reddit

“There are two reasons we need to bail out the auto industry. The first, quite simply, is to buy time. Let's say we agree that the American auto industry is doomed, and that a $25 billion bailout does nothing more than delay the inevitable by three years. That is a perfect and entirely persuasive argument in favor of a bailout. Right now, the ripple effects of the loss of a million or two million or three million jobs (no one is quite sure of the number) would be a nuclear bomb detonated in the middle of a national recovery plan. It's not just the consequences for unemployment and health care and pension guarantees and consumer credit, it's the complete devastation of the landscape in which the efforts of the new Obama administration will have to take place. If $25 billion buys us three years for a recovery plan to take effect, that's a bargain. And there are other reasons to buy time. It is almost impossible to overstate the short-sightedness and pigheadedness of the management teams at the Big Three automakers. In the past few years GM executives have repeatedly derided the idea of a business model based on building fuel efficient cars and have pinned much of their hopes on selling luxury vehicles in China. But there are, finally, signs of improvement, including the development of the Chevy Volt. And there are a whole series of changes in the terms of employment under UAW contracts that are described below. But these things will take time to have their positive effects.” source...