This week General Motors faces its deadline for giving the government its restructuring plan — the alternative being bankruptcy. GM has been working with the Obama administration on various and sundry moves to get the Goliath back on the road to profitability (or at least, solvency), and so far we’ve seen the following moves :
• A plan to outsource a good deal of auto manufacturing to China.
• The firing of the CEO (who is staying on payroll until the Obama administration decides whether or not to honor his contract and pay him his severance — hardly an academic question these days, when a contract means almost nothing to the Obama administration.)
• The dismissal of hundreds of dealers from both GM and Chrysler. (The logic of which escapes me — if the dealers are making money for GM, where is the savings in closing them down? And if they weren’t making money, why didn’t they just go out of business?)
• A proposed increase in the Corporate Average Fuel Economy (CAFE) standard to 34 MPG, likely killing off many of GM’s most profitable vehicles.
Each of these moves, in and of themselves, should give private investors serious pause for concern before putting their money in GM. There is also how the Obama administration has been strong-arming other creditors (in Chrysler’s case), wielding government money as a threat to dictate the rules, and the possibility of being left holding the bag if GM goes into bankruptcy, and the administration’s penchant for ignoring the laws governing debt hierarchy.
But what about those who “invest” in GM by buying a new vehicle? Once you find a dealer who’s still in business, get over the notion that you may be buying a vehicle made in China and not by Americans, put your faith in the Obama promise that the government will back your warranty if GM can’t, and find a vehicle that meets what Obama thinks ought to be the standards for fuel emissions as well as your own needs (good luck if you have a family!) you deserve congratulations. You hit the lottery!
Ain’t Obamanomics grand?
