Titolo

Seven Myths. Nay: Seven Follies (II)

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Talking about bailing out the Detroit Big Three, today's NYT had a small article hidden in the Business Section that examines GM's situation. It turns out that the government's rescue package for GM has "a requirement that the automaker demonstrate a plan for achieving a positive net present value."

The author then makes some quick back of the envelope calculations that show that even under fairly rosy scenarios it is difficult to come up with a positive present value going forward. Hence, the article concludes,

even tough action [by GM: i.e., deep cost cuts, debt restructuring and union concessions] may not persuade the government that G.M. is sound enough to escape bankruptcy.

...Not as flashy as Paul Krugman's articles, but very illuminating!