Dissection of a Power Grab

Tuesday, March 31, 2009

Yesterday, Obama wielded his scepter of justice to seize GM and Chrysler. If you listened to his speech, you probably would have thanked him for it as well. However, I’ve made a point to read his speeches instead. It helps to cut through the lies he’s spinning. I’ve rearranged the important segments for all to see his double talk.

“Let me be clear: The United States government has no interest in running GM. We have no intention of running GM.”

Let’s be clear folks. Firing the GM is not running GM! Rejecting GM’s plan not because it wouldn’t work, but because “it isn’t strong enough,” that’s too is not running GM! Offering GM capital over the next 60 days is not running GM! In fact, GM is running GM so long as they do exactly what Obama thinks they should do. Chrysler on the other hand, Obama is running. I know this because President Obama decided that Chrysler must merge with Fiat. Plus, he didn’t tell us he wasn’t running Chrysler as he told us with GM.

“But after careful analysis, we’ve determined that neither goes far enough to warrant the substantial new investments that these companies are requesting.”

Who’s analysis? How far is enough? We know that, “…no one can deny that our auto industry has made meaningful progress in recent years – and this doesn’t get talked about often enough. Some of the cars made by American workers right now are outperforming the best cars made abroad. In 2008, the North American Car of the Year was a GM. This year, Buick tied for first place as the most reliable car in the world.” The car of the year by the way was the Chevy Malibu, which is not a hybrid.

“And that’s why we’ll give Chrysler and Fiat 30 days to overcome these hurdles and reach a final agreement.” This is where Obama shows us his golden car company management skills, by tilting Chrysler’s hand to the buying company, Fiat. This is a sure fire way to get tax payer money back, let’s give Fiat a major bargaining chip by setting the time frame and an ultimatum. Truly, Obama cannot be charged with inefficiency. The game of negotiation is a very complex one. If you are going to work out the most favorable deal for Chrysler, then you must use as many tools as possible, not diminish them with rhetoric. Keep in mind, the buy out of Chrysler will probably be used to help repay the tax payers. Glad to see Obama working on the side of Chrysler.

“Now, while Chrysler and GM are very different companies with very different paths forward, both need a fresh start to implement the restructuring plan they develop. That may mean using our bankruptcy code as a mechanism to help them restructure quickly and emerge stronger.”

If only this was said and upheld long before we gave these companies a dime. Yet once again, Obama is showing us how the government wastes no money. I thought the billions we have already given, the 6 billion more for the Fiat deal, the billions more for the 60 days of cash influx to GM (surely to be many, many, many more billions), the money the IRS will spend to offer tax credits to buy cars, the tax breaks congress is offering to buy American cars and the backing of warrantees were to keep these companies from going into a disorderly bankruptcy. Now bankruptcy is a way to “clear away debts.” I love how government opens up so many options.

“But what I can promise you is this: I will fight for you. You’re the reason I’m here today…And I won’t pretend that the tough times are over. I can’t promise you there isn’t more difficulty to come…There are jobs that won’t be saved. There are plants that may not reopen.”

Obama will fight for you. Please don’t expect that in fighting for you that you will be getting a job. Also, fighting for you does not mean that plants will be reopening. Hopefully, you will feel better by him spreading the paid around. However, don’t expect your life to be any better. That is not Obama’s business.

“In moments of trial and moments of hardship…Americans rediscover the ingenuity and resilience that makes us who we are.”

I see no ingenuity in anything Obama has been saying. This is a nice “rugged individualism” reference, but there is no place in this speech where individuals are involved in making the auto industry better. In fact, the ideas of individuals were “not strong enough” for Obama. Perhaps, ingenuity is limited solely to Obama’s brilliance.

What Obama has said, speaks for itself. I do not understand the progressive’s blind faith in Obama for the same reason I did not understand the conservative’s blind faith in Bush. The Founders of this country were skeptical of government and for good reason. They defeated a system of tyrants who believed they had a divine right to rule. That elitist attitude has not disappeared but reemerged in the form of our modern day government. We as the people should be expecting more from our elected leaders and demand that they recognize the limits of government that were required by our Founders in the constitution.


Devrim said...

Obama “Let me be clear: The United States government has no interest in running GM. We have no intention of running GM.”
Bill Clinton "I'm going to say this again: I did not have sexual relations with that woman, Miss Lewinsky. I never told anybody to lie, not a single time; never."

They are telling GM the kind of cars they can build (CAFE), they are telling them who can not run the company (Mr. Wagoner), they are telling them what the executives can or can not get as compensation... Now that the government has accepted to "honor" GM warranties, soon they will be telling them what kind of warranties they can or can not give.

