Good morning. Big news last night and this morning. The government extended a lifeline to GM, but only after firing Rick Wagoner, the head of the company. Here's the lede by Mike Allen in POLITICO:

President Barack Obama announced an extraordinary bid to remake the ailing U.S. auto industry Monday, saying he would withhold long-term federal aid to two carmakers unless they make sweeping changes to ensure their survival.  

In blunt terms, Obama said his vision for reshaping GM and Chrysler would be painful to the companies and their workers, but insisted the strong medicine was the only course to saving them – while also leaving open the possibility they could fail.

And he spoke directly to auto workers and communities who rely on the plants, saying, “I will not pretend the tough times are over. I cannot promise you there isn’t more pain to come. But what I can promise you is this – I will fight for you. You are the reason I am here today.”

“These efforts, as essential as they are, will not make everything better overnight. There are jobs that cannot be saved. There are plants that will not reopen. . . .”

Obama also took the dramatic step of putting the federal government fully behind the two companies’ products – saying the United States would back the warranties on their cars for the rest of the years, in hopes that consumers wouldn’t shy away from the battered companies.

The move is producing some strong reaction in the Arena:

Charles Calomiris: "We never should have tried to stop the bankruptcy process, which is the only path toward dealing with reality for these companies. We have a competitive, successful US automobile industry; it just doesn't happen to be unionized, or owned by the "big three," and it isn't based in Detroit. If the current Administration weren't a captive of the union bosses, and if Detroit, Ohio, and Indiana weren't important swing states, none of this nonsense would be happening. Of course, as my uncle used to say, "If my grandmother had a mustache, she would have been my grandfather." In other words, politics, not economics, guides the Administration's wasteful pandering to Detroit; that obvious fact also means that the problem is unfixable by the application of irrelvant economic logic. Ultimately, of course, economics will matter in forcing a rational solution, but that may require another decade of waste, decay and economic ruin in the rust belt. Will the voters of these states ever wake up?"

Gary Clyde Hufbauer: "Three cheers for Team Obama! Decisions taken over the weekend will not only pave the way for rebuilding the auto industry; they will also shorten the list of firms that might want to ask for bailout money."

Jeanne Allen: "It’s very possible that with the president acting as the new CEO-in-chief, I may lose my job. After all, my main occupation is as head of a non-profit research group, one which gains its tax status from government approval, and whose income via contributions is also “financed” by the federal government. Sound ridiculous? Well, it’s no more ridiculous – or scary - than the President of the United States ordering a private company to fire its chairman."

What do you think? Is this too much micromanaging? Too little? Is the president acting politically on behalf of the members from these states, and the swing state voters? In his statement, he gave a kind of lukewarm endorsement of GM--I wouldn't buy their cars after listening to him--but then offers a guarantee of their warranties.

Was this a good move or a bad move?

And by the way, welcome.

David Boaz from Cato posted this in Arena: "For the past few months critics of the bailouts have been warning that government money would come with strings attached. We noted that it’s dangerous to have government setting corporate salaries, deciding what incentives are permitted, and more. I wrote a few weeks ago that if this goes on “we're going to have politicians pressuring government-funded financial entities to invest in green energy, locally grown food, inner-city job training, and other politically popular projects, and to avoid investments in tobacco, alcohol, soft-porn television shows, violent video games, fast-food restaurants, and other profit opportunities.” But I didn’t anticipate that the president of the United States would directly fire the CEO of an industrial company. The strings are being revealed earlier than I would have expected."

Craig Shirley: "he textbook definition of "Socialism" is the state controls the means of production and distribution, such as under National Socialism in Germany in the 1930's.

The fraudulent veneer of private ownership is maintained until of course someone in private ownership offends those in governmental power. In this case, Rick Wagoner offended Obama. With the firing of Wagoner, Obama has now moved America to full socialism. The next step is communism which as Obama knows, is whereby the state owns the means of production and distribution.

What GM and Chrysler should do is figure out how to get the filthy hand of governmental control out of their backside just as soon as possible, go chapter 11 and renegotiate their onerous contracts or give up and surrender to state authority. When Obama is being lectured by the communists running Red China and the socialists running Western Europe that his economic policies are insane, one would think he might listen to those who know how to destroy things. Barring yhat, we should listen.

If Wagonner can be fired, Obama can use the fraudulent argument of government subsidies to fire any of us in the private sector.

We all work for Obama now.

Dean Baker posted this: "