Japanese Auto Makers Face Great Risks With Potential Bankruptcy Of The Big Three

Here is the link to the story at the best automotive news source on the net. This doesn't even speak to the risks in other markets where international auto companies share suppliers such as Europe, Asia and South America. Needless to say, the government is not going to abandon the American auto makers. The only question is if they should be allowed to reorganize after bankruptcy or to try to keep them out of bankruptcy. There are arguments on behalf of both positions. I've already made my position. I believe they should be allowed to fail and then reorganize. These companies must wipe some of their debt clean, rid themselves of legacy management and/or be forced to institute strategic change. And government ought not to be involved in any more of this gambling in the credit default market. That includes for the auto makers. Unwind these transactions at a cost to those who made the bets.

There is no free lunch as current helter skelter government policy seems to be advocating. But, either way, government intervention is inevitable. For those who argue we should let the free markets work, I'll be posting some remarks in a handful of posts. The first will be this weekend or early next week. I'll be combining it with a post on Greespan's mea culpa.