[Updated: Several commenters pointed out that Chrysler hasn't defaulted yet, so the title was mis-leading.]
This probably won't be the last time I say something like this. If I'd wanted to give Chrysler my money, I would have bought one of their cars.
Chrysler has been skirting bankruptcy for 30 years. From the Iacocca loans in the 70s through the ill-fated Daimler Chrysler merger, they've struggled (badly) to build a car people wanted to buy at a price they could make a profit on. They basically invented the mini-van, one of the biggest segments of the US auto market, and still weren't able to stay afloat.
But that didn't stop the Treasury from giving them a great big bundle of TARP money.
Money we'll never see again.
I know all the arguments for propping Chrysler up for a few more years. The economy can't afford to lose those jobs now. A Chrysler bankruptcy would have sent tidal waves through their supply chain, multiplying the effects of their failure. We need to do everything to preserve manufacturing jobs in the US.
Regardless of any merit these arguments have, can we admit one thing: Propping Chrysler up is all we're doing. That $3.7B hasn't bought us one job, long term. It hasn't created a dynamic new car company which will lead the 21st century market. It's just pulling the bandage off slowly.
While we're thinking about employees, let's think about all those employees at Ford, Honda, Toyota and BMW. The Treasury is basically taking money out of their pockets and giving it to their competitor. That doesn't make their jobs any more secure.
Governments should set rules and officiate the game. They shouldn't pick the winners.