Dennis Gartman on GM

From the Gartman letter...

Here in the US, the debate is over the massive expansion of the Obama Administration’s power… some might call it a power-grab, and we are amongst those who do… in the aftermath of the “decision” by Mr. Wagoner to stand down as GM’s CEO over the weekend.

When we wrote yesterday’s TGL in the middle of the night we knew only of Mr. Wagoner’s resignation, which we accepted at face value as his decision to accept responsibility for the horrid path that GM has taken during his tenure in office. After all, GM stock was $70 when he became CEO; it is $2/share now. This is hardly the performance of a great leader, and certainly it warranted his removal. Indeed, we think that Mr. Wagoner was symptomatic of the problems that Detroit was incapable of overcoming: corporate incestuousness that kept repeating the same mistakes time and time and time again. After all, only Detroit could give us the Pontiac Aztec… the modern day equivalent of the Edsel... only materially and massively worse, and much, much uglier!

Now, however, we know that he, along with the entire Board of Directors, was forced to stand down by the Obama Administration. We have scanned through our copy of the Constitution that we keep by our desk at all times for easy reference, and nowhere in its main body, nor in the Amendments, can we find reference to the Federal government’s right to seek control of a business and to run it on behalf of the people of the country.

We are not legal scholars here at TGL, and we are open to arguments by such scholars proving the constitutionality of what the Administration has done, but in our reading of the work by the Founding Fathers and by their antecedents we find it not. This decision frightens us. What then is to stop the Administration from seizing control of some utility because the company’s carbon footprint is larger than the Administration wishes it to be? What is to stop the Administration from taking control of a corporation because its debt structure is too leveraged, according to Administration guidelines? What is to stop the Administration from taking control of a company because it has not met Administration demands on affirmative action? At first these appear to be reductio ad absurdum cases… but are they really, in light of the GM decision?

Indeed these are questions I asked.