Nader on Chapter 11

Ralph Nader, the consumer activist and (perhaps) decider of presidential elections, is out today with an editorial in the WSJ that argues for more Congressional involvement in the automotive bankruptcy cases.

Think about that for a moment.  More people involved in the negotiations.  Great idea.

But it is clear that Nader's view of how this should work is very different from mine. Indeed, he seems to suggest that GM and Chrysler should remain uncompetitive, so as to preserve jobs at unneeded dealerships and plants.  He also suggests that the auto task force should do nothing that increases the profitability of the automakers at the expense of the consumer.  All of which seems to me to be a recipe for a complete liquidation of the companies at some point in the near future. As Corrine Ball said at tonight's (still ongoing) Chrysler hearing, that surely can't be a better result.

The piece is also interesting for its obvious lack of understanding of chapter 11.  For example, he asks if "any rights of owner-shareholders to decide whether they want their company to be dissolved?"  First of all, there is no formal dissolution here -- old Chrysler will persist; secondly, what about United States Constitution, article VI, paragraph 2 and Article 1, Section 8, Clause 4?

He goes on to ask several additional questions about the effects of the bankruptcy cases, the answer to which are rather obvious, if you know bankruptcy.  Perhaps the bigger question is why the WSJ keeps running editorials about these bankruptcy cases, written by people who don't understand chapter 11.

So maybe I have become grumpy.

Comments

[kingofithaki]

so my lebanese friend, ralef nadir, has come out of the cave to once again adorn us with his sage wizdumb...the wall street journal, like everyone else has missed most of the story of how the battle for abn/amro exposed the underside of the derivatives game designed to satisfy the small minds at the NYSSA who insist the world revolve around 13 weeks...but back to mr nadir...he, the one who cut his teeth attacking the dangers of driving a gm car(why he never attacked foreign car makers is for history to explain), now he wants to insure it's permanent demise by insisting it act like the ottoman empire and hang on until someone just kills you...reduce to be rebuilt is the only way to go...and if done right, the firms will be able to take back market share globally, as long as it gets right sized and those left behind are retrained for different types of jobs

[Phineus Q. Sixpack]

"1) Has the task force conducted any kind of formal or informal cost-benefit analysis on the costs of a GM bankruptcy and excessive closures? These may include the social effects of lost jobs (including more than 100,000 dealership jobs alone), more housing foreclosures, the government expense of providing unemployment and social relief, lost tax revenues, supplier companies that will be forced to close, damaged consumer confidence in the GM brand, and impacts on GM's industrial creditors."

No, Ralph, I'm sure nobody ran a cost-benefit analysis on the costs of a GM bankruptcy. Good idea!!