March 30, 2009

"Hugo" Obama Takes a Crack at the Auto Business

Yes, your are reading this correctly: The president of the United States just fired the CEO of a major automaker.

Reporting from Washington and Los Angeles -- In one of its boldest moves yet into a company's corporate affairs, the Obama administration forced out the head of General Motors Corp. over the weekend and prepared to put both GM and Chrysler on a short leash to retool their operations.

The administration will announce today that it has rejected GM and Chrysler's plea for an additional $22 billion in funding. Instead, it pushed Rick Wagoner out as GM chairman and chief executive, giving the company 60 days to restructure, while giving Chrysler 30 days to work out a merger with Italian automaker Fiat.

If they can't show progress, Chrysler may be left to fail and GM may be dragged into bankruptcy, said senior administration officials, who requested anonymity so they could speak frankly.

I guess if there is a bright spot to the Obama Administration's meddling in the affairs of General Motors it is that they are apparently considering NOT throwing more good money after bad. Both of these companies should have been allowed to fail and restructure which would have allowed them to ditch their union contracts -- a major reason for why they are in the shape they're in today.

I hate to say I told you so, but I saw this coming months ago. The free market has a mechanism for this. It's called Chapter 11 of the bankruptcy code and it should have been used in the first place.

With The Messiah dictating the dealings of the automakers and Tiny Tim Geithner the tax cheat salivating at the prospect of taking over “systemically important” companies that he and The Messiah arbitrarily deem to be in trouble, I don't think I like the direction we're headed.

Is there anyone that can't see the trouble we get into when the government starts meddling in the free market by giving companies cash with strings attached? Bravo to Ford for not making a deal with the devil. I bet there are a whole lot of happy people in management at Ford today.

Posted at 06:56 AM | Permalink | Comments (16)