Comments about ‘Auto makers must adjust’

Romney was absolutely wrong about Chapter 11 bankruptcy. In fact, he called it "managed" bankruptcy, which is essentially the same as Chapter 11 by definition. You can argue that that is exactly what was done, and the result is wildly successful. The nonsense about having GM go into bankruptcy is that is is so big and its effects on the economy so great that it would be beyond the ability of the Bankruptcy courts to oversee. Chapter 11 cases rely on the ability of the company to obtain outside capital as part of its reorganization, and because of the size of the problem and the near collapse of the financial system, that outside capital was not there at an adequate level. Thus, the federal government reorganized GM's affairs and preserved an important part of the economy along with a couple of million jobs. Romney and others should know better and stop using this as a political wedge.

Bud and Esquire,

you talk as if GM did not go into chapter 11. GM DID go into chapter 11.

Esquire, you may be correct about the feds being the only ones who could have provided the DIP financing, but since BO hijacked the process, we don't really know if anyone else could have stepped up. The liquidity crisis wasn't beacuse no one had the cash; it happened because no one was willing to circulate their cash.

And Esquire,
if you were truly honest, you would also see that BO, not just the repub candidates, is using this as a political wedge. The truth is, BO paid off his union backers with ownership in both GM and Chrysler ahead of the secured creditors, including teacher and police pension funds. Let the teachers and police starve in their old age, as long as the UAW comes out ahead.

The Founding Fathers would be absolutely outraged by the idea of government giving taxpayer dollars to private industry. Indeed, the Fathers fought the Revolutionary War to prevent this very thing from happening.

The automakers must survive on their own, or perish. Tax dollars should not go to an industry that is so mismanaged and so incompetent that it cannot produce a good enough product to produce a profit.

What is next for the current left wing government? In addition to health care, will it now require citizens to purchase new cars on a scheduled basis?

...which is why my brand new truck is a Ford!

They don't owe the US large amounts of money! They've paid back the bailouts. Guess foxnews didn't report that to their viewers?

Lost in DC. I suspect you will poo poo this, but last Sunday on one of the talk shows, the person responsible for the recovery policies plainly said that govt. involvment was not their first choice, and it was only after an exasutive futile search for private capital that the administration ok'd govt funds for that purpose.

I think another simple fact is that if the bailout hadn't taken place and a couple of million more people were dumped on the unempolyment lines, the effect on the all ready free falling economy would have been such that those bond holders would have lost anyway. It was a no win for them. They had invested in a toxic economy, they were going to lose regardless of what happened.

Pres Obama made the right call on the auto bailout. It was an extraordinary time. The world economy was in free fall and nobody knew where the bottom was. The loss of the U.S. auto industry at that point in time would've been devastating. There wasn't going to be anybody else willing/able to provide financing through a Chapter 11 bankruptcy. Though Republican candidates are claiming otherwise, any Republican president would've done the same thing at that moment in time.

Bailouts breed more bailouts, and dependence on government lessens freedom.

Guess repubs wish that China would have swooped in and taken over the auto industry. Great. Then they could have moved GM and all those other millions of jobs overseas.

Well, repubs have let millions of other jobs go elsewhere with their disastrous policies. What's a few more million? At least the CEOs are doing fine! And we all know from repub ideology that as long as CEOs are doing fine, everyone else will too....

Sooooooooooooooooo where's all those jobs that the Bush tax cuts were supposed to create? I see China's economy doing great.... Maybe they're all being created over there? Maybe we should come up with tax cuts with strings attached. You want your tax cut? Create a job... HERE

The bankruptcy of GM and Chrysler could have in the end resulted in the dissolution of the companies in Chapter 7. Ford warned that even through they did not take a bailout that if the other companies disappeared it could fatally damage their supply chain. The potential existed that the USA could be left without any domestically produced autos.

When we got into World War II, where did the government turn to produce war material? Audi? BMW? Toyota? I am guessing that if they did they wouldn't have gotten a positive response. Domestic auto production by American companies is in the national interest of the USA and therefore well worth the bailout to help them survive.

PS. I am sure the founding fathers would have bailed out the buggy and wagon makers if it was seen as being in the interest of the Country.

I wouldn't be putting much stock in Mitt's explanations of previous comments. If Mitt would have let them go bankrupt then we would be void of American car manufacturing today unless you consider Toyota, Honda and Subaru as American companies. The auto bailouts were a Bush intiative that Obama followed through on so don't go there if you want to be honest. What's worse, an original mis-statement or a dishonest spin on the previous statement?

I think in another time and circumstance you could justify the collapse of the American auto industry, however in this one it would have put us in a situation coupled with the mismanaged banking and housing businesses would have destroyed the economy the likes haven't been seen in our history including the great depression. This was the right move, the only move, and the move of last resort. Of course Mitt would have sold off pieces of GM to Honda, another to Toyota, another to Ford and the heck with wage earner jobs.

Go to your nearest department store and look at the merchandise. Look at the tags on that merchandise. Try to find something that is made in America by Americans using American products. Look at the electronics - Sony, LG, Asus. Look at the clothing - all made off-shore. Look at the toys.

