Why else would Ford have asked for the government to bail out two huge competitors? Why didn't they tell GM to get bent, push for a normal bankruptcy, and buy a bunch of GM assets and brands? It's because they knew they'd be dragged down as well.
Right. Like Toyota, or Honda, or Hyundai, or Fiat, or....The cars that are needed will be made as before but under new ownership.
The government does have a legitimate interest in making sure the biggest manufacturing industry in the US doesn't go down the tubes. In fact, I'd say that allowing a huge chunk of the US economy to implode because of a conservative talking point is downright irresponsible.No. They should have been allowed to go bankrupt. Big Daddy has not business picking winners and losers. Period.
Besides, the government wasn't "picking winners." They didn't pass laws mandating purchases of GM, they didn't discriminate against Ford. They weren't doing anything that Japan didn't do for Toyota or Honda, or South Korea did for Hyundai and Samsung. All they did was keep GM and Chrysler in business.
It's a fact that the credit markets were frozen, that GM and Chrysler's biggest competitors were not screaming about an unfair government buyout, that no one had expressed much interest in buying up GM or Chrysler. And I'm very confident that if Chinese companies wanted to buy Pontiac, Americans would be screaming.You make assumptions that have no basis of fact.
Even the Economist, which initially said that the bailout was a huge mistake, changed its mind by 2010: General Motors: Government Motors no more | The Economist
1) The point was that the bankruptcy did not eliminate all of GM's debts, and they are not profitable solely because of the debt reduction.Where did all the bond holder debt go? It's gone....
2) Bondholders got 150 million shares, and options on another 273 million shares at $10-18 each.
3) They were not going to be made whole, no matter what.
There's no question that GM and Chrysler primarily caused its own problems, and the recession brought it to a hed. The point is that in this circumstance, letting them go bankrupt was not the solution.And who's fault is that? Ford had no problem. Again you pick winners and losers.
That's sort of like saying "when a ship sinks, people still need to float. They can just use the life rafts."One thing you continue to ignore is the need for these protects are still in demand...
The economy is not perfectly frictionless, especially at a time when the country was mired in recession, credit markets were frozen, people were buying fewer cars and already worried about the economy. People have emotional reactions to things like "GM going bankrupt." There also would have been tertiary effects from people being thrown out of work. At this point, there is little question that however imperfect the bailout was, it was undoubtedly better than twiddling our thumbs while American manufacturing went down the tubes.