Detroit automakers could have in theory recovered using traditional bankruptcy protections, in other words by stiffing their creditors. The problem with this “solution” is that it would have in fact killed not only GM, Chrysler and Ford; but Toyota had said flatly that they would cease North American operations under the Republican solution pushed by Mitt Romney and Senators from the southern states.
The reason for this bleak outcome is that the huge debt load that the car makers were carrying was mostly owed to their parts suppliers, and as creditors they would have been wiped out in bankruptcy. Why Toyota? They were using even more American made parts than the so-called US companies.
Entire industries have disappeared from the US economy over the past 30 years; Obama can rightly claim this hasn’t happened on his watch, at least not so far. However, there is a fly in the recovery ointment. We are producing this larger GDP with 6 million fewer workers. Many of these jobs were lost from the housing collapse that began in 2006, but many more workers were given pink slips the day after the 2008 election. These were planned layoffs that were replaced by workers in Asia that had been put in place well in advance. Still more jobs simply dried up with the recession.
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