"...do you think the Federal Government will be [perceived as] meddling in GM's operations, and if so will that make (A) or (B) more likely?"
Yes, I think that the Federal Government will be perceived as meddling, even if they are very light handed. I don't think the perception of meddling is the big problem; rather, it is actual meddling. For example, the government's attempt to shove high mileage cars at consumers may backfire if gas prices stay low. If this scenario develops, in part, because the government dictates the "fundamental" type of cars GM can makes, then government meddling helped sink GM, and scenario (B) is realized. I think that Obama believes what he says about meddling, "in all but the most fundamental corporate decisions". But I think that undue pushing of a global warming and fuel economy agenda is likely. Therefore, I think that my guess of the outcome favors (B). You never know though, confidence in GM because it is backed by the government may boost sales, and if gas prices zoom again the government agenda might actually help GM sell cars. I don't think that the government is going to try to meddle in day-to-day management. So this scenario supports (A). Chris _____ From: [email protected] [mailto:[email protected]] On Behalf Of Dr. Ernie Prabhakar Sent: Monday, June 01, 2009 8:15 PM To: Radical Centrist discussion list Subject: Re: [RC] Predictions? "The End of an Old GM,and the Beginning of a New GM" Hi Chris, On Jun 1, 2009, at 6:22 PM, Chris Hahn wrote: Now, with a lessening of "legacy" union and retirement entitlements, GM has a better chance at being successful. I am no automotive business expert so I will answer the challenge in two ways. Okay, but that dodges the political question: do you think the Federal Government will be [perceived as] meddling in GM's operations, and if so will that make (A) or (B) more likely? :-) -- Ernie P. A. Management at "new company" makes cars that customers want to buy at a price that is competitive. Then, in 5 years the American People's stock will be worth something and half of it will have been sold for a profit, enriching the Treasury. In 10 years all of the American People's stock will have been sold for a considerable profit to the American People. B. Management can't create competitive cars. Then, in 5 years we, the American People, will have lost our investment and GM will be liquidated in Chapter 7. At a certain point I think the Obama administration will let GM fail. 10 years is a moot point. Chris _____ From: [email protected] [mailto:[email protected]] On Behalf Of Dr. Ernie Prabhakar Sent: Monday, June 01, 2009 1:22 PM To: Radical Centrist Discussions Subject: [RC] Predictions? "The End of an Old GM, and the Beginning of a New GM" Okay, time to put your money where your mouth is. What is your prediction for what the relationship between GM and the Federal Government will be like in 5 years? 10 years? -- Ernie P. http://www.whitehouse.gov/blog/The-End-of-an-Old-GM-and-the-Beginning-of-a-N ew-GM/ That's why our government will be making a significant additional investment of about $30 billion in GM -- an investment that will entitle American taxpayers to ownership of about 60 percent of the new GM. Now, let me talk about this. I recognize that this may give some Americans pause. So let me explain as clearly as possible why we are making this investment. We inherited a financial crisis unlike any that we've seen in our time. This crisis crippled private capital markets and forced us to take steps in our financial system -- and with our auto companies -- that we would not have otherwise even considered. These steps have put our government in the unwelcome position of owning large stakes in private companies for the simple and compelling reason that their survival and the success of our overall economy depend on it. Understand we're making these investments not because I want to spend the American people's tax dollars, but because I want to protect them. Instead of taking so much stock in GM, we could have simply offered the company more loans. But for years, GM has been buried under an unsustainable mountain of debt. And piling an irresponsibly large debt on top of the new GM would mean simply repeating the mistakes of the past. So we are acting as reluctant shareholders -- because that is the only way to help GM succeed. What we are not doing -- what I have no interest in doing -- is running GM. GM will be run by a private board of directors and management team with a track record in American manufacturing that reflects a commitment to innovation and quality. They -- and not the government -- will call the shots and make the decisions about how to turn this company around. The federal government will refrain from exercising its rights as a shareholder in all but the most fundamental corporate decisions. When a difficult decision has to be made on matters like where to open a new plant or what type of new car to make, the new GM, not the United States government, will make that decision. In short, our goal is to get GM back on its feet, take a hands-off approach, and get out quickly. _______________________________________________ Centroids mailing list: [email protected] http://radicalcentrism.com/mailman/listinfo/centroids_radicalcentrism.com Archives at http://radicalcentrism.org/pipermail/centroids_radicalcentrism.com/
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