The Obama Auto Plan
It’s taken me all the way until the end of the day to actually digest the day’s big story—the Obama administration’s new auto industry plan. The first thing to say about this is that unlike a lot of other things that have raised the cry of “socialism!” this really sort of is socialism. You have the President of the United States firing the CEO of General Motors, and simultaneously ordering Chrysler to pursue a process of selling itself to Fiat. The administration is wisely trying to avoid an extended period of state-directed management of industrial firms producing consumer goods, but that’s certainly the situation they’re in at the moment and it’s something we ought to try to bring to an end as soon as possible.
My understanding of the Chrysler portion of the deal is basically that if Chrysler and Fiat can’t come to terms within 30 days, then Chrysler is going to enter into a Chapter 7 liquidation process at which point Fiat could buy whatever it wants. Consequently, Fiat is likely to be able to extract favorable terms on whatever deal they reach. General Motors, meanwhile, is in effect being put into a debtor-in-possession bankruptcy. They haven’t technically been put in such a scenario, but the firm’s restructuring plan has been rejected and the panel is offering a 60 period in which to put together a more radical restructuring featuring haircuts from bondholders and labor unions and dealers. This is basically what would happen in a DIP bankruptcy. The thinking is that given current conditions in the economy and the credit markets it wouldn’t be possible to arrange that through the private sector, so a bankrupt GM would need to be liquidated rather than reorganized. The government is stepping in to, instead, facilitate reorganization.
In both cases, these seem like economically reasonable courses of action. It’s important to note, though, that if these plans work it doesn’t seem like they’ll especially achieve what people would ideally like to see. The American auto industry isn’t really going to be “saved.” General Motors is going to shrink radically, and Chrysler’s production facilities will basically become “transplant” factories of an Italian firm. In job terms, the auto industry is going to continue to shrink as a source of employment. In particular, the Chrysler-Fiat merger scenario is consistent with massive job losses in the United States since it’s not obvious how many Americans Chrysler would really want to employ. If GM succeeds in getting out of a lot of its debt obligations, the resulting company isn’t going to be well-positioned to expand when the broader economy recovers since it’ll be hard to borrow on favorable terms. And the “good jobs” nature of blue collar work in the auto industry is going to further erode.
Long story short, this looks like an economically responsible way to avoid a cataclysmic implosion of these firms at an inopportune moment. But this isn’t going to prevent the conditions facing the population of Michigan from further deteriorating. That state more-and-more looks like it’s going to be the 21st century version of the Great Depression’s Dust Bowl. The most important policy question facing us in this regard thus continues to be what can be done to help the people of the Rust Belt that doesn’t just involved indefinitely propping up shrinking firms. The first step is simply to turn around the shrinkage in the larger economy, but the question will remain even if recovery reaches the rest of the country.
73 Responses to “The Obama Auto Plan”
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March 30th, 2009 at 6:21 pm
this really sort of is socialism
MattY’s IIIIIIIIIIIIIIIIII
scale scale scale scale
scale scale scale
scale scale
scale
Maybe we can take up a collection to buy MattY a few winter coats for the train ride.
But, seriously, what could happen with MI is the development of some sort of industry other than cars.
March 30th, 2009 at 6:32 pm
Re: The first thing to say about this is that unlike a lot of other things that have raised the cry of “socialism!” this really sort of is socialism.
No, it isn’t. The name for this kind of practice is ‘intervention’, and it’s a common temporary gambit in capitalist economies, particularly in Latin America. The government temporarily assuming control over an industry for a short-term crisis period, does not equal socialism.
March 30th, 2009 at 6:32 pm
The administration is wisely trying to avoid an extended period of state-directed management of industrial firms producing consumer goods, but that’s certainly the situation they’re in at the moment and it’s something we ought to try to bring to an end as soon as possible.
Certainly. That’s why countries persuing which have state ownership and industrial policy, such as Germany (Volkswagon, etc.), Italy (Fiat), Japan (all of them), South Korea and China (every company they), have all the sucky jobs manufacturing cars, instead of good jobs in finance and journalism. Industrial policy just doesn’t work.
Long story short, this looks like an economically responsible way to avoid a cataclysmic implosion of these firms at an inopportune moment.
