Barack Obama and the Automaker Bailout

Given that I’m certainly going to bitch about Obama when he makes decisions with which I disagree (and I expect there to be many), it’s only fair that I give him credit for the good ideas.

It was leaked today that the Obama team is interested in exploring a prepackaged bankruptcy for the automakers. This is not a bad idea.

President-Elect Barack Obama Picks Up Lunch At Chicago Deli

Please don’t misunderstand; my preference would be for the government to not become involved at all. But that doesn’t seem to be in the cards with our current nannies, I mean, government.

So, we’re in the realm of looking for the “least bad” idea.

It’s clear we’re going to do something. This government doesn’t seem capable of allowing bad companies to pay the price for their stupidity. Simply handing the automakers more money to piss away would be the worst choice, however.

Given the situation, a bankruptcy that is negotiated prior to filing may not be a bad thing (although the Devil will be in the details). The automakers are weighed down by inane channel and labor contracts. Those will have to be renegotiated if the automakers are to have any chance of survival. Bankruptcy court allows for just that.

On the other hand, the argument that the uncertainty of bankruptcy court would hurt the companies even more, while dubious, will likely play well with the public.

So prepackage the bankruptcy, avoid the risk of a rogue (or idiotic) bankruptcy judge, and move on.

Unfortunately, reports are coming out now that the Obama team is not looking at a prepackaged bankruptcy after all. Obama, you’re already won the election! You can take a freaking stand on something now!

My next car is going to be a MINI Cooper, anyways. Well made, and both more stylish and better fuel mileage than Detroit iron.

4 Comments on “Barack Obama and the Automaker Bailout

  1. Shannon Martin

    I’m a die-hard free market economy person – could be that Economics minor I got in college…

    The boys in Detroit have been riding the money train for so long, giving no serious consideration to competing in the world car market, they are like deer in the headlights when faced with a threat to their very existence.

    If they do have the privilege of filing bankruptcy, we can only hope they can rid themselves of the money pit that is a unionized workforce. While laudable for its place in the early part of the 20th century, workers now have guaranteed rights (vacation, sick leave, etc) and are capable of gaining well-paid jobs without union bosses running the show (see all the foreign automakers running profitable businesses down south).

    I say let the market decide, and the chips fall where they may!

  2. Brian Combs

    Training in economics certainly does tend to move one towards free market principles, doesn’t it? Too bad what we seem to be doing now is privatizing earnings and socializing risks.

    Anyone with an abundance of sympathy for the automakers (especially General Motors) should rent a copy of “Who Killed the Electric Car?”

  3. Brian Massey

    The market is telling us that Detroit is doing something wrong. You’ve got to let something die before something better can grow. Is a structured bankruptcy going to be enough of a change for these companies to become something different? Maybe.

  4. Brian Combs

    Couldn’t agree more. Unfortunately, ideals aren’t going to win out here.

    When you can’t win on ideals, argue pragmatism. :-p

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