What’s Good for GM is Good for the Country…June 3, 2009

The futures markets are jittery this morning about the jobs data – which showed cuts are still significant but not as bad as the last 6 months. They’re also nervous about FED Chairman Bernanke’s testimony later this morning, but they shouldn’t be. The stock market should be happy: it just weathered one of the most significant events in American economic history – GM filing for bankruptcy. And it did it without a blink.

This decision signals the end of an era. The old adage “What is good for GM is good for the country” is still true. Like junk bonds, GM now has the opportunity – indeed the need – to get rid of its junk heaps – unprofitable models, too many dealerships, and ridiculously inflated union agreements. GM has a new lease on life. And that’s good.

All ends have new beginnings. Markets must now move on and focus on correcting what led us to these crises. (We need to speak up long before we have to cough up.)

Someone asked me the other day, “When are we ever going to get back to “normal”?

I said, “If you mean business practices of the last few years, I hope never.”

“If you mean leaner, sounder, more accountable business practices – not more creative debt instruments and unregulated investment products – the sooner the better!”

Simply put, if there is no accountability there will be no sustainability whenever an economic recovery begins. And other GMs will happen all over again. The GM bankruptcy should be viewed as a good thing, and a watershed turning point to get us back on the road to what is truly normal – an economy that runs like a smart car.