Sunday, March 29, 2009

He who pays the piper . . .

Of course I don't know why General Motors grossly overpaid CEO Rich Wagoner didn't step down long ago, about the time the company went hat-in-hand to the government for a bailout. But the news as of tonight is that the White House -- which has infinite experience running an auto manufacturer -- will pretty much force Wagoner to step down as part of a government- mandated restructuring of the company. We may learn more in the next several days, but at this point it looks as if a condition of getting another tranche of your money and mine -- along with Chrysler they requested $21.6 billion on top of the original $14-some billion already given to the two companies -- was dumping Wagoner.

I don't know why they didn't just allow the two companies to declare bankruptcy. One justification is that some have said nobody would buy cars from a company in bankruptcy. If current sales figures are any indication, people won't buy cars from a company on the government teat either -- although I think the current situation has a lot to do with the recession. When times are tough and you're not sure whether you'll have a job in the next few months, you postpone discretionary purchases. Since most Americans already have a car that more-or-less functions, it's not that tough a decision to put off buying a new one.

I doubt very much if the government plan to save the auto companies will be better than a private-sector plan or better than bankruptcy -- indeed, it's most likely to be worse. But when you're paying the freight you can micromanage, and that seems to be what the Obamaites want to do.

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