" However, he (Paulson) now stands to gain lasting notoriety as the person who destroyed the domestic U.S. auto industry..."

In my opinion, Paulson deserves life in prison for robbing the middle class and rewarding rich parasites. But he had nothing to do with destroying the U.S. auto industry. The U.S. auto industry has destroyed itself.

Thanks.

A perfect analysis.

So the solution is to throw taxpayer money at them to forestall bankruptcy for a few more months? No thanks.
PS. Does the UAW still have those job-banks where people get paid for not working?

If Americans won't buy cars from a company in bankruptcy, why will they buy cars from a company which is very publicly headed towards bankruptcy? It's unlikely that a taxpayer bailout will do anything except delay the inevitable, don't you think?

It may be fun to blame Paulson, but the U.S. auto industry has done this to itself. Yes, reorganization under bankruptcy provisions will hurt a lot of people. But a lot of people are going to be hurt no matter what. There is no getting around that. At least bankruptcy will give these companies a chance to reorganize and become competitive again. That's about all we can hope for.

Why is it so important to have American Auto makers? If it is truly necessary to continue production in those industrial sectors, for whatever reason, wouldn't it be a better investment for the working class to invite let's say Toyota to fill the void - they have proven to be better at adaptation. When are we going to cut the cord. The American Auto Industry and the work force need to be reorganized - floating an unnecessary industry is void of a future vision, the same thing that got them in trouble in the first place.

Although blaming the industry for the economic woes is unfair. But it is totally fair to hold GM to task for a 45% sales drop compared to Toyota's 23%. Another point about numbers: using the CAR numbers shorts the national workforce by about 17% by BoLabor. Not a challenge about the obvious harsh regional impact possibly in store, but questioning the subjectivity of the CAR.

"This collapse in car sales in turn is the fallout from the collapse of the Greenspan-Bernanke housing bubble."

Wow. That's the simplest (and most simpleminded) analysis I've so far read on the subject. Do you sincerely believe that? No mention of high gas prices, growing concern for the environment, or the inevitable end of the SUV fad? If Bernanke and Greenspan hadn't screwed up, we'd all be driving Hummers. Is that how it works?

The fact is, SUV sales were already well into the process of tanking as far back as 2005. Hummer sales went from an average of 3980 per month in January 2007 to 1843 in May of 2008, while at the same time, sales of the Toyota Corolla went from 25,519 per month to 52,826. See the crossover there? Was this solely the result of the deflation of the housing bubble? Or did it have something to do with gasoline prices approaching $4.00/gallon?

In the Spring of 2008, the bottom literally fell out of the SUV market, but the Big Three, so far up their own asses and so far behind the curve that it's nearly comic, were still loading up their dealers' lots with monster trucks and urban assault vehicles.

Consider the following, from a June, 2008 article on Wired.com:

"The SUV as a lifestyle choice, as a personal statement, is dead," Aaron Bragman, an industry analyst at Global Insight, told Wired.com. "People are downsizing from their big trucks to smaller cars."

What's surprising isn't that SUVs are dead, but how quickly they fell.

The major automakers have in the past year or so vowed to ramp up production of passenger cars, and industry watchers predicted sales of passenger cars would surpass those of trucks within in a couple of years. Instead, it happened almost overnight as fuel prices raced toward, and then surpassed, $4 a gallon.

"We had planned on the small car - truck reversal occurring in 2010," Bragman says. "It's coming a lot faster than anyone expected."

Oh, I dunno. I'd say the people buying those smaller cars expected it to happen a lot sooner than that.

It's pretty clear to me that this meltdown is entirely the fault of the out-of-touch, incompetent, morally corrupt people who run the Big Three. These idiots need to undergo the public humiliation associated with bankruptcy. If GM is burning through $2 billion a month now, does it make sense for taxpayers to toss another $25 billion into the maelstrom? No. I doesn't.

Bankruptcy and restructuring first, then assistance.

This is depressing news this early in the morning.
It appears that even tho the big 3 have been as badly managed as we all thought, we cant afford to let them fail. Im afraid the best suggestion I have is for President Obama not to close Guantanamo, send Paulson, Bernanke and any other likely suspects there and put the car battery on their n&ts until they tell us what the hell they are really up to. Several representatives reported being told that martial law would be imposed if the "bailout" to restore "frozen credit" was not passed. Inhofe confirmed that it was coming from Paulson if you can believe him.

The near consensus that GM can not compete could be correct. Or not.

In 2006 it made a profit of $2billion before extraordinary costs. And,right now, this year, one of Opel's car was voted best German car of the year.

