should not seek government aid, the truth is that if your competitor gets government aid while you don’t, they may put you out of business.
So, instead of figuring out how to make better stuff, and make it cheaper, our business leaders are now going to spend their days wondering how to play the game with DC.
I hope you weren’t planning on any life saving or life changing innovations over the next few years because the likely number of those just got cut in half, again. The time and energy in this country is going to be spent on getting capital and playing with Washington.
Sixty days to a kind of Chapter 11 with GM, 30 days until the life support machine is unplugged and Chrysler is liquidated for good.
On discrepancies between expectations and reality…how about the Google-placed ad for newcarsplus.com?
Anyone else see it?
It says that because the auto CEOs are begging for money, all “2008 car prices discounted 60 percent!”
Click below to show them how much we appreciate such ads:
http://www.newcarsplus.com/?dis=E4D4ECAD-6AC0-4FD6-A&gclid=CPX2p5KCy5kCFQdN5QodzzTt5Q
Attention: President Obama
Don’t sugar coat this one. GM is through and so is Chrysler. They screwed up. The end.
Capitalism, RIP.
It was fun while it lasted.
General Motors asked for a bailout from the government. The government gets to ask for things in return. Them’s the breaks.
You’ll notice that the government isn’t forcing anyone at Ford to step down. That’s because Ford hasn’t received any public money (yet).
This is pretty simple. The government isn’t intervening in the economy. GM intervened in the taxpayer’s purse. You might have disagreed with the bailout in the first place (I did), but once it’s been disbursed, do you really want the same fools to blow our money?
Yes, golf4me, surely the government never ever ever intervened in the economy until Obama was elected!
I doubt that Gm will rise like phoenix from asses.
Will they invest the money in real products, in servicing and restructuring debt or to pay the suppliers of parts? And how on earth they plan to pay the debt? They will need to have a profit of 6bn annually for the next 10 years, without investing the money anywhere but the debt and interest.
And president can`t restore a shit, any manufacturing company must be restored by meticulous, hard working engineers, who know how to build things. of course before that you need to shoot all the beancounters and nerdy scrooges.
I guess in 10 years GM will be like Magnavox with 3 workers left in America for glueing on badges.
You can`t buy yourself out of debt , America, you can only produce yourself out of it. The same goes for GM.
Golf4mre:
Don’t get silly on the semantics. Explain to me how this makes captitalism die? Delivering an endless amount of money with no strings attached to an unproftable business, while seeing them do no redemption whatsoever is not capitalism. It’s called blackmail, extortion and pilfering public assets on a grand scale. If Obama is putting his foot down, it only means that the days of plundering is over.
golf4me, this isn’t the end of capitalism, plain and simple. Your claim that it was fun while it lasted is interesting to me; maybe you haven’t noticed but the style of capitalism that was practiced in the US, particularly from 2002-2008 or so was HORRENDOUSLY IRRESPONSIBLE and essentially ruined the entire world economy.
I’m hoping to all goodness that we return to a more responsible, accountable form of capitalism. It might have been “fun while it lasted,” but only in the sense that ridiculous excess and not protecting your future interests contain some measure of fun before destroying your entire future.
Fixing a broken system is gonna tick off a lot of people. And its gonna get worse before it gets better.
But then again, GM/Chrysler reaped what it sowed. Maybe they shouldn’t have come begging to Washington in the first place…maybe they should have fixed it by themselves.
I am not pro-GM by any stretch. I agree with the sentiments posted. GM is a dismal failure.
However, in a time when potential answers are more intriguing, and more meaningful, than more potshots, I didn’t see a point in this article.
There has always been a philosophy espoused on this site that to be honest is only to be brutally negative and self-inflicting. Wrong.
For Obama to say what it seems would give him credibility with this author, would be to finish off the dying body in one fell swoop. We’re all aware that capitalism requires a certain amount of optimism, irrational exuberance. That’s the deal. Whether you think it’s laughable or not, that is the deal. GM needs sales of existing cars, today, and that requires optimism and vision, as well as a massive massive overhaul. Both.
