GM and Chrysler run themselves into the ground for decades, to the point where we have to save them with tens of billions of taxpayer dollars to avert our complete economic doom.

First off, you equate GM with Chrysler. That is a false paradigm, they are in completely different situations and for different reasons. Chrysler might resemble your statement; GM, however, has always been profitable until quite recently, and still would be but for the financial crisis that locked up credit, both theirs and their customers. When they can’t get reasonable short term financing, and people cannot get financing to buy their cars, that is a perfect storm. Had Ford not have restructured and leveraged maximally ahead of time they would arguably be in the same boat, and even so they are losing money wildly currently. So are the supposed gold standards such as Toyota and Honda. GM for that matter was in such a precarious position because about five years ago they truly set about a plan to restructure and reorient the company. The simple fact is that they were doing exactly what needed to be done and were starting to produce extremely high quality products that are now becoming more and more visible. It is a slow and painstaking process and they got caught in the middle of it. To blithely say they were still being “run into the ground” though is marginally uninformed.

Then GM and Chrysler use financial wizardry and a foreign company to effectively form one giant Mediocre Car Consortium, thus becoming even more Too Big to Fail for the next round of corporate welfare/bailouts, and walk away in bankruptcy court having burned through all the taxpayer money.

Again you have made a bunch of gross generalizations that are not necessarily supported by extant facts. What do you mean”financial wizardry”? That is bloated rhetoric. In the first place the very thin facts in existence to date, contained in the articles linked, do not show any “wizardry”, it shows the type og shifting of assets between potential partners to attempt to maximize the positions of both. Is it feasible and will it work – there are simply not enough facts and circumstances known yet to make that call, yet you bluster to do so.

Oh, after firing a ton of union workers and slashing the pay and benefits for everyone who gets to stay.

Yes many workers have been lost. What exactly was the alternative you proposed? Keeping them all for a couple of months so that the thing went down the shitter? I assume you also know that much was literally ordered by the government.

I’m not sure who, exactly, wins here. Investors lose, the unions lose, the bondholders lose, the taxpayers lose, their competitors who didn’t destroy themselves, both foreign and domestic, lose…. I guess the board members we haven’t sacked get to keep their 7 figure salaries and keep destroying the world?

Again, I haven’t seen your suggested workable alternative. It was, and is, a desperate situation. As I said in the post, I am not real sure about the efficacy of the Fiat/Chrysler combination. I am not crazy about it, but it is the only shot Chrysler has, and it was the decision of the Obama Administration. I don’t see real risk to GM on the Fiat collaboration if they are secured as to the BM Latin American part; i.e. if the fiat deal goes down the tubes, GM gets the Latin operations back. The rest of it they don’t want anyway at this point.

I did think you were somewhat uninformed, but certainly not ignorant; and I meant no smugness or condescension.

Is it not a fact that, under the proposed Chrysler bankruptcy, bondholders could lose 70% or more? Yes, it is. (Though of course some have CDS that will happily bail them out at additional taxpayer expense through our cutout, AIG.) That the unions have to trade their debt for equity in a company circling the drain? They most certainly do! What about mass layoffs and benefit cuts, did I imagine reading about those too? Nope. Right here, as it turns out.

Will Chrysler in fact be walking away with over 7 billion dollars in US bailout money? Computer says, ‘Yes!’Will it take many years to get our GM loans back, if we ever do, and that return is predicated on the idea that GM is consistently profitable for the medium term future? Computer says, ‘Yes!’

What about GM firing tens of thousands of union workers? Again, the answer is yes.

I always supported keeping GM and Chrysler afloat, myself; the problem here is precisely the same one we see, on a larger scale of course, with the bank bailouts. The taxpayer takes all of the risk, gets none of the upside, the Masters of the Universe stay in power, and the average worker or taxpayer gets the shaft. In other words, we return to status quo ante bailout, ready for the next catastrophe engineered by our financial wizard overlords.

For the record, I was trying to be humorous with my comment, not alarmist. Quite frankly I do find this whole situation blackly funny. These deals remind me of nothing so much as Lex Luthor-style comic book supervillainy. (At this point all we need is a crashed UFO from a far off world and we’re set.)

But I do thank you for assuming I was uninformed, as well as the smug, condescending tone.

GM and Chrysler run themselves into the ground for decades, to the point where we have to save them with tens of billions of taxpayer dollars to avert our complete economic doom.

Then GM and Chrysler use financial wizardry and a foreign company to effectively form one giant Mediocre Car Consortium, thus becoming even more Too Big to Fail for the next round of corporate welfare/bailouts, and walk away in bankruptcy court having burned through all the taxpayer money.

Oh, after firing a ton of union workers and slashing the pay and benefits for everyone who gets to stay.

I’m not sure who, exactly, wins here. Investors lose, the unions lose, the bondholders lose, the taxpayers lose, their competitors who didn’t destroy themselves, both foreign and domestic, lose…. I guess the board members we haven’t sacked get to keep their 7 figure salaries and keep destroying the world?

Hooray!

Properly structured, they are more survivable than the US ops alone, though not if GM unloads excess (i.e., low-value) assets and excessive debt. Even with puts, that strategy failed miserably with Delphi, which is in its third year under bankruptcy protection. (It has nowhere to go until GM’s future is decided.)

Since the US taxpayer is footing a big piece of this tab, it ought to know and participate in decisions regarding these proposals – and what GM’s stellar management intends to do with its other assets, notably GM China, GM’s Shanghai technology center, and [GM] Holdens in Australia. (Nothing else in Asia makes money, though its investments do hold valuable rights.)