Should the US government Bail out the auto industry?

The us auto industry has been on its back for several years now.  The situation has accelerated with the most recent credit meltdown and all three are running to capital hill seeking a bailout.  It seems like under the current circumstances this request should be met with a resounding YES.  If any of you paid attention last week to the latest jobless claims, over 500k for the month!

Well what are we missing?  The worst financial crisis since the great depression, staggering unemployment, ECT.  ECT.  ECT……  Then why do the big three have to get down on their hands and knees and beg?  Did AIG have to beg?  Did Citigroup?  The list goes on and on.  The largest manufacturing industry in our nation that represents over 4 million US jobs and our government might let them go bankrupt.

There must be a better way.  If I where in charge here is what I would do;

I would give them a small short term bridge loan so that they could survive over the next couple months and meet obligations.  During this period I would require them to hire bankruptcy consultants and put together a plan for a packaged bankruptcy.  The government would provide the financing to pull them out of bankruptcy.  This would do a couple things.

Flickr Image by: Congressman Markey

It would allow the automakers to restructure with their creditors, unions, employees, and most importantly get rid of all the legacy liabilities that have been haunting them for years.
Give consumer the peace of mind that the big three will survive and come back stronger.  This way we still buy cars from them because we know the government supports the industry and its survival.  All warranties will be honored.

Once this is accomplished the entire industry will be poised for restructuring and will continue to thrive for many years.

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The Credit Crunch Comes to Main Street

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“To understand how the credit crunch is hitting American business — and, in turn, you — look no further than the Dog Shop, a pet-supplies and -grooming store in Washington, D.C. This holiday season, owner Jane Huelle will stock only four varieties of Christmas-cookie dog treats instead of the usual six. That’s because a month and a half ago she got a letter from her credit-card company saying her line of credit was being docked by thousands of dollars.”

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Small Business Finance - Plan Ahead to Weather the Storm

With the nation watching the last few weeks as our economy weakens and the world’s stock markets crash, we all wonder how long it will take for things to recover and get back to normal. It seems that with the new “bailout plan” the treasury department will unfreeze credit allowing businesses to once again borrow money.

Is this really true?
“Lenders are tightening credit to restaurant franchisees in a shift that could make it harder for owners to remodel existing locations and buy new restaurants. Tighter credit could impede plans by restaurant operators to remodel existing stores, install new equipment, open new locations or convert existing company-owned stores to franchised locations, said Sharon Zackfia, a restaurant industry analyst at brokerage William Blair & Co.” read full article

We believe that even with these new plans small businesses will still have a difficult time obtaining traditional bank financing. It is important to plan ahead and secure the necessary capital you need to run your business.

Business cash advance - merchant cash advance programs are available to meet your needs. Even if your credit score has been bruised because of recent events… You are still eligible for an advance.

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