Bailout Watch 474: President Obama: "We Have No Intention of Running GM"
Irony is the discrepancy between expectation and reality. Hypocrisy is the discrepancy between publicly stated intention and privately implemented execution. I’ll let you decide where President Obama’s statement on the federal government’s intervention in the “U.S. car industry” falls. No matter what you call it, there’s a huge disconnect between the President’s assertion that “We have no interest in running GM; we have no intention of running GM” and the fact that Presidential Task Force on Automobiles (PTFOA) is running GM. I mean, you can’t get much more interventionist than forcing the automaker’s CEO to resign and moving to replace the entire Board of Directors.
If you wish to be charitable, you could say that the PTFOA’s plan to provide GM and Chrysler with a still-unspecified amount of federal money (a.k.a. “adequate working capital”) for the next 60 days is a reflection of the administration’s short term plan to achieve its long term goal of NOT running GM. But am I the only one not feeling that one? Especially as the Prez is promising to restore GM to its former glory with messianic fervor: “GM can rise again.” Ooooohh kay. Meanwhile, there are other, um, “anomalies.”
The President went out of his way to kiss the UAW’s ass—I mean, absolve them of blame for Chrysler and GM’s insolvency. Well, not the union per se. The letters “UAW” never crossed the President’s lips. I mean the workers. “It’s not the fault of our (our?) workers,” Obama soothed. “It’s the failure of leadership from Washington (need I mention any names?) to Detroit (we just fired the bastard).” Yes, about that bastard . . .
After laying the blame squarely on GM management’s doorstep, Obama picked it up and threw it in the bushes (so to speak). He pointed out that Wagoner’s summary dismissal was “not meant as a condemnation.” No, of course not. It was a compliment. In disguise. As predicted, Obama deployed the clean slate metaphor with characteristic zeal, and promised that his new Motown WPA would insulate the common man from the fallout from the shakeout to follow.
Switching into car salesman mode, Obama also said the new government’s warranty program would protect consumers during this non-government run transition period. And don’t worry so much about bankruptcy (which is definite maybe), ’cause it won’t mean GM will disappear or “get stuck in the courts for years.”
My, aren’t we the lucky ones?
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Some quotes from Andrew Mellon, Hoover's Secretary of the Treasury: “Give tax breaks to large corporations, so that money can trickle down to the general public, in the form of extra jobs.” Here's the full quote from President Herbert Hoover on the advice given to him by Mellon: ...the “leave it alone liquidationists” headed by [my] Secretary of the Treasury Mellon, who felt that government must keep its hands off and let the slump liquidate itself. Mr. Mellon had only one formula: “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.” He insisted that, when the people get an inflation brainstorm, the only way to get it out of their blood is to let it collapse. He held that even a panic was not altogether a bad thing. He said: “It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people” And here is Keynes' response: "It seems an extraordinary imbecility that this wonderful outburst of productive energy [over 1924-1929] should be the prelude to impoverishment and depression. Some austere and puritanical souls regard it both as an inevitable and a desirable nemesis on so much overexpansion, as they call it; a nemesis on man's speculative spirit. It would, they feel, be a victory for the mammon of unrighteousness if so much prosperity was not subsequently balanced by universal bankruptcy. We need, they say, what they politely call a 'prolonged liquidation' to put us right. The liquidation, they tell us, is not yet complete. But in time it will be. And when sufficient time has elapsed for the completion of the liquidation, all will be well with us again. I do not take this view. I find the explanation of the current business losses, of the reduction in output, and of the unemployment which necessarily ensues on this not in the high level of investment which was proceeding up to the spring of 1929, but in the subsequent cessation of this investment. I see no hope of a recovery except in a revival of the high level of investment. And I do not understand how universal bankruptcy can do any good or bring us nearer to prosperity"