The Auto Bailout vs Bankruptcy
By bobmnu
@bobmnu (8157)
United States
October 12, 2012 1:30am CST
It was brought up in the VP debate that President Obama bailed out the Auto Industry and that Gov Romney favored the Auto Industry go through Bankruptcy. VP Biden made is sound like going through Bankruptcy would have caused the industry to be totally shut down in this country. This is not the case but does point out a major difference between the two candidates.
A government bailout id a decision made to give special treatment to one company or industry over another. In the case of the auto bailout labor contracts remained almost totally in tact, the stockholders lost all their investment, bond holder lost most of their investment and the government picked the winner and losers and has now chosen not to help out American Airlines or any of the other companies that are in the process of bankruptcy.
If the Auto industry had gone through bankruptcy the labor contracts would be open for negotiations. Parts of the company could be sold off to earn money to pay creditors. Stock holders would lose most of the value but might still have an interest in the company. The Bond Holders would be protected and paid. Creditors would be paid. Bankruptcy has a law to follow and set tings that must be done. It gives the company a chance to sit down and talk to all parties and try to work out a solution so that everyone gives in some and gets some in return in an orderly fashion. If the company is in that bad of shape then the company and its assets are sold and as in the case of the airlines over the years most of the people keep their jobs and the company has a chance to do better the next time.
The choice is do you want the government to choose which companies take over and which ones to let fail. Or do you want the rule of law where the parties are given a chance to work thing out and everyone is treated the same and follows the same set of rules.
3 people like this
4 responses
@mensab (4200)
• Philippines
12 Oct 12
i like to have a set of rules for everyone. i don't like playing favorite for certain sectors and disregarding others who are also in dire need as the favorites are. being consistent with the rules is a good platform for candidates to show that they mean business and fairness. everyone must be equal to the eyes of the government which holds power and control over the national resources and finance.
1 person likes this
@flowerchilde (12529)
• United States
12 Oct 12
..."the government which holds power and control over the national resources and finance." -- this is what some in the U.S. are trying to prevent happening in the U.S., thus far the people run most u.s. businesses, although the government does have some sway over finances via congress working with "the federal reserve" bank..
@dorannmwin (36392)
• United States
18 Oct 12
If this was something that I had some kind of a decision about, then I would say that the companies should have the opportunity to work through their problems and if they are able to do this successfully, then they would be allowed to remain in the market. However, if they are not able to successfully work through their problems, then they would be gone into oblivion.
The bailout theory has also been something that has been used for the large banks. It seems that the government is picking and choosing who they want and for that reason all of the huge banks are still around while several of the small banks (which I feel are more personal) are now gone. To me, this doesn't seem right at all.
@artemeis (4189)
• China
14 Oct 12
I have to wonder if these people are joking when I see them take the stands in such debates and I hope that Americans are not seriously considering voting them into office.
I think these people have all forgotten how the economy works and that most industries are all interrelated for the country's economy to work and most of all, grow. Yet, I can see that these people are being uncanny and forgotten how it is like to abandon one of their biggest financial institutions that led to today's economic crisis.
If voting is a mandate then I really hope that Americans will consider seriously with their votes.