Well, yes. This just accelerates the process the US has undegone over the last twenty years. The empire continues to liquidate the basis of industrial power by selling it off to other countries and using the cash to keep the upper class in good jobs, in finance and journalism. They’re just doing it in such a way achive the goal of twenty years without getting all those blue collar workers that vote Democrat mad at them.
The most important policy question facing us in this regard thus continues to be what can be done to help the people of the Rust Belt that doesn’t just involved indefinitely propping up shrinking firms.
Well, you can send them to Harvard, so they can get good jobs in finance and journalism. (And not to forget the think tanks!)
max
['The Randroids should be happy. Well, happier, since we continue to move along the road to reducing the bulk of the population to subsistiance wages, which will make things a lot cheaper for people who live in DC and need servants.']
March 30th, 2009 at 6:43 pm
The first thing to say about this is that unlike a lot of other things that have raised the cry of “socialism!” this really sort of is socialism. You have the President of the United States firing the CEO of General Motors, and simultaneously ordering Chrysler to pursue a process of selling itself to Fiat.
We nationalized the auto industry and forced them to make those decisions? When did this happen?
March 30th, 2009 at 6:50 pm
Now that the US guv’ment is guaranteeing the GM warranties we need to begin training auto workers as repair persons. More Stimulator!
Sorry MamaObama but your garden has to go, we gotta put the White House grease pit somewhere.
And MmmmmMmmmmMmmmm, bet Barry is gonna be hot hot hot in those greasy sweat stained strategically torn overalls.
ObaDaddy!
Damn but this socialism thing is looking better and better…
March 30th, 2009 at 6:52 pm
Shut the fuck up, Lonewacko.
March 30th, 2009 at 6:55 pm
I’m of two minds on this one…
On one hand, the fact that the Michigan/Rust Belt economy has been for so many decades based almost solely on automobiles has sort of set the area up for this kind of crisis–it is, in a way, a long-drawn-out “car bubble.” Lack of a diversified economy tends to subject the people of a state or region to greater suffering in bust times, as their singular source of prosperity falters and they have nothing to fall back on. Furthermore, the people running these companies have done an outstandingly poor job keeping up with the progress that has taken place in the industry elsewhere in the world, and have acted–again in the bubble mentality–as though their short-term formula for success would last forever. They messed up big time, and have to pay the price–unfortunately, so do their employees.
Which brings me to the other hand. I have to agree with the voices of rage in the blogosphere who compare the government’s handling of Detroit with that of Wall Street and notice that the latter is getting off quite easily while the former seems to be getting a pretty raw deal. The injustice is magnified by the fact that while losing one’s job at an investment bank is a setback, losing one’s job at an auto plant is a ticket to poverty. While the banks have gotten some sweet deals from their former colleagues in Washington, the auto workers’ union seems to be regularly blamed for a lot of things that can’t entirely be their fault. Is it class warfare? Possibly. After all, historically speaking, such crises never impact the wealthy as deeply as the working class, and heaven knows the government doesn’t really work for the common man to the degree it claims.
On the third hand, these people are going to lose their jobs regardless. Still, it’s pretty criminal that Wagoner is getting a $20 million retirement package while the little guys are being forced to give up their pensions and health insurance. Yeah, it’s class warfare. As usual.
Bourgeois scum.
March 30th, 2009 at 6:57 pm
this really sort of is socialism.
No it isn’t. Really, it isn’t. GM isn’t VAZ; it isn’t even British Leyland. It is, however, reliant upon government loan guarantees right now for working capital.
March 30th, 2009 at 6:58 pm
Shut the fuck up, “Everyone.”
March 30th, 2009 at 7:16 pm
But this didn’t have to be. The Japanese in 10 years went from a reputation for crappy cars (check out the 1979 Honda Civic or Datsun cars) to the most reliable cars on the road. After getting that right, they worked on perfecting the ergonomics and feel of the car.
Since 1990 American cars have had a reputation for falling apart after a few years. Rather than invest to try to correct that, Detroit took the easy way out revenue-wise and invested in giant cars (which they knew was a failing business model–it would die once oil prices went up).
This government intervention is 20 years too late.
(Drive non-expensive Detroit cars now. They still suck in feel (they feel cheap). Ford is marginally better than GM and DC.
