Part of what makes the auto bailout conversation difficult to have realistically is that this $25 billion number is hanging out there. That’s a lot of money, yes, but it’s actually a relatively small amount of money relative to the scale of the Big Three’s operations. Under the circumstances, a bailout looks a bit like a good deal.
But by the same token, I don’t see any reason to think that $25 billion would actually turn these firms around or even forestall collapse for very long. The car industry in general is in a big slump, and these companies in particular have been on a downward trajectory for a long time. You could buy General Motors for $1.75 billion or Ford for $4.11 billion. Asking for loans that are many times the total value of the enterprise seems to me like a mark of a very, very unsound underlying enterprise. And rather than “saving” whatever promising initiatives — Volt, etc. — may be happening in Detroit, I worry that using those as a rationale for bailing out enterprises that are still primarily oriented around selling trucks and SUVs will keep those programs shackled to dysfunctional institutions. Bankruptcy could liberate whatever elements of GM have real value so that they can be incorporated into different, more viable firms.