Ritholtz cannot be accused of being a Conservative Squawker, politically.
So when he highlights this sort of opinion, it's because it makes sense.
I meant to get to this fantastic article on GM yesterday in the NYT by Andrew Ross Sorkin
"First, let’s recognize that G.M. doesn’t need life support. What it needs is Chapter 11. The bankruptcy process is not a bad thing — indeed, it should be embraced. Bankruptcy allows companies to do tough things they could never do in the normal course of business. It has helped many companies turn themselves around and come out even stronger.
"Bankruptcy would give G.M. enormous leverage with its debt holders — and, perhaps more important, with the U.A.W., whose gold-plated benefits are one reason G.M. is no longer competitive. A bankruptcy filing would also give G.M. the cover to close plants, rid itself of unprofitable brands and shed dealerships. In fact, unless G.M. files for bankruptcy, state laws would make it prohibitively expensive to shut dealerships.
"So, first, the government would force G.M into a prepackaged bankruptcy now — even before policy makers may think it needs to be. As an inducement, the government would allow the merger with Chrysler to go forward. (There’s a lot of resistance to saving Chrysler too, but we need to look at the industry as a whole. And don’t worry: Cerberus, the private equity firm that owns Chrysler, would have its equity wiped out too.) . . .
"The automobile industry has argued that bankruptcy will be a disaster for the industry; that people won’t buy vehicles while they’re in bankruptcy for fear that the warranty won’t mean anything. There’s a fix for that too. The government should establish a warranty insurance fund that would insure the warranties of all G.M. and Chrysler vehicles bought while the combined company is still operating under bankruptcy protection. The cost to taxpayers should be next to nothing, assuming the company survives and can takeover the warranty obligations.
Sadly, Herb Kohl (D-WI), with real-life business experience in his background, has ascribed to the "bailout mentality" instead of to the common-sense solution: BK.
Sorkin endorses Chapter XI, and postulates that the Feds should pop for the debtor-in-possession financing, allowing the merger with Chrysler, and dumping the GMC, Saturn, Pontiac, labels--as well as dumping a LOT of dealerships.
He also postulates that the package should require "green-car" development; which actually does have a lot of merit, insofar as petroleum is not reproducing itself (so far...).
But to argue (as does Kohl, implicitly) that continuing the farce-in-Detroit is the better solution--that's just crazy.
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