[wideminded]

A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs.

A bunch of commentators now are glibly suggesting that the auto companies toss off their pension obligations. There are two things that bother me about this:

1. These companies did make a promise to hundreds of thousands of workers, many of whom spent their entire working lives with the understanding that they would get these pensions. I realize that many around here view these people as greedy, evil union members who shouldn't have been such suckers and who deserve what they get.

2. Even if the auto companies get out from under these pension obligations, undoubtedly the taxpayers will have to assume them via the PBGC.

[lady lawyer]

I don’t think they can get out of pensions that have already vested, but they might cut down on benefit packages for retirees. The only thing annoying about pensioners is those who retired at 55.

What Chapter 11 would allow them to do is to repudiate labor contracts, get wages more in line with the prevailing wages for other manufacturing, and get rid of things like “job banks,” where people are paid not to work.

[curiosity]

1. These companies did make a promise to hundreds of thousands of workers, many of whom spent their entire working lives with the understanding that they would get these pensions.

All corporate liabilities have default risk. Pensions are no exception, and the people who accepted them as a form of payment should have realized that.

2. Even if the auto companies get out from under these pension obligations, undoubtedly the taxpayers will have to assume them via the PBGC.

While I oppose that too, it would be far better use of taxpayer money than throwing it away in a bailout of a fundamentally unsound business enterprise in dire need for restructuring.