Please read George Will's column from 11/20/08 titled "Why Extend Big Three's Warranty". I think He has a good grasp of what is going on.
In my own opinion if GM were to go bankrupt somebody would buy up the assets at auction and continue producing the brand with new labor contracts. Kirk Kerkorion was interested in GM three years ago. He has the capital to buy (in bankrupcy) GM I believe. Chrysler is dead, done, over. Ford can survive, but are they trying? GM needs to kill off GMC, Pontiac, and Buick right now, Hummer yesterday. Saturn, Chevy and Cadillac is all they need. I wonder how much money was wasted developing the new Camaro and Challenger. Both cars were dead before they were even shipped. This just my opinion. Phil? Chris?
2 comments:
which part? I hear the Chinese might be interested. If they have the money, let them. Save our tax money, keep the jobs, keep the economy rolling . .. for now. I know selling a large US company to a forgiegn country is not the best case scenerio. How much money does Warren Buffett have? Isn't there some private money available? I got $10!
All of it, plus what George Will wrote over the past few days. There is no excuse for propping up failed business models. If the auto companies are able to present a convincing plan for becoming successful, then they should be able to attract private investors. If not, good riddance: I don't like hearing the big four (GM, Ford, Chrysler, UAW) whining every couple years about how hard it is to be them, even when the economy is strong.
Whether these companies survive or not, I suspect that they will be (and are) massively downsizing and many of the towns that would be effected are going to suffer whether the feds step in or not.
Chapter 11 is designed to help in the situation that the auto companies are in. This is the progressive way to making capitalism kinder and gentler. Until sometime in the 19th century, in England if someone couldn't pay their debts, the lender had a right to have that person placed in prison (a "penitentiary") until the person could pay or the lender forgave the debts. While in prison, the cost of imprisonment was added to the persons debt. Now we are enlightened and have a provision for bankruptcy. Chapter 11 doesn't work well for banks and the banking crisis was having much broader impacts across the world than failure in the big three will ever have. As much as we may criticize the bank and insurance company bailouts, at least they are a much more justified use of taxpayer money than an auto company bailout ever will be.
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