I wouldn't be surprised to see an "Obamobile" rolling off the GM plants to undercut Ford vehicles who have defied the bailouts so far. Next you know it, Ford will be begging the WH for some $, which would put Ford either out of business or on fast track to become next GM.

March 31, 2009 at 11:27 AM


Thanks for the comment. I too wonder if we won't see the Obama concept car rolling off the assembly.

March 31, 2009 at 11:54 AM
Devrim said...

" I too wonder if we won't see the Obama concept car rolling off the assembly."

The question is not "if", the question is "when" and if it would include a (mandatory option) Rahm Emmanuel bobblehead doll that takes care of parking tickets.

March 31, 2009 at 5:03 PM
The Law said...

I'll say this... as a not so proud anymore driver of a Chrysler 300, which eats gas like it candy and has the fuel effiency of a lineman returnign an interception for a touchdown... The Big three, have been for decades now, been ignoring the very trands that would prevent this crisis.

Read em... car and driver, motor trend, new car test drive... read the archives for the past 5-7 years. while asia builds stylish, safe, and fuel efficient cars, america comes out with the hummer, a million SUVs and the chrysler 300. I'm sorry, but all the signs were ignored. ALL of them. the big three have been in the red for over a decade now.

Now, if Obama made these stipulations, and they were 100% privately owned, then I would too have a problem with this. But if they are getting bailout money, then hell yes there should be strings attached! otherwise, file for bankruptcy! It has been and still is an economically viable option, but they refuse because of their ego. Americans arent that studpid. we know that as wrong as they were for ignorign the trends, we're equally wrong fro buying inefficient cars. I strongly doubt that going into bankruptcy would have any lasting long term effects in consumer spending.

I think it is wholly unrealistic for the government to give a company so much money and have no say in it. Doesn't even work like that in the real world. "All right, I'll give you $950 to pay your rent cause your my brother. But if I give this to you, then you gotta sign up at for that job fair ok? 'Deal'"

It is rare to give large quantites of money to ANYONE without stipulation. No reason to apply a double standard to the auto industry. I'm mad that my main consideration for buying an american car is its longevity... no one ever says, man my honda/nissan/toyota may not run well after it hits 100K miles... I say this afte rmy American car stated to exhibit sings of age at the 103K mile marker...

April 1, 2009 at 12:20 AM
Devrim said...

The Law ; problem is, Ford has the vehicle "we want", Fiesta ECOnetic which gets 63.6 mpg and Volvo has every version in a diesel C30 hatchback (60.3 mph), S40 sedan (58.8 mpg), V50 wagon (58.8 mpg), XC60, XC70 (39.2 mpg).

None of them are ugly, all of them especially Volvo associated with safety. And my 24 year old MB 300D has 300K miles on it to prove the longevity of diesel engines.

Problem is because of US regulations, they can not sell them here.

If telling a company "no you can not sell car here" is not stipulation, I don't know what is. And they had been doing that even when they were not giving money to that company.

By the way, Prius CO2 emissions 125 g/mile, XC70 108 g/mile

April 1, 2009 at 2:46 AM
The Law said...

Still, American auto makers could have been making the cars "we want" and make them fuel efficient all along. Fuel efficiency only became a catch phrase after japan and korea were kicking our butts with fuel effcient cars and gas prices were as high as $5/gallon.

The technology to make cars like the Chevy Volt and Ford Fusion Hybrid (my next car btw!!) has been around. If they made, it people would buy it... we still have to get to work!

Still I digress, if I understand CGen's point correctly, he is upset that the government is making business decisions for the auto comapnies. I say, if the government is giving you money to keep a business that would otherwise be defunct alive, then they should have a say in how the money is spent. Otherwise, file for chapter (11?) bankruptcy, to help eliminate and manage debt, and rebuild. If this is why GM and Chrysler did, the government would have no business interfering. I don't think we can apply capitalist ideology to a company who didnt die (or more accurately fight for their life) in a capitalist way

April 1, 2009 at 10:23 AM


We normally have some point of reference in agreement on issues, but to be blunt, I don’t think I can agree with you on any of your points.

First of all and this is most important, the government has overreached in their “strings attached.” The so called strings were previously defined were two fold. One, the government would not forever bail out GM and the company needed to have a viable plan by the end of March before getting more funds (not Obama's super extra strong plan). Second, there was to be oversight to ensure tax payer money would be secure or the company was to go to chapter 11. I don’t believe they should have received funds, but this was the deal that was made. Nationalization was not in the deal. Now let’s look at Obama’s comments again. He did not say that GMs plan would not work, that they would not be able to make good on their debt. He said their plan was not strong enough. This means that their plan was in fact strong! It’s plain from his speech that he is not interested primarily in allowing ingenuity, to allow auto makers to remake themselves, nor to ensure the most efficient way to get back tax payer dollars. No, his speech is about remaking the auto industries into his image and into what Obama wants regardless of markets or demand. Do you deny this?

