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.)
In the short run, maybe (and only maybe not certainly since you said "MUCH MORE" (with the caps reinforcing that point and making it larger). In the long run probably not.
In any case it assumes the company would have failed without the government intervention (beyond normal bankruptcy protection), which is itself questionable. The company would have gone in to bankruptcy earlier, and probably have had to make more cutbacks, but it could have survived. The government intervention only kept those largely positive cutbacks in the companies current and future liabilities from happening.
The big stick to knock the heads together was the prospect of total failure if no bankruptcy agreement, was reached. The belief that a government bailout was likely reduces the effectiveness of such a stick, but if you don't do the bailout and signal from the start that you won't you have that stick (and if they don't believe the statements and signals to that effect than its worth it to have a large and political well connected company fail, just to show that "no bailout" really means "no bailout". Perhaps if Chrysler was allowed to fail decades ago, the over capacity of the industry would have been reduced and the example would have allowed necessary restructuring to occur earlier and/or to a greater extent.
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.
The loans, and the jawboning where quite serious involvement, and it went beyond jawboning. The government influenced, even pressured creditors to accept the idea that the union would not take cuts as serious as those taken by the more senior creditors, even before the government took a large position in the company.
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's totally unresponsive to the point. When the money talks it has to say something. Here it said something very stupid.
"Money talks" sure. The government, who both directly put up money, and who was a creditor of other creditors who where involved, had power. That's all the money talks means. Sure the government gets the power.
But once it has that power it can use it in positive and reasonable ways, or in negative and unreasonable ways. It would have been more positive and reasonable for it to have interfered far less, for example not imposing the idea that the unions would get superior treatment to creditors who where more senior than they were. |