“On one hand, the fact that the Michigan/Rust Belt economy has been for so many decades based almost solely on automobiles has sort of set the area up for this kind of crisis–it is, in a way, a long-drawn-out “car bubble.” “
March 30th, 2009 at 7:18 pm
Yes, the Wagoner firing seems the headline but with credit to the NY Post the real headline here is “OBAMA TO CHRYSLER: DROP DEAD”.
My guess is that Fiat is going to find lots not to like with Chrysler in the next 30 days and what you are going to see is either Ford or GM cherry pick Chrysler – the only real brand of value it has is Jeep.
March 30th, 2009 at 7:24 pm
Christ – I can hardly see through all the stench of fucking troll in here.
I’ve brought this up before, but really isn’t it time to consider banning some assholes from here? 24 an Ass, an obvious cut and paste blogwhore troll, would be a good start, but there are others too (Myles, JT). To a point some troll shit is acceptable and inevitable. But it gets to a point where the conversation just gets hijacked, which is of course their point.
March 30th, 2009 at 7:34 pm
An interesting inversion. I think there was a time in the previous century when, not quite literally, the Chair/CEO of General Motors or the president of the UAW could have essentially fired the POTUS. Maybe we can achieve energy independence by hooking turbines up to my grandfather and all the other late autoworkers who must certainly be spinning in their graves…
March 30th, 2009 at 7:40 pm
Anyway, we’ve been doing this with the financial firms already–Wachovia, WaMu, National City, and so on all got more or less the Chrysler treatment.
As I recall, the banks you listed got absorbed by larger banks. Who’s likely to do that for GM?
To a point some troll shit is acceptable and inevitable. But it gets to a point where the conversation just gets hijacked, which is of course their point.
Yeah. There’s not much point in reading the comment threads here anymore for anything involving Israel/Palestine, global warming, or any one of several topics where certain Christian-conservative commenters can churn up a froth.
March 30th, 2009 at 7:41 pm
So, then, what stimulus can the federals give to the transportation industry? “Anyone” may answer.
The auto industry is dis-equilibriated, cannot see its future, and the stimulus the federals gave GM cost about 10 grand, Obama announcing the firing of the GM CEO.
Follow me here, now. Of course Obama spent more money, probably a couple of million in preparation, the announcement formalities probably had a variable 20 grand cost.
So, we see here that stimulus action can often cost little, and most often do.
The tens of billions spent was not stimulus, it was pay-off for bets gone bad.
March 30th, 2009 at 7:58 pm
Should I read anything into your choice of a Ford photo?
I don’t see why a relatively debt-free GM will have any more problem getting good financing that Ford or Honda USA, a year or so down the line. With their books cleared out and their capacity chopped down to produce what they might reasonably sell, they’re as good a risk as any other big firm.
March 30th, 2009 at 8:00 pm
цитата…
The first thing to say about this is that unlike a lot of other things that have raised the cry of “socialism!” this really sort of is[...]…
March 30th, 2009 at 8:03 pm
Uh – hmm.
MY again blogging above his pay grade. If Chrysler goes into Chapter 7, Fiat cannot just buy whatever it wants. Fiat might not be able to buy anything. The Chapter 7 bankruptcy trustee uses the bankrupt estate to maximize value for creditors. So…
The primary role of a chapter 7 trustee in an asset case is to liquidate the debtor’s nonexempt assets in a manner that maximizes the return to the debtor’s unsecured creditors.
Fiat may get nothing. It depends on who will pay the most for the desirable assets.
Again, MY doesn’t know sh*t. surprise surprise!
March 30th, 2009 at 8:06 pm
I think the answer to all of the big threes’ problems is higher cafe standards, oh, and higher union legacy costs.
Who in the administration is qualified to hire an auto exec?
This is a friggin’ joke.
March 30th, 2009 at 8:10 pm
The most important policy question facing us in this regard thus continues to be what can be done to help the people of the Rust Belt that doesn’t just involved indefinitely propping up shrinking firms.
Let’s relocate Fort Bragg, Fort Benning, Fort Jackson, Fort Polk, et al. from the South to the Rust Belt. Let the fine Republicans of Dixie see how long they can survive without the largesse of Uncle Sugar.
