A Sensible Plan to Save the Big Three
Cafe Hayek has been following the U.S. automakers congressional beg-fest and has come up with a sensible plan for bailing out Ford, GM and Chrysler, that doesn’t involve Congress or the American taxpayer.
Why don’t the Big Three save the money it takes to put together Congressional testimony and the time it takes for the people in charge to make the trip. Why don’t they just take out ads in the Wall Street Journal and the New York Times outlining what they’re going to do with the money. Then they can do this really novel idea. They can sell bonds and borrow the money. If the plans look good, people might lend them the money. If the plans are lousy, they won’t get the money.
Now I understand it’s hard to borrow money when things don’t look so good for your future. But that’s why Congress shouldn’t be lending them any money. Particularly because politicians don’t have an incentive when they’re spending other people’s money to weigh, review, scour and so on with an eye toward the profitability of the plans.
When people have lost faith in you because you’ve performed poorly, you have to pay a premium to get them to invest. That’s a feature not a bug.
It’s just crazy enough that it might actually work.
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