Monday, March 30, 2009

Oops! Bond holders fire the CEO at GM

Is this the shape of things to come? Turns out that when the government holds the bonds, they can fire CEOs. I guess these Obama folks are serious. The grown ups are back in charge. The only way to get an 800 lb gorilla to pay attention is with a 2 ton gorilla, (private capital). The only way to get everyone to pay attention is with a 10 ton gorilla (that's the government.)

Once things get really broken, the 10 ton gorilla has to get involved. It usually takes a long time. But when the grown-ups are in charge, it happens sooner, rather than later.

Small shareholders who are playing with their own money are too busy. Institutional investors playing with other people's money are busy and don't have the same fear as the small investors. But when the grown ups run the government, they are just doing their job.

If everybody just does their job, things usually work out for the best.

Besides, as it has been said, "Nothing so focuses the mind like the prospect of one's own hanging"
Government Forces Out Wagoner at GM
"The Obama administration used the threat of withholding more bailout money to force out General Motors Corp. Chief Executive Rick Wagoner and administer harsh medicine to Chrysler LLC, marking one of the most dramatic government interventions in private industry since the economic crisis began last year."

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