Also, if I'm on the board of directors at Ford, now I'm thinking that the rest of the auto industry is surviving more or less on the whim of the U.S. government. So even if my balance sheet is healthy enough to go it alone, why am I not going to try to get whatever I can out of Washington? There's the specter that the taxpayer is now going to be on the hook for yet another $30-$40 billion once Ford's leadership decides, "Hey, this bankruptcy deal really isn't so bad."

The Obama administration accused the investors who walked away of “failure to act…in the national interest.” But it’s not difficult to understand why these secured creditors rejected the government’s offer of essentially 29 cents on their investment dollar. If that is how the Obama administration treats capital markets, how exactly do they expect to spur private investment in American companies, as the White House claims it wants to do?

Bankruptcy reorganization will probably yield a better deal for investors than the government’s plan. It also will imbue the process with more financial sanity than anything the Obama administration cooked up. For instance: the historically overindulged United Auto Workers might be forced to make more “sacrifices” than being handed a 55 percent stake in the company—essentially what the core of the administration’s plan would have accomplished—or reducing their CBA-mandated breaks from 16 minutes to 13 minutes.

Bankruptcy has been the best option all along. That was clear the moment it was determined that new private capital or adequate sales revenues would not be available to fund operations. But once the Bush administration circumvented Congress to throw Chrysler (and GM) a lifeline, and the Obama administration followed suit with implicit backing, uncertainty prevailed and the problem persisted. The bankruptcy process will produce a less politically driven solution.

Although there are many differences of opinion between G-20 governments on how best to endure and combat the global recession, there is consensus in their rhetoric about trade and protectionism. How to convert pro-trade, anti-protectionist rhetoric into strong mutual commitments by governments, however, is a more challenging matter—and will be a prominent topic of discussion in London.

Last November, G-20 leaders vowed to avoid any protectionist measures for at least one year, but a recent World Bank study found that 17 of the 20 countries have already abrogated that commitment. The invocation of protectionist policies is rather routine, unfortunately, and the measures cited by the World Bank include many that wouldn't raise alarm in a stronger economy. It is the fact of global recession that has made the world hypersensitive to any policies that might be perceived as protectionist.

Certainly it is crucial to avoid protectionist policies that clog the arteries of economic recovery and help nobody but politicians. But it is also important to keep things in perspective: the world is not on the brink of a global trade war, as some have suggested. Ministers in London should make strong commitments to trade openness without hyping the fears of protectionism unnecessarily.