All hail Government Motors

As this Register editorial notes, they don't have to change the logo. GM can stand for "Government Motors" quite nicely, thank you. We also mentioned briefly what has been since teased out in more detail by others -- that the agreement will present a major trade problem, in that forcing GM to build more cars in the U.S. and preventing it from importing European models it already makes is a protectionist measure and probably in violation of WTO treaty obligations.

The administration says it just wants to nurture GM back to profitability, but as I also pointed out yesterday, decisions will inevitably be politicized in ways that undermine much hope of profitability. Ah, what wonders there are in this Brave New World.

So now it's Government Motors

It's hard for me to see how the bankruptcy/government takeover of General Motors does anything but make the company progressively less viable economically. I know Obama with our-but-really-his 60% stake in the new entity says he doesn't want to micromanage GM or even run a car company. He doesn't have to; he has aides to do it on the government's behalf. Will they move toward profitability or toward what the political class thinks we ought to want in the way of cars? I'm figuring the latter.

It isn't just the big three, but the parts-makers that supply them that are hurting, and many are in the Midwest where Obama and other Democrats will want to keep noisy interest groups happy. Some in Congress will see government ownership of GM as a jobs program; others will see it as an opportunity to make sure GM makes the cutest little fuel-sipping (switchgrass of course), green and eco-friendly cars imaginable, imagining it will have an impact on climate change. Neither is the path to profitability unless gas price go through the roof again soon.

Sorry, GM. You brought it on yourself, but it's still sad. Check my prophecy in a couple of years.