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In the waning days of the Bush administration perhaps the opportunity for historians to point to something he got right. Yes I, too , am opposed to a Bailout on many levels but playing Russian Roulette with the fragile economy may not be the wisest course of action. A measured bailout with lots of strings attached is a good alternative. The prearranged bankruptcy would have been a better option in my mind and the idea that no one will buy a car from a bankrupt company really underestimates the markets creativity. Insurers would write a contract to cover needed repairs on cars sold, funded up front by the auto industry. Just like we buy group health insurance, the insurers would calculate the annual losses in the recent past and charge a premium to cover that plus handling and profit. Secondly, the aftermarket parts makers would jump all over the opportunity presented to supply a large market with parts to repair these cars for the foreseeable future, thus boosting employment. It might even provide for independent mechanics who are properly certifed to perform warrantee work, expanding the consumers options and creating a larger opportunity for small businesses.
Beyond that we, the American car buyers, have stopped buying their cars anyway. That is why they are in trouble in the first place. We prefer Asian reliability and German performance to Detroit mediocrity. I have no idea how the bailout will effectively change that. Daimler Benz tried to "fix" Chrysler but couldn't overcome the "Cultural issues" that made the two companies effectively incompatable. Daimler walked away, selling Chrysler to Ceribus Capital for pennies on the dollar they paid for it, a sure sign of capitulation.
That said, we need to strengthen the economy and keeping people gainfully employed is a step in the right direction. In the long term, however I believe that it is money down a rat hole. Ford, doesn't need it and isn't planning to take it at this writing. They saw the problem and dealt with it early. They should reap the rewards of their wisdom while the other two continue struggling to stay afloat. Ford had electric hybrids available first (of the American Manufacturers) because the Moghty GM thought it could dictate the tune and didn't believe as strongly in hybrid technology as other alternative fuels which were further off in the future (or read that as we haven't finished milking the current technology). Hopefully the "bailout" will contain significant language to force GM and Chrysler to adopt these interim technologies.
At the end of the day the financial crisis is about trust (or the lack thereof) and it is still about housing and that problem isn't going away anytime soon. This recession, from which we are trying to protect the auto makers in this latest round of chicken little, is going to continue until housing rebounds. With the second wave of mortgage defaults still coming (some say larger than the first) housing prices will remain depressed. For those with substantial equity left and a solid credit rating, refinancing at favorable rates is possible and they can use the extra cash to capitalize on the falling prices of almost everything.
