Business: Twilight for Twinkie & the Auto Bailout

The latest mediation effort has failed and as such a court supervised liquidation appears to be the next step. Companies will probably buy up some of the Hostess brands and facilities. Will be interesting to see what survives and what doesn't and in what form.

Hostess employed 18,500 people.

A handful of years ago, GM and Chrysler was essentially in a similar position: unable to pay its bills, too many unprofitable brands, costly union contracts and excess capacity. But since that industry employed so many more people, the pressure to bail them out was tremendous. The Federal government bailed them out at a cost that is still uncertain despite claims it was a success. Here is a video that explored some of the problems of the bailout beyond taxpayer cost including favoritism to unions, business decisions driven by political considerations instead of economic ones and moral hazard.

One wonders how would things have unfolded if GM and Chrysler had gone through traditional bankruptcy court?