Rick Wagoner has been asked to resign as CEO of General Motors. Why would they do this? Maybe Obama doesn't like Wagoner. Maybe it is a symbolic move. Maybe someone should ask the president? Anyway, the Obama administration requested this as a condition of its next wave of bailout loans for GM.
It will not work!
GM's expenses are too big for them to remain competitive with other automakers with less "baggage." The reasons for GM's problems are complex. The problem is simple. Expenses are exceeding profits. We are draining the bathtub faster than we are filling it! Bailout loans are simply a band aid...they are not enough. A complete restructure under bankruptcy is necessary - the sooner the better!
I predict that within 5 years, GM will have three divisions: Cadillac, Chevrolet & GM Trucks. The financial impact of this move will be massive. Massive but not as devastating as a complete shutdown of the company.
Meanwhile, Rich Wagoner, with more than 30 years at GM, gets a nice pension.
