The auto makers are not going out of business, the truth is they will file for Chapter 11 Bankruptcy reorganization just like the airlines did, which means they will still be making cars. The workers and retirees will get screwed (along with taxpayers) but they ain't going out of business. The thing that will hurt the auto business, even with a bailout, is lack of demand, ie. declining sales. Folks are tightening their belts and hunkering down and that means a lot of businesses are going to be hurting from the big auto makers to the local small business. No bailout can prevent that.If the big three automakers go out of business, it will start a chain reaction of unemployment and welfare payments the likes of which has not been seen in modern US history. The events of 1929 will pale in comparison.
I'm not certain about the numbers of jobs to be lost but I heard on the news today that it might be in the neighborhood of 3,000,000 jobs. I'm talking about auto line employees, suppliers, management, car dealers, suppliers and other vendors. The further effect on services and retail businesses in areas where people are laid off cannot even be calculated.
You think you've seen and heard about foreclosures and retail business support failures? Hang onto your hat!
From what I just heard today, it looks like the Congress is going to let the car makers slide. If they do, there will be bread lines on the street in 90 days. If they let the car makers go, there will be hell to pay.
Just in Sacramento alone, 12 car dealers have gone out of business in the past 6 months. Just like the real estate issue, there is no credit in order for them to sell cars. In my area alone, three Ford dealers and a Saturn dealer are gone in the past 90 days.
It's easy to blame the car makers for poor management but the credit crisis is word wide at this time. Countries in Europe are approaching a depression.
Keep a close eye on the new democratic president and his mostly democratic Congress. That's a job I wouldn't want, especially with no experience.
Chapter 11 explained:
"Federal bankruptcy laws govern how companies go out of business or recover from crippling debt. A bankrupt company, the "debtor," might use Chapter 11 of the Bankruptcy Code to "reorganize" its business and try to become profitable again. Management continues to run the day-to-day business operations but all significant business decisions must be approved by a bankruptcy court."