SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Politics : Formerly About Advanced Micro Devices
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: SilentZ who wrote (562356)4/22/2010 2:53:42 PM
From: tejek  Read Replies (1) of 1574261
 
I don't think you can and I am not sure you want to at this point. GM is now about the size of Ford. I think any smaller and they are in danger of being swallowed up by a foreign competitor. Plus, you lose a lot of synergies going smaller.

So how do you solve the proglem of "too big to fail" in this case?

If the economy is booming, then its not too big to fail. If the economy is cratering, then its too big to fail. ;-)

We need to get to the point where the failure of an auto company doesn't drag down the economy and end with hundreds of thousands unemployed.

Its not just about of the size of the company. As important, if not more important, is the type of company. Auto companies produce a high priced commodity which generates a lot of good paying/semi skilled jobs that are concentrated in one of the weakest areas economically in this country........certain cities in the Midwest. That's what made letting them fail so difficult and dangerous......not because they were too big but because of the impact of their loss on the Midwest. Starbucks is a big company but we can let it fail because those failed coffee shops will be resurrected quickly by other companies. AMZN is a big company but its not big too fail. Why? Because its mainly online. The loss will be borne mostly by Seattle, its headquarter city, and the few cities where they maintain warehouses. Other online companies eventually would pick up the slack.

On the other hand, F, GM and Chrysler are an important part of our manu. base with plants in numerous locations throughout mainly the Midwest. There are acres and acres of plants. There are numerous suppliers with their own plants that are mostly dependent on the continuing success of those companies. Their combined loss would be catastrophic to the economy even in good times........and would set us back dramatically as an industrial nation.

And if you want to be in the auto business, and many countries are not, then you have to have some economy of scale to survive in the global economy. I don't think GM and F can afford to be any smaller and Chrysler may be too small. However, Chrysler is getting saved by Fiat so it might not matter.

Frankly, I believe people who say there is no company too big to fail don't know what they are talking about.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News