March 30th, 2009 at 8:11 pm
ba, given the overcapacity in the auto industry, the assumption is that there probably aren’t going to be many bidders for Chrysler’s assets. The trustee is likely to favor whoever offers a lump sum to clear most of the crap off of his driveway, rather than risk holding out to part the company out like an old ‘Cuda in hopes of a better overall net.
March 30th, 2009 at 8:13 pm
Michigan should be called the “Rust Bowl” not the “Dust Bowl”
March 30th, 2009 at 8:28 pm
Re James Gary
Who is Mr. Gary calling a Christian-conservative? I am neither.
March 30th, 2009 at 8:32 pm
So if it is true, as Charley Wilson said 55 years ago that what is good for General Motors is good for the USA, does that mean the country will be filing for Chapter 11 in about 6 months? Oh right, we have a press that prints dollars while GM’s presses only make cars.
March 30th, 2009 at 8:33 pm
Re Fiat
Fiat stands for: “Fix it again Tony”
March 30th, 2009 at 8:37 pm
There is a global oversupply of automobiles. But the U.S. companies, sick as they are, still have somewhere near half the U.S. market share. That’s a lot of cars. So I think Matt’s pessimism is overdone. There is still space for a large automobile industry here, just not AS large as the current one.
March 30th, 2009 at 8:47 pm
Who is Mr. Gary calling a Christian-conservative? I am neither.
I am aware of that, and was not referring to you.
March 30th, 2009 at 8:53 pm
Perhaps the new Camaro will help GM somewhat, as I understand dealers have sizable waiting lists.
March 30th, 2009 at 8:56 pm
You have the President of the United States… ordering Chrysler to pursue a process of selling itself to Fiat.
I’m surprised no one caught the obvious pun: Chrysler selling itself to Fiat by fiat.
March 30th, 2009 at 9:00 pm
I don’t pity Rick Wagoner. He’s been a weakling and a softie all the way. Buckling to the UAW and all that.
The one guy who’s been doing all the tough negotiating vis-a-vis UAW was his successor, Fritz Henderson. I understand that he is known to be a hard-liner and fairly ruthless when it comes to restructuring to profitability. Which is a good thing.
God, I suspected Wagoner was a weakling when I first saw his photo. There is just that look of sheep in his eyes. There is no wolf there, just sheep.
March 30th, 2009 at 9:15 pm
How about give Michigan its money back? You know, the money that Michigan taxpayers send to Washington, which is quickly sent down south to Welfare states like Tennessee, Alabama, and the like? You do realize that these maligned “rust belt” states still pay more into federal taxes than they get back in federal dollars?
March 30th, 2009 at 9:16 pm
In 1920 Michigan had a population of 3.7 million, Wisconsin had a population of 2.6 million. As of the last census, Michigan had a population of 10 million, Wisconsin had a population of 5.6 million.
Without the auto industry, Michigan’s population will likely fall more in line with Wisconsin’s, probably down to 8 million. Minnesota and upstate New York both have populations of around 6 million. Minnesota, Wisconsin, Michigan, and upstate New York are fairly similar in terms of topography and climate.
Its more complicated than I’m making it out, but Michigan’s decline has a ways to go and it will likely wind up as a mid-sized state. “Dust Bowl” is probably overstating things.
March 30th, 2009 at 9:20 pm
Re: Since 1990 American cars have had a reputation for falling apart after a few years.
Huh? That was the reputatio n American cars had in the 70s and well into the 80s. By the 90s a lot of the quality issues had been resolved, but they were still poorly designed (in regards to aesthetics and comfort) and of course way too big with poor fuel stats.
Re: Drive non-expensive Detroit cars now.
I own a Jeep Wrangler. Five years old, almost, and still going strong. I can think of a couple minor design issues that I would do differently, but I have no major complaints with it at all.
March 30th, 2009 at 9:28 pm
Myles SG-
How far has that cursory and totally superficial analysis got you in your business dealings?
k1
March 30th, 2009 at 9:34 pm
Especially if GM goes into Chapter 11 and starts looking to sell off stuff.
