Quote:
Originally Posted by fbodfather
Now - many have said something along the lines that "GM should have been forced into bankruptcy and the government should not have loaned them money." OK - that would have resulted in Chapter 7 in all likelihood simply because there were no avenues to borrow money. You can go into bankruptcy -- but the reality is that the auto industry is a VERY capital intensive business. If the banks aren't loaning money - -something's gotta give.......and so it was a case of getting loans from the goverment and in return, giving the government a percentage of the business -- or starve for capital -- and that usually means chapter 7.
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This right here is the crux of why I do think at least some form of government bailout was needed. Under capitalization can sink even a company with a good business plan. Despite a turn around in recent years GM's legacy costs and other obligations agreed to years and even decades past meant that a bankruptcy was likely sooner or later. It wouldn't have been easy but that didn't necessarily mean the end of GM if it happened when the economy was decent, but for it to happen in the middle of such a crunch made it practically impossible for a 'normal' reformation. As I've said before I'll never be particularly happy with the exact path taken, several serious mistakes were made in how this was approached IMO, although if the TARP investment can is paid back in full by simply selling the stock off in the next year or two I'll be happily proven wrong about at least part of my opinions on this. Despite all that I've generally been impressed with the General's turnaround, but seeing Whitacre on TV acting all Zippety Doo-dah with so much taxpayer money still in GM just sits wrong.