Each of those industries had strong American representation until the demands of the workers make it unprofitable to sell those products to those workers. Look at history. When UNION workers stopped buying union made products, those industries went off shore.

Why should the automobile industry be different?

When BOEING tried to contain costs by moving some of its production to a right-to-work State, what did Mr. Obama do? Did he embrace the fact that thousands of out-of-work Americans would be employed? Did he embrace the fact that BOEING would be able to compete with European made airplanes? Did he use BOEING as an example of forward thinking, as a solver of problems, as an innovator? Of course not. His administration tried to block BOEING.

The figures being released by the government about GM and Chrysler paying back their loans are just as false as the unemployment figures. Everyone knows that TRUE unemployment is more than 15%, even if the government only counts those who still draw unemployment pay as being unemployed. GM and Chrysler have not paid back their debt from sales, they are just moving money around the books in an election year.

To John Charity Spring, no they wouldn't. Not at all. I think the Founding Fathers would have done the same thing, which along the same lines of why they eschewed the Articles of Confederation in favor of a strong central government.

And to "lost in DC, GM was not under the auspices of the federal court system, thus not Chapter 11 of the Bankruptcy Code. It was a similar process. President Obama did not hijack the process. That's just nonsense. And the outside capital was not there. I'm not re-writing history on this one like some are. And as for it being a wedge issue, it is appropriate for the President to tout a successful initiative. It was Romney who attacked it and is all over the map on the issue. Romney should say, yeah, it worked and move on. Instead, he insults everyone, particularly those most impacted by the success of it all.

Convienent MR, that you now count total unemployment..when published unemployment has always been half of true unemployment. When repubs bragged that unemployment was 4 it was really 8 given what you are counting now.

Hey Bud, I know you have been around a while but you should catch up on your news. The auto companies do not owe "huge amounts of money" for the bailouts. Why can't all you Obama haters just admit that the president was right to help Chrysler and GM and be glad your imagined worst case scenario didn't play out. The hatred of our president is so great that we actually have people (I think Bud is included) that are hoping for things to get worse in this country so Pres. Obama won't be re-elected. How pathetically sad. If you really love your country and are a true patriot then you want the unemployment rate to drop, for gas prices to go down, and for our leaders to find a way to stabilize the debt problem.
Stop rooting against our country! Be an American first and a republican or democrat second.

When it comes to telling the government how to govern, the difference of opinions fall into two groups, those who think government should favor people and those who think government should favor business.

The problem for the people is that business has more money to spend on influencing government.

Business, like government, should exist to serve the people. People should control business with just as much vigor as they control government. It is people who create the need and opportunity for business and that far exceeds the value of invested money.

If a business failure occurs, the government of the people have a right and the authority to evaluate the consequences to people, which would include the investors but not favor them.

Most people would like to have government consider and favor all the people, especially those who would loose their livelihood, rather than just those who may loose a few dollars of their investment wealth.

Business people seem to think that only the wealth of owners and investors should be considered.

Our Constitution talks a lot about people but not much about business.

To "Esquire" I think you missed it, both GM and Chrysler filed for bankruptcy.

From CNN Money "GM bankruptcy: End of an era" that was on June 2, 2009.

While you are there, read "Chrysler files for bankruptcy" from May 1, 2009.

Had they gone through bankruptcy before taking the government money, they could have fixed their financial problems. The chapter 11 could have been resolved without government money.

Esquire
MSNBC (I'm not citing fox or the WSJ) reported that GM filed for chpt 11 on 6/1/09 and said U.S. bankruptcy court judge Robert Gerber gave interim approval for the plan.

GM filed for Chapter 11 reorganization in the Manhattan New York federal bankruptcy court on June 1, 2009 at approximately 8:00 am EST. The General Motors Chapter 11 sale of the assets of automobile manufacturer General Motors and some of its subsidiaries was implemented through section 363 of Chapter 11, Title 11, United States Code in the United States Bankruptcy Court for the Southern District of New York.

I guess the US Bankruptcy Court in the Southern District of New York is not in the federal court system? since when? US BK Judge Gerber is not part of the federal court system? and chapter 11 isn't chapter 11? really?

and if BO didn't hijack the process, why is he claiming (and many giving him) credit for the "rescue"?

pragmatist,
whether anyone other than the feds had the cash or was willing to provide DIP financing is not the real point; BO hijacked the process, rewarding the UAW and damaging teachers' and police officers' pension funds (among other secured creditors). unsecured and general creditors should not come out ahead of the secured creditors in a BK proceeding, and the UAW was NOT a secured creditor, but a general or other general creditor.

re:MikeRichards
nonsense

Jobs have gone overseas due to wage rates. Corporations always competing with each other, trying to make something cheaper or better. When cheap labor was discovered, that's where the jobs went. Wage rates that were significantly less than even what 12 yr old babysitters were making. Now, those wages have suppured new consumers in China, Brazil etc. so corporations are hoping to grow their business for these new customers. We have a global economy, global corporations. Corporations that cry about the U.S. tax rate, enjoy record profits, and yet, many times pay little or no taxes. The revenue level from business as a percentage of GDP is historically low.