White House Considers Orderly Auto Bankruptcy, Finally
The Bush administration is finally considering bankruptcy as an option for the automakers. I have previously written about the Big Three and the bailouts so you’ll have a pretty good idea how I feel about the issue if you read those articles. A loan to these companies would just push their eventual bankruptcy further down the road.
Many people have said that sending the automakers through a bankruptcy would be a horrible thing for the economy. 3 million people would lose their jobs, or so they say. That number is calculated based on all 3 companies completely stopping manufacturing for the whole year, which simply isn’t the case. A bankruptcy that was organized by the federal government is a much better solution than just giving them 15 billion. With the huge amounts of debt they currently have along with the terrible contracts they agreed to with the UAW, these companies aren’t going to suddenly turn profitable because of a small loan.
Bankruptcy is the best option for these companies simply because it will give them a real chance to turn things around. I realize that people will be hurt by this. More people will be hurt in the long run if we simply prolong it. Let them fail. Then we can help them pick up the pieces.