Wednesday, December 17, 2008

Bailout Comments from Mandevilles & Toot:

Here's my thought on a bankruptcy of the Big wouldn't matter. Chrysler did it in the 70s when Mr. Iacocca was in charge* (and he took a $1 salary for something like 10 years). People still bought Chryslers, in fact they were able to reorganize somewhat and come out stronger-ish and more innovative (i.e. Chrysler was the first to develop a minivan). But again the UAW was able to sink its teeth in and start ratcheting up the overhead. It didn't help that the Daimler deal didn't workout because of the perceived quality disparity between Chrysler and the Daimler-Benz camps. But either way I still see a lot of Dodge trucks, minivans, and cars on the road today meaning that people really didn't have a huge stigma with purchasing a vehicle from a bankrupt company. Like you, I would look at is an opportunity to pickup a cheap car but most importantly I would view it as a way of actually saving brands that have been around so long. Mr. Gettlefinger was on NPR the other day, defending his position and spouting Union half-truths, and he was asked that same question. "would consumers have an issue with buying cars from a bankrupt company?" His answer was an emphatic "of course they would!" Then the host (I think it was Neil Connan (sp?)) dug a little deeper by saying something to the effect of "I still fly around the country on planes owned and operated by bankrupt companies" I would add also that we still by toys from toy companies that were bankrupt (KB TOYS), we still eat food from bankrupt companies, we still on, and on, and on. Of course I'm talking about those companies that filed chapter 11 and were able to reorganize and break free from some of the shakles of poor decisions in the past. Gettlefinger didn't really have a good rebuttle other than "yeah but this is different".
All that being said, I still don't agree with bankruptcy at all. Being the true free-market-economy-backer that I am I would say let them go away and something bigger, faster, and stronger (wait for the analysis on the documentary with the same name) will come take their place. I like to think of it as Financial or Economic Darwinism (I really want to coin that phrase). My pure market heart says that we shouldn't even consider bailing them out and that we should let the market decide how to deal with them. I think that is what is at the heart of the whole issue. The American public loves these brands but not enough to risk our tax dollars on trying to push them against the market current. Everything is flowing away from these companies in the market (in the form of dollars) and yet the government seems to think that it can give them a paddle-less canoe to float around in hoping against all hope that it will be enough to provide a "bridge"...come on, do we look that stupid!?!

*Chrysler was in quasi-bankruptcy and not actual Chapter 11...please follow link above to read about it.

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