Economic Corner 31 01/22/2026

To Bankrupt or not to Bankrupt?
The focus in the post is the following...Why couldn't Ford be the lone major USA automaker? 

 

Before I speak on that specifically  I must set the background.

 

Me side Pioneer in a dialog came up with two different positions to bankruptcy. The detail of friction, which relates to this post,  is the ability of services to be sustained during and after bankruptcy.

Pioneer's position is firms of a certain financial volume can not be allowed to go bankrupt because the services they provide, even if they have insurmountable debt or have an unblackable ledger, will not be maintained during and after bankruptcy. And said services maintain a way of life in the usa, which is one of the biggest "weapons" in the usa. 

My position is, bankruptcy must always be implemented for every failed firm regardless of financial volume because bankruptcy alone provides proper fiscal, I even add nonviolent, punishment to fiscal management that is inappropriate in the marketplace. And I add, bankruptcy can be implemented with legal speed or control of buyers to the failed firms parts or adjustment of technologies on sale by the firm, sequentially services are maintained.  

 

This post is not about whose right or wrong, we are both right or wrong. These are financial strategic positions. 

 

referral- Dialog between me and Pioneer
https://aalbc.com/tc/events/event/141-economic-corner-5-january-4th-2025 /

 

 

Now I end the background and to the main topic? Why couldn't Ford be the lone major USA automaker?

 

What is known? 
During the 2008–2010 automotive industry crisis, Ford struggled but did not have to be rescued like General Motors[ larger than Ford] or Chrysler[ smaller than Ford], the other two large us automakers. But the USA had and still has minor automakers. 

Thus, I argue based on my view to bankruptcy, General Motors + Chrysler should had gone through bankruptcy with all their assets+ technologies being sold to a closed market with Ford + minor usa automakers as the long buyers. No service would had been undone. Ford was still present and minor automakers in the usa with the bankruptcy market of General Motors + Chrysler would have the chance to grow.  I add the bankruptcy can force the minor firms to be majority [ over 80%] usa owned for a space of twenty years or more to get access to the bankruptcy sale.  

Pioneer's argument was enacted in reality by the government saving GM + Chrysler. But both firms became worse. In 2024, GM was negative in equity or net income, but very positive in assets. So from 2010 to 2024 GM hasn't improved at all, and still needs go through bankruptcy and have all of its assets sold. From 2010 to 2026 GM nor Chrysler have shown improved quality, while they were given a welfare check beyond anything to stay in business. And arguably, Ford was not given the financial advantage as the lone major domestic car maker it earned, evenly. 

 

So why was Ford not able to be the lone major automaker in the usa? 

 

Proof of autofailure position
URL
https://www.politico.com/story/2008/12/bush-announces-174-billion-auto-bailout-016740

 

