Detroit's Big Three automakers are in big trouble.
That's not really debatable. The credit crisis and poor operational performance have investors fearing bankruptcy. A share of GM (NYSE:GM) and a share of Ford (NYSE:F) put together may buy you a $5 foot-long at Subway, depending on when you check; Chrysler's minority shareholder, Daimler, has gone a step further and written down its stake to zero.
What is debatable is whether the government should bail them out. The government's bailout plans have grown past Fannie Mae (NYSE:FNM) and Freddie Mac. And past banks -- even if loosely defined to include new bank holding companies Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS). Indeed, the government's bailout plans have grown to include an insurance company (AIG (NYSE:AIG)) and a credit card company (American Express (NYSE:AXP)).
Should the Big Three be next in line? Let's view both sides before we vote.
Supporters argue:
- GM and Ford employ half a million people alone. That's before you add in Chrysler, suppliers, and ancillary industries. And before you factor in all the pensioners. The American auto industry is thus too critical to our economy to fail.
- If Wall Street, which doesn't produce anything tangible, can get bailed out, why not companies that produce real goods?
- The current problems are temporary and will be remedied once the credit crisis abates.
Opponents argue:
- The banking industry differs from the auto industry because the health of the entire economy relies on the banking industry. Not so for the autos.
- Bailing out Detroit is another blow to capitalism.
- The current problems aren't temporary (as they are in the banking industry) and are a result of mismanagement and competitive disadvantages.
Where do you stand? Should we bail out the Big Three? Vote below and then leave your two cents in the comments section, if you're so inclined.
