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Originally Posted by Fred Demara
that's the point...the reason GM needs a bailout is because no one was purchasing the "widget". In capitalism, we vote on a companies success with our dollars. Overwhelmingly, Americans, and the world have voted GM out of the car making business. And in a capitalist system, when you file chapter 11, your pension is done. No rights, no wrong, no moral judgements - it's just the set of rules that define a fair market.
When the fed steps in and (against the majority of Americas wishes) MAKES us responsible for GM's success, when they have failed miserably, that is called communism.
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I'm no fan of GM, but the concept that "no one was purchasing the widget" just doesn't fly. It was big news that Toyota finally overtook GM in 2008 as the world's largest automaker, as measured by sales. How can it be said that no one was buying the widget, when the company is #2 in sales?
All three of the Detroit automakers have been working on restructuring for several years, but during 2008 the twin blows of high gas prices (in the first three quarters) and the credit crisis have hammered the companies. Even almighty Toyota is suffering during this crisis -- they have announced that they estimate a $4.9 Billion loss for the 2008 fiscal year. The collapse of auto sales is hurting nearly all automakers; the companies that were in weak financial condition before the sales slump are obviously far closer to collapse than the financially stronger companies.
As for the loss of pension in a Chapter 11...that shouldn't happen. The PBGC exists to take over pension obligations when covered companies fold or restructure under Chapter 11. I sure hope that pensions are covered: I worked in salaried, non-bargaining-unit positions at one of the Detroit automakers for about 13 years, and I would sure like to collect the pension accrued on that service time when I eventually retire. Check out this link for details on the PBGC:
http://www.pbgc.gov/media/key-resources-for-the-press/content/page13542.html