Tuesday, December 9, 2008

Buyout Instead of Bailout

Here is a novel idea. The Big Three automakers are asking the government to bail them out of their financial troubles. Their latest request is for $34 billion. However, the total market value of General Motors is only $3 billion. Ford is only worth $7 Billion. Chrysler is privately held so no one knows what it is worth. So, it would be cheaper for the government to buy GM and Ford than to bail them out. Then they could fire the current management team and hire competent managers to run the company in a profitable manner. Maybe they should outsource the management to Toyota or some such people who have shown skill at running a manufacturing business. Then when the stock value goes up the government would sell the companies at a profit. Just a thought.

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