You may recall that last year Detroit came to Washington, hat in hand, looking for another bailout using taxpayer dollars. At that time, some of us questioned whether or not this was a good idea. GM had been on the skids financially for some time and their problems seemed more endemic than temporary. Might they not, we wondered, be better off going into bankruptcy and reorganizing as the airlines did during their dark days? (And you will note that there are still no long lines of people at airports waiting for planes that never arrive.) Also, the bankruptcy option might allow them to relieve themselves of some of their legacy costs and remove the crushing weight of the albatross around their necks by the United Auto Workers.

Nay nay, we were told! Not only is GM too big to fail, but they are an American icon, right up there with the Statue of Liberty and the original Betsy Ross edition of the Stars and Stripes. All they need is a bit more time and some of our money to reorganize and begin producing lean, green cars that people actually want.

Well… so much for that plan.

General Motors’s new chief executive told CNBC that filing for Bankruptcy may be the best option for the struggling automaker.

Henderson’s comments came after President Obama bluntly rejected turnaround plans by GM and Chrysler and demanded that both companies make fresh concessions in order to get more federal aid.

Now I only have one question for the table here. What happens to the money we already gave them? Do the taxpayers get paid back as part of the bankruptcy reorganization, or does this turn into another lump of debt piled on with the rest, left to us to pay off? “Oh well, you put your money in a bad investment and now it’s gone, just like your 401K.”

And, not to be one of those “we told you so” people, but… couldn’t we have done this last year?

JAZZ SHAW, Assistant Editor
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rudi
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rudi
7 years 5 months ago
Also, the bankruptcy option might allow them to relieve themselves of some of their legacy costs and remove the crushing weight of the albatross around their necks by the United Auto Workers. Much of the legacy cost are from retirees, before robots made the old production standards very labor intensive. The auto companies raided their pension funds, with the approval of both parties in Washington. Should 80 year old retirees sell apples on the corner, to unburden capitalism from legacy costs. During the earlier debate about GM, the $70 per hour cost came up. But, the actual pay and benefits… Read more »
MaryL
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MaryL
7 years 5 months ago
Does this place accept the kind of language flung around by Rudi? I hope not. I don’t know what would have happened to the markets, banks, other car companies, automotive suppliers, and consumer confidence last year if GM and Chrysler had been allowed to go under almost immediately, but I don’t think it would have been good. There are some small improvements in some economic measures now, including the TED spread and the Baltic Dry Index, and consumer confidence is up, so while the recession has still not bottomed out, and there are still some hellacious bumps coming our way,… Read more »
GreenDreams
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7 years 5 months ago
I’ve often advocated what to me is a perfectly capitalistic notion for ALL industries that need help. I’m always called a socialist for advocating it. The way for-profit companies raise capital in a capitalist system is to sell stock and borrow when needed. I advocate that to help companies in an industry considered strategic (e.g. autos, banks, insurance), we should buy their stock, not loan them money we’ll never get back. If the company does go bankrupt anyway, we’re still stockholders in the reorganized company. Yes, it’s called “nationalizing” these industries, but it’s just a stock purchase. If a company… Read more »
gekkobear
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gekkobear
7 years 5 months ago
“I’ve often advocated what to me is a perfectly capitalistic notion for ALL industries that need help. I’m always called a socialist for advocating it.” How can that be? “Yes, it’s called “nationalizing” these industries, but it’s just a stock purchase.” So people don’t let you call “nationalizing” an industry capitalism instead of socialism? How rude these people are not to let you create your own meaning for words. “I think we need an auto industry” Why? What is your logic, reasoning, or basis why the U.S. needs a U.S. run auto industry? I think we need a fake plastic… Read more »
HemmD
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HemmD
7 years 5 months ago
Gekkobear I’m glad someone around here understands reality. Reality is hard in the laisser fair economic world. These idealist don’t see that profit is the only measure worth considering. Reality is hard, and people need to realize it. So what if people spend their entire productive life earning a decent retirement and health care. There’s no profit in thinking of the 3-5 million who would lose their livelihood and retirement. At least Wagnor got out with his fair share. We owe Detroit nothing. Maybe they were the backbone that carried the US to the pinnacle of global productivity while you… Read more »
gekkobear
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gekkobear
7 years 5 months ago
“These idealist don’t see that profit is the only measure worth considering.” I’m sorry, obviously that is just foolishness. Profit is useless. In fact, we’d have a much better economy if nobody could ever make a profit. Think of all the jobs that could be created if companies would just stop making profits. And all the investments we’d see from people looking to donate to our new job creation charities. We’ll be the home for lost companies, who can’t make a profit but surely provide all the necessary additions to the economy that make life worthwhile. Like green programs, and… Read more »
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