Diary

Just Great

So now, not only are we getting ready to bail out the auto industry, we may be getting ready to nationalize it:

Congressional Democrats are pushing legislation to send $25 billion in emergency loans to the beleaguered auto industry in exchange for a government ownership stake in the Big Three car companies.

House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., hope for quick passage of the auto bailout during a postelection session that begins Monday.

Legislation being drafted by Rep. Barney Frank, chairman of the House Financial Services Committee, and Sen. Carl M. Levin, D-Mich., would dip into the $700 billion Wall Street rescue money, approved by Congress last month, for the auto aid.

Say, I have a good question: What is the point of having bankruptcy laws anymore? What is the point of having troubled companies go through an orderly, court-supervised reorganization process while their manufacturing plants remain open and while their operations continue? I realize that the short-term pain that accompanies a bankruptcy is no one’s idea of a good time but it does bear asking whether our tremendous aversion to short-term pain is perhaps blinding us to the need to seek long-term solutions to the problems that afflict sectors of the economy like the automobile industry.

Even after a bailout, the Big Three automakers are still going to have problems that show up years down the line. The bailout does not solve the problems of bad management that afflict the automakers these days and have brought them to their current parlous straits. We are delaying the inevitable by kicking the can down the road and avoiding facing up to and addressing some very serious long-term problems in the automobile industry.

Which means that we are going to have this precise same debate a few years later. Just you watch.