Posted Tuesday, Feb. 7, 2012, at 12:07 PM
Apparently Clint Eastwood is personally upset that some people took Chrysler's "halftime in America" to be a positive commentary on the Obama administration.
This seems totally untenable to me. Whether Eastwood or Chrysler executives like to talk about it, the company—currently enjoying double-digit sales growth—would not currently exist today if not for the Obama administration. Recall that there are two main forms of bankruptcy, Chapter 11 and Chapter 7. Chapter 11 bankruptcy is what we normally see for troubled American firms. What happens is that you get into a situation where you can't pay your bills, so you file for protection from the courts. Then you need to get debtor-in-possession financing from someone so that the firm can keep operating and generating revenue. Then, while under protection, you work out a plan to reorganize the business that usually involves concessions from workers, from bondholders, from suppliers, etc., perhaps combined with a sale to another company. The alternative, Chapter 7, is what happened to Borders recently. If you can't figure out a reorganization plan to return to profitability and nobody wants to buy you, you end up liquidating the enterprise. Instead of selling the business, Borders ended up selling all the books it had on hand. They were selling bookshelves. They sold lamps. I got a whole giant bag of stuff at half price. And that was the liquidation of a consumer-oriented retail chain. If you try to liquidate a large automobile manufacturing enterprise, you're destined to get pennies on the dollar. But since Chrysler and GM ran into trouble turning over their debt in the middle of an epic financial crisis, it wasn't possible to obtain debtor-in-possession financing, so Chapter 7 would have been the only available option.
I had concerns about the Obama approach at the time (concerns that I haven't really dropped) that automobile-oriented industrial policy has not really served America well for the past several decades and that he was squandering a non-replicable opportunity to get us off that path. But whether you like what he did or not, there's no denying its impact. The automobile industry of the upper Midwest is still with us specifically because Team Obama chose to ensure that it would remain there.