Here's an idea for the bailout versus bankruptcy debate as options for GM
(and possibly Ford and Chrysler)
Do both.
Agree to a government (taxpayer) financed cash infusion as part of the
reorganization plan in Chapter 11 bankruptcy.
GM apparently has multiple, costly contractual obligations to suppliers,
for
unused facilities, pension plans, etc. that can only be restructured in a
bankruptcy situation, under the watch of a bankruptcy judge.
To pour money into GM without addressing these issues is, in the words of
the famous chant, "More of the same". GM will still be obligated to
these
contracts, including retired pension and existing labor unions contracts.
Under Chapter 11 reorganization, GM can end contributions for existing
retired pensions. The cost of these pensions will be absorbed into an
existing federal pension insurance program (forget the name of it).
This arrangement will also afford GM to be completely restructured, lean
and
mean, and costly contractual obligations that are no longer of benefit can
be terminated by the bankruptcy judge.
The judge can also require labor union contracts to be renegotiated,
management replaced and/or restructured, including salary and perk caps.
Then, with the "new" GM structure in place, a taxpayer financed investment
makes sense to kick start the reorganized company with the money spent to
develop and market modern, fuel efficient vehicles at a cost that can be
competitive with the likes of Toyota and Honda.
It makes sense to me. I also think that Toyota and Honda are walking
down
the same path as the US auto industry and eventually will become bloated
and
inefficient. We should restructure the US industry now, and stay ahead
of
the curve.
Eisboch
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