A case for government intervention?

[Bilge_Rat]

Originally Posted by tater

What helped GM, the bailout, or the restructuring?

no doubt the restructuring was the key, but they could not have restructured without the bailout and no one but the Government was willing to lend/invest funds.

Would the U.S. economy be better off in the long run if GM had been allowed to fail? This would have had an impact not only on GM, but the thousands of other companies which supply products to GM.

[GoldenRivet]

Originally Posted by Bilge_Rat

but they could not have restructured without the bailout

Its called "Restructuring under Chapter 11 Bankruptcy"

its what every other business has had to do up until the dangerous precedent of the government bailout - the message the government has sent to management and CEOs is clear: "Screw up all you want... we will save your asses."

Originally Posted by Bilge_Rat

Would the U.S. economy be better off in the long run if GM had been allowed to fail? This would have had an impact not only on GM, but the thousands of other companies which supply products to GM.

we will never know the answer to this question... we will only know that - if it had failed and vanished another would have risen to take its place.

its called the free market. by allowing GM to fail, who knows? perhaps it could have given rise to companies producing highly stylish electric cars, like Aptera or some other small company.

[mookiemookie]

Originally Posted by GoldenRivet

Its called "Restructuring under Chapter 11 Bankruptcy"

its what every other business has had to do up until the dangerous precedent of the government bailout - the message the government has sent to management and CEOs is clear: "Screw up all you want... we will save your asses.".

Nail on the head. Prepackaged bankruptcy would have avoided a lot of problems and not set bad precedents. The pandora's box of moral hazard has been opened by bailouts going all the way back to Lockheed in the 70's

[GoldenRivet]

Originally Posted by mookiemookie

Nail on the head. Prepackaged bankruptcy would have avoided a lot of problems and not set bad precedents. The pandora's box of moral hazard has been opened.

and when Mookie agrees with me...

you better take it to the bank, like right now.

[Takeda Shingen]

Originally Posted by GoldenRivet

we will never know the answer to this question... we will only know that - if it had failed and vanished another would have risen to take its place.

its called the free market. by allowing GM to fail, who knows? perhaps it could have given rise to companies producing highly stylish electric cars, like Aptera or some other small company.

^^This.

One of the major tenants of free market capitalism is that companies that are unable to sustain themselves, as well as the needs of the public, fail. GM was and is unable to do so. What is clear now is that instead of going out of business and possibly giving rise to companies that offer a superior product, it is now a dinosaur on interminable life support from the federal govenment, which has the clear intention of nationalizing the American automotive industry; a result that will be vastly more catastrophic than the loss of General Motors.