Thread: Bailing out the Detroit automakers
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Old 11-24-2008, 04:28 PM
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Quote:
Originally Posted by Bucklion View Post
I might agree except that the Big 3 owe a ton of money to a myraid of supplier companies, and if they file for bankruptcy it will probably run all of them out of business as well if they don't collect on any of the money they are owed. This would have a huge chain reaction effect.
Well, bankruptcy in this deal is not the same as a Chapter 7 like individuals are familiar with. We are not talking about the Big 3 stiffing all of their creditors, but in reducing the amounts and in some cases lengthening the repayment terms and maybe lowering the interest on the debts owed.

We are talking about canceling contracts with dealerships that grant a certain region and pay structure, and greatly restructuring the debtors' obligation to fund union pensions and to pay certain benefits to union members.

Like any restructuring, any third party can get involved if it is in the best interests of the debtor and creditors. The Govt can come in and offer to provide certain guaranties to suppliers - just acting as financial sureties to keep the flow of parts coming would be a good deal. And the Govt could offer to purchase X amount of stock at Y price if the restructured deal goes through as an incentive to deal, thereby ensuring the cash flow that would be necessary for them to survive.

I am the least thing from an expert, but simply throwing money at them is a dead bang loser, and letting the country slip into a depression if they fail is also not a good idea, despite the attractiveness of the emotional satisfaction that would bring.

So if we do not say "[censored] 'em!" and we can't give those idiots a blank check, we have to find an out of the box middle path. Whatever it is, you can bet people will not like it. We are in tough times, as what must be done is likely not what people want to do or hear. I pray that we have some politicians who are more worried about our country than about their reelection chances........IOW, we are screwed!
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