I really do not understand how Chrysler is a part of this. I thought that one of the main (if not the only) incentives in providing guarantees for their private LBO was that they'll become less of a public-image liability for the US government and less of a drag on the financial performance of the industry sector.

Let them die.

Yeah, the bailout the Big Three need is socialized health care in the United States. They've already shuffled off the pension plans.

I'm of two minds on this. First, I hate the idea that we're essentially giving tax payer money to the auto makers to help them avoid the consequences of their own poor business decisions. Yes, they're "loans" but government loans are usually a glorified handout in most cases. You can write up the current US auto manufacturers troubles to a bad economic climate, rising fuel prices, etc but what you've really got is company management failing to accurately predict consumer desires and then providing often sub-par quality vehicles when compared to their overseas competition. This wasn't some massive catastrophe visited on the auto industry by uncontrollable outside forces, this was simply the result of poor management and planning.

On the other hand, I also realize that the auto industry in the US is somewhat unique among businesses. As they are currently set up manufacturers tend to clump into certain areas of the country and they employ a huge number of individuals within that area. When an string of auto plants close you have massive layoffs in a small number of communities and that can wreak havoc on an entire local economy. Having auto plants close is more akin to closing military bases in the amount of widespread economic impact that it can have.

So in this instance I can't decide which I'd rather see. A "bailout" from the government to keep things going a little longer while hoping the car manufactuers can get their feet back under them or letting the business suffer for it's poor management (as a free market economy would demand) while at the same time costing thousands of laborers loss of employment and impacting countless communities around the country.

Drive through Flint or major parts of Detroit for a startling real life example of this.

These bailouts are probably closer in scope to Alaskan pork barrel than to Wall Street gimme's -- Detroit more or less needs this money to recover within the next 40 years.

Leaving patriotism out of it, this is a false statement. Ford has been considered "as reliable" as Toyota since 2007. GM's reliability has been steadily moving up since about the same time -- they achieved relative parity in early 2008.

There's a stigma about American automobiles that they can't shake, but the vehicles themselves are rock solid.

And in terms of "fun to drive" -- GM just mops the floor with toyota or Honda. My opinion, anyway. =)

The one big gamble that Ford/GM made that Toyota/Honda didn't -- betting on cheap oil for another 100 years. Now the Prius is actually for people other than latte sipping dachsund owning self-fart-sniffers, and the Hummer is no longer a status symbol bearing any sort of positive mark.

I kind of like my 2005 Chevy Impala.

Sure, but Ford has at least 10 years of bad press to counter... I think it began with the rolling SUVs and exploding tires.

BTW the US government bailed out the airline industry, and they seem to be surviving (if not doing so great), but they almost collapsed back in 2001. Maybe this isn't that bad, I don't see it as such a bad move. Plus 25 billion sounds so little compared to 10 billion per month on Iraq and 700 billion for the banks.

You can always make a case for any industry to be bailed out. It always "makes sense", it always "protects jobs and local economies". The problem is that you are spreading the failure around to everyone, and making it that much harder for everyone else to get along. The U.S. car companies may succeed or fail, but they need to do so on their own. They have pushed a failed business model farther than was wise and have been too slow to fix things when the situation changed on the ground. The problem is not technical, it's systemic. Yes, the companies failing will be painful for many, many people. But the risk of a bailout is that it extends those problems to the whole country - and these days, to the whole world. There must be failure. There has to be risk. If there isn't, you are in a command economy and playing an entirely different ballgame.

Aetius is right. If there's no risk of failure past a certain size, capitalism stops working.

I grew up in downtown Flint... one of my best friends grew up in soviet Georgia and says my childhood pictures look more grim than his.

I'm torn about the bailout. 90% of me thinks it's totally ridiculous- I'm from an AC Delco family, with a good chunk of my family benefiting from GM's luxurious dependents' health and pension scheme, and I STILL tell people to stay away from American cars. A car that's ready to die after 90k miles is not a sound investment.

The other 10% of me knows that if the remaining plants in SE Michigan go offline that whole area will be a near-permanent test case for the economic meltdown everyone's so afraid is coming.

Just out of curiosity, what would it take for that greater Detroit area to transition into a different industry? Both Baltimore and Pittsburgh have seen their manufacturing industry leave. Pitt lost steel a long time ago. Baltimore lost shipbuilding. Pitt made a comeback on the high tech industry. Baltimore is primarily a financial services town now.

Detroit has to have at least cheap real estate going for it.

That about sums it up. They need some of the union crowd to buy into education and career shift. The big push right now is to reimagine themselves as a green energy powerhouse. Barring that, or a mass exodus, they need something else to build.

The unions have already realized their way of life is dying. Some of the new plants coming online have made concessions that were quite surprising (e.g. mandatory cross training, lower wages, etc.). If they really fall into total economic ruin for a while, then I imagine wages will fall back in line with something fundamentally workable. Nationalized health care will also put a lot of strength back into the manufacturing sector. Falling gas prices are not helping them at all.

Do you mean that Ford cars built since 2007 are considered "as reliable", or enough time had passed by the year 2007 that vehicles made years ago have finally been judged reliable?

And considered reliable by whom?

Cars built by the FMC in 2007 are more reliable across the board than Toyota. Consumer reports, btw, is my source.

I can't link directly to CR (I don't have a subscription) so here.