Thursday, April 30, 2009

So It's Not Really Bankruptcy?

When you file for bankruptcy, you don't get money from the government. At least my parents didn't when they had to a number of years ago. If you're getting $8 billion in our tax dollars, it's not bankruptcy. It's just another bailout. And if they're getting our money, shouldn't WE be the owners of these companies instead of the government?
As part of the deal, Chrysler is signing a partnership with the Italian company Fiat. The government will be an investor in the revamped Chrysler and will help choose its new directors, but the Obama administration does not plan to help manage the company.
Doesn't plan to help manage the company? What the hell does he think choosing the directors of the company is? Dear God, can't you make 2012 get here any sooner so we can vote him out of office?


Unknown said...

"When you file for bankruptcy, you don't get money from the government".

Yeah, it is kind of odd. 'Bankruptcy' is often resolved by voluntary/involuntary 'receivership' where a sale of the company intact or broken down into assets is common, but this sounds like a weird wedding, with dowry provided by fed gov.

Perhaps they are emphasising the bankruptcy part as the idea of handing over of the major automotive groups would not be something that folks will welcome - folks will need to believe that it's either this or simply close-down, losing all those jobs. Even with the 'it's this or the end', I figure that it's not going to be popular with many folks (If I understand your explanation from a few weeks ago Chris, you'd rather the problem ran it's course without the gov trying to save what seems to be lost cause).

Chances are it'll end in tears though, as once Fiat has finished restructuring, plenty of american jobs will end up being lost to European design/manufacturing centres. The only difference is that it will be months/years rather than right now if a sale wasn't able to be arranged (ie. softening the hit to political popularity of gov). The cash provided by the gov will be to get a better deal than a straight buy-out - that the cash means the gov can negotiate some favourable terms (keep some processes local, save a few jobs). Chances are some jobs will be saved, but whether it 'is for the best', that's another matter.

The truth is the gov can do the 'Left' thing of state regulation/interfering/intervening in business, or they can let market forces run there course (if you want to have a true 'free market' system you can't really have a bet both ways, otherwise you end-up with bloated, inefficient companies that can't compete on international basis).

I would not be surprised if the government's choice is less a matter of being fanatically Left in ideology, but more a matter of cowardice, that they are too scared that losing jobs and companies that can't compete, will lose them popularity. To just let market forces take their toll on the economy, on industry, on employment will hurt, will produce a knee-jerk reaction will make the gov of the day most unpopular.
However, if you are going to have a 'free market' you need the guts to stick to the plan in the hard times (not that doing so will not guarantee a good outcome, but you have to, to give the plan a chance to work).

My best guess is that this is result is not the because the gov is loony-left, but there actions are 'trying to play safe'/cowardice/want to be seen to be doing something - anything to protect popularity