I happened to open Yahoo today and was greeted with an article from something called "Wall Street Cheat Sheet" that proclaimed that it would discuss 9 car and truck models that prove the auto bailout was a success. It is hard to imagine a more ridiculous article.
First, let's remember what the auto bailout was. Back in 2009, the federal government stepped in and funded both General Motors and Chrysler with tens of billions of dollars. Then the feds forced both of those firms into bankruptcy. In the proceedings that followed, Washington pressured the bondholders who had first legal priority to give up most of their position so that the bulk of the assets went to the unions. Washington also provided tens of billions more in financing to allow both companies to continue in business after having shed all their debt.
So was the bailout successful? Well both companies are still around. Chrysler is now a subsidiary of Fiat which got the bulk of the company for little money. A proud American company became an Italian subsidiary. Is that a success? General Motors cut its production dramatically, three lines of cars were cut in the USA alone. GM is now making money and recently restored its dividends. But none of this answers the question. The real question is whether or not the current situation is better than it would have been had the normal bankruptcy process been followed from the start. Did the federal bailout actually save GM and Chrysler from closure? Probably not. They would have survived after a Chapter 11 filing. Did the federal involvement expedite the end of the bankruptcy? Probably. You can judge for yourself if that means that the bailout was worth the price or not.
My point, however, is about the article I read. There is no way to equate products that get produced in 2013 with whether or not the bailout was successful in 2009. Oh, you can say that the companies are still producing vehicles, but that does not make the bailout successful or unsuccessful.
Even better, three of the nine vehicles cited in the article are products of Ford. There was no bailout of Ford; it did not ask for or receive federal money. Under the crazy reasoning of the article, the vehicles from Ford should be proof that the bailout failed. That, of course, is also nonsense.
First, let's remember what the auto bailout was. Back in 2009, the federal government stepped in and funded both General Motors and Chrysler with tens of billions of dollars. Then the feds forced both of those firms into bankruptcy. In the proceedings that followed, Washington pressured the bondholders who had first legal priority to give up most of their position so that the bulk of the assets went to the unions. Washington also provided tens of billions more in financing to allow both companies to continue in business after having shed all their debt.
So was the bailout successful? Well both companies are still around. Chrysler is now a subsidiary of Fiat which got the bulk of the company for little money. A proud American company became an Italian subsidiary. Is that a success? General Motors cut its production dramatically, three lines of cars were cut in the USA alone. GM is now making money and recently restored its dividends. But none of this answers the question. The real question is whether or not the current situation is better than it would have been had the normal bankruptcy process been followed from the start. Did the federal bailout actually save GM and Chrysler from closure? Probably not. They would have survived after a Chapter 11 filing. Did the federal involvement expedite the end of the bankruptcy? Probably. You can judge for yourself if that means that the bailout was worth the price or not.
My point, however, is about the article I read. There is no way to equate products that get produced in 2013 with whether or not the bailout was successful in 2009. Oh, you can say that the companies are still producing vehicles, but that does not make the bailout successful or unsuccessful.
Even better, three of the nine vehicles cited in the article are products of Ford. There was no bailout of Ford; it did not ask for or receive federal money. Under the crazy reasoning of the article, the vehicles from Ford should be proof that the bailout failed. That, of course, is also nonsense.
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