Planning for the worst

Consider the following facts:
1) GM is running out of money and does not have the $$ to keep the company going.

2) Capital markets are frozen up and its difficult for GM to raise private capital.

3) There's a chance (but no guarantee) to raise public funds.

Well it seems like bankruptcy is on the table and everyone is talking about it except GM is not planning for it!

Look I know that you don't want to go bankrupt, but you have to at least consider it and plan for its eventuality. This arrogance (we're too important to die) just means that bankruptcy would be much more difficult if it does occur. They are too busy flying into Washington to lobby the politicians to actually talk about possible restructuring in bankruptcy. Their argument is that talking about bankruptcy will destroy consumer confidence in their products. Hate to break it to you, but there's no confidence in your company already.

Obviously management doesn't care since they wouldn't survive restructuring anyways, but everyone at the company should be outraged. If you won't consider possible contingency plans, well that sounds like poor/bad/idiotic management to me.

My opinion (and I've heard this be said of helping the banks raise capital as well so I can't claim this is an original idea): let GM go bankrupt. Make matching public funds available if GM can raise private capital in bankruptcy protection. This allows the government to be a silent partner to the private sector, prevents the government from running GM (this is a very bad outcome as well!), and makes funds available to the industry. To the extent that the problems at GM are caused by (2), there's a valid argument to helping the industry. If it's a deeper problem, then we need bigger changes and the government policy should encourage change, not provide short-term relief that will only delay the inevitable.

It is an interesting situation: normally the union and management have much different incentives. In this case, they both are lobbying heavily for the same thing.