Re: "1 - If no one but the government will step to the plate, and if in the absence of the government stepping to the plate the business will fail, than it probably should fail."
A reasonable argument that I find myself in philosophical agreement with.
Regardless of that agreement though, a collapse would have cost the taxpayers MUCH MORE MONEY (lost tax revenues, unemployment costs for 2 million plus, massive macro economic deleterious impacts, etc., etc.) as the latest economic analysis has clearly established. And, (absent major new money) full collapse was most assuredly in the cards. This would have returned probably around 5 cents on the dollar to the creditors instead of the 40 to 60 cents successful bankruptcy reorganization provided for them.
So... philosophically I agree with the premise... but in the down-and-dirty world of we 'are where we are in reality' we as a nation have saved much more money this way. At least, for now.
Re: "2 - I disagree that someone had to step up in that status for the business to avoid total failure."
(Then you are disagreeing with most every bankruptcy expert - and the presiding judge - who examined the matter.... most all of them believed that ABSENT THE BIG STICK TO KNOCK HEADS TOGETHER and ABSENT the big multi-billion cash injection there would have been NO WAY that GM could have emerged from the process in less than a year and, by then, there would have been not much of value left anyway.)
Re: "3 - No one else would step up, partially because the government involvement in the process."
That's counter-factual. There was no 'government involvement' (except for the Bush loans), and excepting some jaw-boning efforts, prior to the cash injection while in bankruptcy court.
"Also the other creditors wouldn't step up,"
Because they did not perceive it to be a worthwhile investment for them. That's all. Pure Capitalist decision, no wishy-washy 'higher philosophical' motives.
The process was OPEN and injections of private capital were ENCOURAGED by the government, et al. (The government did NOT WANT TO have to be the only backstop.)
Re: "4 - Even if it was necessary and beneficial for the government to take this role (and I don't agree that it was) The government could take the role without interfering to the extent it did, or really to any great extent."
MONEY TALKS and B-S walks.
That is how American bankruptcy law is written. You gain an extra measure of influence over bankruptcy decisions by helping the bankruptcy reorganization become successful by injecting major NEW MONEY. This is *encouraged* under American law because the results are assumed to be economically beneficial to the nation. |
