Louisville Courier Journal Editorial: "Our" Car Company.
'Our' car company
Not so very long ago, General Motors was not only the giant of the automobile industry. It was at the core of the national economy.
It is now the world's financial basket case, after years of atrocious marketing and production decisions put it on a path that led the company Monday to file for bankruptcy protection. No longer a potent international symbol of capitalism, GM today survives only through a federal investment of at least $50 billion and an ownership share in the new GM for the federal government upwards of 70 percent.
In an extraordinarily complex situation, one thing that does seem clear is that the bankruptcy and federal rescue reflect a dire situation in which all the choices were and are terrible.
The Obama administration believes — reasonably — that GM's collapse would simply pull down too much of a highly vulnerable economy, as auto plants, dealerships, parts suppliers and transportation companies folded in the wake of the demise of domestic automakers. The President and his top economic advisers feel that the recent stirrings of recovery in the credit and retail sectors are too fragile to withstand a shock on the order of GM's failure.
We are inclined, reluctantly, to buy that argument, if for no other reason than letting GM sink seems an even bigger gamble than trying to save it.
But the choices continue to be bad.
President Obama says the government won't try to micro-manage an automobile company, but that will be easier said than done. GM managers' business decisions and political leaders' policy priorities will inevitably conflict. Politicians, unions and state officials will lobby hard to keep factories open in their areas. There will be disagreement between politicians, and between political and company leaders, over how quickly and through what mechanisms to return GM to private ownership.
In an environment of competing considerations, the most important must be the interest of the new majority shareholders — the American taxpayers.
The President should make clear that his overriding objectives are to return GM to profitability and to recover taxpayer investment as quickly as possible, while pursuing the nation's long-term goals of fuel efficiency and emissions controls.
And he should disclose his plans for accomplishing these ends and report regularly on GM's progress.
It will not be easy.
Editor's comment: I am one of those who reluctantly believe that GM could turn around and become an EXTREMELY profitable company.
But if it doesn't, we taxpayers will have rotten eggs on our faces, and I, for one, will not be smiling then.
Not so very long ago, General Motors was not only the giant of the automobile industry. It was at the core of the national economy.
It is now the world's financial basket case, after years of atrocious marketing and production decisions put it on a path that led the company Monday to file for bankruptcy protection. No longer a potent international symbol of capitalism, GM today survives only through a federal investment of at least $50 billion and an ownership share in the new GM for the federal government upwards of 70 percent.
In an extraordinarily complex situation, one thing that does seem clear is that the bankruptcy and federal rescue reflect a dire situation in which all the choices were and are terrible.
The Obama administration believes — reasonably — that GM's collapse would simply pull down too much of a highly vulnerable economy, as auto plants, dealerships, parts suppliers and transportation companies folded in the wake of the demise of domestic automakers. The President and his top economic advisers feel that the recent stirrings of recovery in the credit and retail sectors are too fragile to withstand a shock on the order of GM's failure.
We are inclined, reluctantly, to buy that argument, if for no other reason than letting GM sink seems an even bigger gamble than trying to save it.
But the choices continue to be bad.
President Obama says the government won't try to micro-manage an automobile company, but that will be easier said than done. GM managers' business decisions and political leaders' policy priorities will inevitably conflict. Politicians, unions and state officials will lobby hard to keep factories open in their areas. There will be disagreement between politicians, and between political and company leaders, over how quickly and through what mechanisms to return GM to private ownership.
In an environment of competing considerations, the most important must be the interest of the new majority shareholders — the American taxpayers.
The President should make clear that his overriding objectives are to return GM to profitability and to recover taxpayer investment as quickly as possible, while pursuing the nation's long-term goals of fuel efficiency and emissions controls.
And he should disclose his plans for accomplishing these ends and report regularly on GM's progress.
It will not be easy.
Editor's comment: I am one of those who reluctantly believe that GM could turn around and become an EXTREMELY profitable company.
But if it doesn't, we taxpayers will have rotten eggs on our faces, and I, for one, will not be smiling then.
posted by KYJurisDoctor at 7:13 PM
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