Why The Right Is Wrong About Saving Detroit

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http://mediamatters.org/research/201202170006

February 17, 2012 12:39 pm ET

An emerging myth being pushed by the right contends that federal spending to rescue GM and Chrysler was unnecessary, and that the companies instead should have gone through a "traditional" bankruptcy. In fact, economists at the time explained that frozen credit markets made private financing for a "traditional" bankruptcy impossible. snip

Paul Krugman: Chapter 11 "Would Mean Wiping Out Probably Well Over A Million Jobs." In 2008, Nobel laureate and New York Times columnist Paul Krugman wrote:

If the economy as a whole were in reasonably good shape and the credit markets were functioning, Chapter 11 would be the way to go. Under current circumstances, however, a default by GM would probably mean loss of ability to pay suppliers, which would mean liquidation -- and that, in turn, would mean wiping out probably well over a million jobs at the worst possible moment. {New York Times, 11/16/08}