This article by Paul Farrell of Marketwatch should be especially relevant for left writers who are skeptical of the GM bailout. Really, please read it. It’s a tour de force of the strong factual case for extreme gloom.
Just about every economic indicator is headed south at rates not seen since the Great Depression. Or in some cases, already exceeding Great Depression levels. The failure of an entire sector of our economy, one that employees millions and is responsible for the health care and pensions of millions more, is absolutely not something we can let happen right now.
This also is not some issue of nationalism and protectionism. GM in particular has extensive foreign operations that will likely never be able from the shock of a bankruptcy in a deep recession. These foreign assets are actually the best parts of the company, and compete in markets where gas has long cost more than $5 a gallon making fuel efficient vehicles, and where they have no “home field” advantage.
GM’s stockholders, the people who control the company and elected its management, have already been wiped out. GM stock is down more than 92% since late last year. The desire to “punish” the company further for its obnoxious promotion of massive SUVs, opposition to CAFE regulations, and general anti-regulatory lobbying is something the market has already done.
The responsible measure is a direct equity investment of at least $50 billion in GM and proportionately smaller amounts in Ford and Chrysler. But for now a $25 loan will do, to keep the company afloat until response people are once again in control of government in January.
