Monday, September 20, 2010

“Tell- All” Book by Auto Czar, Steven Rattner

When I heard a few weeks ago that Steven Rattner was writing Overhall, “an insider’s account of the Obama Administration’s emergency rescue of the auto industry”, I couldn’t wait to read the book. It was supposed to be released by the publisher in October and I pre-ordered it on immediately. I was so excited when I got an email from Amazon telling me that the book had been released early and it came in the mail on Thursday, September 16. I began reading it immediately and finished it over the weekend.

What a letdown! I guess the purpose of this column is to save you $27 in the bookstore or $17.95 on Amazon. Do not buy this book unless you would like to read some cute quotations from President Obama like “Why should we save GM?” and “Why can’t GM build a Corolla”...Or from the President’s Chief of Staff, Rahm Emmanuel, “F**k the U.A.W.!”

The author, Steven Rattner, obviously had two reasons for writing this book. The first and most obvious was to make a lot of money and that goes without saying. The second one is pretty obvious too which is to tell the World how he singlehandedly saved the American auto industry.

When rumors began circulating over two years ago that the government was looking for an “auto czar’ to rescue Detroit, GM, Chrysler, and the UAW…not necessarily in that order, I jokingly sent my resume to President Obama. I had a hunch that they would pick somebody without a clue about auto manufacturing or retailing and that it would be a politically motivated choice. Boy was I right! Steven Rattner’s background is as a journalist for the NY Times, writer of Op-ed articles for various newspapers, investment banking, but his key endeavor was as a professional Washington D.C. insider and fundraiser for the Democratic Party. He dates back to Jimmy Carter, counts Al Gore as a close friend, and was a big fund raiser for Bill Clinton, Hillary Clinton, and, last but not least, Barrack Obama. His appointment as auto czar was to pay off a political I.O.U.

I surprisingly agree with some of what he has to say in the book. He fully understands that General Motors and Chrysler dug their own graves by mismanagement and then tried to blame their woes on the great global recession. It’s his lack of understanding of business, capitalism, and the free market system which allows him to conclude that running a business badly is no reason for a company to fail.
He inexplicably thinks that the American auto industry is represented by GM and Chrysler. How can he believe that Ford, Toyota, Honda, Volkswagen, BMW, Mercedes, Hyundai, Nissan don’t represent the American auto industry far more importantly than GM and Chrysler? These other manufacturers build better cars according to all objective third parties like Consumer Reports and JD Powers. Many of these manufacturers build most of their cars in America using American part suppliers and American workers. You can argue that “the profits are sent overseas’, but the profits go to the stockholders. Any American can buy stock in Toyota or any other foreign owned company. The American car-buyer would get along just fine without GM and Chrysler products. As far as the United Auto Workers union is concerned, they would be forced to earn their money rather than “bask in the sun of entitlements” they demanded and received from GM and Chrysler.

Steven Rattner says there’s a good chance GM and Chrysler are going to survive but then again what else can he say? He hedges a bit on whether or not we taxpayers will get back all of the $80B we gave them. I can see why he’s nervous about that. About the time he was finishing his book, Ed Whitacre (GM CEO #3 in the last year and a half) said GM would sell their IPO stock before the election and raise enough to pay back all of the money owned the taxpayers. But GM CEO #4, Dan Ackerson, suddenly replaced Whitacre and now he says GM won’t be able to repay all of the money like Ed said and won’t be going public with the IPO this year after all.

Oh, I almost forgot. Steven Rattner suddenly resigned as Auto Czar when it was made public that his investment company, Quandrangle, is under investigation by the New York Attorney General. It seems that Rattner’s company had been making payments to an indicted intermediary, Hank Morris. Morris is an associate of the New York state pension plan and was helping Quandrangle raise money from the New York state pension plan. Maybe the taxpayers will have to bail out Rattner next?

1 comment:

  1. Thanks for the savings Earl!
    The book was on my list but was to be read with caution due to the source.
    Your astute observation that Steven Rattner's "lack of understanding of business, capitalism, and the free market system" led to his conclusion "that running a business badly is no reason for a company to fail" is incredibly insightful..... and unpopular.
    My bet is that many other business people and most if not all Republican politicians would jump to claim that they could have come up with your observation on their own, that they already knew your "obvious" observation.
    My response would be to challenge their their claim with the query, then WHY are we in the financial position we are in today in America?
    For America to be in the position it is in today a vast majority of business people and a vast majority of political office holders have to be A) devoid of the basic knowledge required to understand how your observation was arrived at. B)Liars and thieves. They understand what will happen to others and could care less about the result of their lies and/or immoral actions on others.C)Lacking in courage as a result of (A).
    Again thanks for the savings Earl, it can now be invested in or spent on a more valuable enterprise.


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