Chrysler turns its first profit since bankruptcy

[SteveSRT8]

Any of the "poor" car companies that went bankrupt would have quickly reorganized and reopened. There's too much money there to let the market get away.

And anyone who can't see that is...

 

[lexus114]

That new 200 looks sharp!

 

[Vibe_2007]

What kind of tax breaks are GM and Chrysler getting that other makers are not? Too big too fail? Meh.

 

[KrisZ]

I don't know about Chrysler, but GM is getting about 45 billion in tax breaks, inherited from "old" GM.

But again, the bailouts were for the car industry, but they were for the UAW, if GM and Chrysler were free of them, they would've been allowed to go through a proper bankruptcy.

But apparently I'm one of the "not too bright" ones, since I don't believe in the "total collapse" theory, which incidentally was echoed throughout media channels pretty vigorously.


So let's summarize:

1. GM is bailed out to to avoid the collapse.
2. After GM was bailed out, the government interferes and forces GM to go through bankruptcy.
3. The bankruptcy laws are botched and investors are screwed.
4. After the bailout government buys 60% stake in GM.
5. The government gives 45 billion of takes breaks from "old" to "new" GM, something that would never happen in proper bankruptcy.



So, if the industry collapse was the real cause then why the government did not stop at #1? It's clear that all the following steps only benefited the UAW.

 

[Cutehumor]

well, with the earthquake/tsunami in Japan, it's a good thing the big 3 stayed in business.

 

[440Magnum]

Originally Posted By: Samilcar
Originally Posted By: LT4 Vette
Some people won't like this...

but Chrysler should have been allowed to fail.



Both times.


The "first time" was VERY different- Chrysler didn't take ONE PENNY of government money that time. They secured private loans that the government agreed to GUARANTEE in the event Chrysler defaulted. That is a huge difference than taking taxpayer money directly. Oh, and then they paid the loans off early and with interest.

I'm torn on the second time. Part of me says that the government had no business getting involved with GM and Chrysler. The other part of me says what the heck? Foreign automakers (and by that I mean Japanese) had many years of their government's complicity in selling here at either a loss or razor thin margins while taxing the bejeebers out of US automakers who tried to sell in their country, all for the sole purpose of harming US automakers and establishing a (false) reputation of more value for the dollar than they really had if they had sold at more normal profit margins.

 

[mcrn]

Any of the "poor" car companies that went bankrupt would have quickly reorganized and reopened. There's too much money there to let the market get away.

And anyone who can't see that is...


Exactly

 

[Spyder7]

Originally Posted By: SteveSRT8
Any of the "poor" car companies that went bankrupt would have quickly reorganized and reopened. There's too much money there to let the market get away.

And anyone who can't see that is...


+1. It would have meant some short term pain, but maybe - for the market as a whole - that would not have been a bad thing. The bailouts simply send the wrong message. In allowing the failure to occur, the new companies that would emerge would do so knowing that the price of failure is bankruptcy, with no nanny involvement to forgive (or reward) your failure.

And as to the "too big to be allowed to fail," then the problem lies in the first part of that statement. I don't see it as in the interest of the economy or the tax payer to have companies that need only to rely on their size to keep them afloat. If that becomes the case, then intervention is called for to break them up into smaller entities that cannot hold the economy and the taxpayer hostage because of their size. There are no new laws that need to be created to prevent this from happening either, as they are already on the books. Its the enforcement end of them that failed the taxpayer and cost them - to me - an absurd price to pay, if we go with the "too big to fail" rationale.

-Spyder

 

[Tempest]

Quote:
If that becomes the case, then intervention is called for to break them up into smaller entities that cannot hold the economy and the taxpayer hostage because of their size.

They failed as they were. If existing law had been followed, the bankruptcy would likely have done the breaking just fine.