Bush announces $17.4 billion auto bailout By Mike Allen and David Rogers 12/19/2008 08:22 AM EST Updated: 12/19/2008 01:31 PM EST President George W. Bush stepped in Friday to keep America’s auto industry afloat, announcing a $17.4 billion bailout for GM and Chrysler, with the terms of the loans requiring that the firms radically restructure and show they can become profitable soon. “If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy,” Bush said at the White House, in remarks carried live by the national broadcast networks. “In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action. The question is how we can best give it a chance to succeed.” Bush said that “bankruptcy now would lead to a disorderly liquidation of American auto companies.” “My economic advisers believe that such a collapse would deal an unacceptably painful blow to hardworking Americans far beyond the auto industry. It would worsen a weak job market and exacerbate the financial crisis,” he said. “It could send our suffering economy into a deeper and longer recession.” The money will come from the Wall Street bailout passed by Congress, a reversal for the White House. President-elect Barack Obama and Democrats had long advocated that course, and Bush had resisted it. Of the total, $13.4 billion will be paid out in December and January, administration officials told reporters in a briefing. The last $4 billion is contingent on release of the second installment of the Wall Street bailout funds by Congress. As it happens — in a source for some potential confusion — this breakdown also corresponds with how the money will be divided between GM and Chrysler, the two major recipients. Treasury estimates GM will require about $13.4 billion in loans; Chrysler $4 billion. Both companies will share in the first $13.4 billion paid out in December and January. GM will need the last $4 billion as well. The government gets a stake in each company, and can call in the loans on March 31 if the firms cannot prove “viability” by then. The manufacturers do not have to be profitable immediately but have to be “profitable soon,” a senior administration official said. The structure largely follows the pattern of legislation that failed in Congress last week in the Senate because of Republican opposition. Bush made no mention of this fight, but in stepping in as he is, the president risks angering conservatives in his party but the administration felt it had no choice given the fragile state of the economy. In doing so, Treasury decided not to be tied to the initial bill in Congress that provided only $14 billion in loans. That was always viewed as inadequate to get to March 31, and the administration opted to go with more realistic numbers. In doing so, however, it sets up a ticklish situation for Democrats in the new Congress. With the auto bailout, Treasury will have tapped out all of the first $350 billion from the financial markets rescue fund by late January. That means Democrats must deal with releasing the second $350 billion even as Obama will be trying to rally support for a large economic stimulus bill. On the Republican side, the real dividing point between the administration and bailout critics in Congress has had more to do with the conditions imposed on the loans — not the aid itself. These differences came to a head in the Senate over the question of how to treat the United Auto Workers, and what pressure should be put on the union to bring down wage levels to match those paid to non-UAW workers at US plants operated by Honda or Toyota for example. Senate Republican conservatives insisted that the UAW agree to specific wage adjustments by a date certain in 2009. When the union rejected this demand as political, Republicans killed the bill. The White House agreed that wage concessions would be needed but thought the better test should be the viability of the companies — not some fixed formula imposed on management and the union. There was real discomfort in the administration with what many saw as a regional, anti-union slant as Republicans from the South — where non-UAW, foreign owned plants are more common — demanded concessions that jeopardized aid to an industry so vital to much of the Midwest. Thus the loan agreements drafted by Treasury take a more flexible approach. There are “Restructuring Targets” to be met in the companies’ recovery plans, including moving to a more competitive wage structure by the end of 2009. But there is also some leeway if alternative savings can be found. The restructuring report due March 31 “shall identify any deviations from the Restructuring Targets and explain the rationale for these deviations, including an explanation of why such deviations do not jeopardize the Borrower’s long-term viability.” In explaining his decision Friday, Bush said holding back “would leave the next president to confront the demise of a major American industry in his first days of office. “The more responsible option is to give the auto companies an incentive to restructure outside of bankruptcy and a brief window in which to do it,” Bush said. “And that is why my administration worked with Congress on a bill to provide automakers with loans to stave off bankruptcy while they develop plans for viability.” The announcement immediately affects GM and Chrysler, not Ford, administration officials said. Ford, which took a line of credit just before financing dried up, has said it does not need immediate federal assistant to stay in business. Chrysler issued a statement thanking the administration but saying the terms will require “consideration.” Here are the details of the White House plan: Fact Sheet: Financing Assistance to Facilitate the Restructuring of Automobile Manufacturers to Attain Financial Viability Purpose: The terms and conditions of the financing provided by the Treasury Department will facilitate restructuring of our domestic auto industry, prevent disorderly bankruptcies during a time of economic difficulty, and protect the taxpayer by ensuring that only financially viable firms receive financing. Amount: Auto manufacturers will be provided with $13.4 B in short-term financing from the TARP, with an additional $4 B available in February, contingent upon drawing down the second tranche of TARP funds. Viability Requirement: The firms must use these funds to become financially viable. Taxpayers will not be asked to provide financing for firms that do not become viable. If the firms have not attained viability by March 31, 2009, the loan will be called and all funds returned to the Treasury. Definition of Viability: A firm will only be deemed viable if it has a positive net present value, taking into account all current and future costs, and can fully repay the government loan. Binding Terms and Conditions: The binding terms and conditions established by the Treasury will mirror those that were voted favorably by a majority of both Houses of Congress, including: — Firms must provide warrants for non-voting stock. — Firms must accept limits on executive compensation and eliminate perks such as corporate jets. — Debt owed to the government would be senior to other debts, to the extent permitted by law. — Firms must allow the government to examine their books and records. — Firms must report and the government has the power to block any large transactions (> $100 M). — Firms must comply with applicable Federal fuel efficiency and emissions requirements. — Firms must not issue new dividends while they owe government debt. Targets: The terms and conditions established by Treasury will include additional targets that were the subject of Congressional negotiations but did not come to a vote, including: — Reduce debts by 2/3 via a debt for equity exchange. — Make one-half of VEBA payments in the form of stock. — Eliminate the jobs bank. — Work rules that are competitive with transplant auto manufacturers by 12/31/09. — Wages that are competitive with those of transplant auto manufacturers by 12/31/09. These terms and conditions would be non-binding in the sense that negotiations can deviate from the quantitative targets above, providing that the firm reports the reasons for these deviations and makes the business case to achieve long-term viability in spite of the deviations. In addition, the firm will be required to conclude new agreements with its other major stakeholders, including dealers and suppliers, by March 31, 2009. Filed Under: 2010Politics

 

POST URL
https://aalbc.com/tc/topic/12348-could-ford-have-been-the-lone-major-us-automaker/

PRIOR EDITION
https://aalbc.com/tc/events/event/628-economic-corner-30-01202026/

 

NEXT EDITION
?

