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It looks like the Big Three automakers are not in good position to get their hands on some of this bailout money they’ve been hoping for. Too many people have expressed skepticism about handing the auto industry a blank check to continue to function in the manner that they have operating in. Others in favor of the bailout are rightly concerned that a crucial hub of American industry could not survive the damage of simply being allowed to go bankrupt. Not to mention the economic impact on Main Street of numerous job losses.

At the same time, there are concerns about how the bailout of Wall Street is going. Are they really using that money to get the credit markets liquid again, or are they just using it to continue to subsidize the exorbitant executive compensation of the same people who screwed up, and not to mention keep afloat businesses who thought they had all the answers?

Well, I am no finance expert by any stretch of the imagination, and I’m not a lawyer either.  But there has to be a way to try and keep these vital businesses afloat with federal money (because we have no choice) while not leaving it in the hands of these same doofuses who helped get us to where we are in the first place, or turning it over to a new bunch of doofuses who learned at the knees of the old doofuses. I have to admit that I was swayed a little by the Mitt Romney op-ed today, where Romney, a Michigan native whose father was once the leader of an American auto company, made the case for bankruptcy.

But as much as I agreed with many of his points, I can’t believe that at this juncture, with the economy in such a state of crisis, that you can simply afford to sit back, let the Big Three die, and see what happens. There’s no way you really want to take that chance.

But, as previously mentioned, you don’t want to give the money to the same people who messed it up. Why should you listen to them? I’m not quite sure it’s worked with the credit markets yet. Just throwing government money at the problems can’t be enough, and can’t be effective.

Hence, my unscientific, uneducated, and unresearched idea that I hope people far more qualified than I will pick up and run with. If one of you twelve to eighteen people is educated and smart enough and actually has some power.

If you’re coming to the government for money, it’s already pretty much a sign if you’re in trouble financially, right? It’s not as if it can possibly be a point of pride to go to Capitol Hill shrugging your shoulders and saying “Look, things just got messed up, okay, plese let us have this money.” And if you’re really in dire shape, what are your options? If you don’t get this money, you’ll have to what? Declare bankruptcy?

So essentially, coming to the government for bailout money is an admission of failure and financial ruin around the corner to begin with. So, instead of the Treasury simply writing checks and going “Don’t screw this up again!”, the Treasury, Congress, the President, and our leaders should say, that you’re not going to get bailed out, but we can save you using the principles of bankruptcy.

For lack of a better word, bailruptcy! I’m not quite sure how to do it, as I admit, but there has to be a way for the government to be able to keep these companies afloat yet be able to impose the market-type corrections that a bankruptcy would bring about. A federal-government managed bankruptcy (and yes, we’d be nationalizing our industries more, but this is just where we are now) could guarantee that these vital industries get to continue. Except now there’s a new entity in charge, one that’s not just looking toward the next quarterly earnings report, with long-term goals to get these vital indstries healthy again and eventually, get the American people’s money back and get the hell out of the industry.

So instead of a bankruptcy judge per se, a person with bankruptcy-judge skills backed by the government legally starts to oversee the transformation of, let’s say ,a car company into one that can be competitive. The government backing supervision, and yes, investment assures that the company won’t be liquidated, supposedly the big fear of a corporate bankruptcy. It gets the protection from creditors while also getting the bums who ran this thing into the ground out of the way to begin with.

I think I know just enough to know that this wouldn’t involve rewriting the Constitution or anything. It would be just a matter of creating a new system to allow the Federal Government to save industries without wasting valauble resources. This could be done, right? I’m even hoping  that I can’t possibly have been the first person to come up with this idea, I’ve just been too busy to read it write more coherently and eloquently by our finer finfacial and legal minds. I know there was talk of placing conditions on the Wall Street bailout, but I’m talking about far more than that here. If the government is going to intervene in the economy because it has no choice, dipping a foot in the mess isn’t going to get it done.

Bailruptcy mitigates the dangers of a bankruptcy without the lack of institutional control that appears to be a bailout. I’d end this post by declaring bailruptcy the answer, but it came from me. After being swayed by the likes of Mitt Romney. So, I implore anyone out there with some real expertise who likes it and can make it happen, I’m leaving the ball right here, run with it.

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2 Comments

  1. They’ve even made a video begging for the money, stating that they have thousands of people relying on them. Not only there will be many people losing work, but many of the retired are in deep water..

  2. I say let them fail now. A bailout is throwing good money after bad. Executives are idiots. They had an electric car 10 years ago! They crushed them all! Why? Why! Now they can’t figure out how to make one in a cost effective manner. Barney Frank says the blue collar workers will suffer. I defy you to find a blue collar worker not in the UAW that makes $60-$70 an hour. Give me a third of that and decent benefits and I will work on a production line all day. If they haven’t saved enough to be prepared for this then it is their own fault. All good things must come to an end, and they should know they had it too good for too long. I know there will be repercussions for the rest of us. But we have to hit bottom before we can climb our way out. They will fail regardless of wether or not they get the $25 billion. Don’t underestimate the fact that average consumer knows this and will not buy a vehicle because the company that would honor the warranty will be out of business


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