Is anyone else wondering why it’s OK to bailout auto makers but we clapped triumphantly when home builders went bust last year?

I don’t remember any triumphant clapping; on what date last year did home builders go bust?

At least part of the difference is that nobody expects that we’ll stop building homes in the US, and start buying homes imported from the orient.

But it won’t make any difference if the Senate doesn’t vote on it.

I get the impression most folks don’t understand ‘bankruptcy’ is not ‘close the doors’. It actually presents them with an opportunity to renegotiate contracts and to become streamlined/efficient. Look at Kmart. They filed in 2002, and two years later they bought Sears for $11B.

The ‘big 3′ doesn’t need a bailout.

I get the impression most folks don’t understand ‘bankruptcy’ is not ‘close the doors’

Actually, bankruptcy IS “close the doors”. Reorganization isn’t – but reorganization only works when you have money to operate with. The automakers don’t have an income stream, nor do they have any financing available, so they can’t operate. The only option is to close the doors.

Look at Kmart. They filed in 2002, and two years later they bought Sears for $11B.

When Kmart filed for reorganization, they had $2 billion of debtor-in-possession financing lined up, and only only had $1.25 billion in liabilities, so this gave them a nice pile of cash to use for operating capital.

They also had strong demand for the goods and services that Kmart was offering; Target and Walmart were reporting record sales. Kmart’s problem was that they had too many stores in bad locations. Kmart was able to void leases, letting them close stores in bad locations. Their remaining stores were profitable, and once they redid those stores to look fresher and more inviting, even more profitable.

It’s a little different with the automakers. GM can’t line up DIP financing, because economy is FUBAR.

It’s not a matter for GM of jettisoning unprofitable car models and keeping the profitable ones. Because sales are at a 27-year low, the entire industry, both foreign and domestic, is unprofitable.

Yes, they have structural problems, including an older workforce that has high health care costs, and a lot of retirees. Bankruptcy won’t allow them to jettison their older workers and their retirees; age discrimination against those 45 and older is forbidden by federal law.

The ‘big 3? doesn’t need a bailout.

You’re right. They need an undertaker. Maybe they can get a group rate, though, to include everyone in the midwest.

The national unemployment rate was 12.5% last month according to the BLS. You’ll see the rate hit 20% nationally if the big 3 file for bankruptcy, and hit 30% in Indiana.

“A good segment of employed”? I don’t know what you’re smoking, Joel, but I bet your friends would like to have a toke.

Persons employed part time for economic reasons are only PARTLY EMPLOYED. It’s worse than being riffed, because you don’t qualify for unemployment compensation.

Marginally attached workers are NOT EMPLOYED AT ALL. They’re persons not in the labor force who want and are available for work.

What’s melodramatic about calling it “unemployment” when someone wants a full-time job, and can’t find one?

Saying that those people are employed is like saying that the minimum-wage workers in fast-food restaurants are all billionaires.

Chapter 11 of Title 11 of US Code is called “Reorganization”, not “Bankruptcy”.
http://www4.law.cornell.edu/uscode/html/uscode11/usc_sup_01_11_10_11.html

“How many legs does a dog have, if you call his tail a leg? The answer is four, because calling a tail a leg doesn’t make it a leg.” — Abraham Lincoln