As of last night the automobile manufacturer bailout has flopped.  It’s amazing to me that our government is willing to spend trillions bailing out financial institutions with little or no oversight.  These financial institutions that gambled on crazy schemes like interest only loans and credit default swaps.  Yet, the brick and mortar manufacturers, their suppliers, advertisers, and hundreds of small businesses that support all of that overhead are being left in the cold.  They are at fault to be sure, for not responding fast enough to the future needs of the end users.  However, I believe the price of oil, the declining value of the dollar, two ongoing armed conflicts, dropping interest rates and printing money we don’t have has done more damage than lack of foresight on the part of auto manufacturers.

GM alone spent over $1B in advertising in the first half of 2008.  These manufacturers do more than just produce cars, they drive the economy.  They are too big to let fail.  If in the worse case senario one major manufacturer falls, it is very likely that Ford and Chrysler will be the next.  All of that will amount to nearly 2 million jobs lost. Most of these people will no longer be able to pay their mortgages and rent.  So we fall back to the financial institutions once again faltering.  If we think our economy is bad now just wait and see what happens next.