The Shane Company, our ubiquitous “Friend in the Diamond Business,” has announced that it is going into Chapter 11 bankruptcy.
This announcement and the reaction to it by readers of the Rocky Mountain News are both signs of our times.
The fact that The Shane Company has to seek bankruptcy protection isn’t a surprise. While the profit margins are very high – the ring your jeweler sells you cost him about one fourth of its sales price, jewelry is a luxury item in hard times. In a year when other retailers are reporting year to year drops in Novermber-December sales of 4%, jewelers are reporting drops of 20% or more.
What was surprising and troubling was the reader reaction to the Rocky story. Readers simply don’t understand that there are different kinds of bankruptcy, and that the kind that The Shane Company chose doesn’t require it to go out of business.
That public ignorance is going to cost the taxpayers billions of dollars as the Obama regime bails out the auto industry.
If the auto makers were to take the bankruptcy route, they wouldn’t go away. Only the unrealistic and unsupportable union contracts would go away. We’re not bailing out the auto makers. We are bailing out their unions. No union need face market realities if it can count on the government to back stop their employers.
Many government programs would not see the light of day if politicians thought the public were well educated on the subject. The auto bailout is one.
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