GM Failure: The Shockwave

Source: CNNMoney.com November 14, 2008

Authors: Peter Valdes-Dapena

Concept: Bailouts, Bankruptcy

Brief Synopsis: This article discusses the effects that will be seen if GM fails. It points out that a domino affect will occur, where suppliers will be hit first and the hardest, potentially closing their doors as a result. Next would be the the dealers, followed by the dealer competitors. GM is seeking Government assistance rather than filing Chapter 7 bankruptcy to reorgranize the company. But will the government bail them out? And where do you draw the line?

My Thoughts: I think that something does need to be done for GM, otherwise it is scary to imagine what will happen as the dominos start to fall. However, I also feel that the government, and ultimately tax payers, can not continue to bail companies out. We can barely keep our individual households above water, why are we expected to help major companies out? Not only that, but when does the Government say enough is enough? If one company gets bailed out everybody is going to feel entitled to a bailout. Where does all the funding come from? Eventually it will have to end somewhere.