An administration truly committed to “change” ought to consider this option: bankruptcy. It’s not the end of the industry, but a new beginning. Here’s why:
First, it’s really not so radical, in terms of magnitude. Yes, shareholders would stand to lose out, but with GM’s current market capitalization of just $2.5 billion, they wouldn’t lose much. Apple, by comparison, is worth $87 billion.
Second, reorganization would put the automakers on a sustainable course. Key are labor costs:
With a bankruptcy judge’s approval, collective bargaining agreements
can be reformed to fit economic realities.
Bankruptcy, in contrast, strips a company down to its valuable assets and then sets to putting those assets to work in the marketplace.
Take the bailout option off the table once and for all and let Detroit get itself working again.
clipped from: blog.heritage.org