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Comparing GM, Ford, and Chrysler all going bankrupt simultaneously in the middle of credit crisis is not comparable to when individual airlines go bankrupt due

by gfodor 14y ago

Comparing GM, Ford, and Chrysler all going bankrupt simultaneously in the middle of credit crisis is not comparable to when individual airlines go bankrupt due to poor management. The auto industry is highly concentrated in a single geographic area and are all economically dependent upon one another due to shared suppliers. It's very likely that if GM or Chrysler went bankrupt Ford would too. Who would be left then to use these assets? Some unnamed US automotive company? A Japanese automotive company? (imagine how that would go over.) Just how long do you think it would have taken for Detroit to get back to work? A month? 6 months? A year? A decade? Don't forget that if Detroit went bankrupt and turned into a dust bowl, aside from the untold amounts of human suffering it would drag down GDP and have wide-ranging effects on the rest of the country.

anamax 14y ago
> Comparing GM, Ford, and Chrysler all going bankrupt simultaneously GM was the only problem because Ford wasn't in trouble and Chrysler was (and still is) negligible. > auto industry is highly concentrated in a single geographic area Most "US made cars" are not made in Michigan.... "In 2011 , the Detroit Region produced 1.56 million vehicles, accounting for nearly 82% of Michigan's motor vehicle production, over 18% of the United State's motor vehicle production, and nearly 12% of North America's motor vehicle production. Currently more than 151,000 metro Detroiters work in the automotive and auto-related industries." http://www.detroitchamber.com/component/content/article/14-about-detroit/924-auto-industry http://www.detroitchamber.com/component/content/article/14-a... US auto suppliers sell to all companies that make cars in the US. > Who would be left then to use these assets? Some unnamed US automotive company? Not necessarily - there are folks who could have afforded the assets. (Penske is a minor player and they made a serious bid for Saturn.) Note that GM was selling cars for more money than it cost to make them - the problem was the legacy liabilities, liabilities which they'd have shed in ordinary bankruptcy. The "bailout" money was a political payoff. It mainly went to keep the UAW pensions solvent and GM shut down Saturn as a sweetener. (The UAW always hated Saturn, even after organizing it.)

by gfodor 14y ago

anamax 14y ago

> Comparing GM, Ford, and Chrysler all going bankrupt simultaneously GM was the only problem because Ford wasn't in trouble and Chrysler was (and still is) negligible. > auto industry is highly concentrated in a single geographic area Most "US made cars" are not made in Michigan.... "In 2011 , the Detroit Region produced 1.56 million vehicles, accounting for nearly 82% of Michigan's motor vehicle production, over 18% of the United State's motor vehicle production, and nearly 12% of North America's motor vehicle production. Currently more than 151,000 metro Detroiters work in the automotive and auto-related industries." http://www.detroitchamber.com/component/content/article/14-about-detroit/924-auto-industry http://www.detroitchamber.com/component/content/article/14-a... US auto suppliers sell to all companies that make cars in the US. > Who would be left then to use these assets? Some unnamed US automotive company? Not necessarily - there are folks who could have afforded the assets. (Penske is a minor player and they made a serious bid for Saturn.) Note that GM was selling cars for more money than it cost to make them - the problem was the legacy liabilities, liabilities which they'd have shed in ordinary bankruptcy. The "bailout" money was a political payoff. It mainly went to keep the UAW pensions solvent and GM shut down Saturn as a sweetener. (The UAW always hated Saturn, even after organizing it.)