Obama is doing exactly the right thing by keeping the rhetoric positive and his help conditional. (I am not pro-Obama either.)
My Saab ran on hope.
As in “I hope my transmission doesn’t go into limp mode”, “I hope my oil screen isn’t covered in wax” and “I hope my brake discs wont warp this winter.”
Justin Berkowitz :
March 30th, 2009 at 11:06 am
Sajeev Mehta :
March 30th, 2009 at 11:18 am
You are both exactly right. This reminds me of the comic strip “The Wizard Of ID”. The king said one time to “Remember the Golden Rule, he who has the gold makes the rules.” Simple as that.
@ jurisb:
You can`t buy yourself out of debt, America…
No, but this is America. You can borrow yourself out of debt… Just take out some more loans to make the payments on your existing loans.
JB,
As soon as someone asks for and receives government money, everyone is affected. Ford spent thousands of man hours and likely millions of dollars strategising on all this. They should not have to. They should be figuring out how to win by making better business decisions, not how to deal with, and possibly compete with the government. Part of the system is supposed to be competing for capital on the basis of ability to make returns.
I can see why Obama (and the media for that matter) will avoid the B word at all costs
Obama specifically discussed bankruptcy in this speech. He didn’t avoid it, he offered it as a distinct possibility:
While Chrysler and GM are very different companies with very different paths forward, both need a fresh start to implement the restructuring plans they develop. That may mean using our bankruptcy code as a mechanism to help them restructure quickly and emerge stronger.
Now, I know that when people even hear the word ‘bankruptcy’ it can be a bit unsettling, so let me explain what I mean. What I am talking about is using our existing legal structure as a tool that, with the backing of the U.S. government, can make it easier for General Motors and Chrysler to quickly clear away old debts that are weighing them down so they can get back on their feet and onto a path to success; a tool that we can use, even as workers are staying on the job building cars that are being sold.
What I am not talking about is a process where a company is broken up, sold off, and no longer exists. And what I am not talking about is having a company stuck in court for years, unable to get out.
He is raising the very real possibility of filing 11 with the government acting as something similar to a DIP lender.
TTAC should be thrilled to pieces with this outcome. Personally, I’m impressed that the administration is using the threat of a cramdown as a way to pressure the bondholders. This could go toward correcting the mistake that Senator Corker made when he stipulated a specific purchase price of the bonds, which only strengthened the hand of the bondholders and helped to create the delays in cutting a deal that we have seen until now.
Two quotes from Mr. Obama: “We cannot, we must not, and we will not let our auto industry simply vanish”
1. It is not “your” industry, Mr. Obama. The industry has its owners: Cerberus and GM shareholders. Last time I checked there was not “collective ownership” of means of production in the USA.
2. Without bailouts nothing “vanishes”. Resources (capital, machinery, workforce) simply relocate to other business lines.
3. Buyers free choices led Chrysler and GM to bankruptcy. They voted with they wallets, but you do not accept their votes. Why, Mr. Obama?.
Mr. Obama: we cannot make the survival of our auto industry dependent on an unending flow of tax dollars. These companies – and this industry – must ultimately stand on their own, not as wards of the state.”
This second quote is in flagrant contradiction with the first one, Mr. Obama: If you are “not going to let some industries vanish”, those industries are NOT “on their own”.
This is a milennia old principle, Mr. Obama. It is called “principle of non contradiction” and was enounced first by Plato and developed by Aristotle (two “white dead men”).
There´s no amount of voluntarist incantations (“Yes we can”, “Change we can believe in”) capable of contradict the laws of logic, Mr. Obama. It´s Judgment Day for decades of mismanagement at Detroit and at Washington D.C.
Pch, those selected quotes make it pretty clear he’d like for bankruptcy to happen, but needs to soften up the public to make it politically acceptable first.
