Obama's Vietnam - GM!

As former Secretary of State Colin Powell said to George W Bush: "You break it, you own it".

The Obama's are certainly wowing them in Europe with Barack reminding everyone of John F Kennedy, while Michelle performs a masterful performance as Jackie. The style and commanding presence of the new President are a welcome change from the late Bumbler in Chief George W. The Europeans are eating it all up.

Turning to substance things are not so rosy. The Europeans do not want to mire themselves more firmly into Afghanistan, despite Obama urging them to do so. There is great fear in the administration that Afghanistan could become Obama's Vietnam and derail his economic plans just like Vietnam did to Johnson's.

Yet, Obama may have already have blundered into his own Vietnam and that is GM not Afghanistan. The unprecedented firing of the GM CEO Rich Wagoner by the President of the United States certainly puts the Obama in the driver' seat at GM.

This episode reminds me of another JFK moment, when the US green lighted the coup d'etat against Vietnamese President Ngo Dinh Diem and in effect became the masters of Vietnam. As Ho Chi Minh put it: "I can scarcely believe the Americans would be so stupid."

From that point forward the Americans would search in vain for a nation leader for Vietnam and instead wound up with a series of puppet Presidents with no support in the country at large. We broke it, we owned it.

Turning to GM, the main problem is that the unions have contracted overly generous benefits to both current workers and retirees that are not sustainable with the shrunken size of the company. To provide for retirees GM must ship 900,000 cars a year! The math does not work out.

The sorry truth is the company must be radically reorganized which means less jobs and benefits especially for union members. A rational set of work rules and incentives to work, innovate and make cars cheaper and of higher quality would also be a good idea.

This task is now to befall the political process where the party in charge is intimately associated with union interests. Where will this political courage come from? If Obama tries to scale back the union, which certainly must be done, he will run afoul of major elements of his party. If conditions continue and the government keeps the company on life support, the rotting husk will be Obama's. If the whole thing collapses, it is Obama's.

Before the President was calling the shots, he had the necessary smoke screen to let what needs to be done, be done. Now that Congress has the knowledge that it can dictate to the company, where will this end?

Perhaps we will witness the spectacle of the merry go round GM CEOS and more and more cash infusions. In Vietnam at one point they had to ask around the table: "Would anyone like to be Prime Minister". No takers here! Would anyone want to be CEO of GM while its being run from Washington?