March 30th, 2009 at 9:47 pm
#36 is correct. “Drive non-expensive Detroit cars now…”, etc. is a decades-old evaluation. The Mustang, e.g. is non-expensive and it’s a great car. GM and Ford cars have been reliable for a while now, and presently they’re not ugly anymore either. The trucks are as good as ever. It’s only Chrysler that’s failed to produce new designs.
March 30th, 2009 at 10:43 pm
OK, let’s talk Michigan. What simple low cost stimulus plans would put Michigan back on its feet?
Michigan wants to be in the transportation business, then Michigan should loosen its traffic rules to allow innovative transportation solutions. Otherwise, some other state out west will take the lead.
March 30th, 2009 at 11:04 pm
Your question is incorrect. There is no simple way, nor any low cost way, to solve Michigan’s problem. Imagine that hurricanes begin to pound the coast of Florida over the next ten years with increased frequency until Miami becomes a ghost town and you begin to understand.
Another falsehood. Michigan has attempted to transform its economy a number of times over the last thirty years. During the 80s it attempted to bring in tourist dollars with the “Yes Michigan” campaign, which had varying degrees of success and failure.
During the 90s Michigan attempted to develop a tech corridor, trying to foster more companies like software giant Compuware to represent the next generation of Michigan.
The plan earlier this decade was to develop a biotech corridor, to develop more pharmaceuticals like Pfiser as well as new medical technologies based on research from Michigan’s research schools.
As I said before, what would help is if leeches like Alaska, Mississippi, New Mexico, and the like returned the money they’ve taken from Michigan over the last 7 years.
March 30th, 2009 at 11:12 pm
How far has that cursory and totally superficial analysis got you in your business dealings?
You should pop this question to the idiots who picked that weakling Wagoner in the first place, not me. I would never have picked that softie.
March 30th, 2009 at 11:49 pm
Francisco The Man Says:
March 30th, 2009 at 7:24 pm
Christ – I can hardly see through all the stench of fucking troll in here.
I’ve brought this up before, but really isn’t it time to consider banning some assholes from here? 24 an Ass, an obvious cut and paste blogwhore troll, would be a good start, but there are others too (Myles, JT). To a point some troll shit is acceptable and inevitable. But it gets to a point where the conversation just gets hijacked, which is of course their point.
========================================================
How DARE you make me read something I disagree with! I want my cocoon and I want it now!
March 30th, 2009 at 11:50 pm
Regarding Fiat,
Sergio Marchionne, CEO, total compensation $4,531,466
and oh BTW, he is on the board of UBS AG where he gets $525,000
and oh BTW, he is on the board of Philip Morris International
Chairman of the Board, Luca Cordero di Montezemolo, made $7 million in 2005, but generally pulls in just $500,000/year.
Time to claw back some $$$?
March 30th, 2009 at 11:57 pm
Americans have spoken loud and clear. We don’t want a Chrysler airbag sitting inches from our heads. We don’t want our children out there at night on the turnpike, driving a GM car. There are some things, like Iraq or GM, that no President can fix.
March 31st, 2009 at 12:09 am
“During the 90s Michigan attempted to develop a tech corridor, trying to foster more companies like software giant Compuware to represent the next generation of Michigan.”
I remember during the rolling blackouts in 2000 (2001?) Michigan was putting ads in the Bay Area—BART stations and the like—saying, in effect, “Here in California your business has to deal with blackouts. Come to Michigan instead!” (At least I think it was Michigan.) Anyway, I kind of doubted that would go anywhere, and I guess it didn’t.
March 31st, 2009 at 12:40 am
Hector Says:
March 30th, 2009 at 6:32 pm
Re: The first thing to say about this is that unlike a lot of other things that have raised the cry of “socialism!” this really sort of is socialism.
No, it isn’t. The name for this kind of practice is ‘intervention’, and it’s a common temporary gambit in capitalist economies, particularly in Latin America. The government temporarily assuming control over an industry for a short-term crisis period, does not equal socialism.
Kind of like they did with the banks and financial sectors as of NOW.In the long run it`s best for GM but ultimately unionized labor will get screwed the most because alot of us don`t have any kind of college degree or any other training to fall back on.Our free trade agreements are so lopsided it`s not funny and couple our trade deficitwith it is sucking the life out of our manufacturing calabilities.Our country is 3rd from the bottom inunionized wages and yet we are number 2 in productivity behind tiny little Ireland.Health care and supervisory amd management wages is hurting our competitiveness with our top 20 trading partners.
