Bailing out Detroit

“It’s tempting to call it a car crash,” said the San Francisco Chronicle in an editorial. Detroit’s Big Three automakers are hemorrhaging cash and market share, and they want a second $25 billion in federal loans to survive. Detroit is “anything but cocky, but it’s confident it won’t be turned down on its latest tin-cupping mission,” relying on the “too big to fail” argument—about 1 in 12 U.S. jobs is tied to car manufacturing.

Fine, letting GM, Ford, and Chrysler collapse “isn’t politically viable,” said Paul Ingrassia in The Wall Street Journal. But if taxpayers are going to be on the hook, we need a “thorough housecleaning” at the companies—replacing management and boards with government technocrats, wiping out shareholder equity, and “tearing up existing contracts with unions.”

Let them fail, said David Olive in the Toronto Star. “Detroit has been a significant destroyer of jobs and shareholder value for the past decade,” and the automakers have been “cosseted by taxpayers and motorists” long enough. Just maybe, “several smaller, more nimble and competitive firms” will emerge from Detroit’s “hidebound” morass.

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At least one of the three, probably Chrysler, won’t survive anyway, said Daniel Howes in The Detroit News. But letting all three fail would result in an industrial collapse that “would give new meaning to the word ‘ugly.’” Still, to merit yet another taxpayer handout, Detroit management and unions need to make it clear they'll use it as more than a crutch.