In the next 48 hours, Chrysler is expected to file for bankruptcy because, according to press reports, a significant minority of its creditors object to the Obama administration’s planned takeover in which the government and unions would own a majority stake. The Obama administration hopes to persuade the court to ratify and rubber-stamp its plan.  But the bankruptcy courts should exercise independent judgment instead, as they do in any typical bankruptcy case.

The expected Chapter 11 bankruptcy filing of Chrysler LLC is…

Read the full story

My reaction to Lehman Brothers’ declaring of Chapter 11 bankruptcy and the refusal of Treasury Secretary Hank Paulson and others to take extraordinary Bear Stearns-like measures for the government to prop the firm up can be summed up in three words: It’s about time!

Business failure is not only a permissible outcome of capitalism, it’s a necessary one. As the great economist Joseph Schumpeter has written, the process of “creative destruction” is essential for the market to function. For innovation to flourish…

Read the full story