Certainly many of us have many reasons to be dissatisfied with positions Lutz and Wagoner have taken e.g.on Global Warming. Let's not confuse that with an objective analysis of GM's competencies. And for god's sake let's not punish the GM workers on the line either because we hate Lutz and Wagoner or because we are buy into the conventional analysis of their company.

Here's an experiment . Go back and look at the GM analyses being written in 2006. If they were wrong in their often glowing description of the company then, why think they are right now?

My guess is that G&M is just another company . Neither uniquely well nor poorly run.Under ordinary circumstances perhaps we could let nature take its course and have it enter XI and then VII. It would take a terrible toll on its workers but perhaps that's not a reason for Govt intervention. But.

Dean is right in that these are not ordinary circumstances but the direct result of Bush's wildly incompetent economic management.

And quite apart from a bankruptcy's effect on the labor market , GM's debt becoming illiquid (along with that of the suppliers who also fail)will have unforcastable but certainly adverse consequences on our attempt to avoid a world wide economic collapse. It would not only be cruel, it would be stupid.

I wrote a reader blog on this, but let me sum up my take - as someone who follows Detroit closely.

1. Look at Toyota's website - here you will see that Toyota - in the US - makes mostly trucks. Nissan also makes more truck models for the US than cars - they even have a Suburban like SUV that weighs 6000lbs. Even Honda makes a full size pickup now.

2. Liberals are sticking to a story that goes back to the early '70' which is "GM-didn't-make-the-small-cars-everybody-wanted." The truth is that GM had a small car in 1960 - then a subcompact in 1971. But...

3. Small cars don't make money. Since the beginning, big, powerful vehicles have always brought in the big profit margins. Gas price swings have proven NOT to effect this. In 1975 - a major recession year and just after the Arab oil embargo, the nameplates that actually increased sales were Lincoln and Cadillac and some other luxury models while the industry suffered a downturn in general.

4. GM has played ball with CAFE standards - early on they decided to meet the standard rather than pay fines for breaking it. But all these liberally loved profitable companies - particularly luxury German makes Mercedes, BMW and Porsche (limousine liberal anyone?) - just tacked the fine onto the window sticker (the cars were so expensive already the fine machts nichts to them).

Where's the outrage about that?

5. Liberals like Tom Freidman think "innovation" will lead to the 70mpg cars he envisions as saving America - but he also believes we can use the model of consumer choice and global capitalism to push rich people into expensive cars that get great gas mileage - Chevy's "Volt" concept is said to cost $40,000 to build - yet it's an 'economy car.'

It's literally counterintuitive, and by all measures economically irrational to pay more upfront on the sticker (and consider you're paying interest on the loan) for extra economy that will pay off only by the time you want to trade in (five years).

Strictly speaking, if we want to take a taxpayer stake in GM, our first priority should be get a flagship for Cadillac to compete with the $70,000 Mercedes S class - that's if we want GM in the black.

I detect a great deal of snobbery and "familiarity breeds contempt" in the current neo-liberal line we're hearing about GM's need to go bankrupt.

In 2003, Arianna Huffington gave us "What would Jesus Drive." The notion here was that we could incorporate consumer choice into a national drive to 'do the right thing.' But consumption is inherently hedonist - Thorstein Veblen would also remind us that car choice is a mode of "invidious distinction." Car buying is not about joining hands and singing cumbaya.

Now in 2008 the rhetoric has morphed into "What would Jesus build?" But again, the fatal flaw is in this idea that one company can be forced to make 'nice' cars while Mercedes goes on being "bad." If GM is forced into making "pious" cars, then you can bet that the brige loan will be good money after bad - and consumers will stampede to luxury foreign makers - those makers who's fuel swilling performance cars don't seem to bother liberals much at all.

While it may be a good idea to bail out GM, that does not necessarily mean it is an ability the government has.

While it may have been a good idea to buy up the toxic assets of the various financial institutions, it certainly was not an ability the government had or could readily acquire.

The reality is that bankruptcy probably does not mean the end of GM. It means the reorganization of GM. That reorganization will be carried out by people who do this type of work in the normal course of their working life. People skilled at their work. No new hires, no new skill sets.

The importance/advantage of using existing systems is that this problem is too big to get wrong the first time around. Any government attempt to solve this problem would probably get it wrong the first time around. Then there really would be big trouble.

And to suggest that people who have bought a Chevy for the last 40 years might switch because they worry about the long term prospects of GM is about as reasonable as saying they might switch their favourite NFL team, or start saluting a different flag.