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The Poor Sparrows of Michigan
Obsidian Wings —
... Look, I’m not crazy about a Detroit bailout either. And in a different era, I would probably oppose it. But these are not normal times – now is not the time for another body blow. And besides, it’s not like the bailout is an absurd idea that can only be justified by interest group politics. There are effectively millions of people who could be out of work if Detroit goes down ( ...
Let Detroit Go Bankrupt, Ctd.
The Daily Dish | By Andrew Sullivan —
Jon Cohn says Chapter 11 bankruptcy might not be an option: In order to seek so-called Chapter 11 status, a distressed company must find some way to operate while the bankruptcy court keeps creditors at bay. But GM can't build cars without parts, and it can't get parts without credit. Chapter 11 companies typically get that sort of credit from something called Debtor-in-Possession (DIP) loans. But the same Wall Street meltdown that has dragged down the economy and GM sales has also dried up the DIP money GM would need to operate.
That's why many ...
Saving Detroit
The Talent Show —
... said, I am sensitive to the fact that letting the big three go out of business would be a pretty serious blow to our already fragile economy. But if the solution to what ails automakers is an infusion of cash, wouldn’t it be better to get banks involved? If we’ve already set aside $700 billion to help bailout banks in the hopes that it will free up lending, wouldn’t it be a better idea to just have Congress mandate that banks participating in the bailout must offer debtor-in-possession loans to the big three. That way, if an auto manufacturer fails, they need ...
Saving Detroit
This Modern World —
... Screw them. That said, I am sensitive to the fact that letting the big three go out of business would be a pretty serious blow to our already fragile economy. But if the solution to what ails automakers is an infusion of cash, wouldn’t it be better to get banks involved? If we’ve already set aside $700 billion to help bailout banks in the hopes that it will free up lending, wouldn’t it be a better idea to just have Congress mandate that banks participating in the bailout must offer debtor-in-possession loans to the big three. That way, if an auto manufacturer fails, they ...
Big 3 Bail-out thoughts
Newshoggers.com —
... economic times as we have entered a liquidity trap. Unusual and massive interventions are warranted to prevent a Japanification of the US economy. Salvaging the remains of GM, Ford and Chrysler is most likely justifiable as the alternatives are worse. It is not desirable, but it is justifiable.
Publius at Obsidian Wings argues that the spin-off and inverse multiplier effects will be massive: There are effectively millions of people who could be out of work if Detroit goes down (and bankruptcy doesn’t ...
On Will Wilkinson On Detroit
Political Animal —
... the state should have intervened. It shows up more specifically here: "If employees of the Big Three deserve to have taxpayers pay part of their relatively lavish salaries, then employees at thousands of failing businesses deserved the same. They had no chance of getting it, though, simply because they donât have the right history with Washington. There is no other reason. " Really? No other reason? Offhand, I can think of several other reasons, most of which are included in the Jon Cohn article publius cited. (Ezra Klein posted a shorter version ...
More On Sparrows
Obsidian Wings —
... Really? No other reason? Offhand, I can think of several other reasons, most of which are included in the Jon Cohn article publius cited. (Ezra Klein posted a shorter version ...
Cars
Paul Krugman —
Jonathan Cohn has the best statement I’ve seen of the case for a rescue. No illusions — these are companies that, to a large extent, drove themselves into a ditch. If the economy as a whole were in reasonably good shape and the credit markets were functioning, Chapter 11 would be the way to go. Under current circumstances, however, a default by GM would probably mean loss of ability to pay suppliers, which would mean liquidation — and that, in turn, would mean wiping out probably well over a million jobs at the worst possible moment.
Comment on What To Do About GM? by Kevin
Comments for Lean Left —
... without any evidence, onerous employee demands. The employee demands are not onerus - -they take people who do hard work and give them a lower-middle to middle class lifestyle. Dare I say that anyone who would think that constitutes onerous would be nothing more than a myopic right wing indivdual interested in hearing only what they want to believe?
Here, by the way, is a more compelling discussion of the changes that GM has already made to become a better business:
http://www.tnr.com/politics/story.html?id=a4893b49-36df-4784-9859-2dfa3a3211bf
Bailing Out in the Real World
Matthew Yglesias —
... someone yes, “yes this sounds like a bad idea, but if we do it like this and like that and like this then it’ll all be okay, therefore we should do it.” Which is fine. But we also need to ask ourselves, if we accept the proposition of Detroit’s management, the UAW, and Michigan politicians that what’s good for General Motors is good for America, how likely is any of this stuff to happen.
