{"id":997,"date":"2008-11-15T14:10:36","date_gmt":"2008-11-15T19:10:36","guid":{"rendered":"http:\/\/www.jasetaro.com\/blog\/?p=997"},"modified":"2011-03-10T14:58:19","modified_gmt":"2011-03-10T19:58:19","slug":"wall-street-journal-just-say-no-to-detroit","status":"publish","type":"post","link":"https:\/\/www.jasetaro.com\/blog\/2008\/11\/15\/wall-street-journal-just-say-no-to-detroit\/","title":{"rendered":"Wall Street Journal: Just Say No to Detroit"},"content":{"rendered":"

There’s an interesting essay<\/a> by New York University finance professor David Yermack in today’s Wall Street Journal.<\/p>\n

\n

Just Say No to Detroit<\/h3>\n

Given the abysmal performance by Detroit’s Big Three, it would be better to send each employee a check than to waste it on a bailout, says David Yermack.<\/h4>\n

Before Michael Moore became famous for documentaries like “Fahrenheit 9\/11” and “Sicko,” his first big success came in 1989 with “Roger and Me.” In that film, Mr. Moore followed General Motors chairman and chief executive Roger Smith with a camera crew, asking him why the company was closing plants and producing low-quality vehicles. Mr. Smith looked flustered and inartfully avoided Mr. Moore’s camera crew while it lingered outside his country club or GM’s executive offices.<\/p>\n

“Roger and Me” was entertaining, but it missed the real story about Roger Smith, who turned out to be a forward-thinking genius. Mr. Smith made big investments in information technology and satellite communications, acquiring Electronic Data Systems in 1984 for $2.5 billion and Hughes Aircraft in 1985 for $5.2 billion. Mr. Smith’s successors divested those businesses at huge profits — EDS was taken public in 1996 for more than $27 billion, and Hughes, renamed DirecTV, went public in 2003 for more than $23 billion. (The man who sold EDS to Roger Smith at a bargain price was H. Ross Perot, who then convinced many people that the experience qualified him to be president.)<\/p>\n

Mr. Smith understood all too well that GM shouldn’t continue investing in its failing automobile business. That was 25 years ago. Today, our government is being asked to put tens of billions of dollars in GM, Ford and Chrysler, but we would be much better off if Washington allowed these companies to go bankrupt and disappear. Read the rest…<\/a><\/p><\/blockquote>\n

From a purely academic point of view professor Yermack’s conclusions are interesting. From a political point of view they’re a non-starter. No politician democrat or republican liberal or conservative is going to allow 3 bellwethers of American industry to fail… Even if that means throwing good money after bad.<\/p>\n","protected":false},"excerpt":{"rendered":"

There’s an interesting essay by New York University finance professor David Yermack in today’s Wall Street Journal. Just Say No to Detroit Given the abysmal performance by Detroit’s Big Three, it would be better to send each employee a check than to waste it on a bailout, says David Yermack. Before Michael Moore became famous […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[26,7],"tags":[313,166,314,312,315,316],"class_list":["post-997","post","type-post","status-publish","format-standard","category-economy","category-politics","tag-auto-industry","tag-bailout","tag-chrysler","tag-david-yermack","tag-ford","tag-general-motors","entry"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/pfpI7-g5","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":1026,"url":"https:\/\/www.jasetaro.com\/blog\/2008\/11\/19\/mitt-romney-let-detroit-go-bankrupt\/","url_meta":{"origin":997,"position":0},"title":"Mitt Romney: Let Detroit Go Bankrupt","author":"Jeff","date":"November 19, 2008","format":false,"excerpt":"Former Massachusetts Governor Mitt Romney has a must read Op Ed on troubles facing Chrysler, Ford and GM in today's New York Times. Let Detroit Go Bankrupt By Mitt Romney, New York Times Op-Ed, Wednesday, November 18, 2008 Boston IF General Motors, Ford and Chrysler get the bailout that their\u2026","rel":"","context":"In "Education"","block_context":{"text":"Education","link":"https:\/\/www.jasetaro.com\/blog\/category\/education\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1059,"url":"https:\/\/www.jasetaro.com\/blog\/2008\/11\/26\/the-25-billion-question\/","url_meta":{"origin":997,"position":1},"title":"The $25 Billion Question","author":"Jeff","date":"November 26, 2008","format":false,"excerpt":"Holman W. Jenkins Jr. has an excellent Op Ed piece in today's Wall Street Journal. Mr. Jenkins ask the one question that no one Congress dares ask... Why is it Ford and GM can build viable auto businesses all over the world but not in North America? A Car Wreck\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1517,"url":"https:\/\/www.jasetaro.com\/blog\/2009\/02\/14\/gm-billions-more-in-bailouts-or-bankruptcy\/","url_meta":{"origin":997,"position":2},"title":"GM: Billions More In Bailouts or Bankruptcy","author":"Jeff","date":"February 14, 2009","format":false,"excerpt":"Today's Wall Street Journal has a front page story about GM's restructuring plans... The article is worth reading unfortunately, the on-line version is subscriber content so if you're not a Journal online subscriber you'll have to register to read it. Here's the free excerpt: General Motors Corp., nearing a federally\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1088,"url":"https:\/\/www.jasetaro.com\/blog\/2008\/12\/11\/will-the-auto-industry-bailout-work\/","url_meta":{"origin":997,"position":3},"title":"Will The Auto Industry Bailout Work?","author":"Jeff","date":"December 11, 2008","format":false,"excerpt":"I've been so focused on finishing up the projects I'm working before the holidays I've only been half attention to the news recently. I completely missed Holman W. Jenkins Jr. latest Wall Street Journal column: The Bailout That Won't Would you buy a car from Congress? By Holman W. Jenkins\u2026","rel":"","context":"In "Money & Investing"","block_context":{"text":"Money & Investing","link":"https:\/\/www.jasetaro.com\/blog\/category\/money-and-investing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":477,"url":"https:\/\/www.jasetaro.com\/blog\/2008\/09\/25\/newsflash-wall-street-journal-reporting-agreement-in-principle-is-reached-on-700-billion-bailout\/","url_meta":{"origin":997,"position":4},"title":"Newsflash: Wall Street Journal Reporting Agreement in Principle Is Reached on $700 Billion Bailout","author":"Jeff","date":"September 25, 2008","format":false,"excerpt":"From the Wall Street Journal: Congress reached an agreement in principle on a $700 billion package to bail out the financial industry, leaders from both parties said Thursday. They plan to present the deal to the White House later Thursday, hoping for a vote within days. Lawmakers said there were\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1008,"url":"https:\/\/www.jasetaro.com\/blog\/2008\/11\/17\/wall-street-journal-why-bankruptcy-is-the-best-option-for-gm\/","url_meta":{"origin":997,"position":5},"title":"Wall Street Journal: Why Bankruptcy Is the Best Option for GM","author":"Jeff","date":"November 17, 2008","format":false,"excerpt":"Today's Wall Street Journal has a must read Op Ed column by Michael Levine. Levine examines the problems faced by GM and explains why seeking chapter 11 bankruptcy protection may GM's best chance for survival. Why Bankruptcy Is the Best Option for GM Chapter 11 would better preserve the valuable\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/posts\/997","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/comments?post=997"}],"version-history":[{"count":0,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/posts\/997\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/media?parent=997"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/categories?post=997"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/tags?post=997"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}