November 25th, 2008
03:41 PM ET

Sync, and Swim Together

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Daniel Kahneman and Andrew M. Rosenfield
The New York Times

THE chief executive of General Motors recently said bankruptcy is not an option and that even talking about it hurts business. He is probably right.

Bankruptcy has worked well for troubled companies in many industries — by providing a way for them to adjust their contractual arrangements with investors, employees, suppliers, distributors, dealers and others. But it is not well suited to automakers because cars are durable goods that buyers hold and use for many years. Indeed, 8 in 10 consumers say they would not buy or lease a car from a manufacturer that files for bankruptcy.