Bush considering "orderly" auto bankruptcy

Discussion in 'Economy' started by DavidS, Dec 18, 2008.

  1. DavidS
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    DavidS Anti-Tea Party Member

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    Bush considering "orderly" auto bankruptcy - Yahoo! News

    WASHINGTON – The Bush administration is seriously considering "orderly" bankruptcy as a way of dealing with the desperately ailing U.S. auto industry.


    White House press secretary Dana Perino said Thursday, "There's an orderly way to do bankruptcies that provides for more of a soft landing. I think that's what we would be talking about."


    White House press secretary Dana Perino said Thursday, "There's an orderly way to do bankruptcies that provides for more of a soft landing. I think that's what we would be talking about."


    President George W. Bush, asked about an auto rescue plan during an appearance before a private group, said he hadn't decided what he would do.
    But he, like Perino, spoke of the idea of bankruptcies organized by the federal government as a possible way to go.


    "Under normal circumstances, no question bankruptcy court is the best way to work through credit and debt and restructuring," he said during a speech and question-and-answer session at the American Enterprise Institute, a conservative Washington think tank. "These aren't normal circumstances. That's the problem."


    The comments came a day after Chrysler LLC announced it was closing all its North American manufacturing plants for at least a month as it, General Motors Corp. and Ford Motor Co. await word on government action. General Motors also has been closing plants, and it and Chrysler have said they might not have enough money to pay their bills in a matter of weeks.
    Prices of GM and Ford stocks were down substantially after the White House comments Thursday. Though Ford, unlike General Motors and Chrysler, is not seeking billions of dollars in federal bailout loans, a major collapse of the other two would be expected to badly damage Ford as well.
    Bush said the auto industry is "obviously very fragile" and he is worried about what an out-and-out collapse without Washington involvement "would do to the psychology" of the markets.
    "There still is a lot of uncertainty," he said.


    At the same time, the president said anew that he is worried about "putting good money after bad," meaning taxpayer dollars shouldn't be used to prop up companies that can't survive the long term.
    He revealed one other consideration — that Barack Obama will become president in just over a month.


    "I thought about what it would be like for me to become president during this period. I believe that good policy is not to dump him a major catastrophe on his first day in office," Bush said.


    At the White House, Perino said, "The president is not going to allow a disorderly collapse of the companies. A disorderly collapse would be something very chaotic that is a shock to the system."


    She said the White House was close to a decision and emphasized there were still several possible approaches to assisting the automakers, such as short-term loans out of a $700 billion Wall Street rescue fund. Bush has resisted this approach before, and it is adamantly opposed by many Republicans.


    "It's in the spectrum of options and there are a lot of options," Perino said.
    She said one of the factors delaying an announcement on an auto rescue plan is the continuing discussion between the administration and the various sides that would have to sign on to a managed bankruptcy — entities such as labor unions and equity holders in addition to the companies themselves.


    "In any scenario that comes forward after this decision-making process, all those stakeholders are going to have to make tough decisions," she said.
    The presidential spokeswoman would not put a timetable on when an announcement would come, and suggested it may not happen this week. But something must be done, she said.



    "If you thought that our economy today could handle the collapse of the American auto industry, then you might come to the conclusion that doing nothing was an option," Perino said. "We're going to do something.
     
  2. Mad Scientist
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    Mad Scientist Deplorable Gold Supporting Member Supporting Member

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    I've never heard of a "disorderly bankruptcy", must be more "the sky is falling talk" from gubamint to soften us up.
    Let me guess, the gubamint will take over all the legacy costs (retirement) from the big three and the unions will stay the same. Just a guess.
     
  3. editec
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    editec Mr. Forgot-it-All

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    It IS the legacy costs which are killing the big three, after all.

    Their actual worker production costs aren't the problem, their legacy costs definitely are.

    Any way you look at it, the retired (even thouse who brought money with them from the past) are a drag on the workers who are supporting them.

    Now while many retired have fat retirement accounts, their money IS competing with workers' money for the good and services being produced TODAY.

    So regardless of whether or not those former workers saved money, in the aggregate a nation can really only afford to have so many people who are no longer producing goods or services.

    How many depends entirely on how productive TODAY'S workers are.

    Since the USA has been systematically deindustrializing itself, fewer and fewer workers are manning productive labors.

    FREE TRADE is STILL the number one economic mistalke this nation has made, and the problems that have at their root that policy decision are manifesting in the form of inflation, deflation, the collapse of the rel estate and stock markets.

    Yeah, that's right. That's what I am saying and will continue to say til I am the biggest bore on this board.

    Every fucking economic problem we have in this nation can be traced directly back to that stupid stupid policy which was designed to bankrupt not only the working class, but this nation and all its governments, FEDERAL STATE AND LOCAL.
     
  4. Zoomie1980
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    Zoomie1980 Senior Member

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    Free trade had NOTHING to do with. People living beyond their means did, coupled with unscrupulous lenders more than happy to support the addiction. But free trade had nothing at all to do with ANY of it.
     
  5. JimH52
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    JimH52 Gold Member

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    So, what Bush is really talking about is a "structured bankruptcy. Now that we all know that he caved and is giving 17.5 B to GM and Chrysler, let's see how long it will be before they come back for more. No way the Union and Legacy cost are going away.
     

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