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GM and Chrysler did go through a bankruptcy in the end. Most companies that do, don't shut down either. GM and Chrysler are still in place with a lot of the same problems that led them down the path to unprofitably.
Yes,it was interesting to listen to the president berating those who were willing to 'let GM and Chrysler go into bankruptcy rather than act'......leaving out the minor,unimportant FACT that in the end and millions of dollars later.....his administration still allowed GM and Chrysler to go into bankruptcy anyway.
In the real world in the end had the fed govt stayed out of it GM and Chrysler might have been where they are now anyway....or maybe better...or maybe worse.Since neither were able to avoid bankruptcy even with govt help I don't see how it can be proven that the gov't help did anything 'helpful'.
Of course it worked - maybe the government should throw billions of dollars it doesn't have at EVERY business that starts to fail. Who cares if we reward poor management, they can fail over and over and over. There's always more money where that came from! Never mind this enormous moral hazard. We should NEVER let those poor corporations go through bankruptcy proceedings and face the consequences of their poor management. Even though in that case (which ultimately happened anyway, just, as dixiegirl and imbobbb mentioned, with unnecessary costs to the taxpayers) they can still undergo restructuring that will make them more viable in the future.
GM and Chrysler did go through a bankruptcy in the end. Most companies that do, don't shut down either. GM and Chrysler are still in place with a lot of the same problems that led them down the path to unprofitably.
Why is it so many people can't understand the difference between a company bankruptcy and a personal one? You seem to, others don't. Many companies come out stronger after bankruptcy.
Yes,it was interesting to listen to the president berating those who were willing to 'let GM and Chrysler go into bankruptcy rather than act'......leaving out the minor,unimportant FACT that in the end and millions of dollars later.....his administration still allowed GM and Chrysler to go into bankruptcy anyway.
In the real world in the end had the fed govt stayed out of it GM and Chrysler might have been where they are now anyway....or maybe better...or maybe worse.Since neither were able to avoid bankruptcy even with govt help I don't see how it can be proven that the gov't help did anything 'helpful'.
Going into BANKRUPTCY wasn't the CONCERN. The concern was that without the government stepping in GM would likely have not just gone into bankruptcy but that it would have been LIQUIDATED - which is FAR different from going bankrupt. Being liquidated means the plants are shuttered and EVERYONE looses their job - producing a ripple effect down the supply chain. Even "The Economist" magazine - which DISAGREED with the bailout at the time, now says it was the RIGHT thing to do:
Free-marketeers that we are, The Economist agreed with Mr Romney at the time. But we later apologised for that position. "Had the government not stepped in, GM might have restructured under normal bankruptcy procedures, without putting public money at risk", we said. But "given the panic that gripped private purse-strings...it is more likely that GM would have been liquidated, sending a cascade of destruction through the supply chain on which its rivals, too, depended." Even Ford, which avoided bankruptcy, feared the industry would collapse if GM went down. At the time that seemed like a real possibility. The credit markets were bone-dry, making the privately financed bankruptcy that Mr Romney favoured improbable. He conveniently ignores this bit of history in claiming to have been right all along.
Going into BANKRUPTCY wasn't the CONCERN. The concern was that without the government stepping in GM would likely have not just gone into bankruptcy but that it would have been LIQUIDATED - which is FAR different from going bankrupt. Being liquidated means the plants are shuttered and EVERYONE looses their job - producing a ripple effect down the supply chain. Even "The Economist" magazine - which DISAGREED with the bailout at the time, now says it was the RIGHT thing to do:
Free-marketeers that we are, The Economist agreed with Mr Romney at the time. But we later apologised for that position. "Had the government not stepped in, GM might have restructured under normal bankruptcy procedures, without putting public money at risk", we said. But "given the panic that gripped private purse-strings...it is more likely that GM would have been liquidated, sending a cascade of destruction through the supply chain on which its rivals, too, depended." Even Ford, which avoided bankruptcy, feared the industry would collapse if GM went down. At the time that seemed like a real possibility. The credit markets were bone-dry, making the privately financed bankruptcy that Mr Romney favoured improbable. He conveniently ignores this bit of history in claiming to have been right all along.
Had Romney been in the White House and had to make the decision he would have done the same thing as Obama did. There was no viable alternative as this article points out. The move, however necessary, was risky. Romney broke faith with the American worker and American corporate management by believing the restructuring would fail. He went on record opposing it so that he could claim "I told you so" when it did. Bad move. He lost and now he pays the price. That's politics.
Had Romney been in the White House and had to make the decision he would have done the same thing as Obama did. There was no viable alternative as this article points out.
That's exactly right - that's why even Bush understood that. It wasn't JUST GM & Chrysler that would have gone under - without orders from those 2 car makers, there wasn't even work for the automobile sub-contractors to stay in business - meaning THEY would have gone under (whereever they were - ALL over the country), and if THEY went under Ford wouldn't have been able to get the componants for THEIR cars and so FORD would likely have gone under as well (through no fault of their own) because ALL THREE of the of the auto makers depend on the SAME suppliers. It was NOT simply a matter of ONLY GM & Chrysler being effected - it would have virtually destroyed the ENTIRE US auto industry.
The "devil was in the details".
Ken
Last edited by LordBalfor; 03-01-2012 at 09:10 AM..
Yup, Romney's position will come back and bite him.
The bailout was the RIGHT decision - and it WORKED.
Ken
So you are a President Bush fan? Romney is right. The govt should not have been involved until AFTER the bankruptcy hearing if they needed help. The bondholders were screwed.
I dont know why this was is so hard to understand???? All US auto manufacturers would have been affected if chrysler and GM went under. In addition, the suppliers, the employees of suppliers, small business owners down to restaurants where the employees buy lunch...It would have been a disaster.
So you are a President Bush fan? Romney is right. The govt should not have been involved until AFTER the bankruptcy hearing if they needed help. The bondholders were screwed.
No, I'm NOT a Bush fan - but in this case he was RIGHT (and I'm more than willing to admit that - and did so at the time).
For the bankruptcy to have gone through SOMEONE needed to be there to back it up financially (as is always the case when a major company goes bankrupt) - and NO ONE was willing to do that because the financial industry was in PANIC MODE at the time. As The Economist article points out - the credit market was completely locked up at the time. There wasn't TIME to sit around a WAIT for the credit markets to losen up again (look how long it's taken for that to happen). The plants would have simply been shuttered - and the impact of that would have IMMEDIATELY flowed downstream to the suppliers - and then back upstream to Ford.
Ken
Last edited by LordBalfor; 03-01-2012 at 09:57 AM..
Yep, propaganda is the only thing they know. They could care less about facts or the truth.
This coming from someone who is an avid Romney supporter--a guy who changes his own personal "facts and truth" almost hourly. But it's highly entertaining to watch his supporters twist themselves into pretzels trying to justify his ever changing "truth", so carry on.
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Romney is right. The govt should not have been involved until AFTER the bankruptcy hearing if they needed help. The bondholders were screwed.