Great Bailout Watch today Robert. I have very similar concerns with today’s news.
For those of you not shocked by today’s Presidential pronouncements, when the Feds decide to talk down your business, impose punitive rules upon your business’s products, then run down the industry that you borrow capital from keeping you from borrowing capital privately, forcing you to turn to the Feds for capital, do not be surprised when you get similar treatment as you saw today in which you are soundly chastised for not knowing how to run your business by a group of beaurocrats who have little private business experience, no one of CEO, CFO, or COO experience, and no one with executive experience running a multinational corporation. Thus, I find their ‘recommendations’ dubious at best.
Mostly, Chrysler and GM have made their own beds, for that I have no doubt. No doubt at all. However I have a lot of doubt as to the veracity of the Fed’s plans to actually ‘help’.
A is A :
GM asked for money. Nobody is forcing it on them.
I also think your claim that those quotes conflict is unfounded. Obama is saying it’s important for America to have an auto industry (your parsing of the word “our” seems semantic — Bush referred to “our troops” but I really don’t think he was suggesting he owns them). Obama is saying the government will give them some money, but not infinite money.
In other words, you could easily reconcile his two statements by the phrase “teach a man to fish.” In other words, the aim (though impossible) is to give GM enough money to make itself a self-sufficient company. Obviously this is not going to happen, but I really don’t think Obama’s alleged communist leanings are the issue here.
I realize this is sort of futile, as you’ve made your decision as to how you want to see the situation. That’s your choice of course.
Of course the government (ostensibly representing “the taxpayers”) is right to insist on conditions. And the devil is ALWAYS in the conditions (i.e., details), to which the government ALWAYS attaches politically motivated strings to every moving appendage.
The fundamental question here is whether or not government should be involved in bailing out any company or industry period. Though others may disagree, to me only companies absolutely essential for national defense/security might qualify. Might. Otherwise, NFW.
Bush went totally wobbly and approved the initial bailout bucks for GM and Chrysler, which paved the way for the Obama administration to go whole-hog into national industrial policy. This is being done not for rational economic reasons, but for purely political reasons. Which is to say, for the political purpose of favoring, through political policy, certain groups at the expense of others. In this case, to ensure the UAW survives intact and unscathed, and ensure that “Detroit” is forced into producing “green” cars, all in conformity to Obama’s and the Democrat’s political priorities.
Whereas economics (the free market variety, anyway) is all about creating wealth and expanding “the pie”, politics is about dividing it up in a zero sum game – someone wins, someone loses. This is why socialism ultimately fails every time it’s tried: It subordinates economics to politics; wealth making to wealth sharing; profit incentives to create and expand, to punitive political incentives to conform and obey. Ultimately, there is little wealth left to share, whether you’re talking an entire economy, or merely and industry.
Were GM and Chrysler allowed to truly fail or go into bankruptcy, what would happen in the long run, aside from the inevitable short-term pain the companies, their employees and shareholders (and bondholders) would have to suffer?
The same thing that happens when any business or industry goes bust. Opportunity eventually finds its way to create new businesses and industries out of failed ones. Over time sales lost by either company would be absorbed by others. The jobs lost by either company would, to a certain extent, be picked up by other auto companies, and “excess” jobs would eventually be absorbed by other industries. Over time GM’s and Chrysler’s “lost” production would, to the extant the market demanded it, be picked up by Ford, Honda, Toyota and others, and the concomitant industry supply chain.
In other words, if market forces for punishing failure were allowed to actually work here, far from being the end of the world, the auto industry would eventually emerge HEALTHIER, with far less excess capacity, more productivity and as a result a much better, more profitable business model. This would in turn actually ATTRACT capital into the auto industry, and set the stage for long-term growth.
But no, we can’t stomach losing jobs in the short run – especially union jobs, so instead we have to have the government spare us our pain.
And in doing so, almost guarantee the laws of unintended consequences have their day, someday. The Brits learned this lesson the hard way back in the ’70s. So, why are we bent on repeating the British Leyland epic failure here?
