Comments on: GM and Chrysler Near an Agreement?? http://blog.robertsalomon.com/2008/10/29/gm-and-chrysler-near-an-agreement/ Sat, 06 Mar 2010 19:47:14 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Erin http://blog.robertsalomon.com/2008/10/29/gm-and-chrysler-near-an-agreement/comment-page-1/#comment-1284 Erin Mon, 18 May 2009 14:43:49 +0000 http://blog.robertsalomon.com/?p=131#comment-1284 Very interesting article, as are some of your other posts. I have bookmarked your great site for future visits. Very interesting article, as are some of your other posts. I have bookmarked your great site for future visits.

]]> By: Robert Salomon http://blog.robertsalomon.com/2008/10/29/gm-and-chrysler-near-an-agreement/comment-page-1/#comment-597 Robert Salomon Thu, 30 Oct 2008 16:43:22 +0000 http://blog.robertsalomon.com/?p=131#comment-597 You raise some valid points Anonymouse. I have struggled with this myself. In the end (unfortunately), I am inclined to believe that GM is too systemically important at this point to allow to fail. And it's not just about the managers, shareholders, and/or employees of GM, but also about the upstream auto supply chain, and the supporting businesses that service GM as a client. There are scores of companies such as those. Ordinarily, I would agree with you about allowing GM to go into bankruptcy and then restructure. I am a staunch advocate for "free" markets. Unfortunately, I believe the situation is so dire that it would be incredibly difficult to find anyone right now with the capital to allow them to restructure. The airlines continued to fly because there were private creditors/investors willing to come in and allow them to restructure. With GM, if they went into bankruptcy, it is unclear that there are folks with the capital available to facilitate it, ...so it would end up in the government's lap anyway at a higher price tag (or completely extinct barring government aid once in bankruptcy). ...just one man's opinion. You raise some valid points Anonymouse. I have struggled with this myself. In the end (unfortunately), I am inclined to believe that GM is too systemically important at this point to allow to fail. And it’s not just about the managers, shareholders, and/or employees of GM, but also about the upstream auto supply chain, and the supporting businesses that service GM as a client. There are scores of companies such as those.

Ordinarily, I would agree with you about allowing GM to go into bankruptcy and then restructure. I am a staunch advocate for “free” markets. Unfortunately, I believe the situation is so dire that it would be incredibly difficult to find anyone right now with the capital to allow them to restructure. The airlines continued to fly because there were private creditors/investors willing to come in and allow them to restructure. With GM, if they went into bankruptcy, it is unclear that there are folks with the capital available to facilitate it, …so it would end up in the government’s lap anyway at a higher price tag (or completely extinct barring government aid once in bankruptcy).

…just one man’s opinion.

]]> By: anonymouse http://blog.robertsalomon.com/2008/10/29/gm-and-chrysler-near-an-agreement/comment-page-1/#comment-594 anonymouse Thu, 30 Oct 2008 15:25:39 +0000 http://blog.robertsalomon.com/?p=131#comment-594 I have a better idea. How about we spend $0 on them? What's the logic for subsidizing GM? We're only bailing out shareholders, creditors, & management. The apparent hope is that the benefits "trickle down" to workers and communities. How's that worked so far? Better to save the money to help workers and communities affected by the inevitable plant closures that will have to happen regardless of who owns those firms. Besides, it's not as if bankruptcy means these companies go up in a puff of smoke. Look at all the airlines that have gone bankrupt and never even missed a flight. More importantly, bankruptcy would bring about a desperately needed change in management at GM. Forgive me for not wanting to write Rick Wagoner a love letter with $10B tucked inside. More broadly, what's the public policy rationale for bailing out private firms? Does Circuit City deserve a bailout? Does my dry cleaner? If the economy needs to be stimulated, let's have a stimulus plan. If we want to preserve manufacturing jobs then lets devise a policy for doing that. What we definitely need to STOP doing is throwing money at the people who created this mess. I have a better idea. How about we spend $0 on them? What’s the logic for subsidizing GM? We’re only bailing out shareholders, creditors, & management. The apparent hope is that the benefits “trickle down” to workers and communities. How’s that worked so far? Better to save the money to help workers and communities affected by the inevitable plant closures that will have to happen regardless of who owns those firms.

Besides, it’s not as if bankruptcy means these companies go up in a puff of smoke. Look at all the airlines that have gone bankrupt and never even missed a flight. More importantly, bankruptcy would bring about a desperately needed change in management at GM. Forgive me for not wanting to write Rick Wagoner a love letter with $10B tucked inside.

More broadly, what’s the public policy rationale for bailing out private firms? Does Circuit City deserve a bailout? Does my dry cleaner? If the economy needs to be stimulated, let’s have a stimulus plan. If we want to preserve manufacturing jobs then lets devise a policy for doing that. What we definitely need to STOP doing is throwing money at the people who created this mess.

]]>