From Derek Lowe….

There was a legal ruling last week in California that we’re going to hear a lot more of in this business. Conte v. Wyeth. This case involved metaclopramide, which was sold by Wyeth as Reglan before going off-patent in 1982. The plaintiff had been prescribed the generic version of the drug, was affected by a rare and serious neurological side effect (tardive dyskinesia, familiar to people who’ve worked with CNS drugs) and sued.

But as you can see from the name of the case, this wasn’t a suit against her physician, or against the generic manufacturer. It was a suit against Wyeth, the original producer of the drug, and that’s where things have gotten innovative.

It stuff like this this gives rise to the phrase “First, let’s kill all the lawyers.” But the real problem here is the First District Court of Appeals in San Francisco (is that a shocker or what?). This case should have been laughed out of court.

The airline industry goes bankrupt all the time. But we still have air travel. Why should we assume that bankruptcy means the end of the car industry?

My solution would be for the shareholders to be wiped out. All the secured debt holders to be given equity in proportion to how much money they were owed and all the unsecured to take a hike. After all that is done the Government should take over a portion of the pension obligations seeing as how the government has guaranteed them anyway. After all that is done, you would probably have a car industry that could survive on its own.

The worst possible solution (and the one that will probably happen) will be for the car industry to receive just enough money to keep on being a walking dead man.

(h/t Naked Capitalism)

From the New York Times…

A recent study found that the typical family who filed for bankruptcy in 2007 was carrying about 21 percent more in secured debts, like mortgages and car loans, and about 44 percent more in unsecured debts, like credit cards and medical and utility bills, than filers in 2001.

Their incomes, meanwhile, remained static over those six years, according to the study, which used data from the 2007 Consumer Bankruptcy Project, a joint effort of law professors, sociologists and physicians. Researchers surveyed 2,500 households nationwide that filed for bankruptcy in February and March 2007.

I can’t but help note that in 2005 they change the bankruptcy laws to make it harder for people to get out of their debts. The goal was to force more people to pay what they owed. But the practical effect seems to have made it so that people pile the debt even higher before they declare bankruptcy.

I am not one of those touchy feely poor victim type people. But I never thought that the 2005 law was a good idea. From my perspective, the real problem is that banks were willing to loan people too much money. If you loan people too much money, it does not matter what the law says. You are not going to get repaid.

From Calculated Risk….

In Pakistan they protest receiving aid. In Iceland they protest not receiving aid. In the U.S. everyone just becomes a bank …