Mitt Romney in the NYT: “Let Detroit Go Bankrupt”

Full editorial can be found at The New York Times.  It’s short, so if you care about the subject, give it a full read.  Nothing in it that cannot be found elsewhere in the discussions, except a bit about George Romney and American Motors.

I find myself largely agreeing with Romney, especially in regards to his recommendation that shareholders not be saved.  They (we, myself) made a bet and lost.  We deserve to lose money on it.  Sadly many shareholders were not gamblers or investors but likely employees looking to support their employer and build up a retirement nest egg at the same time.  They will be the losers in this deal, sadly.

While I do agree with the goals espoused by Romney to be achieved through bankruptcy (despite his odd comparison between the Taurus and the Avalon.  Really?  Camry isn’t a closer match for target market?), I still do not see how that is more likely to be achieved through bankruptcy than through a many-strings-attached bailout.  The costs of possible additional job losses and temporary displacement as well as the chaos that may result for bond holding banks (already under duress), other automotive manufacturers, and affiliated parts suppliers during bankruptcy proceedings I would imagine could have costs in the billions (once again, I am nothing close to a bankruptcy expert and Mitt Romney is probably pretty close to an expert on restructuring).

And as little faith I have in the abilities of government, I have even less faith in the heads of the auto unions and the automakers whose incompetence has driven a once-viable and prosperous industry to the slow and obvious collapse we see before us.  Would restructuring include giving every party at the table common sense?  To quote Some Assembly Required quoting, partially, former Chrysler President Thomas Stallkamp: “”There’s the feeling that next to financial services, automotive execs are the dumbest people in the world.” Not really, there’s politicians, economists and voters to consider, too.“

Depending on the pricetag, could it be worthwhile to force the change through the vehicle of a bailout with conditions, that would salvage the reputation of Detroit somewhat and avoid cataclysm in employment and related industries during a time when every sector of the economy seems to be built of straw?

… and the cow goes moo