If you really think liquidating GM and Chrysler's assets would have resulted in anything other than a net destruction of wealth for the U.S. I don't know what to tell you. What good is a car factory if the entire supply chain has broken down?
You can argue that the loans should not have been made on principle, and you can argue that they were a poor investment vis a vis net return to taxpayer dollars, but it's very hard to argue that they were a net loss on U.S. GDP unless you assume a "controlled bankrupcy" for GM and Chrysler would not have destroyed the U.S. (or global) auto industry. That's a big leap.
> If you really think liquidating GM and Chrysler's assets would have resulted in anything other than a net destruction of wealth for the U.S. I don't know what to tell you. What good is a car factory if the entire supply chain has broken down?
Why do you assume that the supply chain would have broken down?
> it's very hard to argue that they were a net loss on U.S. GDP unless you assume a "controlled bankrupcy" for GM and Chrysler would not have destroyed the U.S. (or global) auto industry. That's a big leap.
It's easy to assume that standard bankruptcy would not have destroyed the US auto industry because there's no reason why it would have destroyed the US auto industry.
Bankruptcy is basically about separating assets from liabilities.
If GM's assets are well-suited to profitably making cars, that's what they'd have been used for post-bankruptcy. Why do you assume otherwise?
US airlines go bankrupt every so often. Their creditors take a loss but the effect on the rest of us is that a few flights get cancelled and that's about it.
Comparing GM, Ford, and Chrysler all going bankrupt simultaneously in the middle of credit crisis is not comparable to when individual airlines go bankrupt due to poor management. The auto industry is highly concentrated in a single geographic area and are all economically dependent upon one another due to shared suppliers. It's very likely that if GM or Chrysler went bankrupt Ford would too. Who would be left then to use these assets? Some unnamed US automotive company? A Japanese automotive company? (imagine how that would go over.) Just how long do you think it would have taken for Detroit to get back to work? A month? 6 months? A year? A decade? Don't forget that if Detroit went bankrupt and turned into a dust bowl, aside from the untold amounts of human suffering it would drag down GDP and have wide-ranging effects on the rest of the country.
> Comparing GM, Ford, and Chrysler all going bankrupt simultaneously
GM was the only problem because Ford wasn't in trouble and Chrysler was (and still is) negligible.
> auto industry is highly concentrated in a single geographic area
Most "US made cars" are not made in Michigan.... "In 2011 , the Detroit Region produced 1.56 million vehicles, accounting for nearly 82% of Michigan's motor vehicle production, over 18% of the United State's motor vehicle production, and nearly 12% of North America's motor vehicle production. Currently more than 151,000 metro Detroiters work in the automotive and auto-related industries." http://www.detroitchamber.com/component/content/article/14-a...
US auto suppliers sell to all companies that make cars in the US.
> Who would be left then to use these assets? Some unnamed US automotive company?
Not necessarily - there are folks who could have afforded the assets. (Penske is a minor player and they made a serious bid for Saturn.)
Note that GM was selling cars for more money than it cost to make them - the problem was the legacy liabilities, liabilities which they'd have shed in ordinary bankruptcy.
The "bailout" money was a political payoff. It mainly went to keep the UAW pensions solvent and GM shut down Saturn as a sweetener. (The UAW always hated Saturn, even after organizing it.)
You can argue that the loans should not have been made on principle, and you can argue that they were a poor investment vis a vis net return to taxpayer dollars, but it's very hard to argue that they were a net loss on U.S. GDP unless you assume a "controlled bankrupcy" for GM and Chrysler would not have destroyed the U.S. (or global) auto industry. That's a big leap.