Systemic risk can render drastic action necessary. But what about the prospects for the long term? Will they truly look up? David Leonhardt writes:
The Chrysler bailout may have saved the company, but it did nothing, after all, to stop Detroit’s long, sad decline.
Barry Ritholtz – who runs an equity research firm in New York and
writes The Big Picture, one of the best-read economics blogs – is going
to publish a book soon making the case that the bailout actually helped
cause the decline. The book is called, “Bailout Nation.” In it, Mr.
Ritholtz sketches out an intriguing alternative history of Chrysler and
If Chrysler had collapsed, he argues, vulture investors
might have swooped in and reconstituted the company as a smaller
automaker less tied to the failed strategies of Detroit’s Big Three and
…Speaking of which, Detroit’s Big Three have come back to Capitol Hill
lately, lobbying for billions of dollars in handouts. This time, their
executives insist, they’ll use the money to solve their problems.