Looks like the Obama Administration is administering tough medicine to the two most ailing car manufacturers, giving GM and Chrysler 60 and 30 days respectively to get their acts in order. Additionally, GM's CEO is out, reportedly at the behest of the Obama Administration. A couple of things about this.
1. The Dow will drop 500 points today as skittish investors see additional signs of the Apocalypse. Institutional investors saw this coming and have already priced this into their outlooks. The steep drop to occur today will be earned back within two weeks.
2. Unlike some, I don't see the forcing out of GM's CEO as evidence of nationalization/socialization. I think the Obama Administration has a fundamental interest in seeing that the money taxpayers have paid into this corporation is well spent on a company headed in the right direction....and if that isn't the case, making the CEO and the GM Board aware of that fact is part of their duty. As a matter of fact, I see what appears to be Obama's "letting them fail" policy as reinforcing the power of creative destruction inherent in capitalism.
On the whole, I think Obama's playing this one right.
...giving GM and Chrysler 60 and 30 days respectively to get their act in order...
ReplyDeleteOr else what?? We'll give them $20 billion and 60 days more? How is this "letting them fail"?
Is this the same guy who said:
"I find myself increasingly thinking that it is time for GM to go bankrupt and restructure. Yes, it will be yet another hit on the economy...but I am also increasingly beginning to feel we've just about bottomed out on this, that there isn't much downside (if any) left. Let's get it over with and start rebuilding this country." 12/20/08
"Conservatives should oppose any aid to the ailing auto industry… " 1/27/09
"This is a bucket with a hole in the bottom. It is time to cut these two companies off and allow them to fail. " 2/18/09
Clearly my writing and thinking was too opaque and or nuanced for you.
ReplyDeleteI think this is a big step in the failure direction.
Obama has a political base to tend to, and he's doing that. But he appears to be hastening their demise nonetheless.
Would I prefer that he just came out and said, "uh, no."? Of course. But that's not going to happen.
Clearly.
ReplyDeleteI just don't see any evidence of an Obama "letting them fail" policy at play here. As you point out, he's got a political base to play to.
Can't wait to see what concessions the UAW is going to agree to...
ReplyDeleteUntil the union is broken, GM stands no chance.
Simmer down you two.
ReplyDeleteThis is not a gymnasium.
You know, GG, I think I may have written a little prematurely.
ReplyDeleteI wrote this story based on news reports I heard on the radio....did not do any supplementary reading (shoddy form, I realize) before writing.
Based on what I've read....I still think Obama's going to let these guys fail--especially Chrysler (not a public corp).
But I think you are right to be a little suspicious.
I think he's more inclined to let Chrysler fail as you say(or merge with Fiat, which is just as bad), but he's just not going to give up the ghost on GM - because it's HIS now. And if he lets it "fail", it's his failure, so he will do everything he can to prop it up for as long as it takes. Serving up Wagoner was just window dressing.
ReplyDeleteI wonder if he is consulting with Hugo Chavez for his next move.
ReplyDelete"consulting with Hugo Chavez" -- probably so. And then our insightful congress will amend the constitution to allow Obama to serve as president for life.
ReplyDelete