It's time to pull the plug on GM...and Chrysler (if they cannot seal the alliance with Fiat).Chrysler stands to gain...well...anything if they form the alliance with Fiat. Fiat gets to import their cars into the US (and will probably outsell Chrysler). Granted, Fiat Group is a rather large company when all branches are considered (Fiat, Ferrari, Maserati, New Holland, Case, etc.). Somehow, they're able to make cars, trucks and tractors...and stay in business. Chrysler can't seem to make a transmission that will outlast a set of mediocre tires-never mind the fit and finish of their cars. I had a 16 year old Toyota pick up that was more reliable than a co-workers brand new Dodge truck. My truck had 500,000 miles on it...her truck had 6000 miles on it before it dropped its first of three transmissions in as many years. I sold my truck for more than I paid and never spent more than $500 on it for repairs.
GM should have been put to sleep six months ago-they'd certainly be in better shape now if that had happened. The UAW would have been banished from GM-yes, the government would have to pick up the health care of the disbanded union members-but WTF? We're doing that AND paying all of the executives, R&D, marketing, storage, rent, leases, etc. Pull the fucking plug already! I'm tired of working in a shaky industry (ironically supported in part by the US auto industry) to watch my 401k cost me money...watch my IRAs lose value. And no, it's not all the fault of GM and Chrysler...but Japanese executives of a company comparable would have committed hari kari by now.
Citibank's hand will come out again, as has AIGs...when will it stop? Why bother to fill a hole when the bottom cannot be found? It's a waste of effort. There's no value added by doing so-it's actually a losing proposition-just like Iraq.
Obama needs to run the country like a business-get rid of the waste, put a bounty on lobbyists and get rid of them until they can serve a real purpose for the American people (like they were originally intended to do...), make companies either get competitive or let them die. Trying to support every failing large business is a bad idea...like doing open heart surgery on someone whose torso has been torn from their body...they'll bleed out and the effort is wasted.
Where's the investment in infrastructure? Where are the benefits to a large company for economizing or increasing efficiency? Tax credits for large companies to replace low efficiency appliances? Paradox of thrift is killing our economy...no one is spending money because they don't know if they'll have a job in the near future...thus the need to manufacture/purchase is drying up, thus the job market is going sour. How do you get people to spend money in an economy this unstable? The government should stop wasting money trying to shore up GM and Chrysler (and AIG and Citibank)...at this point, it would probably be cheaper to finance GM by giving people in a specific tax bracket a voucher for a new car...it would at least keep people employed, move old inventory and if GM did go bankrupt-there would be less assets on the books when they dried up and shriveled from the vine.
I don't claim to know what should be done here...but it's pretty fucking clear that the status quo isn't the answer. Dumping money in the accounts of GM, Chrysler, AIG and Citibank is doing nothing...except keeping people employed who probably deserve to be unemployed.
I recently read an article in the WSJ with Nouriel Roubini about nationalizing the banks and I tend to agree with what he says.
"The kind of government interference in the economy that we saw in the last year of Bush was unprecedented. The central bank -- supposed to be the lender of the last resort -- became the lender of first and only resort!
"Between guarantees, liquidity support, and capitalization, the government has provided between $7 trillion to $9 trillion of help to the financial system. De facto, the government is already controlling a good chunk of the banking system. The question is: Do you want to move to the de jure step."
"We started with banks that were too big to fail, but what has happened, in the process, is that these banks have become even-bigger-to-fail. J.P. Morgan took over Bear Stearns and WaMu. BofA took over Countrywide and then Merrill. Wells Fargo took over Wachovia. It doesn't work! You can't take two zombie banks, put them together, and make a strong bank. It's like having two drunks trying to keep each other standing."
"So if you took over a big bank, and you split the assets in three or four pieces, maybe you create three or four regional or national banks, and they're stronger! Nationalization -- or 'temporary receivership,' if you like, if the N-word is a political liability -- is an occasion to undo the sort of consolidation that has created an even bigger systemic problem. And the only way to do it is by essentially taking them over and breaking them up."
