Quotes of the day

“What I found this year was a far cry from complacency. The ranks of line executives and engineers are thick with members of the Obama generation, who barely remember when GM was fat and happy. They are hungry to change the beleaguered company and prove its critics wrong. They are also piercingly critical of the old GM, candid to the point of eagerness in owning up to and analyzing the company’s mistakes and faults. The decades of denial are over…

In its rescue proposal to Congress, GM practically begged for a strong federal overseer with the power to force unions, dealers, and creditors to accept further retrenchment. GM wants the stick of a bankruptcy-like arrangement without the stigma of the real thing. In principle, a federal bailout could give GM a hard push into the future by wrenching its balance sheet into alignment with reality…

Whether a bailout can save GM depends, then, on which GM you think you’re bailing out, the calcified shell of the old GM or the new-economy company struggling to emerge. Given the record, counting on GM to succeed would be rash. But consigning it to fail might be even more so.”

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“I was speaking to an extremely well-informed person yesterday who told me that he thought a GM bankruptcy would inevitably become a fire sale liquidation, create a cascade of bankruptcies of the other Detroit auto companies and suppliers, and therefore kill 2-3 million jobs. He said that he doesn’t like to exaggerate, but that this would be ‘Armageddon’. I take his concerns seriously, but there is a distribution of possible outcomes in the event of a Big 3 bankruptcy, and no matter how confident anybody manages to sound about it, the outcome is highly uncertain…

The money used for this purpose is money that is not used somewhere else. The amount that would ultimately be loaned to the Big 3 is unclear, but most observers believe that when all is said and done, it will be much, much more than the $34 billion that the Big 3 have requested. Let’s assume $100 billion. As a pure thought exercise, how many jobs could we create with an extra $100 billion of venture capital? How much more sustainable would these be than jobs in companies that need to come to Washington to beg for capital?”