I was cautiously and very uncomfortably in favor of the $700 billion financial industry bailout. I thought that the collapse of the world financial industry was a real possibility, and that that might set back world economic growth by a decade. I don't know where I got that "decade" estimate. Like Paulson's $700 billion, it just seemed like the right number. And I do expect that we will get all or almost all the money back, or even make money on the deal. On the other hand, that is an economic intervention that would have terrified most economists only a year ago.
The auto industry is different. The world monetary and industrial complex doesn't need GM, Ford, and Chrysler to keep going. Granted, those manufacturers represent a lot of jobs, and if they really went out of business that would have serious economic repercussions. But those "repercussions" are coming with or without the bailout. The Big Three are supposed to come up with serious plans for fixing their business models in return for bailout money. Those plans will be about what would result from bankruptcy court. Costs have to be reduced, and that means, among other things, reducing the crushing burden of union contracts. The only reason the bailout has a chance in Congress is that the auto unions want it. They want to hang onto the present system as long as possible, and that is what we will be funding if we give the car companies what they want.
But it's only putting off the inevitable. The big three can't compete with their current burdens. And the same Congress that is being asked to save them it busy planning environmental legislation that will put more nails in their coffins.
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