A is A, what are you talking about? Obama never ever ever even came remotely close to claiming the auto industry was “his.” When he spoke of “our auto industry” he obviously meant our as in America’s. You don’t need to assign radical meaning to his speech, it weakens your position and detracts from the other very impactful (positive or negative depending on your viewpoint) statements.
You’re right that there’s a minor disconnect between the statement that we must save the auto industry and that we cannot make it dependent, but only if you don’t think about the words. Obviously, he opened with a claim that the auto industry is important to America and cannot be allowed to fall apart and the second claim shows that he is committed to stepping back after this initial intervention. The two are not even close to being flagrantly contradictory, the second idea clarifies the first and shows that after a hopefully brief intervention the gov’t isn’t going to own, manage or direct the companies.
Please, this situation is difficult enough already, we don’t need people warping words and making black-and-white immediate assessments with ridiculous spin.
those selected quotes make it pretty clear he’d like for bankruptcy to happen, but needs to soften up the public to make it politically acceptable first.
I disagree. I suspect that it’s a negotiation tactic to get the bondholders to play ball.
The government wants the benefits of bankruptcy without actually filing. They are trying to avoid filing, as is evident by all of the things that they have done to date in order to avoid it. The main stumbling block at this point has been the bondholders, hence the threat.
In effect, the congressional Republicans did a nice job of appealing to their constituents, but they did a lousy job of creating a framework for cutting a deal with the bondholders. Corker should have weakened them, but in trying to look like a tough guy, he just inadvertently improved their hand by putting them in the driver’s seat.
This looks to be an effort to fix that mistake. In order to gain the upper hand, the government must discuss bankruptcy. That doesn’t mean that they want to go there. It’s ultimately a decoy and a bluff (although I suspect that they will reluctantly file if pushed, hence the warranty comments.)
The Prez has sent the message loud and clear, you take government money then I own you and as the owner can hire and fire who I choose. This is not all bad. I find it ludicrous that the people who brought us the finacial mess are still collecting their huge salarys. As to the union being complicit in the failure of the auto industry, remember that it is managements responsibility to negotiate a deal with labour that does not disadvantage the company. Ultimately it is managements fault that they gave the workers the contracts they did.
h82w8: “Whereas economics (the free market variety, anyway) is all about creating wealth and expanding “the pie”, politics is about dividing it up in a zero sum game – someone wins, someone loses. This is why socialism ultimately fails every time it’s tried…”
I disagree with both assertions of this statement – first that the aim of the free market is to expand “the pie” and second that socialism fails every time it’s tried.
The free market, left to it’s own devices, trends toward monopoly and consolidation of wealth in the hands of the few. Given that the aim in a unregulated capitalist system is to acquire as much wealth as possible in competition with others, it takes very few cycles for one successful group to gather a majority of resources and use their power to suppress wages and raise prices, thereby gathering more wealth to themselves and ensuring the competition will not threaten their position. It’s the basic problem of libertarianism – the able thrive, but after the “cream has risen to the top” there are masses of people who cannot make their way in a world controlled by the wealthy. Without significant philanthropic interest or a strong belief in community & the betterment of society, unfettered capitalism is disastrous for the vast majority of people.
Second, there are many successful socialist countries. Socialism can be viewed as a political or economic system, and thus capitalist socialism is not a contradiction of terms. A country that provides free health care and guaranteed end-of-life care (through pensions/nursing home system) can still operate a capitalist economy, the taxes just tend to be higher. Basically, socialism doesn’t fail every time it’s tried and is being exercised in many very successful countries at present.
Loan the billions to new American auto companies, and see what they can do with it – the American auto industry doesn’t have to vanish. Oh, and did he forget that Ford is part of the “American auto industry?”
BTW – Ford must be telling itself that it only has to keep its head down and hold its breath for a few more minutes/months. Their situation is probably very dire, but not being on the govt hook means they get a huge pass these days, no matter what.
