Chastened auto-executives carpooled to Washington this last week to beg the lawmakers for a bailout.
One of the most notable features is the way congress seems intent on humiliating the auto CEOs. One has to wonder why the auto company CEO and the bank CEOs have been treated so differently. Partly it's clearly clout: the automakers are pretty well connected, but the big banks influence is doubtless far greater. Also, as I pointed out in the previous post, there are plenty of southerners who have regional interests directly opposed to those of the automakers.
The country seems understandable reluctant to land money to a failing business. Recently, Paul Krugman said he believed there is no future for the US car industry. It seems clear, even given the bailout, the automakers will emerge smaller companies that will eventually fade away.
Beyond this, we need a paradigm shift, before cities start going under water. America in 50 years will not be the car-centered nation it is today, market pressures (rising gas price) and environmental problem will see to that.
So, we should have no illusions about the long term viability of these companies. Still, the bailing them out would be money well spent. Allowing one of these companies to go under would likely hurtle us toward depression. From this perspective, shelling out billions to merely postpone the inevitable seems perfectly reasonable to me.