Govt would have to fund Big 3 bankruptcy
No one has the money to fund a bankruptcy?So, you want the Big 3 to go into bankruptcy to clean house? Alright. I was just watching some pre-coverage of the bailout testimony before Congress and analysts were discussing how there is no financial institution strong enough to finance the bankruptcy of the Big 3. Oddly enough, financing a bankruptcy would actually cost more than the bailout loans - and the bankruptcy wouldn't be a loan.
I don't know, folks. There is a lot of reason to hate the Big 3, I realize that. Still, we're giving hundreds of billions to just Citibank, and no one hardly says anything. Yet, when we try to help the auto industry - an employer of millions directly and indirectly - America wants to crush them? Does America really hate the UAW that much more than billionaire Wall Streeters?
posted by Dahcredyns at
7:04 AM
6 Comments:
"Oddly enough, financing a bankruptcy would actually cost more than the bailout loans - and the bankruptcy wouldn't be a loan."
How so?
Presumably, the government could loan the companies money after bankruptcy, and that loan would be senior to any other debts the companies might have.
You have not seen really bad cars :-) American cars are good. No reason to hate them. The fuel economy is the other concern. You should not hate big3 only because they overlooked this concept or approached it inefficiently :-)
dan-
They didn't elaborate fully, and I wasn't fully paying attention at the moment, but I'm paraphrasing - those are not my comments.
I'm going to try to find the video in a little while, it usually takes CNBC a little time to post.
I know they talked about how tens of billions, combined between the companies, is due early in January, much of it going to suppliers for instance. Without that money, then suppliers go into bankruptcy.
Essentially, they were saying that if you are trying to prepackage a bankruptcy to keep the industry going as the details are worked through, tens of billions will come due during that time. If that money isn't paid, then the prepackaged bankruptcy wouldn't work. There wouldn't be any pieces left to pick up.
Then you're talking about liquidation, not restructuring.
Is Chad the same guy as the blogger dahcredyns?
yes. working from two different computers.
watching congressional testimony on this right now, and an expert from Moody's, essentially told Congress the same thing just now. in a nutshell, there isn't enough time to prepackage a bankruptcy in a way that all parties involved would agree to. he also said that letting the big 3 go into general bankruptcy right now would be devastating to the economy.
also, this was from an outside expert called by congress to balance against auto industry experts.
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