I find it hard to believe that only Chrysler stockholdes would have been hurt, even forgetting about union contracts which was a bigger pill to swallow back then than it is now. Consider: Chrysler bankruptcy --> collapse in stock values --> collapse of asset values used as collateral on other loans (by firms, banks, and wealthy stockholders)---> banks owed money call-in loans, former stockholders (firms, banks, etc.) sell assets, trim production costs, call-in other loans-->further bankruptcies-->.... return to step two. Anyone associated with this chain will be adversely affected. But, New owner(s) [one of the remaining big two?] gets Chrysler cheap--->immediately halts production and investment on current and potential money losers (and maybe future money earners: if I remember correctly Iacocca (sp?) came to Chrysler with the K-car and minivan ideas Ford higherups had vetoed, so no minivan craze and maybe proportionally more jobs go to Mexico)---> lots of high-paying low-skill jobs are cut and these folks are turned lose on other sectors, lowering wages; supplier connections are altered and maybe employment is churned as well, some win some lose; and let's not forget the absolute and redistributive impacts of the increased degree of monopolization in the auto industry. If such scenarios are reasonable, it seems both lead to net negative impacts on workers. But then again, who can say what might have happened. If Chrysler goes banko, how would investors and corporate managers have behaved after that? This is largely speculative mumbo-jumbo in its own right, who knows what might have been. Who loses and who wins is important. If some capitalists lose, do all capitalists lose? Marxian analysis would say that the remainder will win. If some workers lose, do all workers lose on the whole (even if an equal proportion of workers also win)? Jeff ---------- From: Michael Perelman To: [EMAIL PROTECTED] Subject: [PEN-L:404] Re: Re: Naive question on Japanese Debt Date: Friday, July 31, 1998 1:33PM I wholly agreee with Randy. Maybe we are are crazy but this talk of a financial crisis seems to be constructed out of device to protect what Marx called fictititous capital. Forgetting about union contracts for the moment, what would have happened if Chrysler had gone bankrupt and somebody picked up the company for a fraction of what it had been worth previously. The new owner would have earned a healthy profit because the investment would be low. He could afford to pay good wages. Only the investors in Chrysler stock would have been hurt, along with a few Mercedes dealers. A minor shock at best. We call it rational when firms downsize; why can't the stock market be allowed to downsize and let the economy go on as before. Maybe I am wrong/crazy .... Nobody else on pen-l except Gene/Mat/and Randy from afar seems to be interested in this. So maybe I should drop it. Randy Wray wrote: >> 1. someone recently told me a story of a financial official (i can't >> remember if it was a banker or a regulator) who had visited a mom >> and pop >> grocery store in denver to look over the books. her/his assessment >> was >> that the store was hopelessly bankrupt, and mom and pop didn't even >> know >> it. indeed, they had probably been bankrupt for years, and probably >> would >> remain so for years to come. so long as no one looked closely at the >> books >> and inventory (there had been stuff on the shelves for yrs, carried >> at >> purchase price but no longer of any value whatsoever), this store >> could >> remain in business for yrs to come. but any close analysis would cut >> off >> all bank credit and the store would close down. whaddyado? >> >> 2. another story. a regulator at the occ assured me that he could >> take any >> bank, no matter how insolvent, and cook the books to keep it open >> for 5 >> years. and hey, things might turn around. >> >> -- > Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 916-898-5321 E-Mail [EMAIL PROTECTED]