Don’t want this to sound like we’re ganging up on you A is A, but you are seeing a contradiction where this is none. Let me explain why:
“This second quote is in flagrant contradiction with the first one, Mr. Obama: If you are “not going to let some industries vanish”, those industries are NOT “on their own”.”
Obama did not say nor even imply that the carmakers are currently on their own. He has in mind, a (hopeful at best) sequence of events planned here: automakers not on their own now, are helped out. THEN, later on down the road, the carmakers WILL be on their own.
It’s like teaching a child to ride a bike. No reasonable person would say “well if the child has to stand on their own, then why prop them up? That’s a flagrant contradiction.” At the moment you have to hold the child up BUT at some point, you have to let go and let the child ride on their own.
There’s no conflict in principle either, it’s not like Obama said “we’ll NEVER intervene in the economy” or anything of that sort – no hypocrisy involved. It’s just a planned sequence of events. Not one at the same time as another, it’s one after another.
There’s nothing even remotely contradictory about that.
PCH,
Did Corker really make a mistake, or did he simply side with the bondholders on principle?
Did Corker really make a mistake, or did he simply side with the bondholders on principle?
No, he didn’t side with them. What he did was specify a maximum price that should be paid to them. Furthermore, that price was above the current market price being paid for the bonds in the open market today.
Of course, that doesn’t make sense. Even if he had meant to cap the price, what he really did was put a floor on it. Stating a specific figure was a huge negotiation error. And then setting that price above market made it that much worse, because it shows naivete and desperation.
He also included their approval in the timeframe for the next stage of funding. That was meant to pressure them, but it had the opposite effect by making them a critical constituent.
So Corker blew it on both levels. He raised the bondholders importance AND he created a price floor for them to hurdle. He turned what could have been a pressure tactic into a gift.
What he should have done was effectively said, We expect very favorable terms from bondholders, we aren’t just going to punish the stockholders. If forced, we will use legal means such as Chapter 11 or even 7 to cram them down. We mean business, and you bondholders are going to have to take the pain that everyone else must. That would have translated into: Your investment may go to zero, so get real and expect a big haircut, because that’s the best that you can hope for.
There’s no principle here, just bad poker. I called it on this website at the time, and I hope that I am correct now that the new sheriff is trying to get past that.
GM asked for money. Nobody is forcing it on them.
Bad for GM for asking the money. Worse for Bush II and for Obama for giving it (yup, it was Bush II who rescued them on december).
I also think your claim that those quotes conflict is unfounded.
Sorry, but “we will not let our auto industry simply vanish” is flagantry contradicted by “These companies – and this industry – must ultimately stand on their own”.
If you go to another city at 18 to “stand on your own” you do not ask for money at your parents. If you do, you are not “on your own”.
your parsing of the word “our” seems semantic — Bush referred to “our troops” but I really don’t think he was suggesting he owns them).
American Troops are organized and paid by the US government. A president can properly speak about “our troops”.
GM and Chrysler are privately owned. By American citizens and by foreign investors and stockholders. Ditto for Toyota or Honda. It is totally improper for a US president to speak about “our companies”.
Obama is saying the government will give them some money, but not infinite money.
Obama has no “infinite” money (although sometimes it seems otherwise).
Any money Obamas flushes down the toilet trying futilely to revive GM and Chrysler -those financial corpses- is going to be “some” (finite quantity of) money.
In other words, you could easily reconcile his two statements by the phrase “teach a man to fish.”
GM and Chrysler are not incipient car companies struggling in some backwater country trying for the first time to build cars.
GM and Chrysler were leaders in their field decades ago. The analogy of “teaching to fish” is totally out of place here.
but I really don’t think Obama’s alleged communist leanings are the issue here.
A system where the ownership of the means of production is nominally private but where the state interferes continously with the economy is not called “Communism”, it is called “Fascism”.
