[Pen-l] no bailout for GM?

[raghu <mraghu01@xxxxxxxxx>]

http://www.nakedcapitalism.com/2009/03/obama-pushing-quick-surgical-big-auto.html
--------------------------------------------snip
What is Team Obama smoking? It isn't to their advantage to have an
unrealistic view of the process, yet the pronouncements strongly
suggest they haven't done sufficient due diligence on what this
entails.

And consider this comment from a reader:
The "Chapter 11" reorganization idea is an assumption. There is little
contemporary evidence that a Chapter 11 reorganization of GM can
succeed under the current system. A Chapter 7 bankruptcy liquidation
is more likely. And there is no evidence Chrysler will do anything
other than liquidate.

It would be better if we were wrong, but this looks like Lehman redux.
The powers that be are getting bailout pushback, and aren't willing to
take any financial perps out, so by default it's Big Auto. And if they
miscalculated, the consequences will be catastrophic. It won't simply
be GM and Chrysler, but the parts makers, and the transplants will
take hits due to the loss of suppliers. GM and Chrysler are not
isolated players, but major components in a large ecosystem. There are
no good answeres here, but the Administration does not appear to have
thought this out (how many balls does Geithner have in the air,
including the G20?). A miscalculation here would have major
repercussions. But Andrew Mellon would be pleased.




-raghu.


--
"I lost a button hole today" - Steven Wright
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