Like the banks, except they make shit.

CHICAGO (Reuters) - General Motors Corp, nearing a Tuesday deadline to present a viability plan to the U.S. government, is considering as one option a Chapter 11 bankruptcy filing that would create a new company, the Wall Street Journal said in its Saturday edition.

"One plan includes a Chapter 11 filing that would assemble all of GM's viable assets, including some U.S. brands and international operations, into a new company," the newspaper said. "The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked."

The worst part of this is not that GM will die an inglorious death, or how this affects its own employees. What I'm most saddened by is that we're going to watch the implosion of auto parts manufacturers, the companies that doe the majority of the manufacturing work that GM (and Ford and Chrysler) used to do. Very little of the steel that goes into a car is formed and machined by GM employees. These companies will get wiped out, and, in aggregate, they employ many more people than the Big Three.

Everybody knew this was coming, but we haven't thought much about parts manufacturers. GM owes billions of dollars to these companies, who will not be paid back by the original borrower.

So, these are the consequences (though it wasn't like GM was in a position to pay these guys anyway), and they are for the most part unavoidable. I don't see how the government will be able to sit back and watch this unfold without trying to soften the blow, so you'd have to think that the government would guarantee GM's operating debts so the parts companies can make payroll while they downsize. You're still looking at tens of thousands of workers laid off, both within GM and within parts manufacturers, and all of this will happen quickly.

Pretty much exactly what you don't want to happen right now, but I don't see a way out of it.