WSJ Opinion piece on GM

[Camino LS6]

http://online.wsj.com/article/SB124035637935940943.html

Quote:

So King Barck the Mild is finding as he tries to dictate the terms of what amounts to an out-of-court bankruptcy for Chrysler and GM. He wants Chrysler's secured lenders to give up their right to nearly full recovery in a bankruptcy in return for 15 cents on the dollar. They'd be crazy to do so, of course, except that these banks also happen to be beholden to the administration for TARP money.

Wasn't TARP supposed to be about restoring a healthy banking system? Isn't that a tad inconsistent with banks just voluntarily relinquishing valuable claims on borrowers? Don't ask.

Kingly prerogative also conflicts with kingly prerogative in the case of GM's unsecured creditors, who are the sticking point in agreeing to a turnaround plan by the drop-dead date of June 1. His retainer, Steven Rattner, has delivered word that the king's pleasure is that these unsecured creditors give up 100% of their claims in return for GM stock.

It may also be the king's pleasure, he advised, to convert at some point the government's own $13 billion in bailout loans into GM stock.

There's just one problem: Why on earth would GM's creditors -- who include not just bondholders but the UAW's health-care trust -- want any part of this deal?

They've already seen that the rights and privileges of shareholders are not worth diddly when the king is throwing his prerogatives around. He dispensed with the services of GM chief Rick Wagoner, though the king owned not a single share of GM stock at the time. His minions communicated the king's pleasure that GM consider discontinuing its GMC brand, maker of pickups and SUVs that offendeth the royal eye -- though these vehicles earn GM's fattest profit margins.

His minions haven't asked GM to give up the Chevy Volt, even after determining it will be a profitless black hole, because of the king's fondness for green.

No wonder the king's mediation of 40 years of stalemated labor and business issues in the auto sector isn't going so well. There's a reason royal discretion has long been outmoded as a way to run an economy: Things just work better if a realm's subjects are left to resolve their own disputes and interests through the impersonal mechanism of the markets and the law.

His current bailout strategy amounts to asking thousands of bondholders and GM retirees to buy stock in a GM that the king's own policies mean they'd be loony to buy. Add the fact that passenger cars and trucks in the U.S. are a trivial source of greenhouse gases in any case -- they could all become carbonless and it would be irrelevant in the face of China's and India's coal use. King has only been on his throne for three months. His policies already have devolved into savage incoherence.

But let's face it, the king is also somewhat lacking in the lion-heartedness department.

He's on record saying that the only sensible way to reduce fossil-fuel dependence is to put a price on it, as with cap and trade. Then why not have the courage of his convictions and do away with the proven ineffectualness and perversity of trying to regulate automotive fuel mileage directly?

He could release GM, Chrysler and Ford to make those cars, and only those cars, consumers would reward with profits (including fuel-efficient cars they might suddenly find desirable if Mr. President moves ahead with plans to tax carbon emissions).

He wouldn't be foolishly trying to rewrite GM's labor contracts and splitting negotiating hairs with its lenders. GM -- along with Chrysler and Ford -- might not avoid a trip through the bankruptcy courts. But either way, they'd be better able to meet their obligations to creditors, including UAW retirees, if allowed to focus on making cars the public actually wants to buy.

King Barck could take a leaf from St. Jimmy the Simple, who faced a collapse of the railroad industry. He signed the Staggers deregulation law, returning power to the industry itself to decide what services to provide and which customers to chase. What had previously been an industrial basket case, halfway nationalized already, fixed itself almost overnight.

He might consult with the Sage of Omaha, who has become a fan of the rail business. What would make Sir Warren similarly enthused about investing in GM? The answer, we're guessing, is not more cars like the Chevy Volt. The banks get all the attention, but they have the power to earn their way out of trouble. Not GM, the way things are going. St. Warren could do the king a real service by warning him off a path with Detroit that could end up blighting all the years of his reign.

[Croc]

I couldn't get through this article, just like I couldn't get through any article written during the past 8 years referring to G.W. with a derisive nickname. Immature. IMO, if the quality of the ideas were there, name-calling wouldn't be necessary to sell the article.

[Camino LS6]

I actually found it to be creative, if a bit derisive.

I'll just leave it there.

[Croc]

I actually found it to be creative, if a bit derisive.

I'll just leave it there.

See, when it comes to politics, I don't have time for the "silly" aspects of it--if someone wants to be critical, keep it objective and policy-based. Starting off making personal insults shows the inherent biases and lack of respect toward the office holder of the writer, and kills whatever credibility they could have had with me.

[FUTURE_OF_GM]

I think the article makes some great points. But like Croc, I find the satire simply annoying. This is one example as to why the media is no longer taken seriously

[Camino LS6]

Well, it was presented as an opinion piece, rather than a "report".

I got a chuckle out of it.

As for the "royal" description of Obama, that could just as easily be applied to GWB. In my view, they both have overstepped their authority.

[siegen]

Maybe my vocabulary is lacking, but I couldn't make it past 3 sentences of that article before my eyes glazed over.