A is A,
You make a very good point, but the way you put it isn’t going to convince anyone. It is true that if you won’t let an industry vanish, then you must necessarily be on the hook to support it indefinitely if it keeps failing.
JB’s interpretation is valid. He wants to put emphasis on “simply vanish.” IOW, he doesn’t see the first statement as a promise to support GM forever. Fair enough, but unfortunately, I have come to believe that this is our President’s regular M.O. He says things such that different groups will hear what they want. In this case, those who want to hear GM won’t be allowed to fail hear the first line, while those who want to hear there are limits hear the second.
The problem is that many people are still not really listening to President Obama, comparing his words to other statements, his actions, his stated ideals, etc. and making a reasonable examination of what he is going to really do. His speeches are often intentionally misleading, but so were President Clinton’s and there are still people who don’t get it (or won’t admit it).
Man, talk about a tough crowd to please…
RF, at the very least you should be pleased with the head of RiR (and the Board of Bystanders?). I know, that hardly guarantees future success. But it’s a start.
I am no fan of the president, but I recongnize that if he goes down in flames, the pain will be shared widely.
So here’s to hoping for some success. Pch101, is this the first time we see hope backed with gonadsguts?
A person who casually drops the terms “Fascist” and “Communist” when discussing a mainstream domestic politician is just shouting very loudly, “Rational debate with me is impossible! Rational debate with me is impossible!” ad nauseum.
A person who casually drops the terms “Fascist” and “Communist” when discussing a mainstream domestic politician is just shouting very loudly, “Rational debate with me is impossible! Rational debate with me is impossible!” ad nauseum.
Thank you. Add my signature to the End Hollow Political Rhetoric petition.
Red Ink Rick’s abrupt departure makes me wonder if Rick was planning C11 and Obama got wind of this and canned his ass.
One of the problems with the President is that you can’t believe what he says. He has also said that he is not a believer in big government. He also excoriated the Bush administration for huge deficits. He has also claimed that his budget will “cut the deficits in half” in five years. You could go on and on. So, when he says that he does not intend to run GM, right after firing the CEO, you know not to believe him. So far, the only rule of thumb that seems accurate with respect to the truthfulness of Mr. Obama’s statements is that if they are consistent with a hard-left ideology, you can believe them, while if they are consistent with a limited government, free market ideology, you cannot.
Don’t want this to sound like we’re ganging up on you A is A, but you are seeing a contradiction where this is none. Let me explain why…It’s like teaching a child to ride a bike
Excuse me, sir, but the “children” (both of them) actually forgot how to ride a bike. Both of them are -unfortunately- very, very ill children. Children that should not be allowed (much less encouraged) to ride a bike.
* The Chrysler child crashed big time in 1979. In 2008 it crashed badly the second time. Do you suggest that it is appropiate to bailout Chrysler with tax money (lets say) every 19 years?.
* The GM child was a world leader in bike riding, half a century ago. Currently it has terminal Alzheimer and he forgot everything about bike riding. You do not try to teach a terminal Alzheimer case to ride a bycicle. That would be futile and dangerous.
A company that creates the Hummer brand, that sells reskinned N-Bodies from 1985 to 2006 or that sells you a Dex-Cool cooled car simply deserves to disappear.
According to buyers, investors and stockholders, Chrysler should have ceased to exist in 1979. GM (as is today) in 2008.
I invite you to take a look at Chrysler and Chevrolet crash test ratings at EuroNCAP
http://www.euroncap.com/results.aspx
For Jupiter sake. Kia gets better ratings.
BDB: A person who casually drops the terms “Fascist” and “Communist” when discussing a mainstream domestic politician is just shouting very loudly, “Rational debate with me is impossible! Rational debate with me is impossible!” ad nauseum.
The Truth About Comments!
Also, we’re getting pretty close to Godwin’s in this story, I know it’s been invoked elsewhere already…
If only these brilliant politicians, who obviously know more about running a car company than their current managers do, had kept American Motors, Packard, Terraplane, Queen, Peerless, Ruxton, Crestmobile, Gasmobile and all those other great brands going maybe America would currently have a strong automotive industry.
