Professor Mark J. Perry's Blog for Economics and Finance
The shrinking of GM and Chrysler are inevitable; the only questions are how long it takes and how much it will cost. President Obama will help himself, taxpayers and the economy if he forces the hard decisions as soon as possible, well before the next election and while he can still blame the last Administration. Bankruptcy increasingly looks like the least painful choice.
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
4 Comments:
One of the few politically smart things Bush did was provide the "Beg 3" a bridge to Obama, and thereby prevent their bankruptcy from occurring on his watch. I don't believe Obama can get away with blaming the default(s) on Bush. I also don't think Obama will allow the default(s), given the UAW support provided to democrats.
JCarr
People are getting fed up with all this hat in hand behavior by our so-called corporate titans. When does it stop? I keep on hearing that commericial real estate is the next shoe to drop. How many more industries will come running to DC for their share?
The last time I checked we are a nation of laws and they include bankruptcy laws. Let's use them.
The auto Industry needed $25 B. GMs needs would have been met if they didn't have to throw money at Delphi.
The bankruptcy has taken a toll on GM as well. The automaker has booked $11 billion in expenses connected to Delphi and could take on more financial responsibility
http://www.detnews.com/apps/pbcs.dll/article?AID=/20080826/AUTO01/808260374/1148
As an owner of a GM car I would still buy from GM if they declared bankruptcy. In fact I would be more likely to do so if they filed for bankruptcy.
Bankruptcy is the only means to redesign their organization, top to bottom, develop a realistic business plan and become profitable here in the U.S.
It is sad to see this once great company willing to allow lawyers and bureaucrats in DC run the company and tell them what kind of cars they should make.
Wagonner and the board should file for bankruptcy, which would enable them to scrap the UAW contract, organize the business on a profitable basis and eliminate the mediocre politicians from having a say in how to make something as complex as an automobile. If they did that, they would be doing something bold for a change, instead of the incremental nonsense that is only delaying the inevitable.
Let's face it none of the politicians that are currently telling them how and what to make manufactured anything in their lives except their own exaggerated resume's. The only marketing skill they have is to pander and lie to the lowest common denominator (Voter) so they can remain in office.
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