TNR’s Jonathan Cohn, for example, makes the most persuasive case for a Detroit bailout. Per Krugman’s summary: ...
Bailouts And Consequences
Lawyers, Guns and Money —
I think this article by Jon Cohn is very important. There are two points here that I think should be emphasized. First, I do think that there's a tendency to go a little overboard when it comes to the quality and popularity of American cars. This is largely the fault of the companies themselves -- if you buy one crappy, unreliable car in the 70s or 80s you won't buy another one -- but in addition to what Jon mentions the Malibu is selling well and has been well-regarded by critics, and Cadillac makes as good a car as anyone in the luxury market. I don't think it's terribly ...
We Are All Flint, MI Now
Firedoglake —
... As Jonathan Cohn points out, an imminent GM bankruptcy is more likely to be a Chapter 7--total liquidation bankruptcy--rather than a Chapter 11 bankruptcy. That's for the same reason why GM is begging for cash right now in the first place: no one is lending. ...
Why we should help the auto industry: A clear explainer
Crooks and Liars —
... and a very bad holiday season upon us for retailers, how can we actually let the auto industry go out of business? Yes, many people will come with their hands out now after the bailout, but we really have to look at it as pragmatically as we can. Let's keep the knee-jerk reactions to the downtrodden Conservatives who would rather see millions of more jobs lost. Sure, they dug themselves into a ditch, but it's too important to just reject it out of hand.
Jonathan Cohn writes a very good piece on the situation:
That's why many analysts and scholars ...
Republicans Have a Chance at Redemption
RedState: Conservative News and Community —
... . And despite what the
bailout proponents say, it’s really the only viable way for
Detroit to remake itself and survive. Feeding the beast won’t fix
the problem. ...
Comment Trolling on the GM Bailout
Obsidian Wings —
... helping them toward a productive company that can actually make products that people want on a regular basis. Is that argument out there somewhere?
Sidenote: the Congressional Hearings I saw this morning made me want to cry. It seems to come down to "we haven't really screwed up, just give us money". That approach doesn't bode well for the idea that they have really changed.
Original Cohn article which sparked the discussion here ...
Private jets
Political Animal —
... his G4 private jet at a nearby airport. It's one of a fleet of GM-owned luxury jets used to ferry executives around the world. Ford's Mulally has access to a jet as part of his $28 million employment contract; it's one of eight private jets Ford owns for its executives. If these guys had flown commercial first-class, while their companies are teetering on the brink, it would have been embarrassing. But company-owned private jets? I've seen some persuasive arguments, most notably from Jonathan Cohn , on government intervention to rescue the auto industry. But a) these CEOs ...
Shorter Mitt: Let the Auto Retirees Starve!!!
Firedoglake —
... Of course, as Jonathan Cohn persuasively argues, the Big Two and a Half are much more likely to be forced to focus on short-term profitability in bankruptcy than if they're working through a bridge with strings attached. So if you want long-term vision, you're better off advocating a bridge, not bankruptcy. ...
Shorter Mitt: Let the Auto Retirees Starve!!!
The Latest on Air America —
... precisely what Mitt wants--investing in long-term products. Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years. Of course, as Jonathan Cohn persuasively argues , the Big Two and a Half are much more likely to be forced to focus on short-term ...
TNR on why we can't afford to let the auto industry fail
AMERICAblog News| A great nation deserves the truth —
It's a good analysis, arguing that it is precisely because of the economic crisis we're in that we can't let the industry fail (via Krugman): One reason for the casual support for letting GM fail is the assumption that bankruptcy would be no big deal: As USA Today editorialized recently, "Bankruptcy need not mean that the company disappears." But, while it's worked out that way for the airlines, among others, it's unlikely a GM business failure would play out in the same fashion. In order to seek so-called Chapter 11 status, a distressed company must find some ...
A Brief Note Regarding GM
Obsidian Wings —
... Or were Publius (and Hilzoy) right, and a bailout was needed even though there was a chance that it might fail? And how is John Cohn's credibility doing these days?
Inquiring minds .... well, I have one. Or two, since I have the luxury of not having an opinion on the subject.** (Well, I have an opinion regarding Cohn's credibility -- its not good* -- but not an opinion on whether the bailout was a good idea.)
*A tip off came in Cohn's original articlefor TNR, when he wrote the following:
But the economists and ...
