Government Motors a.k.a. GM
Tuesday, April 7, 2009 | Steve Merritt Is this Spam?The President of the USA, last week, mandated the firing of the CEO of General Motors. In America, a public company’s Board of Directors is the only entity that can fire its CEO. Certainly GM has erred over the years, but will GM, its customer and shareholders benefit from government intervention, coaching and possible management? And you think dealing with the DMV is tough! Wait until you attempt to have the local GM (Government Motors) perform warrantee service on your vehicle. The government will run GM with the same skill set evident in the operation of Amtrak and in the fiscal management of Social Security.
The Obama administration states they will assist “GM to produce a better business plan”. Who should develop and implement a business plan then continue the turnaround endeavors? A seasoned auto executive or a former community activist, skilled as an orator who has never held a ‘for profit’ job? Similar hubris was evident in comments about Chrysler needing a partner to remain a viable entity. The anointed one will anoint Fiat as the probable partner. The government has allocated $17 billion to the auto industry that will vaporize in a bankruptcy. Should a government in debt itself over $11 trillion counsel the car business?
President Obama also states that GM’s problems are the fault of the management not the workers. Not the workers? The $72 per hour union worker who affixes a bumper to the frame of a Pontiac G6 is not a component of the problem? The extortion like efforts of the United Auto Workers has contributed to the ill health of GM. Why was the head of the UAW not fired? Because, I suspect, the union had more to do with paving the road to the White House than did business leaders. A coup de theatre by the UAW with the supporting cast of the Obama administration was accomplished.
In August 2008 the IBD/TIPP poll asked Americans if the USA was evolving into a socialist state. 39% of Republicans said yes. This month 63% responded in the affirmative. The Information Technology and Innovation Foundation ranks countries in innovative competition. The USA ranked number 6 in the top ten behind Singapore, Denmark and S. Korea among others. The march to socialism is well underway.
Since the announcement of the CEO’s termination, GM has fallen nearly 30%. I would not invest in GM or any other company in which the government has dictatorial control. In a bankruptcy shareholder equity will disappear. Dictatorial involvement by government has only produced one car desired by the masses, the VW Kafer, known as the Volkswagen Beetle in 1938 Germany.
