In yesterday's Senate Banking Committee hearing on lending money to the Detroit 3, Dr. Mark Zandi, Chief Economist of Moody's Economy.com, testified that even though it was unlikely that the companies would be able stick to their plans, the result of not lending them money now would be cataclysmic.
The resulting job losses and manufacturing shutdowns triggered by their rapid demise would cause a strain on state and federal social services agencies unlike anything those of us born after the great depression have ever seen.
The Detroit 3 believe their plans will enable them to survive for now and thrive in the future. Senator Bob Corker believes that the companies can't survive, even if they are lent all the money they want. There are those who agree with him.
What if lending them money now is just delaying what some consider to be the inevitable? Wouldn't it be better for America to buy some time to prepare for a soft landing of the demise of these companies? Wouldn't it be better to keep the factories going while we're in the midst of our worst recession since the depression? Wouldn't it be better for dealers to have time to plan for a new reality? Wouldn't it be better to give states some breathing room before they get hit with a tsunami of unemployed factory and dealership workers?
Lending the Detroit 3 money now (with real oversight and specific benchmarks) could mean helping them recover, or it could mean just delaying the inevitable. But delaying the inevitable is a better and less expensive option right than is shuttering our factories and dealerships and pushing millions of Americans to the unemployment lines at a time when we can least afford it. I think of it as an economic stimulus package with immediate benefits that could keep America's manufacturing base functioning as we retool for a green manufacturing economy.
What do you think?