Instead of a Bailout How about a Buyout?

Allen Frederick

Another example of why “GIVE ME’S” never work out. Take for example the current problems facing the big three auto companies. Union negotiated contracts are taking and ever increasing portion of company profits to maintain. Giving benefits to those who are no longer producing or contributing to the profit making potential of the company is leaching resources from the parent. A large portion of society taking from the public watering hole is depleting the supply faster than those who are contributing can replace it. In the end failure is inevitable.

All this BAILOUT business is BAD BUSINESS, and will only delay the inevitable.

Considering there are market solutions to market problems I would certainly support using those options instead of looking for another hand out. What say you?

clipped from www.sphere.com

An administration truly committed to “change” ought to consider this option: bankruptcy. It’s not the end of the industry, but a new beginning. Here’s why:

  • First, it’s really not so radical, in terms of magnitude. Yes, shareholders would stand to lose out, but with GM’s current market capitalization of just $2.5 billion, they wouldn’t lose much. Apple, by comparison, is worth $87 billion.
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    Second, reorganization would put the automakers on a sustainable course. Key are labor costs:
    With a bankruptcy judge’s approval, collective bargaining agreements can be reformed to fit economic realities.
    Bankruptcy, in contrast, strips a company down to its valuable assets and then sets to putting those assets to work in the marketplace.
    Take the bailout option off the table once and for all and let Detroit get itself working again.

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