Recent Blog Posts
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The Times' Rorshach Geithner Story
Apr 27 20099:26 am EDT -
Sinking Animal Spirits
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Counter-cyclical Urban Policy
Apr 26 200910:00 am EDT -
Be Your Own Counterfeiter
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Being Tim Geithner
Apr 25 200912:37 pm EDT -
Notes From a Press Conference Naif
Apr 25 20099:41 am EDT -
What Good is the News?
Apr 25 20098:32 am EDT -
Stressful Enough
Apr 24 20092:29 pm EDT -
Not Regretting the Pound
Apr 24 20091:09 pm EDT -
Introducing the New Ford Squeeze
Apr 24 20099:47 am EDT
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Why the Detroit Bailout Should Include Bankruptcy
With Deutsche Bank saying that GM is worthless, and some kind of government bailout of Detroit now a certainty, the battle lines are being drawn: is bankruptcy an option? Justin Hyde says it isn't, and he might well be right, politically. But it certainly should be an option, and Joseph White has an excellent column today explaining why.
If there is to be a government bailout of Detroit, a large sum should go towards funding the union retiree health obligations set up by the three big automakers in 2007. There should also be a scheme to backstop the automakers' warranties, so that consumers don't balk at buying a new GM car for fear the automaker won't be around any more to make good on its obligations. But I see no reason why GM in particular, and US automakers in general, shouldn't take advantage of the perfectly-good bankruptcy system if they're insolvent. Yes, the government might be the entity extending the debtor-in-possession financing. But GM bondholders should absolutely share in the pain here.
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