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Laying the groundwork

How G.M. might just be the U.S. government’s test case for future bailouts


 

The U.S. government’s work on saving General Motors from extinction could be little more than a warm-up for a more massive bailout the country’s retail sector. Estimates that G.M.’s collapse would lead to a million job losses are likely inflated; much of the damage has already been done as the company and its suppliers have laid off thousands in the lead-up to the crisis. G.M.’s collapse would still send hundreds of thousands to the unemployment line,  but the biggest employment-related headache for the government could come from the retail sector, the single-largest employer in the U.S. Retail chains like Dillard’s, Rite Aid and Neiman Marcus employ thousands of people, and are on increasingly shaky financial ground. A successful bailout of G.M. could in effect provide the government with a blueprint for rescuing them, as well as other troubled retail companies. At this point, “the auto bankruptcy is not the issue,” writes Douglas A. McIntyre. “The issue is how well the process prepares it for the next industry bailout.”

24/7 Wall St.


 
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