Who are the real beneficiaries of the auto bailout?

The idea that U.S. taxpayers should bailout GM, Chrysler, and Ford is ridiculous.

The only sensible course of action for these companies is bankruptcy. No other course offers them the opportunity to reorganize their affairs legally and fairly.

The choice is not between a bailout on the one hand and no American auto industry on the other – that is a false dichotomy. Fundamentally, these companies are perfectly capable of producing marketable, competitive, innovative products. Perhaps not all three would survive a bankruptcy proceeding, but at least two would, and these two would sell millions of cars per year, profitably.

Suggestions that the bailout is in the national-defense interest of the United States are equally silly. America has a deep bench of politically-entrenched, fabulously-wealthy defense contractors – including the “Big Three” automakers – that is perfectly capable of building tanks and whatever other vehicles the empire needs.

Sure, there are union pressures, but these, too, are overblown as a motive force for the bailout. Some of the jobs will disappear in a bankruptcy scenario, but most will not. Many who lose their jobs will find employment elsewhere, even in the same industry.

No, the real beneficiaries of this bailout are the people who own the debt and equity securities issued by automakers and their suppliers, and the banks who have lent money to them and their franchisees. In other words, the same cast of characters who have already benefited from Wall Street bailout will be saved, at least temporarily, by this one. No other group has the political clout to get members of the House and Senate to vote for something that most of their constituents oppose.

The auto bailout is just another form of Wall Street bailout.

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