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April 21, 2009
To liquidate or not to liquidate
On intransigent creditors unwilling to cave to government demands on Chrysler:
From a public relations perspective, however, gratuitously driving a company as storied and economically important as Chrysler into bankruptcy is generally not the kind of thing that any bank wants to do. Unless, that is, banks in general have already hit the zero bound in terms of reputation. Call it the Ticketmaster strategy: you can do anything you like once everybody hates you.
When banks have no reputation left to lose
I don't expect we'll see the liquidation of Chrysler because the government will cave. However, if they did, that would be a great contribution to reestablishing that:
1) The banking system is independent from the government
2) This is the sort of economy where poorly run firms fail
3) Small creditors won't be pushed around by the government
Posted by OneEyedMan at April 21, 2009 3:29 PM
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