[Croc]

Well, it was presented as an opinion piece, rather than a "report".

I got a chuckle out of it.

As for the "royal" description of Obama, that could just as easily be applied to GWB. In my view, they both have overstepped their authority.

Maybe so, but it is still highly disrespectful to the office and serves as a barrier to communicating whatever reasoned and intelligent points the writer may be expressing. It's hard to take someone seriously when they are being snide--they just come off as unreasonable, with a stick up their ass.

Or more facetiously--"His opinion in its current expression does not deserve even the most dilapidated soapbox, certainly not one in the venerable WSJ."

[Croc]

Maybe my vocabulary is lacking, but I couldn't make it past 3 sentences of that article before my eyes glazed over.

Same. 3 was my limit, and my vocabulary is robust.

Edited April 23, 2009 by Croc

[deftonesfan867]

The article made me think of this.

[Robert Hall]

I've never found the WSJ to be that compelling in terms of articles or the opinion articles, I much prefer the NY Times..read articles on there every day.

[balthazar]

>>"if someone wants to be critical, keep it objective and policy-based. Starting off making personal insults shows the inherent biases and lack of respect toward the office holder of the writer, and kills whatever credibility they could have had with me."<<

Are you saying writers should only write on subjects & individuals they respect ?

Can one reasonably render opinion on a person they disrespect... with respect ?

Yea- I guess that's possible, but respect is still earned, not guaranteed, in most instances.

Inherant respect for the POTUS's office has been eroding as long as GM's marketshare.

That said- I too generally abhor smarmy 'journalism', but there are still some interesting points in the op-ed.

Edited April 23, 2009 by balthazar

[Camino LS6]

The key to this is remembering that it is an Op-Ed.

Invective is part of the form.

[mustang84]

I got bored reading most of it, but one line did catch my attention.

His minions haven't asked GM to give up the Chevy Volt, even after determining it will be a profitless black hole, because of the king's fondness for green.

I do agree with this line and wonder if the focus on strictly green will actually connect with consumers or just be another bunt that will do little to save GM.

I was a huge Volt proponent and still think it would be a nice car for GM to have, but it's over a year and a half away. No doubt it has probably consumed far more money than had GM spent it on fast-tracking the Cruze for US markets or improving the existing fleet. I know GM couldn't have predicted the market bottoming out like it did, but the Volt is simply the wrong car at the wrong time.

[Camino LS6]

Bad timing has been one of GM's worst attributes for a very long time - either by bad luck or bad decsions.

The result is the same either way.

[balthazar]

>>"...the Volt is simply the wrong car at the wrong time."<<

Not neccessarily. Everyone is pretty sure gas is going to skyrocket again, but with it at 1.79 - 1.89 here for the near future, Prius inventory has rocketed from a few days to over 6 months. Volt would likewise sit right now.

If gas climbs, say next year, it may just coincide with the Volt's arrival nicely, but yes; that would be but a happy accident on GM's part.

[Teh Ricer Civic!]

>>"...the Volt is simply the wrong car at the wrong time."<<

Not neccessarily. Everyone is pretty sure gas is going to skyrocket again, but with it at 1.79 - 1.89 here for the near future, Prius inventory has rocketed from a few days to over 6 months. Volt would likewise sit right now.

If gas climbs, say next year, it may just coincide with the Volt's arrival nicely, but yes; that would be but a happy accident on GM's part.

I guarantee you if gas were to skyrocket next year, the government would likely get heavily involved to keep prices down to "spur" the economy. Whether that is through subsidies or threats abroad i do not know, but they cannot afford to allow gas prices to skyrocket under their watch.

[longtooth]

I guarantee you if gas were to skyrocket next year, the government would likely get heavily involved to keep prices down to "spur" the economy. Whether that is through subsidies or threats abroad i do not know, but they cannot afford to allow gas prices to skyrocket under their watch.

Whatcha mean, "if"?

Do we enjoy playing Russian Roulette here?

Suppose we do since we here are bent on repeating history.

[Croc]

>>"if someone wants to be critical, keep it objective and policy-based. Starting off making personal insults shows the inherent biases and lack of respect toward the office holder of the writer, and kills whatever credibility they could have had with me."<<

Are you saying writers should only write on subjects & individuals they respect ?

Can one reasonably render opinion on a person they disrespect... with respect ?

Yea- I guess that's possible, but respect is still earned, not guaranteed, in most instances.

Inherant respect for the POTUS's office has been eroding as long as GM's marketshare.

That said- I too generally abhor smarmy 'journalism', but there are still some interesting points in the op-ed.

No, that's not what I said at all.

[balthazar]

I guarantee you if gas were to skyrocket next year, the government would likely get heavily involved to keep prices down to "spur" the economy. Whether that is through subsidies or threats abroad i do not know, but they cannot afford to allow gas prices to skyrocket under their watch.

You mean, the same admin that has already openly talked about future large gas taxes to help lower consumption and push/force more green cars ?? :wink: