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Politics : The Obama - Clinton Disaster
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To: RMF who wrote (3293)12/16/2008 2:29:58 AM
From: DuckTapeSunroof  Read Replies (3) of 103300
 
Re: "So you figure people wouldn't want to buy cars from a company in a "disorderly" bankruptcy, but they'd still want to buy cars from a company in an "orderly" bankruptcy?"

I *know* that people will not be wanting to buy cars from companies who they THINK are on the verge of bankruptcy --- which is EXACTLY WHERE the Big Three are *already*.

So, as far as that metric goes, the hammer has ALREADY DROPPED.

The damage already done.

Keeping the companies perpetually weak and forever on the verge of filing for bankruptcy means keeping customers forever not wanting to trust that their warranties will be honored.

Best to bite the bullet and restructure them to make them strong again --- then the public will have more trust. (And deservedly so....)

What the government needs to do to help this process along is to offer to LOAN or GRANT the companies big bucks to help them EMERGE FROM BANKRUPTCY REORGANIZATION. (Their debt load will be slashed in bankruptcy, their bond holders forced to take a haircut, forced to trade their bonds for new shares of stock.)

The government can PLEDGE BILLIONS to finance some third party guarantee of vehicle warranties, if that would help consumer confidence.

So --- the government needs to play a big role here, helping them with money and guarantees, but only to help them EMERGE from bankruptcy reorganization.

If they just give 'em money now it's merely throwing money down a bottomless hole... really only bailing out the bond holders (by giving them a last opportunity to sell out)... but it WOULD NOT save the companies or the workers' jobs... it would only keep a dying patient on life support and prolong the sickness, and help to keep the economy weak.
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