 

1/24/2026

 

Citation

https://aalbc.com/tc/topic/12348-could-ford-have-been-the-lone-major-us-automaker/#findComment-79568

osted just now

@ProfD 

  On 1/22/2026 at 10:04 PM, ProfD said:

IMO, Ford could never have been the lone US automaker.

just for clarification, did you mean the lone major us automaker, as i asked,  or the lone us automaker, which i didn't ask?

 

once I comprehend that I can look at the rest of your reply in total. 

 

  On 1/22/2026 at 10:04 PM, ProfD said:

Then, capitalists would have swooped in and picked the bones and built new automakers.

 

bankruptcy historically isn't designed to delete the assets of firms, but to allow for penalty to the owners or investors of firms while selling assets back into the market. Did you comprehend the original point of contention between me and @Pioneer1?

 

@Troy

  22 hours ago, Troy said:

As you mentioned bail out undermine capitalism and artificially bolster companies as well as tax incentives, tariffs against foreign competition not to forget laws that stifle competition suppress worker rights, etc.

Bailouts don't undermine fiscal capitalism de facto, it is implementation. the problem with the usa is the government has bailed out every single industry in the usa absent managing for it to improve. White people love touting welfare to work for black laborers but then for the industries in the usa owned by whites in whole or majority:  real estate/farming/aviation/automotive/banks/dot com/crypto/green energy , they want blank welfare checks absent demanding better management by the whites who are being saved from the poor house where their financial actions led them. 

It is the same with tariffs. If you want to block out foreign firms that is fine, it is common in history for all governments, but you must manage the industry internal industry, the usa doesn't manage the internal. And that goes to laws that stifle competition or better, don't penalize failure enough. 

Look at the film studios industry in the usa. 

AT&T sold warner bros to discovery because AT&T wanted to get rid of the debt on a loser. AT&T spent alot of money and got no return and added debt. Discovery bought Warner Bros on the cheap on the condition of taking all the debt off of AT&Ts books. 

Even though AT&T were and are making very positive profits on telecommunications, they didn't want the losing film studio on the books to manipulate their stock value or influence speculation to their stock negatively. But, AT& T needed to be penalized properly, by having that sale blocked and Warner Bros closed and its assets auctioned off. AT& T should never have bought Warner Bros in the first place. Again, film studios like all media properties are financial losers historically. yes they have times of positive results but usually they are failures for obvious reasons. 

Music labels/film studios/theaters/sports teams/sports leagues/similar  are all as collective industries financial losers. Dallas Cowboys? yeah but look at the canadian football league or the defunct euro league. yeah New York knicks , who have a fortunate stadim, but what about the d league, the chinese league? no and no. Look at the yankees. ok, but what of double or triple a? terrible. Music labels are historically only profitable for the selloff at the end of their lives. 

So penalty is what is truly lacking? and I comprehend why ? not having financial penalty has a long tradition. the entire white wealthy of the confederacy were too big to fail , or had  a huge bailout at the end of the war between the states. which like all bailouts after led to a consistency of behavior, in that case, killing black people. And even in bailing out the government can penalize. And that penalization can be very positive for the industry in cleaning up bad financial practices. 

 

  22 hours ago, Troy said:

All we really have is tesla and while China has superior vehicles that cost less our EV charging infrastructure is paltry compared to the rest of the world.

i don't have any validatable information on china, but some say their ev industry is bottoming out, the problem is, even though they have the greatest deposits of rare earth minerals for the batteries accessible  the EV cars use and china has an infrastructure to produce them or use them, the chinese automotive industry is built to export, not sell in china, and with usa+ europe not fully suitable for EV use completely, let alone the majority of humanity, absent any infrastructure for EV cars, the market for EV's is not a global one. The fuel of gas based cars serves a very good function in terms of international trade. Oil just needs to be sold. BUT EV's need electricity at volumes above remote gain. Electricity to handle a large volume of EV cars requires a system of infrastructure. this is the financial flaw that always existed. this is why the oil producers were not worried with the EV car movement the usa led because they knew, while USA+ China + Western Europe + japan will eventually change their energy infrastructures, most governments in the world don't have any energy infrastructure at all. so any vehicle that requires one is financially negative from the begining. So... its complex. This is why the hydrogen developers are still active in the labs. The negative of hydrogen is they haven't found a way to make its infrastructure cheap, you still need hydrogen lines and production+ Hydrogen is very dangerous to handle, very explosive. and it smanufacture also is part of the comprehension of hydrogen bombs so... the nuclear element is about it and the usa/russai/china/india/israel/select western european don' want the development of nuclear weapons to be common knowledge outside of the current nuclear powers.  The positive, is hydrogen is like gas, in that you don't need an electric grid as much as hydrogen tanks and hydrogen based cars just put hydrogen in.