It was announced today that the CEO of GM would be stepping down as part of the new restructuring plan required by the government to continue to receive government bailout money, in a move that many are viewing as a forced move by the government. While I don't know if that is true per say, I do feel that it is the right thing to do. Rick Wagoner will step down from the position that he has held since 2000 which will open the way for GM to receive more money for the TARP bailout package. Failure to "restructure" in a way that the government approves of could lead to the loss of money already received.
What sends up red flags in my book is the idea that the government is deciding who can keep their jobs in a major corporation. I understand that there are many out there that believe that more government oversight is what is needed in this country, and I agree, too a point. I do believe that there has been too little supervision with too many kids in the candy shop. Greedy investors drove up prices and allowed unsound practices to take place that got us in to this mess. So yes, I do agree that there should be greater government review.
BUT...
There is a point where you need to draw the line. The American people are very upset right now. They are all looking to see what is wrong and who is to blame. Yes, part of the responsibility lies with the auto companies, just like it lies with the investors on wall street. For years the automakers have been riding the SUV wave and have now washed ashore with nothing to keep them sailing. The only auto company that is still out on the water is Ford. While I do drive Ford cars, I do not believe that they are still afloat because they practiced better business, rather they have the environmentalist to thank for keeping them afloat.
A few years ago, the government passed some fuel efficiency standards for the auto companies which required that the average MPG for the entire fleet of vehicles remained above a set level. Fords biggest seller is the 17 MPG F-150 Pick-up. To counter the lack of MPG from the F-150, Ford developed the Focus, rather they redesigned the Escort and called it the Focus. When the price of gas jumped to $4 a gallon, Ford was the only company that had cars which could compete with the Honda Civic and the Toyota Corolla. The Focus is the only reason that Ford did not have to accept the government bailout money.
So why should GM get the short end of the stick? Why should they be forced to make a deal with the devi... (hem)... government. They shouldn't, but we keep telling the government that is exactly what we want. After the AIG bonus disaster, the outrage from the American people made it very clear to the people in Washington that we want the government to step in and take control. While in the short term this may be helpful, in the long term we may be setting ourselves up for a few headaches.
Asking the head of one of the largest corporations to step down may have some good effects, if we can manage to stop there, but what happens if we don't stop. At what point does the government have to stop telling the publicly traded companies how to run their businesses. I own stock in GM and was not asked if I wanted to accept the bailout money or if the CEO should step down. All the government has managed to do is to scare the few investors that GM and the other automakers have, into thinking that the government may possibly take more control than they should have.
I know that tens of thousands of jobs are on the line, and I understand that when people are losing everything that something needs to be done. What we should all worry about is the partnerships entered into while the times are bad. If something is a bad idea when times are good, what makes us think that the very same thing will be a good idea when times are bad. We all need to slow down, take a few breaths, and give everyone a chance to really consider the potential consequences of our actions.
What sends up red flags in my book is the idea that the government is deciding who can keep their jobs in a major corporation. I understand that there are many out there that believe that more government oversight is what is needed in this country, and I agree, too a point. I do believe that there has been too little supervision with too many kids in the candy shop. Greedy investors drove up prices and allowed unsound practices to take place that got us in to this mess. So yes, I do agree that there should be greater government review.
BUT...
There is a point where you need to draw the line. The American people are very upset right now. They are all looking to see what is wrong and who is to blame. Yes, part of the responsibility lies with the auto companies, just like it lies with the investors on wall street. For years the automakers have been riding the SUV wave and have now washed ashore with nothing to keep them sailing. The only auto company that is still out on the water is Ford. While I do drive Ford cars, I do not believe that they are still afloat because they practiced better business, rather they have the environmentalist to thank for keeping them afloat.
A few years ago, the government passed some fuel efficiency standards for the auto companies which required that the average MPG for the entire fleet of vehicles remained above a set level. Fords biggest seller is the 17 MPG F-150 Pick-up. To counter the lack of MPG from the F-150, Ford developed the Focus, rather they redesigned the Escort and called it the Focus. When the price of gas jumped to $4 a gallon, Ford was the only company that had cars which could compete with the Honda Civic and the Toyota Corolla. The Focus is the only reason that Ford did not have to accept the government bailout money.
So why should GM get the short end of the stick? Why should they be forced to make a deal with the devi... (hem)... government. They shouldn't, but we keep telling the government that is exactly what we want. After the AIG bonus disaster, the outrage from the American people made it very clear to the people in Washington that we want the government to step in and take control. While in the short term this may be helpful, in the long term we may be setting ourselves up for a few headaches.
Asking the head of one of the largest corporations to step down may have some good effects, if we can manage to stop there, but what happens if we don't stop. At what point does the government have to stop telling the publicly traded companies how to run their businesses. I own stock in GM and was not asked if I wanted to accept the bailout money or if the CEO should step down. All the government has managed to do is to scare the few investors that GM and the other automakers have, into thinking that the government may possibly take more control than they should have.
I know that tens of thousands of jobs are on the line, and I understand that when people are losing everything that something needs to be done. What we should all worry about is the partnerships entered into while the times are bad. If something is a bad idea when times are good, what makes us think that the very same thing will be a good idea when times are bad. We all need to slow down, take a few breaths, and give everyone a chance to really consider the potential consequences of our actions.
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