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November 2009

Next time you have an idea, sit on your hands and keep quiet.

2:49 am | Categories: automotive news, legislation
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steve_ - Oct 22, 2009 9:33 pm

I think the bailouts were done to facilitate the bankruptcies, not stave them off. Without bailout money for debtor financing, the rapid reorganizations that we saw would instead have drug out like Delphi's did - four years or so, assuming they could have lasted that long. Rathner got them some breathing room and paying taxes instead of putting all those people on the street (talk about bailout money - unemployment comp., food stamps, personal bankruptcies).

rsholland - Oct 22, 2009 1:11 pm

I'm talking about what the loss of GM and Chrysler will have on the midwest, and especially Michigan. If those two companies go, that area—as bad as it is now—will become America's Chernobyl, akin to a nuclear wasteland. No, neither one is out of the woods yet in terms of liquidation, but at least they now have a chance. Without government aid it was pretty much a sure thing.

pf_flyer - Oct 22, 2009 11:31 am

Neither one is out of the woods yet on liquidation. A lot of folks think Chrysler is in especially bad shape. My point is, that as much as we might want companies to be around forever, a lot of the time they're not. Could be as a result of changing times, or bad management, or just plain rotten luck. "As GM goes, so goes the country" really hasn't been all that true for quite some time now. I get the emotional attachment people have to car brands, but GM lost my Dad (and by extension his sons) way back in 1965 with an absolutely horrible Impala that he endured for 6 months before giving Chrysler a try. He gave GM a second chance. That was the '73 Vega. Game, set, match. You alienate that many long-term customers, you're going to have problems making a comeback.

rsholland - Oct 22, 2009 4:56 am

Maybe, but if the law of the jungle had prevailed, we would not be in a deep recession, but rather a deep depression. According to Rattner (yeah, Obama's guy), neither GM nor Chrysler could have survived if they had done it by themselves, and most likely would have been liquidated. I suspect there are also a lot of other (non-partisan) business experts who would agree with him.

pf_flyer - Oct 22, 2009 2:59 am

The bailout was done to stave off bankruptcy filings, and we wound up there anyway. I think you'd be hard pressed to make the case that those filings would have been Chapter 7 rather than Chapter 11 if things had been allowed to take their course. The threat wasn't that the companies would liquidate, but that they wouldn't have a chance to restructure under bankruptcy protection because people wouldn't buy cars from a company that filed bankruptcy. Well GM and Chrysler bought parts from Delphi. Passengers still bought tickets on bankrupt airlines. And people are still buying cars from GM and Chrysler. The bottom line is that the companies have to make products that people want to buy. if they can't do that, then they will go away. Law of the jungle.

rsholland - Oct 21, 2009 7:06 am

Gotta disagree with you here Bob. If "economic nature" had taken its course, as you suggest, GM and Chrysler would have been liquidated. The fallout from that for the mid-west—and the whole country—would have been devastating. Would you have preferred that over what the Obama administration did? There were no good choices here, but I think this was clearly the lesser of the two evils.

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