Though not quite Orwell’s “Newspeak,” one has to admit the resemblance uncanny. War is peace. Freedom is slavery. Ignorance is strength. The Gov’t is NOT running GM, but IS financing it and now covering warranties [WTF?!]
Don’t get me wrong… happy to see RIR bounce. Just when you thought nobody was more disconnected from reality than Wagoner, you learn otherwise in one speech… “GM can rise again!” Are you serious?
Slippy is right… Ford need only bide its time a bit longer. It’s decision to stay ‘pure’ will look sage, unless forced to ‘merge’ or submit to gov’t ‘[non]-takeover.’
March sales #s are due this week, and once April’s totals plunge to zero, RF’s prophecy will HAVE to be fulfilled. GM is toast. Dow >6,200 when GM’s filing pops…any bets?
If only these brilliant politicians, who obviously know more about running a car company than their current managers do, had kept American Motors, Packard, Terraplane, Queen, Peerless, Ruxton, Crestmobile, Gasmobile and all those other great brands going maybe America would currently have a strong automotive industry.
+10
That´s it. Creative destruction. That´s one of the fantastic virtues of Free (truly Free) Enterprise.
“Save GM” or “Save Chrysler” makes just as sense as “Save AMC” or “Save Hupmobile”.
There´s a nice category of defunct US automakers at Wikipedia:
http://en.wikipedia.org/wiki/Category:Defunct_motor_vehicle_manufacturers_of_the_United_States
There´s a lot of ethical lessons to be learned reading about those defunct automakers.
Ok, lets just say you are a huge Obama fan and are completely happy with his government taking a much larger role in industry, banking, healthcare, C02 regulation, etc. How would you feel if Jeb Bush walked into office after him with all that power?
I’m surprised they didn’t make Henderson CEO ad interim.
GM needs an entirely new board and management team with a new outside CEO, somebody like Mulally or Ghosn.
If the new CEO comes from the old guard, you risk infecting the new hires with the old virus and the disease will continue…
guyincognito, you’re absolutely right to point out that this is an issue shouldn’t be viewed purely through a lens of political preference. One shouldn’t be happy with Obama doing something that they would automatically consider a disaster if a person with opposing beliefs did, especially given the transitional nature of our political system – those in power can generally look forward to being out of power within the decade.
People are OK with the gov’t taking a larger role in private industry right now because the captains of those industries have driven them off a cliff. Bush recognized the need for it and Obama is continuing his policies in this regard. One can only hope that control will be ceded back to the market after the ship has been righted and proper regulations are in place to prevent people from letting their greed and short-sightedness ruin the economy again. Then, in like 20 or 40 years, it’ll all happen again and everybody’ll freak out but it’s ok because the economy is cyclical.
Also if Jeb Bush ever assumes the presidency, I’ll have assumed a coup has taken place or we’re in Bizarro World, because the Bush name is pretty well worn out at this point. Oh man, President Jeb Bush… what an interesting thought exercise…
I am lost, who called who a communist?
I am lost, who called who a communist?
“Who.”
“Who called who a communist.”
“What?”
“No, what’s a Fascist.”
“Who?”
“Who’s a communist”
“What? Who?”
“What’s the fascist, who’s the communist.”
“I’m sorry, who’s the what, now?”
“Now’s a libertarian.”
Ah, certainly then, Now cannot be tolerated. Who in the right mind would want to talk to one of them.
Mr. R. Farago,
Governing a nation is a rather more complex task than running a private sector corporation, or writing commentary as a journalist.
OF COURSE the US President needs to engage in, er . . . double-speak of sorts. He must “kiss ass” all around at various points in time, to nurture a fragile consensus that’s crucial if he is to have the ability to get things moving.
So, is he being hypocritical in disavowing the intention to “run GM” whilst demanding a change in leadership in exchange for putting even more tax-payers’ money at risk?
