Maybe letting GM go Bankrupt isn't such a great idea

Marketwatch reports that

Initial jobless claims rose 32,000 to a seasonally adjusted 637,000 in the week ended May 9, the Labor Department reported. ....

[A]nalysts have focused on the recent downward trend in claims. Claims hit a peak of 674,000 in late March.

Economists had expected claims to move higher this week. Roughly 27,000 hourly employees of Chrysler were laid off in the wake of the company's bankruptcy filing. There were also layoffs at parts suppliers.

A spokesman for the Labor Department said the government could not quantify the exact number of layoffs stemmed from Chrysler. But the increase in claims did come from the automotive sector.

In other words, take out Chrysler, and we would've been under 600,000. Not great by any stretch of the imagination, but a move in the right direction.

If little ol' Chrysler can knock a hole in the recent decline in new applications for jobless claims, imagine what even a "managed" bankruptcy of GM is likely to do.

So far this year most of the data has broken towards the "optimistic" vs. the "pessimistic" scenario. Putting North America's biggest automaker out of business, even temporarily, is the gravest threat to the better scenario.

One hopes minds in Washington are focused on this fact.

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Comments

We can't afford to let it go.

I thought a better idea was to force or negotiate a merger between Chrysler and GM. Then restructure the auto industry including making it smaller. We would have preserved some manufacturing base at the same time preserving some jobs.

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wait until the GM rush comes

But my take is different. We know GM is going to offshore outsource the jobs as in 98% plus is wanting to "move it's headquarters" out of Detroit. So, I think they should have never gotten any money at all and only protect the UAW health and pensions.

In other words, like GM has been doing for years, they are determined to screw over the workers anyway to sell their Aeros in China for $1200.

So, I think instead the U.S. should have either wiped out all management at GM, started over, forced it to be a real U.S. company...but something instead of what's happening.

Chrysler maybe different in terms of long terms plans to move offshore.

GM moving into bankruptcy or not, their agenda remains the same, to offshore outsource all production so I wish the U.S. government had become an auto manufacturer and truly taken over GM.

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We need an active government that

looks at excess industrial capacity and says, "you guys can't make a profit making you normal lines, but you can switch to make this." For example, taking auto parts suppliers and easing their entry into the wind turbine industry. This is already happening on a limited basis, but an active government role in promoting it would allow us to put people to work while jumpstarting a new industry that will help us break our dependence on foreign energy sources.

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GM - Common Sense

We should make sure the jobs goes to Americans and not to Korea, China, Mexico. Why bailout a company that will help other countries instead of America? It seems like this country is already loosing it's common sense.

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Firing Wagoner, Bloomberg article, June 1st

I just read this article about the canning of Wagoner.

Now here's the thing we missed. We did not look at GM's own restructuring plan as a public audience and evaluate it against what our pals Larry Summer's and Tim Geithner's $50 Billion dollar bankruptcy is doing.

I noticed this paragraph, buried in the piece:

The plan contained a provision to shed the Saturn, Saab and Hummer brands and cut 47,000 more jobs worldwide. The UAW would be asked to give up benefits and take on more health-care costs. Bondholders would be asked to exchange $27.5 billion in debt for $9.2 billion and equity.

A matter that still needed to be resolved was the prospect of a Chapter 11 filing. The government wanted a full exploration of the bankruptcy option.

As the four men talked about where in the report such a discussion might go, Henderson raised his hand.

“I want to write this section,” he said, according to a person familiar with the proceedings, who reconstructed the exchange. “I know what it should say.”

Appendix L, the section of the Feb. 17 plan that handled bankruptcy, took up the last 16 pages of the 117-page document. The overriding message: Bankruptcy would be a taxpayer nightmare. It would cost the U.S. about $33 billion to fix GM out of court, compared with $45 billion to $103 billion in court protection.

Is that true? $33B vs. $50B+ in U.S. taxpayer costs?

Lest we not forget, our government assumingly is all for GM offshore outsourcing 98% of production as part of the Ch. 11 bankruptcy....

So, did we miss the beat and not track on what was really going on with GM?

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