I wrote a post here on Gather just under a year ago, asking if General Motors would go bankrupt. Well, we got the answer today: YES.
In between the time of that post and the present day, we sat through a presidential campaign that was sometimes surreal, a roller coaster ride of gasoline prices and economic disasters, and heated arguments involving fuel efficiency, carbon emissions, plug in electric cars, and the role of government in the business world. Embittered free marketeers now describe the new General Motors as "Government Motors"- a wholly owned subsidiary of the American People, which they fear may become a mismanaged hood ornament of the Car we call the Democratic Party.
On the other hand, this was a long time coming, it should be admitted. For decades, GM sat back and grew a spare tire of fat, while Japan Inc ate its lunch for it. More recently, Obama prodded Rick Wagoner, CEO, whatchagonnado, and got the pretty clear reply, why nothing of course, it's not my job to downsize the company to a realistic proportion, that's your job. So fine, away with Wagoner, and government was forced to play a role in something that is supposed to be done by private enterprise. When you have such an obvious problem, SOMEBODY has got to be willing to actually deal with it. Pretending it will go away was not going to cut it. A little honesty a bit earlier would have made it possible for the Feds to devote fewer billions to giving GM a lifeline while it struggled to make obvious decisions.
The whole thing is utterly embarrassing. No we did not invent the automobile, technically it was the Germans, but still, we like to think that we perfected it. Now, we are left hoping that GM, or the remaining half of GM at least, will emerge from bankruptcy into an environment of increasing demand for NEW vehicles, as opposed to the cheap used cars that litter the landscape, some of them gas hogs and some of them worn out Saturns like the one I drive. But amazingly, this 1991 car that I will be piloting to work in the morning actually is more fuel efficient than most of the newer stuff out there. It would be nice if we could enter an environment of gasoline prices that are high enough to discourage waste, because that will help support the process of re-tooling the auto industry into a fuel efficient entity that will actively explore plug in electrics, super diesels, and whatever it takes to gradually leave gasoline internal combustion behind. If it take 20 years, fine, it's 20 years well spent.
In the meantime, thousands more GM employees will now be hitting the street to find nonexistent jobs. And the ones still with jobs? They are hoping that the whole plan will fly. Half a GM is better than nothing, that's the concept.
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Comments: 8
I wanted to chat about something more cheerful than the Tiller murder. Well, maybe it is a little more positive than that......
Hello Chris.
I believe that President Obama had to make the decision to prop up General Motors. If GM had gone out of business under his watch, the Right would have forever blamed him for the demise of this company, along with the many jobs that would have been lost.
So the President was between and rock and a hard place. It's a classic catch 22 situation, one that I believe he made the right decision on.
I only hope that GM changes it's ways and start producing more fuel efficient vehicles. If I were them, I'd focus on hybrid and electric vehicles.
Today I drove past our local Chevrolet dealership and outside they were proudly displaying the new Camaro and next to it was the muscle car, the Corvette. My first thought was that they just don't get it.
Within a quarter mile I passed the local KIA dealership. All the vehicles had signs posted on them showing how many miles per gallon their vehicles get. I did not see a vehicle with a MPG of less than 35 miles per gallon. My first thought was that KIA gets it.
Now that the Government has a 60% stake in GM, maybe they will be able to put pressure on them to make more fuel efficient vehicles. At least that is my hope.
Chris, I'd like to thank you for posting your article with our group, Barack Obama's Presidential Appointments, Bills and Policies. (Join Our Group and Post Your Articles. We Love Opposing Points of Views)
Your article is now our latest FEATURED post.
Lloyd
GM should have been split up a long time ago. Let's hope that from this wreckage not one, but a number of new, smaller companies will emerge that are each viable. For longer-term viability, I'm convinced that the cars they'll produce will need to have electric motors.
Hours before GM filed for bankruptcy protection in the same court, Chrysler won bankruptcy court approval to sell most of its business to a group led by Fiat.
GM is a classic case of a Capitalist enterprise asking government to take it over. What's wrong with this picture? It's supposed to be the government demanding to take over rather than the business demanding to be taken over. Capitalists asking to be taken over by socialists just isn't the image of the free enterprise system with it's pure competition and free markets that I was taught as a youth.
Strangely I am not disillusioned. I remember those farm subsidies.
Talk about bad PR for the new GM and its cars....
What is the point that many seem to miss is that this was what many predicted months ago when Bush started and Obama accelerated the lurch towards government control of the industry. Tens of billions (more if you include the likelihood of more loans/grants/mandatory gov fleet purchases/and tariffs/quotas on foreign cars) of paper later, it happened anyway but this time, the private sector fools who loaned them money got screwed because they had confidence that their secured loans would get the legal protection normally afforded them in bankruptcy court.
They got wiped out. That will ensure confidence in Obama Motors will be shaky at best for such future loans/investments. This mess now rests solely on the taxpayers ever shrinking shouldres.
I still don't believe the government should have stepped in at all.... decades ago included. If the government hadn't "taught" the industry to rely on intervention through earlier loans, etc... the company would have been forced decades ago to be more innovative... more cutting edge... and more competitive. But instead, we keep the IV dripping... and the patient nearly died. Short term prognonsis is shaky and full recovery (even optimistically speaking!) is not expected in the near term.
I believe in free market enterprise and government intervention is not part of that. It puts the free market in jeopardy of being held hostage by lobbyists, politics, etc. Look at the accusations already.... some plants and dealerships are suggesting they are being targetted for closure, not based on their productivity, but instead by the voting district they reside in. True or not, it makes you think about the possibility that it could happen!