I typically disagree with Mr. Reich's positions, but he hit this nail on the head: Stockholders (and, to a lesser extent, bondholders) gain rewards from the businesses they own precisely because they're assuming the risk that the business might not do well or might fail entirely. In this case, shareholders should have done a better job of supervising the companies' actions, such as by insisting that they produce high-quality, high-mileage vehicles.

In fact, bankruptcy protection the answer for much of Main Street as well--except that Congress and the president recently made it much, much harder for individuals to get their debts removed. We should roll back the ill-advised bankruptcy reform to restore the last-resort safety valve of chapters 13 and 7.

Clearly, we must take whatever actions that can be taken, to prevent our country from descending into a full-blown depression. Perhaps, in addition to the options of bankruptcy or taxpayer-funded bailouts we need some 'third way' of providing an economic shock absorber that could do the job better. For instance, in the case of the auto companies, perhaps we could let them re-organize under bankruptcy, but provide consumers with incentives for buying American vehicles, such as rebates, tax credits, and/or extended warranties (so people will still buy from a chapter 11 auto maker). In addition, something like bigger tax write-offs for suppliers who lose money in the short term, or even direct subsidies to them, could help to cushion them from some of the loses. This all would be in keeping with the 'tickle up, not down' mantra, that economists, such a Mr. Reich, advocates. This could also be extended to other critical segments of the economy. Of course, this would have to be done very carefully (providing some more employment for economists), so as not to prop-up companies that SHOULD be allowed to fail and so as not to become equivalent to pure protectionism, or making it less dangerous for other companies to fail. Also, this would only work if it was done over a short period of time (i.e. so as to really serve as a shock-absorber and not a giant 'corporate golden-parachute'). Such a, temporary, 'bankruptcy-bailout', would allow large companies that have been around for decades, to be given a second chance at survival, with the odds of their survival, greatly, increased. Yes, it would not be completely fair to other, smaller, companies, but it might be better for taxpayers than either a direct 'blank-check' bailout or regular bankruptcy with low probability of success (i.e Delphi).

I agree with the position expressed by Robert Reich this morning: Chapter 11, if done correctly, is capable of offering a company the possibility to continue operation while rectifying egregious behavior. Case in point: Circuit City. We'll see how that goes, but one MAJOR item needing correction is the $8 million salary of its CEO. Maybe $80,000 for a salary? I have 3 graduate level degrees and even working as a manufacturing engineer for 2 major airplane companies I barely made half that a year...NO ONE NEEDS THAT KIND OF MONEY!!!

I agree with you regarding what the bail out entails. Actually, the Energy Department has been given authority from congress to administer $25 billion in low-interest loans to help Detroit retool their auto plants and meet new fuel-efficient standards. However, recently the government approved $5 billion of this loan to help Cerberus fund GM’s takeover of Chrysler. Yet, this $5 billion is only half of what is needed to initiate layoffs, close plants and cover integration expenses of the two companies. So yes, the plan to layoff workers is already part of the game plan with the bailout money. A merger between GM and Chrysler for example would already cost our economy 40,000 jobs.

The MAJOR point you miss here is that with bailing out these auto companies, it enhances the auto companies brand image. Would you want to buy a car whose company is in bankruptcy? How reliable is a warranty on an automobile in this case?

The big 3 really screwed up their business plan because they kept making big SUVs at the same time that most americans were buying big houses and taking out big mortgages they couldn't afford. Back then auto companies argued that there just wasn't a market enough to justify the kinds of investments required for more fuel efficient cars.

I agree that the people running these companies should be punished in some ways rather than rewarded again with a bailout. Yet, the larger story is how large these companies have become, and how arrogant they are to their own failures.

Still...the question is what is best for our country..?? I think we need to bail them out but also restructure management, and maybe reallocate their employees so that they become part of the green economy. Bankruptcy is the equivalent to letting them fail which is not a good thing for America's economic future. I actually believe that government should play a role in the automobile industry perhaps before it gets like this. Just as I also believe we should and do play role in our airline manufacturing as well as our banking systems. This is the edge that the big Asian governments have over the US. They see these industries as part of a greater strategy, rather than just another free enterprise like music or cosmetics. I guess the hard question is where do we draw the line, and what industries are critical for our success as a nation.