Quote:
Originally Posted by Bvonscott
No no no. If the auto industry collapsed, and the detroit automakers went belly up, MILLIONS of people would lose their jobs. MILLIONS. All the plants, all the dealers, all the parts supplies, majority of auto shops. Plus the stock market would crash. Entering a full depression. So where would people go to get there car fixed? Or anything else auto related? The public would be up in arms!
Trust me, the government knows this, they will step in and help detroit at the last minute. Too many taxpayers to lose.
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The problem is NOT the bankruptcy of one or all of the detroiters that would cause massive downstream problems, it's the slow down in business and buying that would cause problems downstream.
What's the difference? Bankruptcy is not liquidation in most cases. When companies do go BK they normally remain in business, the employees keep working, the suppliers do take a hit but they still continue to sell to the BK company but the courts guarantee the payments. The losses to the BK customer are underwritten 50% by the IRS. It's the stockholders that lose everything. But most if not all the downstream benefits remain albeit at a reduced but more vibrant level.
However if a business keeps shrinking and shrinking and shrinking...THAT will reduce the level of benefits downstream. In this case one might WISH for a BK so that the subject company can wipe the slate clean and begin growing again. The current situation is like a wasting disease, TB or cancer, where the bread winner is bed-ridden and can't earn any money. The 'family' suffers.