Today President Obama moved decisively to position the bankrupt US auto companies (GM and Chrysler) in a survival mode, and to ensure that the US ends up with an auto industry.
And in the process Obama showed politicians and others that there is steel in this administration.
First of all, he fired the CEO of GM because the CEO dithered in coming up with plans for a proper restructuring of the company. And he is changing the board to replace the old ineffective one with a new one.
Then he guaranteed purchasers that their product warranties from GM would be met by the government, if needs be. This was needed to encourage Americans to buy GM products. Why buy a car from a company which might not be around to fix it?
He also gave GM 60 days to come up with a proper restructuring plan, and gave Chrysler 30 days to do a deal with Fiat or face bankruptcy – Fiat and Chrysler have now cut a deal.
What is Obama aiming at?
He is slashing the companies debt levels, wiping out the equity of shareholders, forcing the unions to take massive pay cuts, reducing the number of autos, closing plants, and pushing the industry to make energy efficient (green) cars.
About bloody time.
Way to go, Obama!
