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I think the parent was commenting on the irony of this statement considering that the big US automakers were recently recipients of a large government bailout p

by victoro 12y ago

I think the parent was commenting on the irony of this statement considering that the big US automakers were recently recipients of a large government bailout precisely because they couldn't "successfully adapt to competitive and technological displacement risks over the medium to long term".

mikeash 12y ago
That's not irony, that's a big reason for giving the big US automakers a better credit rating than Tesla. If Tesla finds itself in dire financial straits, they'll be wrapped up and shut down. If GM finds itself in dire financial straits (again), they'll be bailed out (again) or merge, or something. They won't go away. Which one is more likely to pay back your bond? The one with a virtual guarantee from the government that they'll stay in business, or the tiny startup with a bright future?
- arjunnarayan 12y ago
  When GM was bailed out, they declared bankruptcy. That means bondholders got close to nothing.
- scott_karana 12y ago
  I'm sure you're right about Tesla being left to wither, where big auto would be bailed out again, but that doesn't address this at all: > competitive and technological displacement risks
- thetrb 12y ago
  Both GM and Chrysler went through bankruptcy in 2009.
- justin66 12y ago
  > If Tesla finds itself in dire financial straits, they'll be wrapped up and shut down. If GM finds itself in dire financial straits (again), they'll be bailed out (again) or merge, or something. They won't go away. > Which one is more likely to pay back your bond? The one with a virtual guarantee from the government that they'll stay in business, or the tiny startup with a bright future? There's something I'm pretty sure you don't know. During the last bankruptcy and government bailout, GM bondholders got decimated to the tune of tens of billions (!) of dollars. If hey, there might be another bailout! is the thinking behind the credit rating, it ought not raise the rating.
lupin_sansei 12y ago
For the record Ford didn't get a bailout (though at one point they asked for one) http://www.factcheck.org/2011/09/ford-motor-co-does-u-turn-on-bailouts/ http://www.factcheck.org/2011/09/ford-motor-co-does-u-turn-o...

by victoro 12y ago

mikeash 12y ago

That's not irony, that's a big reason for giving the big US automakers a better credit rating than Tesla. If Tesla finds itself in dire financial straits, they'll be wrapped up and shut down. If GM finds itself in dire financial straits (again), they'll be bailed out (again) or merge, or something. They won't go away. Which one is more likely to pay back your bond? The one with a virtual guarantee from the government that they'll stay in business, or the tiny startup with a bright future?

arjunnarayan 12y ago
When GM was bailed out, they declared bankruptcy. That means bondholders got close to nothing.
scott_karana 12y ago
I'm sure you're right about Tesla being left to wither, where big auto would be bailed out again, but that doesn't address this at all: > competitive and technological displacement risks
thetrb 12y ago
Both GM and Chrysler went through bankruptcy in 2009.
justin66 12y ago
> If Tesla finds itself in dire financial straits, they'll be wrapped up and shut down. If GM finds itself in dire financial straits (again), they'll be bailed out (again) or merge, or something. They won't go away. > Which one is more likely to pay back your bond? The one with a virtual guarantee from the government that they'll stay in business, or the tiny startup with a bright future? There's something I'm pretty sure you don't know. During the last bankruptcy and government bailout, GM bondholders got decimated to the tune of tens of billions (!) of dollars. If hey, there might be another bailout! is the thinking behind the credit rating, it ought not raise the rating.

lupin_sansei 12y ago

For the record Ford didn't get a bailout (though at one point they asked for one) http://www.factcheck.org/2011/09/ford-motor-co-does-u-turn-on-bailouts/ http://www.factcheck.org/2011/09/ford-motor-co-does-u-turn-o...