Current Events — HabitableZone

Current Events » in reply to Will GM Bankruptcy really Tank the ECONOMY?

It doesn't look good.
ER — (archived)

It's not only the GM employees and stockholders who will take a bath, but the pensioners too. The suppliers will also go under, and all the merchants the victims patronize will be affected too. Welfare services will be put under great pressure while the tax revenues that support them will collapse. It will have a ripple effect that will cascade through the economy, especially hammering those states where GM is concentrated.

And what about GM's capital assets? The physical plant, factories and machinery, the marketing network, will not be in high demand from anyone else, it will just rust away, and even that 165 day backlog of unsold shiny new cars cannot be just given away, it will take away business from other auto companies that may still be in business. It reminds me of the Depression, when milk was poured into drains and fields of ripe produce were plowed under while people were starving in order to keep food prices up and save the farms that were still operating.

The technical term for it is "the contradictions" of the market. This is what Obama is trying to avoid.

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