President Barack Obama did the right thing in ousting Rick Wagoner as head man at General Motors. Already there are a few encouraging signs that the GM community realizes it is time to step on the accelerator.
As for squawking that Obama is being too meddlesome, it is time the president takes off the gloves and gets his hands dirty reforming the banking sector, too. Removing the brass at Citicorp and Bank of America would be a good place to start.
The Obama administration is not engaged in a rescue of GM. Its is more of a salvage operation — saving viable units, while being sufficiently focused to squeeze remaining value out of the scraps.
Whether this unprecedented government intervention at GM will pave the way for the once-mighty automaker to reach an agreement with its unionized workers and big-money creditors remains to be seen. And it is still unclear whether a corporate restructuring under an umbrella of taxpayer guarantees would be preferable to filing for bankruptcy. The track record of GM's management, unions, and creditors in trying to agree upon a salvage plan is truly pathetic, after all. This trio of special interests seems determined to turn the Darwinian notion of survival of the fittest upside down.
With populist rage running at ugly levels, a GM bankruptcy might also insulate Obama from the sort of political backlash that erupted in the wake of the AIG-bonuses debacle. That insulation could be needed to keep larger recovery efforts moving forward.
Still, the fact that GM has not yet melted down has given Washington, the financial markets, and the public a chance to catch their breath. Just as the nation needed an interval to wrap its mind around the fact that Wall Street — with the disappearance of Bear Stearns and Lehman Brothers and the implosion of AIG — ain't what it used to be, so, too, does it need to adjust to the new reality of a greatly diminished Detroit.
The etiquette of political debate does not seem to allow for a frank discussion of what's going on with GM. It is as if 30 years of being fat and happy has dumbed down the nation's various elites — including the media. Vocabulary fails us. The nation's collective imagination seems unable to skip out of the spin cycle that has reduced the GM saga to just another blame game.
But the stakes are so high, and the climate of opinion so skeptical, that it seems necessary to remind ourselves this is not a game. Theatricality is a necessary part of politics. These days, however, theatrics have overshadowed the objective. This is real life, not a reality show. Reckless speculation in the housing market; unregulated greed on Wall Street; unprecedented levels of personal, corporate, and government debt have already compromised or ruined prosperity for countless numbers for the imaginable future.
Ford, with a bit of luck, might pull through on its own; Chrysler appears headed for a shotgun marriage with Fiat; and GM — either under the direction of a bankruptcy court or at the behest of Washington — will slim itself down and probably sell itself off. All of this, of course, is a best-case scenario.
Banishing the delusional myopia of the political and financial communities is proving to be as daunting a job for Obama as salvaging GM. But botching the job in Detroit could crack the thin veneer of hope that Obama has managed to apply to the economic crisis. Even a "successful" resolution of the GM situation will mean more economic pain — banks still are not lending; the economy continues to contract, though at a slower rate than a few months ago. Hope, sadly, is what the nation is running on at the moment.
