Should the US bailout the big three automakers?

[Wayne Maybury]

I recently read an interesting article on the US auto industry. While GM is looking at trying to find a buyer for the Hummer line (good luck these days), Ford sold Jaguar and Land Rover a couple of years ago and got a reasonable price for them. While GM and Chrysler are in Washington begging for a bailout, Ford raised billions of dollars 2 years ago in anticipation of this present mess. While GM and Chrysler are discussing dropping a model here and a model there, Ford has trimmed their selection of models to the bone. These factors have separated Ford from the other two. Ford has also worked very hard at improving their quality to the point where they are now considered as good, or better than, the competition (Toyota & Honda, not GM & Chrysler).

I am not an economist but I feel that the government should allow GM and/or Chrysler to go bankrupt at which time they would have to really get their business in order including renegotiating their labor contracts, pension plans, etc., and also probably getting rid of a lot of the dead wood at the top. The present shareholders would get hosed as the note holders would have all of their debt converted into equity. Of course this would result in a new board of directors and a new management team.

Wayne