EconomistMom.com

I think this Dilbert cartoon well captures the helpless feeling executives and government policymakers have about the auto industry these days.  As the Washington Post editors explain today, there’s not much we can (or should) do to keep the industry from shrinking:

For all his sympathetic words, Mr. Obama did not commit himself to any particular policy but left himself room to consider what kind of aid might be appropriate. In fact the only sensible bailout of Detroit would be one with strict conditions. Congressional Democratic leaders have suggested assurances that GM, Ford and Chrysler would use taxpayer money to create high-tech, “green” cars; for their part, the Big Three are willing to discuss an equity stake for Washington.

That’s better than a blank check but is hardly sufficient. Post columnist Steven Pearlstein has suggested that these companies need to be reorganized top to bottom, through a kind of “prearranged” bankruptcy greased with federal aid…

We doubt that this is the kind of rescue the car companies or the United Auto Workers have in mind, but it points to what should be an essential principle of any government charity. If the result is not a viable, albeit smaller, U.S. car industry, Washington will be simply throwing good money after bad.

And although plans for a possible GM-Chrysler merger have been “called off” (at least for now), both companies will continue to look for ways to cut “to the bone” (as a GM official called it), with the “key focus” of “returning…to profitability” (as a Chrysler official put it).  The layoffs and buyouts will continue, and thousands more autoworkers will lose their jobs each month. 

Anything the federal government can do to assist the industry and its workers in the immediate term (from now through early next year) is frankly going to seem like the “cookies and lemonade” kind of buyout packages that the auto companies are offering to the lucky of their job-losing workforce. 

But they say when life hands you lemons…