That is the question. Is that the best way for GM to save the company and the industry as well? Too big to fail seems to be the mantra these days for everyone looking for a handout from the US government. This means that if GM is forced into bankruptcy, the whole industry may go down and cause massive harm to America’s economic well-being.

But the worst-case scenarios seems to be like this : GM collapses and many of its suppliers fail which means the Ford production will be taken down while the industry goes into a chaotic contraction with the loss of thousands of jobs. But some analysts think GM’s only course of action is to declare bankruptcy and restructure. And they say that if GM does it right with a good plan, it could be the best bet to save the company and the industry as a whole.

Steven Pearlstein at the Washington Post :

The danger is if GM is forced to declare bankruptcy in a collapse without a plan. Doing so may cause a panic by suppliers and scare consumers away. That could actually precipitate the worst-case scenario that those interested parties are claiming will happen if they do not get a bailout.

No one really knows what will happen if GM fails. Many in the US Congress as well as the incoming Obama administration don’t want to see that scenario play out. If GM can survive until Obama is sworn in, they will likely get a bailout along with Ford and Chrysler. But if they go down before the Bush administration reverses course and gives the Detroit 3 the 25 billion dollars, we may just get an answer to that question.