Iacocca's words still applicable to Obama's adminstration.

In his book, Where Have all the Leaders Gone? Lee Iacocca writes :

“Am I the only guy in this country who’s fed up with what’s happening? Where the hell is our outrage? We should be screaming bloody murder. We’ve got a gang of clueless bozos steering our ship of state right over a cliff, we’ve got corporate gangsters stealing us blind, and we can’t even clean up after a hurricane much less build a hybrid car. But instead of getting mad, everyone sits around and nods their heads when the politicians say, “Stay the course.”

Stay the course? You’ve got to be kidding. This is America, not the damned Titanic. I’ll give you a sound bit: Throw the bums out!

You might think I’m getting senile, that I’ve gone off my rocker and maybe I have. But someone has to speak up. I hardly recognize this country anymore. The President of the United States is given a free pass to ignore the Constitution, tap our phones, and lead us to war on a pack of lies. Congress responds to record deficits by passing huge tax cut for the wealthy (thanks, but I don’t need it). The most famous business leaders are not the innovators but the guys in handcuffs. While we’re fiddling in Iraq, the Middle East is burning and nobody seems to know what to do. And the press is waving pom-poms instead of asking the hard questions. That’s not the promise of America my parents and yours traveled across the ocean. I’ve had enough. How about you?”

Lee Iacocca was writing about the Bush administration. The interesting point by the excerpt above is that much of what Mr. Iacocca writes is applicable to Obama administration as well. Media is still waving their pom-poms, President Obama is taking deficits to new heights (just hit $1T this morning), we have move our focus from Iraq to Afghanistan and Pakistan, and we are still leading corporate crooks off in handcuffs.

A wave of nationalization is flowing across the United States. It started with our financial industry where regulations put in place prior to the meltdown were not enforced; rather Congress asked, begged, and strong armed the financial markets to offer mortgages to those who could not afford them. Now those same “leaders” in Congress are crying foul. Leadership, as Iacocca mentions, is failing us.

President Obama nationalized the auto industry by taking controlling interest in GM. The “Leadership” forced GM in to bankruptcy while Michigan is experiencing unemployment rate at 14.1% and expected to go higher as GM and Chrysler emerge from bankruptcy. Now the Auto Czar, Steven Rattner, is stepping down amid a kickback scandal; yet the Obama administration gives Rattner a “vote of confidence”. I agree with Iacocca in his question and outrage at the lack of “leadership” in both public and private sectors.

America has been a country of innovators. That aspect of America is being threatened by Obama administration. No business is too big to fail!!! Markets still exist for the products of companies that are labeled “too big to fail” and smaller companies will pick up the pieces once the larger ones fail. The nationalization of the financial and automotive markets will hamper growth in both industries. The next move is for Obama to nationalize the Health Care industry through offering a public option.

A public option is not leadership in action. It’s an enabling program. To bring leadership into the Health Care system, do it through regulation to guide the course. Many options are on the board, some of which I have stated in a previous blog, but Obama is sticking to the public option as the savior for the Health Care industry. The public option will not advance the Health Care industry; rather it will stagnate it. The public option is not one that will spur innovation that Iacocca said lacked back in 2007.

Now I did not agree with all of actions taken under the Bush administration and the “Change” candidate is not doing much more than Bush that excites me either. Yes, the Bush administration stripped away freedoms through the guise of protecting America post 9-11 but Obama is going to bankrupt America before he can nationalize it. Either aspect, bankruptcy or nationalization, are not an America I want to see take place.

World View on US Nationalization of GM

The world understands the move made by President Obama’s administration with General Motors is a gamble and a shift from Capitalism to Nationalism. Below are a few quotes run in Die Spiegel. Die Spiegel warns, in their June 2nd article titled GM Insolvency ‘Proves America’s Global Power is Waning’, “the insolvency of General Motors shows America’s weakening industrial clout and poses major risks not just for the economy but for Barack Obama.”

Although President Obama promised a “hands-off” approach to assisting GM emergence from bankruptcy, many see conflict between business and political aspirations cropping up. The Financial Times Deutschland reports, “The restructuring of the group will turn into a political drama. That creates considerable risk for the entire US economy, but also for international competitors operating in the American auto market. The restructuring of GM will be extremely expensive for the American taxpayer; $50 billion could disappear into a black hole. But in the long run, the fact that it will be impossible to run this company in line with market principles will weight far more heavily than the financial burden. It’s already clear that job cuts and plant closures will soon be discussed in a similar way as the closure of military bases: regional politics will be at least as important as productivity figures.”

Even the Center-left Suddeutsche Zeitung writes, “If Obama fails in his attempt to save America’s automobile industry, his economic policy will lie in ruins. But politicians make poor business managers and the economic crisis hasn’t altered this fundamental truth. This isn’t because elected politicians aren’t as competent as private sector managers, but because they have other interests. This has to be so – politicians are committed to the common good and have to organize electoral majorities to achieve their goals. In the nationalized General Motors, serious conflicts of interest are unavoidable.”

A prime example of politicians making bad business managers is the notion of GM to sell the Hummer product line to a Chinese automaker. One of our primary on the ground military vehicle is the Hummer. President Obama has touted that we need to become energy independent but now we will rely on a foreign power for one of our critical on the ground military vehicle. The domestic front is not much better.

The Frankfurter Allgemeine Zeitung warns, “The insolvency of General Motors is a historic moment for America. June 1 also marks the day on which Barack Obama rewrote the rules of American capitalism. It’s an alarming development.” The alarming development is the passive role that President Obama will take with GM but, as the Frankfurter Allgemeine Zeitung observes, “In fact Barack Obama has shown in the case of General Motors and Chrysler that he’s prepared to play a very active role. He dictated very unattractive debt reduction terms for creditors and then labeled them as speculators.”

The nationalization of GM and Chrysler are rewards President Obama is giving to the Labor Unions that helped get him elected. As Ford continues to lead the way, it will be interesting to see how the Government leads the way to assist GM and Chrysler. With $50B of taxpayer money being poured rewarded to the Union led GM, how can free market principles exist without the temptation of anti-trust actions on behalf of the Government under the guise of “in the best interest of the taxpayers”. Face it American’s, GM will never be a public company again. To payback the $50B plus interest, GM will need to be worth $69B and that has happened only once; 2000.