Yet another submission by a loyal reader. Credit and thanks to the author: Jaroslav Kudritski.

On a recent trip to New York I was in Times Square doing some shopping and across the street a man was holding up a sign that said, “Stop corporate bailouts”. It got me thinking about a few things, besides the fact a one man protest will not change many people’s opinions. The most important sector to the American economy undoubtedly has to be manufacturing, specifically in the automobile industry. The rate of import of foreign automobiles really began to climb in the 60’s and 70’s and the almost immediate supremacy of European luxury and sports cars should have been a sign of days ahead. Instead, Detroit sat on its high horse as Mercedes Benzes and BMW’s became the cars of choice replacing Lincolns and Cadillacs. It is amazing that it has taken almost 50 years for this trend to catch up to the average Joe the Plumber vehicle. Now, after a slow and painful downfall the Big 3 are starting to feel the pain. Considering a large part of the country’s economy rides on their shoulders, what are the options? Can Detroit be saved? How would saving the Big 3 affect the future of American corporations?

After many large financial firms have been wiped out in mere days, it is not hard to believe that a giant blue chip can go down. This is the unfortunate reality of the capitalist system. However, it is that same principle that keeps our industries competitive on a global market. From a purely capitalistic decision there should be no help offered to the Big 3. The free market means they should sort out their own problems if they can. Under normal conditions this would not be a problem. Their sheer volume would allow them to take out sizable loans to restructure their business. However, with the current financial crisis there comes a stop in liquidity that worsens the situation. Furthermore, it is important to remember the government bailed out Chrysler not too many years ago and today they are the worst off of the three.

Although hardcore capitalists do believe these companies should be left to fail, under today’s economic system it is almost impossible to fathom. A refusal to bailout would mean these companies would probably file for bankruptcy protection. Yes, the infamous Chapter 11. As you many recall, many US air carriers have gone through the process and it has turned them profitable all while being under the control of the government. It would entail a multi-year restructuring process that could result in many top executives being sacked. Many think the loss of a job would not hurt these individuals and it wouldn’t. It would hurt their massive stock portfolios that were handed out by the very companies they dove head first into the mess they are stuck in today. In reality, there really is no choice for the everyday consumer. The fates of these companies will be decided behind closed doors by top-level officials. The question we should be asking is: have we elected the representatives that can deal with these situations properly. Only time will tell.