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Originally Posted by BigLouie
IF GM had been allowed to go under taxpayers would have had to pick up pension plans with a $26 billion shortfall.
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Why? The pensions plans would have been voided and restructured in the bankruptcy courts as well. Take a look at what is happening to Detroit government workers pension plans in federal bankruptcy courts. There is no reason why the taxpayers should have been required to pick up the tab on ridiculously generous UAW pensions.
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Originally Posted by BigLouie
Besides GM going under most of their suppliers would have gone under. There would have been a cascading effect as the suppliers go under, the people that work for them are out of jobs which closes other business. It's not just GM.
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Actually, no. That's why I mentioned using about $10B for liquidity shortfalls. That money would have been earmarked for Delphi and other parts suppliers to keep them afloat while GM was sold off to new management and its unions forced to renegotiate.
Quote:
Originally Posted by BigLouie
Besides you are being extremely naive if you think Congress was going to let this happen. Stock holders of GM include not just individuals but a lot of institutions and banks and no way are they going to allow this to happen. Basically the money that runs this country says GM stays in business and so the loans were made. NO matter what you may think, there is no way it does not happen. And you are just a foolish if you think that all it would have taken was some Congressmen with backbone, well they know where their money comes from and it ain't the taxpayers and it certainly ain't you. If the big money that fuels campaigns wants GM to stay, GM stays.
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No. I'm not naive. You, however, are quite cynical.
I am painfully aware of the political motivations behind this bailout. That doesn't make it right.
The worst part about bailing out GM is that it ensures that it will happen again. Under your line of thinking, the big companies don't get held accountable.
If what you wrote is true, then you are really saying that GM is too big to fail.
But ANY company that is too big to fail is too big to exist in the first place. That goes doubly for the big banks - Wells Fargo, Goldman, etc.
Letting GM go bankrupt would have served notice to all the other pigs at the trough that they cannot count on being bailed out in the future for reckless decisions.
Look up "moral hazard". No pays any attention to it anymore.
