Chrysler wants more money,or pulling out of Canada
Yes. It would be a disaster if they went away completely. I saw a quote that 1 in 10 American jobs is tied to the auto industry in some way. The only problem with the scenario is that Chapter 11 is not necessarily the end. Companies come out of Chapter 11 all the time are are often stronger for the experience. If the big three go Chapter 11 the first thing any judge will do is void all the inexcusably expensive union contracts that put them in bankruptcy in the first place. That alone will make them profitable businesses. Bailouts on the other hand only postpone the inevitable. The cost of union labor is simply unsupportable.Susan J. Demas | Analysis | Capitol Chronicles December 09, 2008 20:47PM[/B]
Categories: Business
Here's something you probably haven't read about amidst all the ginned-up outrage over the Big Three's corporate jets: If you let the autos go bankrupt, it will cost American taxpayers more than four times what they're asking.
Yes, we could be out about $66 billion if two of the Big Three go bye-bye.
This comes from a report issued by the Anderson Economic Group headed by Patrick Anderson. Free-market types should listen up because the erudite Anderson is hardly some way-out lefty - he's one of their own. Anderson is not a big fan of burdensome regulation and taxes. He is one of Michigan's top economists. And his research clearly shows that taxpayers would get a better deal if the Big Three get their $15 billion bridge loan.
This report should be required reading for every taxpayer. Mitt Romney and U.S. Sen. Richard Shelby (R-Ala.) should be treated to autographed copies.
The report says that if two of the autos fail, 1.8 million jobs will be lost in the first year, and about $66 billion dollars will disappear in federal and state tax revenue over a two-year time period. Some jobs and technology will be permanently shifted overseas. Right now, GM and Chrysler are teetering. If Ford goes, the nonprofit Center for Automotive Research estimates the number of jobs lost will rocket up to 3 million.
The report looks at a scenario if the federal government grants a $30 billion loan. Right now, the amount is only $15 billion. Even assuming the companies only repay $15 billion of the $34 billion, taxpayers will be out a total of $16 billion. That's not ideal, but it's a far rosier picture than being stripped of $66 billion thanks to unemployment cost and tax revenues lost.
It's clear that those clamoring for bankruptcy are only looking in the short-term. They say that they want to keep more cash in taxpayers' pockets. Well, if you want to save money, the bridge loan is the way to go.
