Last week President Obama did a photo op at a GM plant. In remarks to the assembled GM workers Obama took credit for saving their jobs. In fact, he took credit for saving the "American auto industry." The problem with this is that he was being dishonest or showing his ignorance.
He based this claim on his bailout of GM and Chrysler with taxpayer money (actually money borrowed from China) rather than allowing Chrysler and GM to go bankrupt. One might be tempted to overlook this claim as another "misspoken" comment from the President, but apparently it was not because he was reading from the Teleprompter. Then also last week Obama spokesman Robert Gibbs displayed either gross dishonesty or gross ignorance on the same point.
Now here's the problem. Gibbs is talking about Obama taking over General Motors and Chrysler shortly after taking office. He claims that if GM and Chrysler had declared bankruptcy, a million workers would have been out of work and dozens of communities would have been devastated.
The problem with that claim is that it simply is not true. In fact it is so untrue as to be absurd. When a company goes bankrupt it is the creditors that loose. Those creditors can be the bond holders, the lenders who have loaned the company money, the suppliers who have delivered but not paid and finally the stockholders.
When a company goes bankrupt either one of two things happen. Either the court determines which creditors will get paid and which will not or the assets are sold, essentially to the highest bidder, and the company "emerges" from bankruptcy and begins building cars again. The same workers who were employed before often simply return to work for a different owner.
Now it is true that sometimes in a bankruptcy union contracts are voided and new ones are negotiated. But history has shown that workers don't necessarily suffer much in such realignments and often benefit because the company dumps excess costs and emerges healthier than before, thus protecting jobs in the long run.
Most college graduates have had a course or two that explains all this. We don't know if Robert Gibbs is a college graduate or not or if he and the President were absent from Business 101 the day they covered bankruptcy but either they know and are simply being dishonest or they are exceedingly ignorant. Either way, it is not good for us that they don't know any more about business than this.
And Mr. Gibbs was being disingenuous when he claimed GM and Chrysler operated at a profit last quarter. That is no more true than you or I running up our credit card account and claiming we spent less than we took in for a month or two.
So, wonder if they just don't know any better or if they think we are so stupid we don't know when they are being dishonest?
And by the way, Mr. Gibbs. F-150's are made by Ford.
He based this claim on his bailout of GM and Chrysler with taxpayer money (actually money borrowed from China) rather than allowing Chrysler and GM to go bankrupt. One might be tempted to overlook this claim as another "misspoken" comment from the President, but apparently it was not because he was reading from the Teleprompter. Then also last week Obama spokesman Robert Gibbs displayed either gross dishonesty or gross ignorance on the same point.
Now here's the problem. Gibbs is talking about Obama taking over General Motors and Chrysler shortly after taking office. He claims that if GM and Chrysler had declared bankruptcy, a million workers would have been out of work and dozens of communities would have been devastated.
The problem with that claim is that it simply is not true. In fact it is so untrue as to be absurd. When a company goes bankrupt it is the creditors that loose. Those creditors can be the bond holders, the lenders who have loaned the company money, the suppliers who have delivered but not paid and finally the stockholders.
When a company goes bankrupt either one of two things happen. Either the court determines which creditors will get paid and which will not or the assets are sold, essentially to the highest bidder, and the company "emerges" from bankruptcy and begins building cars again. The same workers who were employed before often simply return to work for a different owner.
Now it is true that sometimes in a bankruptcy union contracts are voided and new ones are negotiated. But history has shown that workers don't necessarily suffer much in such realignments and often benefit because the company dumps excess costs and emerges healthier than before, thus protecting jobs in the long run.
Most college graduates have had a course or two that explains all this. We don't know if Robert Gibbs is a college graduate or not or if he and the President were absent from Business 101 the day they covered bankruptcy but either they know and are simply being dishonest or they are exceedingly ignorant. Either way, it is not good for us that they don't know any more about business than this.
And Mr. Gibbs was being disingenuous when he claimed GM and Chrysler operated at a profit last quarter. That is no more true than you or I running up our credit card account and claiming we spent less than we took in for a month or two.
So, wonder if they just don't know any better or if they think we are so stupid we don't know when they are being dishonest?
And by the way, Mr. Gibbs. F-150's are made by Ford.
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