Why all the political games in Washington around giving the Automakers the $25-40 billion?
While the political gamesmanship surrounding the proposed bailout of the Detroit Three has centered around two prominent schools of thought (“too big to fail” and “moral hazard”), it has unfortunately also skirted much discussion of the actual risks, benefits, and impacts on our economy should either course of action be adopted. Instead it seems that our elected officials are balanced between a need to intervene and a desire not to make the problem worse, which has led to posturing and inaction. The risks from adopting either approach are significant, as it is difficult to foresee tactical implementation of either option. At risk are not only the jobs of direct employees, but a cascade of bankruptcies among automotive suppliers, regional banks, and financial institutions holding commercial paper and bonds. My firm has completed a study of the tactical risks of different means of handling the automotive companies. I’ve included link to that study below. Take a moment to read it, and if
