Friday, December 12, 2008

Stiglitz, an Econ Nobel Laureate, on the upside of bankruptcy of the Three

From FT:

It is more plausible that confidence will be restored if the industry is freed of the burden of interest payments and is given a fresh start. Modern cars are complex technological products and the US has demonstrated its strength in advanced technology. US workers, working for Japanese carmakers, have shown their hard work can produce cars that are desirable. America’s managers too have demonstrated their managerial skills in many other areas.

H/t: Mankiw


Stephanie said...

I think I'm in favor of bankruptcy. But it's not as though that means that only the Big 3 themselves will feel the pain. Their suppliers will feel it and will probably go under too, and then their suppliers (raw materials) will feel it. And that may all be OK, it's just that we tend to overlook that when we say "Let them declare bankruptcy".

Scooter said...

I think there will be short term and intermediate term pain.

But don't discount the "vultures." There are those who will swoop down on the carrion and put those assets (plant and personnel) to work.