[Soultrader]

What are your thoughts regarding this issue? Article here.

Any chance CNN is sending a message by adding cnn=yes at the end of the url link?

[brownsfan019]

This is really an interesting dilemma the US gov't is facing w/ this. How can you justify propping up co's that may go bankrupt anyways? The money at stake here is huge.

But then you have so many jobs - both directly and indirectly - tied to this. Just so many people's jobs and lives at stake here too...

I have a feeling either option is the wrong one. Good luck to Obama and his advisers working through this one.

[DbPhoenix]

The argument goes that bankruptcy for GM and Chrysler means bankruptcy for suppliers, dealers, etc. But if GM and Chrysler aren't making cars, the suppliers, dealers, etc are going to go bankrupt anyway.

It's largely PR, the govt not wanting to be seen as abandoning large numbers of workers. But the govt is essentially powerless, as with the housing and banking issues.

[diablo272]

I agree, there is only so much the government can do at this point. It will be interesting and probably unpleasant to see how this unfolds.

[brownsfan019]

Originally Posted by DbPhoenix »

The argument goes that bankruptcy for GM and Chrysler means bankruptcy for suppliers, dealers, etc. But if GM and Chrysler aren't making cars, the suppliers, dealers, etc are going to go bankrupt anyway.

It's largely PR, the govt not wanting to be seen as abandoning large numbers of workers. But the govt is essentially powerless, as with the housing and banking issues.

That's the thing DB - they ARE making cars... albeit w/ little to no profit. As of now, those dealers and suppliers do have jobs and continue to have jobs while the cars continue to be made. If/when the co's go bankrupt, then the domino effect will be big. How big is anyone's guess but a serious ripple effect.

[DbPhoenix]

Originally Posted by brownsfan019 »

That's the thing DB - they ARE making cars... albeit w/ little to no profit. As of now, those dealers and suppliers do have jobs and continue to have jobs while the cars continue to be made. If/when the co's go bankrupt, then the domino effect will be big. How big is anyone's guess but a serious ripple effect.

But production's been cut, workers are being "laid off", and financing is generally unavailable. Even entire plants are being shut down. This translates into less product and less demand for parts. Dealers are going out of business every day due to lots full of cars either nobody wants or nobody can afford to buy. Whether the autos go formally bankrupt or not is largely beside the point.

The issue is not unlike the banks, which are insolvent, but as long as they can pretend that the mortgages on their books are worth far more than they are in reality, they can also pretend to be solvent. The movers and shakers in govt don't want to be blunt with the public about this stuff because they believe that the public can't handle it, which is probably true. But the banks are no different from the trader/investor who believes that as long as he doesn't sell the stock that is trading at a fraction of the price he paid for it, he hasn't really lost anything.