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The Water Cooler
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Vote for Restoring the Rule of Law in November
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<blockquote data-quote="Dr. Tad Hussein Winslow" data-source="post: 1321338" data-attributes="member: 7123"><p>I completely agree with this, particularly no. 1.</p><p></p><p>For hundreds of years, we've had well-working bankruptcy laws. Chapter 11 is a reorganization that saves a company from going belly up, allows them to continue business, yet hoses some unsecured creditors a bit, to varying extents, steamlines their product lines to just the profitable ones, etc. It's deemed to be, and is, worth the tradeoff, in order to let them continue and save lots of jobs and continuity in the economy if they have a basic core profitable product/service line. That's what chapter 11 does, and they could easily have done it.</p><p></p><p>Thousands upon thousands of small, medium, large, and huge companies have done successful reorganizations over the years under Chapter 11, and Chrysler and GM could have done the same exact thing - no big deal at all. Hell, the better question than "oh my, what on earth SHALL we do if they go - gasp - bankrupt?" is "which fortune 500s have NOT done chapter 11 at one time or another?".</p><p></p><p>But instead, these companies griped and begged and fear-mongered, along with this admin. and BOTH parties doing the same thing, and made people think that "bankrupt = gone" and "bankrupt= calamity and millions of lost jobs and predicate to guaranteed 2nd great depression" when nothing could be further from the truth. Bankruptcy or no bankruptcy, bailout or no bailout, the fat (unprofitable lines & plants) eventually has to be cut. In bankruptcy, it's the general unsecured creditors of the company, who made bad loans to them when they shouldn't have, who take the haircut.</p><p></p><p>So, all that we did here with the bailout of Chrysler and GM is this: By substituting bailout for Chapter 11, we shifted the real actual cost away FROM the creditors who lent them money when they knew or should have known that they were bad loans (jeez OP - what creditor COULDN'T have seen that they were going bankrupt due to the absurdly-bloated union contracts and everything else?) - ONTO us, the taxpayers, who did nothing to cause them to get insolvent. Oh, and we also encouraged more slothful negligent and extravagant behavior, rather than punishing it.</p><p></p><p>It's real simple. It's nothing more than a huge deception-fatcat-featherbedding payoff - simply shifts the burden of the "haircut" FROM creditors (yes including the union, via contract rejection) - ONTO YOU and ME!</p><p></p><p>Disgusting, but the public bought it hook line and sinker at the time, and many still do. Believe me, if you have a strong but vague & inarticulable resentment and anger at the bailout - I'm here to tell you that it's dang good and justified feeling that you have!</p></blockquote><p></p>
[QUOTE="Dr. Tad Hussein Winslow, post: 1321338, member: 7123"] I completely agree with this, particularly no. 1. For hundreds of years, we've had well-working bankruptcy laws. Chapter 11 is a reorganization that saves a company from going belly up, allows them to continue business, yet hoses some unsecured creditors a bit, to varying extents, steamlines their product lines to just the profitable ones, etc. It's deemed to be, and is, worth the tradeoff, in order to let them continue and save lots of jobs and continuity in the economy if they have a basic core profitable product/service line. That's what chapter 11 does, and they could easily have done it. Thousands upon thousands of small, medium, large, and huge companies have done successful reorganizations over the years under Chapter 11, and Chrysler and GM could have done the same exact thing - no big deal at all. Hell, the better question than "oh my, what on earth SHALL we do if they go - gasp - bankrupt?" is "which fortune 500s have NOT done chapter 11 at one time or another?". But instead, these companies griped and begged and fear-mongered, along with this admin. and BOTH parties doing the same thing, and made people think that "bankrupt = gone" and "bankrupt= calamity and millions of lost jobs and predicate to guaranteed 2nd great depression" when nothing could be further from the truth. Bankruptcy or no bankruptcy, bailout or no bailout, the fat (unprofitable lines & plants) eventually has to be cut. In bankruptcy, it's the general unsecured creditors of the company, who made bad loans to them when they shouldn't have, who take the haircut. So, all that we did here with the bailout of Chrysler and GM is this: By substituting bailout for Chapter 11, we shifted the real actual cost away FROM the creditors who lent them money when they knew or should have known that they were bad loans (jeez OP - what creditor COULDN'T have seen that they were going bankrupt due to the absurdly-bloated union contracts and everything else?) - ONTO us, the taxpayers, who did nothing to cause them to get insolvent. Oh, and we also encouraged more slothful negligent and extravagant behavior, rather than punishing it. It's real simple. It's nothing more than a huge deception-fatcat-featherbedding payoff - simply shifts the burden of the "haircut" FROM creditors (yes including the union, via contract rejection) - ONTO YOU and ME! Disgusting, but the public bought it hook line and sinker at the time, and many still do. Believe me, if you have a strong but vague & inarticulable resentment and anger at the bailout - I'm here to tell you that it's dang good and justified feeling that you have! [/QUOTE]
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