http://treylaura.blogspot.com/2008/11/gm-what-to-do-part-1.html
http://treylaura.blogspot.com/2008/11/gm-et-al-what-to-do-part-2.html
Part 3 focuses on an Economist article which compares and contrasts Chapter 11 bankruptcy (re-organization) v. a government bailout. They are skeptical regarding the viability of a re-org given the challenges associated with consumers sticking with a manufacturer whose warranties and spare parts would be suspect. Correspondingly they do not seem enamored by the prospect of a un-mentioned alternative, Chapter 7 (liquidation), as liquidating a GM amidst a severe recession (i.e. blowing up several hundred thousand more jobs perhaps more) might just push the US even further towards GD 2.0. That leaves the bailout option, the Economist points to potential brighter days for the US automakers given recent cost cutting and the reality that evenutually say by 2011 that folks will have to replace their autos. So a bailout could be seen as bridge financing to get the automakers from 2008 to 2011. Somehow I do not see it being that rosy but again, any better alternatives, let me know.
From Economist:"IF NOTHING else, the revelation by General Motors (GM) on November 7th that it is in danger of running out of cash before the end of the year has concentrated minds...Consumer surveys that suggest that 80-90% of prospective customers would abandon the products of a carmaker that had filed for bankruptcy protection...The North American car market should come back strongly in 2010 or 2011...They are also nearing the final stage of a lengthy and painful restructuring of their North American operations. Two million units of capacity have been stripped out; factories are being converted to produce more fuel-efficient cars; and a landmark deal with the United Auto Workers union in 2007 paved the way to cutting $1,000 of costs on every car they make from next year. “The river they are swimming across has been getting wider and deeper, but the pot of gold on the other side has been getting bigger as well,” says David Cole of the Center for Automotive Research."http://www.economist.com/business/displaystory.cfm?story_id=12601839
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