Saturday, April 4, 2009
At last: The president forced out GM CEO Rick Wagoner, doubting he could come up with a viable plan to save the company – something that's no surprise to any longtime reader of ours.
Ironically, Fritz Henderson, Wagoner's right-hand man, will replace Wagoner. Fritz is at least as culpable as Wagoner for the company's dismal performance over the last decade. New boss, same as the old boss.
In terms of corporate incompetence, Wagoner now owns the all-time record. Since he became CEO of GM, the stock has fallen from more than $70 to around $2. And the company lost close to $90 billion. He was CEO for roughly 3,000 days. So... he lost about $30 million per day as the CEO of General Motors. That is, without a doubt, the longest and largest corporate losing streak of all time.
GM had about 300,000 employees during the period. Instead of making cars, Wagoner could have simply paid each employee $300,000 back in 2000 and closed the doors. GM would have lost the same amount of money, but at least the employees could have done something profitable with those 10 years. There's no bigger burden on an economy than an unprofitable business. It wastes resources... and time.
For newer readers, you might get a kick out of our first "Letter from the Chairman," a satire we wrote in early 2007 from the perspective of Rick Wagoner.
Bloomberg estimated the total bill for the U.S. bailout at $9.7 trillion. In just one month, that number has ballooned to $12.8 trillion, which is close to the size of our entire economy. Put another way, the government is spending everything both it and private businesses combined spent last year to correct the problems with our nation.
Clusterstock says it differently: $1 trillion is about what the U.S. collects in taxes in a year. So to pay for this recovery, the government would have to raise our taxes nearly 13x. Either that or pass it onto future generations.
What will break next? That's what we find ourselves wondering as we watch the government pour money into one disaster after another.
From a reader: Please expand on how you plan on achieving your goal of being able to leave the country with fortune intact, within 24 hours.
I honestly don't know yet, in terms of specifics. But I have a pretty good idea of what needs to be done...
First, you've probably got to have a second citizenship. Foreign banks generally will not do business with Americans because of U.S. laws and diplomatic pressure from D.C. You can get around these restrictions by becoming a citizen of another country. Such citizenships can usually be purchased, if you know the right people in the right places.
Next, you'd want to move as many of your assets as possible into trusts and foreign corporations beyond the reach of the U.S. government. If your asset base is a bunch of real estate in the U.S., this might not be possible. But if your asset base is a company like mine with lots of international customers and mostly intangible assets, it can work very well.
It would be hard to seize my business if my core assets were located on a computer server in Costa Rica, if my bank accounts were in half a dozen different countries, and if I were a citizen of Switzerland. That's just hypothetical, of course, but you can see the gist of it.
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Date Range:3/26/2009 to 4/2/2009
Date Range:3/26/2009 to 4/2/2009