Sunday, November 02, 2008

No GM Bailout, Thankfully

Finally, someone in the government made the right call when faced with a dying company's begging bowl:

The Treasury Department has turned down a request by General Motors for up to $10 billion to help finance the automaker's possible merger with Chrysler, according to people close to the discussions.

Instead of providing new assistance, the Treasury Department told GM on Friday, the Bush administration will now shift its focus to speeding up the $25 billion loan program for fuel-efficient vehicles approved by Congress in September and administered by the Energy Department.

The message is clear: Use the loan money as intended to revamp your product line with smaller, fuel-efficient cars. The only problem is that mercantilist policies like this risk retaliation from our trading partners. Remember that the Smoot-Hawley tariff was a major factor in prolonging Great Depression 1.0. Let's not overdo things with a repeat.