Was Obama's Auto Industry 'Reinvention' Good for Detroit?
By Jay Akasie Sep 07, 2012 1:00 pm
In a convention speech with populist overtones, bankruptcy can be a four-letter word. But Wall Street doesn't seem to agree.
The eurozone argument for a controlled bankruptcy is similar: A nation-state that is continually bailed out by the central bank will most likely never take the politically unpopular measures to tackle the problems that got it there in the first place. The shield of bankruptcy, however, allows politicians to step back and do whatever is needed for a long-term fix.
But added into a convention speech with populist overtones, bankruptcy can be a four-letter word.
Warren, now a candidate for the US Senate, told the convention that she envisioned an America where everyone plays on a level playing field. Before she came to national prominence as a TARP overseer, she taught bankruptcy law at Harvard Business School. She should know better than anyone that a controlled bankruptcy of the auto industry would have done just that — leveled the field so that endemic problems that got the industry there in the first place could be dealt with in a serious manner.
At least one player appears to have a sobering view of the auto bailout. Shares in new incarnation of GM have been trading well below its $35 IPO for nearly two years. Perhaps Wall Street is telling the Obama administration that it’s not fully convinced that his industry reinvention was built to last.
No positions in stocks mentioned.