Sunday, March 11, 2012

Romney, Santorum, Gingrich - Bailout Experts?

Romney would have left the auto industry go through a Chapter 11 bankruptcy.  Santorum doesn't think the government should be involved in bailouts of any kind.  Gingrich refers to the auto industry bailout as "a violation of 200 years of bankruptcy law". 

what eye thynk:  The one who really gets me is Romney.  A Chapter 11 bankruptcy needs private capital to keep the business running while it re-organizes.  Essentially, a private company or bank purchases a failing company's assets, (in this case GM and Chrysler), allowing the failing company to use that capital to run their business while they reorganize.  He seems to have conveniently forgotten that there wasn't anyone interested in buying GM or Chrysler's assets--and that included Bain, the company Romney started in 1984. 

Santorum would have left GM and Chrysler go it alone.  I doubt there would be very many customers willing to buy a car being made by a business in bankruptcy and no sales equals no possible return to profitability.  (Remember Braniff Airways?  No one would fly on their planes after they filed an independent bankruptcy, their cash flow fell to zero and they threw in the towel after six weeks.)

Gingrich loves to promote himself as this great historian, but I have to think that the panel of Federal District Court judges who determined that no private capital was available, thus paving the way for a government bailout, and who also oversaw GM's bankruptcy process and oversaw their emergence from bankruptcy knows more about bankruptcy law than he does.

And just in general, all three of you need to stop "blaming" President Obama for the auto industry bailout.  That happened under President Bush's watch...just like the housing collapse, the banking collapse and our head first dive into economic recession.  However, you might want to think about giving President Obama a little credit for our slow but steady rise from the depths.  That would be nice.

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