Think about this for a second---what happens if Chase or BofA slide toward failure? It'll be the F5 tornado that makes all of the other failures look like a mild dust storm. Citi is coming apart at the seams right now...it's only a matter of hours/days before they either break apart or collapse (fortunately, they didn't get Wachovia).The banks should be nationalized-even if only temporarily-to stabilize them and the skittish public. It's the fastest way to stabilize them and get them back on track. Regulation is a bitch-yes-but it's stable and controlled...which, if anyone remembers, is why we wound up in this situation to begin with-unregulated lending to just about everyone.
Increase the gas tax-it's largely unchanged for the last...what...? Ten years? Shift the focus from fossil fuels to supporting alternative energy-that will create jobs and reduce foreign dependence when the economy turns back around in a couple of years (yeah, I think it'll take that long-this place is a mess).
I'd rather send my wasted money to some family in Africa-at least I'd know that they were going to use it for something worthwhile. I really hope Obama can change my mind about the kakistocracy that's run this country for the last 8 years. I've been to Canada twice in the past six months and it's starting to look better every day.
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4 comments:
"Obama needs to run the country like a business"... what, drive the country into the ground, then give himself a bonus?
Bah humbug on that, sir!
- Badtux the "Business Culture of Failure" Penguin
Obama can't drive it too much further into the ground than Dubya. Hell, at this point, if he can tell anyone where we're going, he's one step ahead of Dubya.
As far as your comment, I guess that depends on how you interpret the term 'business'.
My interpretation of 'business', and I suppose I should have detailed that more clearly, is more like that of SAS Institute.
There is a solid business plan, moral and ethical decisions are made, employees are treated with respect and not tethered to a desk. The company respects the individual's hierarchy of needs, so to speak, and they are repaid with highly skilled, highly dedicated workers.
As a manager, one of my largest challenges is getting people excited about learning something that can potentially help not only the company but the employee as well. The executives of AIG, GM, Chrysler, etc. are short-sighted and focused on the cash. Remove the CEO pay inequities and those that want to do the job because they can do it correctly will run the company-not just the immoral and greedy as we have now.
That's how the country should be run. There's a lot of dead weight around here-with at least this, I'm sure you can agree.
The basic problem is that the laws of the country need to be reformed to reward long-term behavior on the part of business. Until then, you will continue to have business leadership with all the long-term vision of a fruit fly running major corporations because if they don't look at the next quarter as their sole point of reference, they can be sued by stockholders or fired by the board of directors. It's not a surprise that Ford Motor Company -- with 51%+ of its stock held by the Ford family -- is far more healthy than Chrysler and GM right now. As a family-owned business, Ford can look at the long term. GM and Chrysler never had that luxury, their board and CEO would have been sued into a smear on the pavement if they'd tried.
So while I was being snarky, I was being serious too. So the President should run the country like a business? Okay. So, he should run the country into the ground by focusing on the short-term rather than the long-term (gotta keep that stock price up, right?) while paying himself bonuses, then when the country is bankrupt, putting millions out of work, he should give himself even bigger bonuses while begging for newly-printed money from the Federal Reserve to cover the cost of the bonuses? Alrighty, then!
BTW, I don't think we're going to get out of this without some level of socialism. Might as well start wrapping your mind around that. I will explain on my own blog later, as soon as I finish wrapping *my* mind around it.
- Badtux the Snarky Penguin
Socialism, like it or not, is already here. Unchecked greed and its detritus have forced us as taxpayers to take on this burden.
Maybe we'll think twice about removing regulation to prevent one company (AIG) from getting 'too big' to fail.
Run the country like a business, yes. It doesn't have to be 'public' with stock-but it does have to focus on long-term survival. As you allude, the main reason we're in this shit hole is because of short-sighted greed. There once was a day when products were designed to last as long as possible (not simply out live the warranty by a few days/months) but that wasn't good enough. People didn't buy enough when products last long periods of time.
Remember the first microwave? My grandparents had one. An Amana Radarange. It literally lasted 20 years before it stopped working. Their second microwave was 3 years old when it stopped working.
Obama needs to set up the country to work like that first microwave. It doesn't have to be all things to all people (like GM tries to do) or generate huge immediate returns-just generate steady, consistent, long-term results...like a savings account or a 401k should. We're playing the commodities market with our financial future here...and that's just idiotic. The fact that the government allowed it just goes to show that the wrong people were in office (and probably benefited from it as well).
It is possible to run a company with steady returns, keep a happy board of directors and stakeholders and not run the place into the ground in five, ten or even twenty years.
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