Would no bailout for Big Three be better?

By Noah Graff

General Motors, Ford and Chrysler have asked for $25 billion in government loans to survive the economic crisis — that’s in addition to the $25 billion Congress approved in September to foster fuel-efficient technology (NPR.org).

CNBC’s Dylan Ratigan, host of “Fast Money” and “Closing Bell” says the automakers don’t deserve another handout from the government.

He says that capitalist economics should resolve their situation, not more charity from the government. He argues that the big three have a union problem that’s not sustainable and incompetent management, so instead of another handout from the government you say, “We’ve got $25 billion at an open bid to the entire world. I want the 10 best car designs on the planet earth, I’ll give you two and half billion dollars each for each of your car designs. [If] you’ve got to do them in Detroit you can hire the workers from General Motors.” Then you would do a complete restructuring plan to finally set up a profitable business model.

GM and Ford say they are both spending more than $2 billion in cash each month, and GM says it could run out of money soon – so soon that CEO Rick Wagoner says the company may not have enough time to wait for a bailout from the Obama administration after the new president is sworn-in in January 2009.

Source: www.thestreet.com, www.npr.org

Question: Should the U.S. government give another $25 billion “loan” to the Big Three?

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