In December of 2008, GM and Chrysler asked Congress to provide a package of bail-out funds amounting to over $17,000,000,000 ($17 billion) in order to help them avoid bankruptcy. According to a BBC News report, "The car makers have argued that even an orderly bankruptcy would send them out of business forever, with the loss of millions of American jobs." The Senate listened to the American people and rejected the bail-out, which should have cleared the way for GM and Chrysler to enter bankruptcy protection and work out a new plan for reducing overhead and debt while keeping the parts of their companies that worked. However, that wasn't acceptable to President Bush. He decided to use the TARP funds (provided by Congress to bail-out the banking industry) to circumvent the will of the American people.
29 May 2009
Ironic, Isn't It?
Now, President Obama has literally taken control of GM and Chrysler. He has ordered the firing of GM's CEO, Rick Wagoner. He has oredered Chrysler to merge with Fiat. And, ultimately, he has forced GM and Chrysler to undergo bankruptcy anyway. The difference between allowing the automakers to go through bankruptcy in December vs. doing it in May? Now the American taxpayers are on the hook for billions of dollars in bad loans. Now, you and I own majority shares in GM, despite having no desire whatsoever to invest in the auto industry. Now we will be forced to throw good money after bad, because we will have to pay unemployment benefits to all the laid off autoworkers, bail out the Michigan state government, and face the fact that the shares of GM have fallen from around $6 per share at the end of October to less than $1 per share today. This was a horrible waste of billions of tax-payer dollars at a time when we could least afford it with absolutely no upside; the jobs will still be lost, the plants will still close, the government will now force GM to make cars no one will want to buy, and we will end up dumping billions more down an abyss that we had no Constitutional authority to create.
But hey, at least we are being Progressive!
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3 comments:
While the investment probably wasn't the best idea, the CEO and the "old guard" at GM really needed to go in order to help GM. Despite their claims that they were trying to work things out, many of the executives and the board have avoided getting canned and preserved the failed leadership which has contributed to the whole problem, not to mention the public's propensity toward waste and excess. Sometimes I think GM wanted to fail and painted a picture in which they could prop themselves up with government money, deceiving the people and government officials so they could continue in their excess and waste. Really, GM is probably more to blame for provoking the hand of the government.
Then there are the unions. They stood to lose everything, but that's the side of the story you don't hear. One can only speculate as to how they have manipulated the situation and were probably manipulated, possibly even in agreement with the corporation's leadership.
The only issue I have with your depiction of leadership at GM is that the government had no business telling them how to run their company. The shareholders of GM get to make that decision. Instead, once again, this was clearly a case of the government deciding it knows better than the American people. Also, changing one person out of the "Old Guard" will not substantially alter the corporate practices of climate at GM. The entire Board is still in place, all of the department heads are still there, etc.
As for the unions, at least they are finally BEGINNING to act like they could lose something. Where were they over the last couple of years when GM was trying to renegotiate those union contracts to avoid this situation?!? Only when the government steps in are they willing to negotiate? It seems awfully "convenient" that the unions overwhelmingly supported the Obama campaign, and now they are seemingly his willing accomplices in taking control of the auto industry in this country. Let's not forget that after GM emerges from bankruptcy protection, the unions will own approximately a 27% ownership stake in the new company. Add that to the 70% stake the American taxpayer (or, more precisely, the politicians in Washington) will own, and you can count on GM needing government money for decades to come.
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