Did you not just this this week say that if Wagoner were replaced by his hand-picked deputy, that the government couldn’t be serious about causing genuine change in the way GM is run? The government didn’t even go that far.
Having it both ways, are we?
But going back now to what Mr. Obama may really be up to. . . I would not at all be surprised if sixty days hence, he were to conclude that not only Chrysler (which appears a foregone conclusion even at this time) but also GM cannot be saved by throwing good taxpayers’ funds after bad. He may know that already.
Virtually all that remains of the TARP funds will be needed to deal with the financial sector’s problems. He will need to go to Congress if he were to find that he needs to save the walking dead. He must know what the response will be.
No President, even one as popular as he is, can get away with appearing to callously flush an iconic American corporation down the drain. He must be seen to be mightily striving to save it and the jobs of hundreds of thousands who voted him into office.
There must be moments when the US President wishes he were the Premier of China instead. Life would be so much less complicated.
Easy to throw rocks, but Hooverism just ain’t gonna cut it. Most people know that Chrysler isn’t going to work out. The FIAT thing will fall through. But, at least Obama game them a chance.
GM may be able to get the funding they need to pay off the pensions and medical plans. Otherwise, who do you think is gonna pay the unemployment insurance?? Taxpayers are going to pay one way or the other.
The shareholders and bondholders are toast. If anything, Obama is being generous. But, if after a sixty day extension, GM still doesn’t have a plan, no one will blame Obama if GM goes the bankruptcy route – which is still going to cost big.
why are you complaining that much?
you have multitasking Pres, that has just given you a 50 year 20000000000km guarantee on anything GM, and if the dealer doesn’t fix it, you can sue, because it’s a government plan. guarantee’s can’t get any better.
by the way does that apply to the ZR-1?
PS: Chrysler wont even make it with a 20 year guarantee…
carlos.negros: Easy to throw rocks, but Hooverism just ain’t gonna cut it.
The idea that President Hoover advocated a laissez-faire approach to the economy in the wake of the 1929 crash is a myth.
He was called the “Great Engineer” in part because he believed that the federal government could “engineer” the economy to eliminate downturns.
He created the Reconstruction Finance Corporation to prop up failing companies, and instituted public works projects as well. Which didn’t stop the economic downturn in the wake of the Great Crash from becoming the Great Depression.
Some quotes from Andrew Mellon, Hoover’s Secretary of the Treasury:
“Give tax breaks to large corporations, so that money can trickle down to the general public, in the form of extra jobs.”
Here’s the full quote from President Herbert Hoover on the advice given to him by Mellon:
…the “leave it alone liquidationists” headed by [my] Secretary of the Treasury Mellon, who felt that government must keep its hands off and let the slump liquidate itself. Mr. Mellon had only one formula: “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.” He insisted that, when the people get an inflation brainstorm, the only way to get it out of their blood is to let it collapse. He held that even a panic was not altogether a bad thing. He said: “It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people”
And here is Keynes’ response:
“It seems an extraordinary imbecility that this wonderful outburst of productive energy [over 1924-1929] should be the prelude to impoverishment and depression. Some austere and puritanical souls regard it both as an inevitable and a desirable nemesis on so much overexpansion, as they call it; a nemesis on man’s speculative spirit. It would, they feel, be a victory for the mammon of unrighteousness if so much prosperity was not subsequently balanced by universal bankruptcy. We need, they say, what they politely call a ‘prolonged liquidation’ to put us right. The liquidation, they tell us, is not yet complete. But in time it will be. And when sufficient time has elapsed for the completion of the liquidation, all will be well with us again.
I do not take this view. I find the explanation of the current business losses, of the reduction in output, and of the unemployment which necessarily ensues on this not in the high level of investment which was proceeding up to the spring of 1929, but in the subsequent cessation of this investment. I see no hope of a recovery except in a revival of the high level of investment. And I do not understand how universal bankruptcy can do any good or bring us nearer to prosperity”