It seems kind of interesting that the CEO of that company resigned so quickly after it was suggested by the Obama administration.
Not quite sure on all the details but I do not like this sort of intervention just because the government has bailed them out. Luckily, the man that replaces him was expected to replace him eventually anyway.
I wonder if AIG will get this kind of treatment?!?!!?! I bet it will not as they were large contributors to the democrats during election time. Oh how special.
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http://www.industryweek.com/articles/u-s-_government_backs_warranties_for_gm_chrysler_18808.aspx
The U.S government has now decided to take on the role of Automobile Warranty Insurer. Soon all debt will be backed by the govt. granting the illusion of a higher than merited credit rating. Keeping the cost of capital down, and investments flowing is the supposed purpose of this safety net, but it fundamentally places all the pressure on the U.S Balance Sheet (not in the best of shape as well all know). If you look at this maneuver, the govt. is taking the script straight from AIG themselves. AIG used it high credit rating to insure securitized packages, effectively loaning out its rating to unworthy investments. As we have seen this process ended in calamity for AIG, and it is reasonable to expect the same consequence for the U.S government. It is time for responsibility and accountability to hold sway in the U.S again and to stop sacrificing the philosophy this country was founded on for what is the politically convenient choice (which only results in short term illusions anyway).
I agree 100%. This country needs to focus on long-term solutions. The voters criticized our former president for increasing the deficit. Our current president is following in his footsteps at a much quicker pace and yet the criticism is not as prevalent.
The media coverage has been lacking and what is worse is that I have yet to hear complaints from my peers. I have only hear conservatives lash out.
This is not only apathy, it is hypocrisy.
Obama has been given carte blanche by the U.S. media. However, Europe is not following his lead. He has tried to influence other countries to follow our wild spending spree and they have refused.
Just to offer another perspective - would we not want the government to exert some substantial control on a company getting bailout money - especially if that company appears to not be moving as quickly as needed to shore up the walls and re-invent itself? I find it hard to envision a company making such radical cuts of product lines, staff, etc without some serious external pushing... Perhaps this is the lesser of two evils?
The only "external pushing" that should be required to promote the normal business procedures of restructuring product lines, business models etc is the threat of bankruptcy. Bankruptcy is a natural process in a free market, and beneficial in many ways as good assets are assimilated and bad discarded. In this case, the government is using the bailout money not as an incentive for reform by the automakers, but as leverage to achieve their own political agenda. In this case demonstrated by: the ousting of Rick Wagoner (the fact that he was ineffective as CEO is a moot point because it is still the decision of the board of directors), forced merger between Chrysler and Fiat, and specific requests for eco-friendly cars (regardless of their economic viability). While I do agree any company receiving bailout money effectively has a new shareholder as as such, since maximization of shareholder wealth is the fundamental premise of our corporations, this shareholder must be treated no differently. The slippery slope is that once government begins defining the economic gameplan of companies, it by definition ceases to be capitalist, and begins operating as a Socialist government. "Socialism refers to a broad set of economic theories of social organization advocating public or state ownership and administration of the means of production and distribution of goods, and a society characterized by equality for all individuals, with a fair or egalitarian method of compensation."
I am afraid my economic background is not sufficient to provide a full analysis but I would agree that, in general, it should not be the role of the govt to bail out the auto industry. I support the idea of the almost Darwinian view that the market will regulate itself via survival of the fittest but here - apparently - we have such an economic ponzi scheme that we simply could not allow them to fail due to collateral consequences. Do you agree? so... now that we have acted, I think we have a duty to ensure that we exert some level of control to ensure the investment is well made.
This is where I disagree with Dale... We do have a scheme that almost requires that we keep GM alive, but the role of government is not as board of director. They are simply a large investor. They have options they could have used and have played within the gambit of stock ownership. They, however, chose the route of pressuring someone to step down. This is not a government position simply because the government is an investor.
Just because the government has a stake in their success does not give them the right to intervene in such a fashion.
What will happen next? Will they decide their manufacturing system, demand that they hire more workers?
I just think there was a line and the US government crossed it!
Jorge-
Look - think of it this way - have you ever watched the Soprano's? First the restaurant is struggling, then Tony "invests". Pretty soon he is having free dinner there every night and taking booze and steaks out the back door. Then he makes changes to the management. Finally, when it looks like it may go under anyway, he burns it to the ground. The owner collects the insurance and builds a new restaurant.
Problem solved :)
Dale,
So what you mean is that the bailout will fail miserably and the government will light it on fire and claim ignorance? That Obama will reign over America with fear tactics and thuggery?
And that Obama's last year as President will be marked by his fear for losing his life?
Will his last "episode" leave everyone hanging on the edge of their seat and then utterly disappoint us?
I thought we were the conservative view, Dale?! :)
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