Monday, December 15, 2008
What would a General Motors bankruptcy look like?
Republicans, in particular, argue that there should be no government help for General Motors and Chrysler without an attendant bankruptcy filing to sweep away the structural obstacles to profitability. This interesting article from The Deal argues that a bankruptcy is inevitable whether or not there is a short-term bailout, and -- this is the important part -- it predicts how the administration of General Motors under Chapter 11 might play out. It is the most thoughtful piece that I have read on the subject.
CWCID: Paul Kedrosky.
2 Comments:
By 
Escort81, at
Mon Dec 15, 06:01:00 PM:
Excellent article. Admittedly speculative, Elman quotes lots of knowledgeable people in the restructuring business.
A "good" bankruptcy process tries to get all parties to recognize the economic reality of the situation and have everyone understand that clear-thinking operating decisions should be the foundation of a new start. Sure, there is haggling and posturing (and this deal will be particularly complex), but everyone should want to avoid a conversion to a Ch. 7 liquidation.
Of course, actually entering bankruptcy in the first place requires an understanding of the reality of the situation.
In that spirit (slightly off topic, but relevant to the issue of Big 3 bankruptcy), I present Rep. Barney Frank (D-MA) on 60 Minutes last night. You can toggle ahead to 0:50 for the money quotes on bankruptcy. The rest of the clip is worth watching.
I have no problem with the fact that Rep. Frank is "Jewish, left handed and gay," as he describes himself, but his attitude seems to drip with condescension. I can't tell if he is trying to pull Leslie Stahl's leg, or what. For a guy who is alleged to possess a high level of intellectual horsepower, he seems to lack some basic wisdom. As my late mother would observe, he also seems to lack some basic courtesy. Rep. Frank would start to earn my respect (not that it matters, since I am not one of his electoral constituents) if he would at the very least say that there are some Fannie/Freddie decisions from earlier this decade that he would like to reconsider. Right now, I get the sense that reality could smack this guy up the head, and he would still not acknowledge it.
By flyshooter, at
Tue Dec 16, 07:29:00 AM:
The old addage, "follow the money" applies to this subject and Barney Frank in particular. He's in the pocket of the UAW and thus, while he does possess a high level of intellect, he will compromise economic facts for personal gain every time!