March 31st, 2009 at 1:44 am
“The first thing to say about this is that unlike a lot of other things that have raised the cry of “socialism!” this really sort of is socialism. You have the President of the United States firing the CEO of General Motors, and simultaneously ordering Chrysler to pursue a process of selling itself to Fiat.”
I think Obama is doing what he thinks is best for the auto industry.
Cure for Yeast Infection
March 31st, 2009 at 2:16 am
Since when is a major creditor, the only creditor willing to keep a company afloat, dictating the debtor’s operations, socialism? Just because that creditor is the US government? If the government didn’t act like a real creditor it would be blasted for just a giveaway. Now, it acts like an actual creditor and it’s socialism. I swear, one reason the government is dysfunctional is that the citizens of this country are impossible to please.
March 31st, 2009 at 3:03 am
Re: Christ – I can hardly see through all the stench of fucking troll in here.
Francisco: I spent the last 28 years in political hibernation convinced my nation was stupid to the core and therefor, beyond repair. Given hope recently I decided to search this new medium for a glimmer of reason. What I found in this search was that only willful blindness on my part would have prevented me from finding reason on a grand scale.
Contained in this blog and others is a kind of consistent brilliance from the citizenry I never thought existed.
As a neophyte blogger (is that what I’m doing?) trolls (the willfully blind?) make this experience all the sweeter.
March 31st, 2009 at 4:15 am
How about providing relocation assistance to Detroitans so they can move to somewhere else where there’s actually jobs? I know Obama wants to try to entice new buinesses to Detroit but why bother when there are already plenty of businesses elsewhere? Unless it’s possible to convert Detroit from Motor City to Solar & Wind City…
March 31st, 2009 at 5:56 am
How about providing relocation assistance to Detroitans so they can move to somewhere else where there’s actually jobs? I know Obama wants to try to entice new buinesses to Detroit but why bother when there are already plenty of businesses elsewhere? Unless it’s possible to convert Detroit from Motor City to Solar & Wind City…
Sorry… forgot to say great post – can’t wait to read your next one!
March 31st, 2009 at 6:33 am
I am hopeful that the impasse just reflects the assumption on the part of the bargainers that the government will bail them out anyway, so why make big concessions? Obama has disabused them of that.
The only part of bankruptcy that bothers me is the pension situation. Does the inadequate Federal pension plan get stuck with it?
March 31st, 2009 at 6:45 am
The first thing to say about this is that unlike a lot of other things that have raised the cry of “socialism!” this really sort of is socialism.
As John Cole pointed out, of course not.
March 31st, 2009 at 7:39 am
But, seriously, what could happen with MI is the development of some sort of industry other than cars.
Because poverty and inertia are impossible.
March 31st, 2009 at 7:44 am
Michigan has a tourist problem. Physically, northern Michigan is a charming place. Gently rolling hills and around every bend in the road, a crystalline lake. (Thanks, Mr. Glacier!)
But between black fly season and the cool rainy end-of-summer blahs, you’ve got a block of around 18 hours.
March 31st, 2009 at 7:54 am
Wagoner is the least of our worries. What about the millions of hard-working union members who will be on the streets if Obama has his way?
http://www.sunstateactivist.org/ssablog/
March 31st, 2009 at 8:53 am
The point is, that Fiat (or anyone) only needs to offer more than Chrysler can get from a bankruptcy proceeding. That lowers the price Fiat has to offer. If Chrysler’s board thinks they will cut their own throat to spite Fiat, Chrysler’s creditors should try to have the board members put in jail.
March 31st, 2009 at 9:14 am
Sorry there was a typo in the comments:
Should read:
That said I agree with the post.
March 31st, 2009 at 9:31 am
I think I’ve got to agree with “max” – we’re making ourselves into a nation of lawyers and bureaucrats. We produce nothing, make nothing, and do nothing of real value.
Of course that’s an exaggeration – there is plenty we still do, but that is the basic gist of where we’re heading. In some respect we’ve become a giant leach sucking off the real value of the world. We have substituted “administration” for substance, where we only manage and consume what others create.
