Let GM Go Bankrupt
Posted by David Keelan on Wednesday, November 19, 2008
Readers please comment. I want to write a long post on this one but can’t quite get it started.
WASHINGTON – Detroit’s Big Three automakers are running out of time in their quest to convince skeptical lawmakers that Congress should throw them a $25 billion lifeline.
Top executives with General Motors, Ford and Chrysler will return to Congress on Wednesday, appearing before a House committee to plead for a “bridge loan” to give them a massive infusion of cash to prevent millions of layoffs, stave off bankruptcy and stabilize their teetering companies.
Here is a stab a conveying my thoughts.
If GM is so cash strapped and begging for emergency loans why wouldn’t they cleanse themselves in a bankruptcy? Think of how much cash they would generate if they didn’t have to deal with secured creditors. I am not talking about liquidation. I am talking about shedding debt, kicking shareholders, and creditors to the curb (pardon the crudeness but that is what it would be).
Now the downside is that they would likely walk away from their post-retirement obligations and leave a lot of people solely dependant upon Medicare for their health benefits. If we are talking about 6 million related jobs is that the price we would have to pay?
Seriously, what do you think would happen? They would still make automobiles, they would still be going concerns. Look at the airline industry.
Freemarket and Hayduke – I know you are out there. What do you think? Cindy, Ed, Pz, Jim? Anyone?