Should the Big Three be put out of their misery?

Should the government step in to save them or just let them die peacefully in their sleep?  Barack Obama and most of the Democratic caucus believes some government assistance, to the tune of $25B (remember when that seemed like a lot of dough?), will be required to keep the Big Three automakers afloat.

This comes just a few weeks after Washington provided another $25B the automakers claimed they needed to finance the conversion to building more fuel efficient cars.  (Of course, one could argue any management team with the smallest bit of competence would have directed the development of more fuel efficient cars long before now).

Henry Blodget argues let the Big Three die:

Ford, GM, and Chrysler are done for regardless, Obama. Bailing them out yet again won't fix them. It will just prolong the agony.

The companies' problems result from:

  -  Their inability to build cars (cars, not trucks) Americans love
  -  Their inability to restructure their way out of their pension and union obligations
  -  Their inability to compete on their own merits.

Throwing another $25 billion of taxpayer money down the rat hole won't do anything other than postpone the crisis. Just let the companies go bankrupt, Obama. That's what bankruptcy is for. Let the shareholders and debt holders take the hit. Not the American taxpayers.

The danger, of course, is that the companies never emerge from bankruptcy, and a significant number of folks are without jobs and pensions. 

It's likely Barack Obama and the Democrats will prevail here, and Detroit gets another $25B check from the government.  And just like banking and insurance, the American people will now have some "ownership" in American automobile manufacturers.  But how about setting up some new rules for American business:

  -  We're all about free enterprise.  But if a corporation is so poorly managed to require massive government assistance to stay afloat, that management should get the boot and the government (and, by extension, the taxpayers) get some oversight into the management of the bailed out company.            

  -  And about those companies that are too big to fail?  How about this; if a company is too big to fail, it's just flat out TOO BIG.

Comments

[John]

Our trackback feature isn't working right now, so I wanted to make sure you got credit for one of our posts. You're partially quoted:

http://www.meltingpotproject.com/mpp/2008/11/obama-i-heart-bailouts.html