If the government could bend the rules and allow them to renegotiate labour contracts and healthcare without declaring bankruptcy, that should be option #1. If

If the government could bend the rules and allow them to renegotiate labour contracts and healthcare without declaring bankruptcy, that should be option #1. If these companies are still straddled with the nightmare of these obligations, no amount of government money will save them in the long run. Government run "innovation initiatives" are fraught with the same problems as a government owned company (moral hazard, non-market competitive landscape, distorted incentives) and should be considered equally inefficient. Nothing can match the innovation that could be achieved by allowing these companies to be broken apart (a process that began 30 years ago when Toyota started achieving success using standard, outsourced, intermediate goods). Breaking these companies up would create a competitive framework for smaller players to enter. Think about what could happen if you could start a car company without having to hire a single assembly-line worker? It would be like giving the car business a set of APIs.