March 29, 2009
What da boss wants, da boss gets
Is this feeling a little like Chicago writ large? A little banana republic-ish?
Drudge leads with this report from Politico about Da Boss making a corporate titan an offer he couldn't refuse.
The Obama administration asked Rick Wagoner, the chairman and CEO of General Motors, to step down and he agreed, a White House official said.
On Monday, President Obama is to unveil his plans for the auto industry, including a response to a request for additional funds by GM and Chrysler. The plan is based on recommendations from the Presidential Task Force on the Auto Industry, headed by the Treasury Department.
The White House confirmed Wagoner was leaving at the government's behest after The Associated Press reported his immediate departure, without giving a reason.
The surprise announcement about the classically iconic American corporation is perhaps the most vivid sign yet of the tectonic change in the relationship between business and government in this era of subsidies and bailouts.
Wagoner has been CEO for 8 years and at GM for more than 30. The company has not said who will replace him. GM has received $13.4 billion in government aid, and has been seeking $16.6 billion more.
Industry sources had said the White House planned very tough medicine in Monday's announcement, which turned out to be an understatement. And it went to the very top. The measures to be imposed by the government will have a dramatic effect on workers, unions, suppliers, bondholders, shareholders, retirees and the communities where plants are located, the sources said.
GM and Chrysler have to prove their viability as a condition of a federal bailout released under former President George W. Bush, and both have asked the current administration for more money. Ford has not sought federal funds because it had secured a line of credit just before money dried up.
Obama said Friday in an interview with CBS’s “Face the Nation,” broadcast Sunday, that the carmakers were going to have to do more.
“There's been some serious efforts to deal with a combination of long-standing problems in the auto industry,” the president told host Bob Schieffer. “What we're trying to let them know is that we want to have a successful auto industry, U.S. auto industry. We think we can have a successful U.S. auto industry. But it's got to be one that's realistically designed to weather this storm and to emerge at the other end much more lean, mean and competitive than it currently is.
“And that's gonna mean a set of sacrifices from all parties involved — management, labor, shareholders, creditors, suppliers, dealers. Everybody's gonna have to come to the table and say it's important for us to take serious restructuring steps now in order to preserve a brighter future down the road."
Schieffer followed up: “But they're not there yet.”
Obama added: “They're not there yet.”
GM's Wagoner may very well deserve the sack, given the automaker's dismal performance during his tenure, but that's for the shareholders to decide -- not Pres. Obama.
Historians have documented political systems wherein the Supreme Leader dictated how companies are run, and by whom. It didn't work out that well for the Germans. It won't work any better for us.
I won't draw a direct comparison between the Soviet Union and the U.S. -- not yet, anyway -- so long as private ownership still exists. But the National Socialist German Workers' Party combined private ownership of business, with economic policy -- what should be manufactured and by whom-- dictated by the national government.
Are we seeing the creation of the American Reich? I don't think so, but perhaps we're witnessing the destruction of the American free-market system.
Posted by Mike Lief at March 29, 2009 03:32 PM
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Comments
Did you notice the stock market this morning? It continues the trend of crashing whenever The One makes a big move in his economic plan. I am SOOOOO hopeful for change.
Posted by: The Little Coach at March 30, 2009 07:59 AM
We are moving towards a totalitarian state where our divine leader controls industry, banks and the military. We are on the brink of the Fourth Reichstag.
Obama is now in collusion with the IMF against American interests. He is the Manchurian candidate!
Posted by: Radon at March 30, 2009 07:42 PM