I don’t know know the answer, but I do know that not everyone can be a hedge fund manager or a journalist. I also know we can do better, but at the moment we seem to be slowly and not-so-slowly self destructing ourselves.
There was a time not so long ago when basic jobs that didn’t require degrees were respected and paid reasonable wages. I suspect we’ll know we’re healthy once more when that is true again.
March 31st, 2009 at 9:35 am
What max said.
So let’s see, the top four requirements for people would be food, shelter, energy, and transport. So let’s give up on transport, seeing as how we can still do that after a fashion, and find something completely new for Michigan to do, a product that people in the U.S want and we can export all over the world.
I know, we can restart the world-wide market for tulips!
March 31st, 2009 at 9:51 am
Interestingly enough, Wagoner was at Harvard (MBA).
The problem with him wasn’t just that he was incompetent; that could have been allayed by good subordinates. He was an enervate, soft-touch weakling too.
He couldn’t face down the stakeholders. He didn’t have the survival instinct. And so he must go.
I wish Henderson all the best. He’ll need all the toughness he can get.
March 31st, 2009 at 9:52 am
There really is only one thing you can do with weaklings like Wagoner; give them the boot.
The kid never toughened up.
March 31st, 2009 at 9:55 am
Frankly, I don’t think Wagoner ever deserved any respect. He was no Übermensch.
March 31st, 2009 at 9:59 am
Here’s an “avocat du diable” question:
Why?
It’s actually that I don’t think this is true, but it’s funny that we say things like this as a “mantra”. Things like “the market knows best”, “market systems are best”, etc, etc.
The implicit assumption is socialism is bad/evil. How do we know this? The Soviet Union. However the Soviet Union wasn’t evil because it was socialist, it was evil because it was a totalitarian state.
Still in the end I agree with Matthew that the ideal is not to have state owned, however I do question the basis for our assumed “postulates”. I think we’ve said these things for so long we’ve forgotten why they’re true, or more importantly, why they might not be true.
March 31st, 2009 at 10:32 am
I’m more concerned with the millions of people Obama just put out of a job, and the millions more he’s going to leave pensionless and with slashed wages while asking his wall-street friends for absolutely nothing but drinks in the oval office.
March 31st, 2009 at 11:40 am
Re: Socialism
Pete Rozelle forced socialism on some single digit millionaires and presto, billionaires emerged out the end.
Labor got screwed to.
March 31st, 2009 at 11:43 am
I don’t get it. The US doesn’t make enough stuff but makes too much stuff?
March 31st, 2009 at 11:50 am
It also needs to buy less stuff of the more and less stuff it makes.
March 31st, 2009 at 5:13 pm
Actually TJ, you are decades behind the mark. Michigan has been working on breaking into the tulip market for decades:
http://holland.org/
Suck on it!
March 31st, 2009 at 7:41 pm
The US auto industry has been a delayed sunset industry for decades now. The Obama plan is to avoid an immediate crash and set up a cushioned landing. It’s better for people to walk away from a grounded plane than to have it crash spectacularly into the dirt. Either way, the plane will never fly again, but at least the passengers are not killed in the fallout.
Detroit sealed its fate when it cast its lot with the SUV. Once the SUV became economically unviable, the US auto industry was going to go down the same path it did in the 1970s, but this time much closer to economic death.
March 31st, 2009 at 10:24 pm
There is a worldwide glut of cars right now. And the major car companies are throughly multi-national; there is nothing particularly “American” about Chrysler, compared with Toyota. One thing the global economy does not need is every country subsidizing its own car companies. Obama is very wise to be very suspicious of perpetual federal help for GM and Chrysler. For one thing, it would give people like Bill O’Reilly a legitimate beef against Obama, and the right wing would love that. There is so much that Detroit auto workers could be doing that would really help people, like rebuilding our crumbling infrastructure (of which Detroit has plenty).
March 31st, 2009 at 10:35 pm
Socialism? Perhaps. I suggest readers look up the case of Conrail. In the ’70s the feds basically took over the remains of Penn Central, and then with a combination of direct investment and regulatory reform, Conrail turned into a profit making corporation. Conrail was later sold off to the private sector.