Good posts regarding this issue, keep it up. I’m dumbfounded that conservatives are seemingly apathetic about the demise of an American manufacturing industry, which WILL happen if bankruptcy is the route. Detroit was called the “Arsenal of Democracy” during World War II because its plants were transformed to build the tanks and planes that won the war. It’s not an industry that we can or should turn our backs on. Surely, the UAW is the single biggest cause of their current failures. But, like you noted, most of the required restructuring is already underway and will take effect in 2010. This loan allows the companies to stay afloat until then.
I personally don’t appreciate your post because you obviously did not read mine fully - my family has been with GM and my father has worked for GM for over 30 YEARS!
The airline companies filed Chapt. 11 and people are investing in those stocks and are still flying.
I think you should understand what Chapt. 11 is before you post and actually understand that the clause itself deal with reorganization to make the company profitable again.
Chapt. 7 is what you don’t want to file...
I also worked in the defense manufacturing industry so again you should not go about making assumptions about the backgrounds of people and their professions and knowledge.
http://www.sec.gov/investor/pubs/bankrupt.htm
BTW w/ any ailing company that is floundering there is a possibility of liquidation or failure - but if done correctly and rehabilitated esp. w/ known brand names the companies can still sell their stocks and bonds at much lower rates until the P/E ratios go back up.
The bailout idea does not mean that the companies won’t tank either - they have FUNDAMENTAL problems at the American Auto Industries - throwing money at them is not going to fix it and where is the money going to come from?? What magical seed is going to grow this money?? Will the Fed just print more out so we can end up in hyperinflation or will everyone just continue to get taxed for bad management we had nothing to do w/? Just curious. Chapt. 11 is the smartest thing for these companies to do. The govt. can prevent the companies from being bought by international ones if need be during the process.
You don’t think that having a faltering economy causes national security issues?? What happens when the debt is so astronomically high that everyone ends up pulling out investments - we hit a depression, high unemployment and hyperinflation - you think that’s not risky? - well if you don’t then keep on throwing money at everything - the paper money eventually means nothing if it even does at this moment.
You don't give enough credit to our bankruptcy system. Many creative devices can be used to keep customer confidence in a company undergoing Chapter 11. It's very common to create an escrow account so that warranties will be honored. Debtor-in-possession financing can be arranged to make sure that a companey continue making profitable investments while in bankruptcy.
There is a reason why very few big, public companies are ever liquidated: Chapter 11 works, and no one has made a convincing argument as to why it would not work for Detroit.