Chrysler is Bankrupt
Chrysler is going to file for bankruptcy since they failed to come up with a plan that is acceptable to their creditors to restructure by the date the Obama administration set. On the other hand, GMC has found a path to restructuring which involves the government and the UAW being the major owners, with the previous owners only retaining about 10% ownership. It is ironic that the government and the UAW, the two groups (with management coming behind at a close third) that are most responsible for the utter failure of GMC to make a good product that people actually want to buy – which absolutely no one would buy if not for an irrational need for some people to buy only substandard American made cars form the “big three” despite the fact that there are 11 companies besides the big three that manufacture cars in this country, and unlike the big three have never downsized their plants – for a price cheap enough that GMC could actually afford to continue making it will now be financially liable when GMC finally liquidates (and it will eventually liquidate). Unlike with the profit sharing scheme that the UAW forced on GMC that lets them profit when the company is profitable but accepts no risk when the company looses money like a stockholder would.
Anyway, back to Chrysler. They are apparently fighting to be able to use loans from US and Canadian governments. Why can’t they get a loan from a bank or some other organization? The answer is because every private company knows that Chrysler is already dead and it just doesn’t know it. I suppose I can understand why people want Chrysler to stay afloat. It employs 4800 people. If they went under and had to liquidate then all of those people would lose their cushy overpaid jobs. What people need to realize is that Chrysler is a drain on the economy, and is helping to keep the rest of us in this recession. It is keeping valuable resources, machinery, raw material, skilled laborers and managers in a company that can’t create wealth. It is simply drawing all money towards it and basically making it disappear. You cannot simply spend yourself into prosperity because spending money is not the same thing as creating wealth. We are in this recession because there is not enough wealth. Just printing money and spending it does not create wealth, it is simply redistributing wealth. It is like trying to raise the level of water in a pool by taking water out of one end and pouring it into the other. This company needs to go under to free up its resources to go to other areas that will be able to help create the wealth needed to pull us out of this recession and bring us back into prosperity.
