Foolish Thoughts on the Detroit Bailout
We've been writing (and I've been editing) a lot of coverage on the potential bailout of the Big Three automakers.
The hard part of these types of debates is that any end result is pain. No matter what we do. There's no Hail Mary pass we can throw, no "this might be just crazy enough to work" solution.
If we let them bail them out, we get the short-term gratification of saving jobs and pensions. And we can pretend that everything's going to be okay. But in the long-term, we're spending valuable resources keeping uncompetitive companies alive. If we don't, well, a lot of people are going to suffer.
If we don't bail them out, we get the awful images of families out on the streets and grandparents losing the pensions they'd worked for all their lives. But we eventually recover as we focus on new opportunities...perhaps even new car companies that can compete with the Hondas and Toyotas of the world.
Most Fools I talk to, including me, prefer the latter. The hugs and kisses of socialism always sounds better in theory than the selfishness and brutality of capitalism, but the results don't coincide with the theory.
Morgan Housel explains how the financial bailout is a different animal than an auto bailout:
Why We Shouldn't Bail Out Detroit
Tim Hanson takes the bailout frenzy to its logical conclusion:
Satellite Radio: Too Big to Fail
Bill Mann shows how we're ignoring the lessons of Japan's lost decade:
Failing Like Japan