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November 19, 2008
Let the auto companies file for bankruptcy
Why? They are poor businesses managed by idiots. Besides that, the prime problem of the US Auto industry is high cost of labor, health care, and retirement costs. Chapter 11 will allow those expenses to be renegotiated. If we just lend them money, they will be back and will not do the hard work to reorganize the businesses into profitable companies. The foreign companies can make money. The US companies make money overseas in buckets. The problem is the expense side in the US. This will ONLY be fixed by a Ch11 reorganization. This is what the process was designed for. GM is NOT AIG. There are not the size of credit default swaps or co-party risk dependent on a GM failure. Let them fail. We will have lots of new startups and a more efficient model. Take the medicine now. This will avert economic collapse by allowing these companies to be profitable again.
Posted by Martin at November 19, 2008 6:07 PM
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