I have to confess that I'm surprised that so many people seem surprised that the auto bailout failed.
First, you have to remember that the TARP wasn't wildly popular at the time and the logic behind the auto bailout was even more tenuous.
Second, you've got to think that there are some p*ssed off Republican senators looking to settle some scores and show (in a very public fashion) that they're not dead yet, not going away, and not going to rubber-stamp everything the new Congress/Obama administration wants. So, I look at this as a shot across the bow (or, perhaps, into the bow).
Third, and in in line with the first point, look at how the TARP has worked out. Paulson (and Bernanke) went to Congress and said "give us a boatload of money and minimal supervision ... and we're going to use the bulk of the money to buy distressed assets off of bank balance sheets".
In practice, though, we've all seen that the truth is far different -- the TARP has been used as a bank stabilization fund. Now, politicians lie all the time, but they really don't like being lied to (in other words, so long as they're the ones doing the lying, everything is kosher for them). So, I've got to think that a lot of Congressmen are/were thinking "hey, you fooled me once..." and are not inclined to tick off their constituents a second time only to see another BS proposal go south.
So, what do the auto companies do now?
If things are as bad as they say, they go bankrupt. And maybe that's not so bad over the VERY long haul (in the short run, it's bad for all of us).
There have to be rewards for success and consequences for failure, and bankruptcy is arguably the ultimate consequence for corporate failure. IF the afflicted automakers can seize the opportunity (and get strong, forward-thinking management in place), then they can restructure their business and find a cost structure, product line up, and business philosophy that makes sense.
If not ... well, life goes on.
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