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Obama considers allowing GM/Chrysler to go bankrupt; Wall Street has a heart attack

Misty

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Apparently the White House has decided that GM and Chrysler haven't "done enough" to ensure future profitability, and is considering permitting them to go bankrupt. In the case of Chrysler, they may just let it die; GM may be luckier. Naturally, Wall Street, which has become addicted to bailouts, tumbled about 250 points today.

I have to say, I'm pleased to see that there may be an end coming to bailout mania. Admittedly, this has been helped by pure accident up to this point - companies are so afraid of Congress slapping new rules on them if they accept bailouts that they are trying to avoid it at all costs. Still, this represents a turnaround from a few months ago when it looked like any company that was in trouble could come hat-in-hand for Uncle Sam's money (think newspapers). Now if we could just get the big banks off the spigot...
 

The Big Al

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Re: Obama considers allowing GM/Chrysler to go bankrupt; Wall Street has a heart atta

GM can lean itself out and scrape by. We've already been talking about how it will likely be nothing more than Chevy, GMC, Cadillac, and Buick with a few models from Pontiac being absorbed into those four. They'll cut everything else.
 

Netto Azure

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Re: Obama considers allowing GM/Chrysler to go bankrupt; Wall Street has a heart atta

Well from what I heard from NPR earlier they said a merger between Fiat and Chrysler is in order if a deal can come out. And GM is another "too big to fail" BS. The problem is it's somewhat true, the auto parts suppliers will be in shock if GM goes down and it will be hard for other auto companies to get them.

(Off-topic: You're right Big Al...NPR is going anti-union, =| I keep on hearing how unions essentially bankrupted the Auto companies and now they're demanding that the "union bosses" resign like GM CEO Rick Wagner "If Obama wants real reform" ;_; If we only had true Universal Healthcare here in the US then all that FK-9'ing will stop. D=< Hay it's sad how card-check can't even pass now after all of that right-wing propaganda on how unions are evil and all that. TT^TT)
 
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the gadfly

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Re: Obama considers allowing GM/Chrysler to go bankrupt; Wall Street has a heart atta

Honestly, what's so bad about letting GM and Chrysler declare bankruptcy? Lots of companies do it and come out stronger for it.

As for letting banks and other financial institutions declare bankruptcy, umm, don't they have our money? I don't need to buy a new car. I sure as hell need the money I've entrusted to the big banks and let them manage it for me.
 

The Big Al

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Re: Obama considers allowing GM/Chrysler to go bankrupt; Wall Street has a heart atta

The problem is the contracts held by union workers. If GM and Chrysler declare bankruptcy, they would have to be renegotiated and likely further screw the workers. Not to mention there are entire towns that depend on the car plants running for their economy.

The money you have in the banks is insured. The earth could open up and swallow your bank and you would be none the worse for it.

I don't think people understand the tsunami that would be created if the American auto industry goes under. It employs 1% of the entire U.S. population and millions more depend on those workers making and spending money.
 

the gadfly

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Re: Obama considers allowing GM/Chrysler to go bankrupt; Wall Street has a heart atta

The money you have in the banks is insured. The earth could open up and swallow your bank and you would be none the worse for it.
Oh, if it were only so simple. I, like so many others, didn't leave my retirement money in bank accounts where it was insured by FDIC earning a pittance in interest.

I don't think people understand the tsunami that would be created if the American auto industry goes under. It employs 1% of the entire U.S. population and millions more depend on those workers making and spending money.
One percent? That doesn't sound that impressive to me. There must be as many people working at Starbucks and Subway. Not to mention the millions providing the stuff they sell.
 

Hector

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Re: Obama considers allowing GM/Chrysler to go bankrupt; Wall Street has a heart atta

This worries the most because of the negative effect that it will have on the stock market. I know that seems somewhat heartless to say (because I live in Massachusetts and GM going down doesn't affect my family directly in a job loss or anything like that), but investments are what pay for my college education currently and if GM goes under, the American stock market is going to crash because of the number of jobs being lost, as well Americans panicking and holding onto their money to keep it safe. And this would put our entire economy at risk of collapse.
 

