On the other hand, The New Republic makes the case for the bailout. While the author, Jonathan Cohn, acknowledges that much of the scorn is deserved, he argues that bankruptcy will make it difficult for the companies to get car parts. He says GM, Ford and Chrysler have actually shown great improvement, taking the steps everybody says are necessary “until an unexpected trifecta of high gas prices, vanishing credit, and a deep recession hit.” From the article:
“According to the most recent Harbour Report, the benchmark guide for manufacturing prowess, Chrysler's factories now match Toyota's for the most productive, while both Ford's and GM's are improving. (A Toledo Jeep factory was actually named the nation's most efficient.) Consumer Reports now says Ford's reliability is approaching that of perennial leaders Honda and Toyota, whose ratings actually slipped last year. In late 2010, GM will introduce the Chevrolet Volt, a plug-in hybrid that can go 40 miles without gas, and the Chevrolet Cruze, a compact that relies solely on gas but that gets 45 miles to the gallon.”One discussion I haven’t seen yet is how the failure of one of the big three would affect the other two. Would it drag them down with it? Would it further compromise the economy like the Lehman Brothers’ collapse? Or would it benefit the survivors?
None of the companies seems to be able raise cash anyway, so in practice it may not make much of a difference if one of their domestic competitors fails. But it could potentially improve the sales of the remaining two just by reducing competition. Of course, consumer confidence in the domestic manufacturers could crumble, leading to a further reduction of sales. What really worries me about letting one (or all) of the U.S.-based carmakers fail is the economic fallout like the one following the decision not to save Lehman Brothers.
Since there’s no easy answer for this, it’s not such a bad thing that the government is taking its sweet time to decide what to do.
