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Jack Welch: 'Tar and feather' VW cheaters

Former General Electric chief and management expert Jack Welch said Thursday that Volkswagen has been taking the correct course of action in the face of what he called an "egregious act" of rigging some diesel cars to beat U.S. emissions tests.

"They made the right first move because ... axing the CEO had to happen," he said in a CNBC "Squawk Box" interview. "They did it fast. They didn't do it by a thousand cuts."

The embattled German automaker on Friday is expected to name a successor to Martin Winterkorn, who resigned Wednesday as chief executive. He denied any personal wrongdoing. The VW board Friday also plans to start firing employees responsible for the deceit.

"Now they have to go in and get a whole crowd of them and get them hung in the town square," Welch said. "Here's a place where truth and trust didn't exist."

"I would tar and feather them," he said.

Meanwhile, Germany's transport minister said Thursday emissions manipulations by Volkswagen also took place in Europe.

Welch: Fed hike 'won't change the world'

In the CNBC interview, Welch also said the Federal Reserve should not raise interest rates because there's no inflation.

A week after Fed policymakers decided not to increase interest rates at their September meeting, Fed Chair Janet Yellen on Thursday is set to talk about price pressures. She speaks at the University of Massachusetts, Amherst, which happens to be where Welch earned his bachelor's degree.

"As an industrialist ... I don't think you need it," Welch said, referring to a rate hike.

Either way, he added, a quarter-point hike won't change the world.

Welch said the sophistication and the science of supply-chain management today has been a little-talked-about force behind lower inflation.

"The gap between commodities pricing which is down and the selling price, you used to be able to hold on that gap for a while and be able to get the low price from oil and sell the chemical product at a higher price," he said. "Today that compression is instant."

"Industrial companies that are buying copper cheaper, their customers are saying, 'Give me that copper spread.' You don't keep it. You used to keep that, and you'd raise prices, and you'd live nicely. That's gone," he said.

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