I came across an article on the "Big 3" automakers and their trip to the bailout buffet at the end of last year. The pathetic arguments on the collective part of the Ford, GM and Chrysler is because they cannot guarantee that they will be able to attract consumers who will purchase their products, they need help.
Well duh. Automakers have been on notice since the 70's energy crisis that the day would come when fuel efficient vehicles and durable goods, like cars, would dominate the industry. Just as our financial industry role-models were lured by easy credit and the opacity of accounting systems, automakers greedily sold high margin SUVs instead of developing needed technologies to compete in the next age of business.
Having given up their once magnificent market power, and influence toward better vehicles, this industry is now cowering instead of thriving. Imagine if Big 3 had developed sustainable, efficient vehicles in the 80's and 90's. Wouldn't present day income shrinkage spur demand for its products currently? As economic recovery begins and incomes rise I think we may see the demand for american automobiles drop as evidence that our auto industry produces an inferior product. Foreign made vehicles will be substituted at a much higher rate because they match up better with complimentary things like fuel prices.
Now I understand the well publicized argument that certain industries are too large to fail. Certainly the auto industry is in there with insurance and finance and the demise of automakers would send shockwaves through our labor markets and affect our domestic and world economic outlook.
However, at what point do we stop inflating our national debt in favor of a few bloated industries that have brought problems upon themselves? The ever-widening deficit will have economic consequences that no one wants and the truth is the economic consequences of more debt are unknown. What we do know is that the future is gonna suck when we, as a nation, are unresponsive to future crisis because we are overdrawn.
Just as the Federal Reserve regulates monetary policy, a regulating body that would require a scalable amount of capital, insurance and/or surety bonding in gigantic industries would decrease federal government/taxpayer exposure in the future.