The Big Al

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Re: Obama considers allowing GM/Chrysler to go bankrupt; Wall Street has a heart atta

One percent? That doesn't sound that impressive to me. There must be as many people working at Starbucks and Subway. Not to mention the millions providing the stuff they sell.
The people at Starbucks and Subway aren't skilled labor.
 

Misty

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Re: Obama considers allowing GM/Chrysler to go bankrupt; Wall Street has a heart atta

The problem is the contracts held by union workers. If GM and Chrysler declare bankruptcy, they would have to be renegotiated and likely further screw the workers. Not to mention there are entire towns that depend on the car plants running for their economy.

The money you have in the banks is insured. The earth could open up and swallow your bank and you would be none the worse for it.

I don't think people understand the tsunami that would be created if the American auto industry goes under. It employs 1% of the entire U.S. population and millions more depend on those workers making and spending money.
First off, the "American auto industry" isn't going anywhere. While there is a distinct chance Chrysler could be liquidated, GM will probably simply be reorganized and Ford is fine. And don't forget all of the foreign automakers that could pick up the pieces if needed. While the fallout of a GM liquidation is likely to be on the order of tens of thousands of jobs and billions of dollars in government funds to pay the pensions, I'm not so sure that would devastate the economy any more than, say, the collapse of Lehman Brothers.
 

The Big Al

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Re: Obama considers allowing GM/Chrysler to go bankrupt; Wall Street has a heart atta

Towns and cities aren't depending the local Lehman Brothers branch to be the main engine of their economy. There are that depend on the local car plant to be the main engine of their economy across the country, however. GM and even Chrysler's liquidation wouldn't stop with them. It would kill the local business that service the workers and in turn affect those who sell to those businesses and so on.

Even bankruptcy would be problematic for the workers because they would be the ones required to sacrifice the most. You honestly believe Rick Wagner will give up this fat paychecks before making the UAW make more concessions?

I wouldn't put my trust in the foreign car makers either. Their plants here only assemble the vehicles with parts made elsewhere. There have also been rumblings about them pulling out of the states if the Detroit three run into serious trouble.
 

Misty

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Re: Obama considers allowing GM/Chrysler to go bankrupt; Wall Street has a heart atta

Rick Wagoner already gave up his fat paychecks.
 

Netto Azure

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Re: Obama considers allowing GM/Chrysler to go bankrupt; Wall Street has a heart atta

First, Rick Wagner's gone/fired. Second that "$1 salary" is BS when they have millions in stock options that are still worth something. Yeah the Stock Market has taken a nose-dive but they are still worth something in the market. =/
 

The Big Al

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Re: Obama considers allowing GM/Chrysler to go bankrupt; Wall Street has a heart atta

I just heard Obama fired Wagner. All I can say is it's about fucking time.
 

PokemonHero

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Re: Obama considers allowing GM/Chrysler to go bankrupt; Wall Street has a heart atta

Yeah, Obama's not showing any mercy for GM or Chrysler. Chrysler may be able to scrape out survival by merging with Fiat, but they only have a month to do so. But GM's in a tough situation. It's probably best to go ahead and restructure everything. Hey, Wall Street may have a heart attack now, but it will hopefully pay off in the future.
 

The Big Al

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Re: Obama considers allowing GM/Chrysler to go bankrupt; Wall Street has a heart atta

Like I said in my first post. GM already has a plan to become a much thinner company and they will likely have to follow through. If worse comes to worse, so are suggesting the government might just buyout GM and make it a nationalized brand.
 

Barb

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Re: Obama considers allowing GM/Chrysler to go bankrupt; Wall Street has a heart atta

What about a merger (say, between Ford and Chrysler)? Hasn't that been debated before?
 

Nekusagi

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Re: Obama considers allowing GM/Chrysler to go bankrupt; Wall Street has a heart atta

I thought Chrysler was going to merge with Fiat.
 

the gadfly

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Re: Obama considers allowing GM/Chrysler to go bankrupt; Wall Street has a heart atta

The people at Starbucks and Subway aren't skilled labor.
I'm sorry, but are the skilled workers assembling automobiles somehow more important than the unskilled people working at Starbucks and Subway?
 

The Big Al

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Re: Obama considers allowing GM/Chrysler to go bankrupt; Wall Street has a heart atta

They are when they're the major source of money flowing into the community.
 
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