From the NY Times of 18 Dec 2008:
Quote:
Car Bankruptcy Cited as Option by White House
The White House raised for the first time on Thursday the prospect of forcing General Motors and Chrysler into a managed bankruptcy as a solution to save the companies from financial collapse. ...
Mr. Ray said that a number of airlines went through bankruptcy protection earlier this decade, using federally backed loans awarded by the Air Transportation Stabilization Board, which was set up to aid the industry after the September 2001 attacks.
The board turned down United’s request, however, and the airline subsequently restructured under bankruptcy protection without federal money.
“United is still flying, and G.M. is not doing very well,” Mr. Ray said. “Their chickens have come home to roost, and now it’s inevitable” that G.M. seek bankruptcy protection, he added.
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Had GM not used Enron accounting in 1991 to avert bankruptcy, then GM's problems would have been addressed and solved. Cars would be designed by car guys. The Hybrid would have been widely available in 1999.
Chrysler is owned by a rich investment firm that could easily finance Chrysler's bridge loans. Maybe even do what 1979 Chrysler did when government did not bail them out. 1979 Chrysler replaced bad management, then bridge loans from the banks. Loans that Chrysler paid off in only four years because Lee Iacocca (a car guy) replaces Chrysler's only problem - top mangement.
Cerebus is an investment firm that would rather have government pay for their bad investment decisions. Rich investors once had to accept the risks of their investments. But the economy downturned. According to Cerebus, that is not fair. Therefore government should bail them out.
Deutsche Bank called it about one month ago. GM's future stock price is predicted to be zero dollars per share. Obviously.
GM products were obviously that bad long ago.