In taking over the companies, Obama is throwing caution to the wind with tax payer money, by rejecting a strong plan and taking on the risk of what Obama thinks is a stronger plan. Obama has never run a company nor has any understanding of the auto industry. In fact, you echo Obama’s reasoning for GM’s failures, but you are basing your information on memory and not fact.

Here is how we got to where we are. GM started having trouble in the 80’s when they came out with ugly, unreliable, fuel efficient cars that were over priced. The Japanese entered the market by offering sleek, reliable, and cheap cars. Obviously, GM lost market share, but always had a viable company, which has not been unseated as the #1 car company by volume of cars sold. GM struck back by creating the most popular American car designs of all time with trucks and SUVs. This saved the company, not doomed it. Even now according to Geithner’s report on GM, GM has 20 profitable cars and 11 of them are trucks and SUVs. There was an article the other day about how the Hummer is the best selling car in Iraq. Meanwhile, their finances were being drained by legacy benefits, which are the largest reason for GM’s struggles and you failed to mention. GM would have posted profits 7 of the last 9 years had their legacy benefits not been on the books at 8-10 billion annually. Without legacy benefits, it’s likely that GM would not be in the state they are in.

You have mistaken your own preferences in cars and applied it to the whole world. Now hybrids have been popular only 2 of the last 10 years and have already fallen off again. This is not only an unprofitable business model it is a losing one because it is not enough as far as energy efficiency goes. You pointed out that GM had green technology and that’s true. In fact, they are the leading edge in almost all current green car technology ideas. However, it was the government that is and continues to balk at a possible dominant design.

Any major green car of the future is going to need regulations and infrastructure support from the government. So what’s it going to be? Ethanol? Biofuel? Electric? Hydrogen? Air? Ethanol, biofuel, and hydrogen require massive new plants for production as well as new fuel stations and transportation. Air and electric require massive influxes of energy and upgrades to the grid as well as making car outlets available. We still don’t know what the government is going to do, which has made cars based on these ideas nearly impractical roll out even today. GM’s strategy was not to jump on the fading hybrid wagon, but to be the first to take on and be an innovator in the final design of green cars. I think even today that’s a brilliant strategy, if only our government would make up their minds. In the not so distant past, the government had indicated that ethanol would be the way to greener cars. No major changes to car design nor engines needed for that. The new administration has other plans and has hinted at electric cars, hence GM’s introduction of the volt.

Once again, I don’t believe we should have loaned to GM, but I’m not seeing strings, I’m seeing take over. I’m not seeing a President who is protecting our tax payer dollars, but gambling with it. He’s spending more of our money for his pet auto projects. I must remind you in the president’s own words, GM is still a leader in the industry on quality, design and technology. There is no reason for this Obama power grab.

By the way, I have an answer to your gun comments on your blog, but haven’t had the time to reply. I will do so as soon as I have the time. Thanks for your comment.

April 1, 2009 at 1:10 PM
The Law said...

Hey man if everyone agreed on every topic, the world would be a boring place! However, I'd like to add in a final element.

"You have mistaken your own preferences in cars and applied it to the whole world."

Remember, I drive an unquestionably American car... a Chrsyler 300. When I bought it, I was a typical American consumer who said "F Earth... I want my big sports luxury car with heated seats, autostick, and can do 0-60 in 6.8 seconds! Gas? Bah! Humbug! It's only $1.84 it's like 20 bucks to fill 'er up!" In many ways, I drive the sports luxury sedan version of the hummer -- 15-18mpg city/23-26mpg hwy aren't numbers to brag about. I bought the car I wanted.

Why did I want it? Mainly for prestige... and I think that car is absolutely beautiful. But what if I could've gotten a car that cost the same, looked the same, drove the same, but utilized hyrbrid technology, or was a gas engine that got 35mpg city/42mg hwy? heck yes I wouldve bought that car. And I'd do my part in lessening our dependence on oil as well as give the earth a little extra ait to breathe.

Is Obama trying to shape the auto industry in his image. Hell yes he is. It is quite obvious, so even the most diehard liberal has to recognize that. The image is simple: build cars that use less fuel and go farther. Preferably zero-emmisions. If your plan can't do that in the near future, then you get no money. It is a fair thing to do. Because it is a fact that US Automakers have not put as much money into green tch auto R&D as Europe has (particularly the UK). And as a technology buff, USA is falling WAY behind in the technology sector.

On a personal note: I believe green tech cars failed in the US market cause theyre freaking ugly! This is America man... I want my car big and roomy, and has a fair amount of sex appeal. These tiny, boxy, minimalist cars they roll out in japan just don't cut it. The lack of interest is really based on asthetics I think.

April 2, 2009 at 5:28 AM

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