GM in the US does seem to be brain-dead, but I'm not sure I'd give Ford and Chrysler more credit. Ford and GM in Europe have had to fight more for market share, and they've made more interesting and better cars there.
But they're too big to fail. At the very least, the DOD is a big customer of theirs. GM was the #57 US Department of Defense contractor in 2007:
http://www.govexec.c...5/0807-15s2s1.htm
($806M in sales to DOD).
Ford and Daimler-Chrysler are much farther down the list.
I'm a little torn on what to do about GM, Ford and Chrysler. They probably need a decade to do an orderly shrinkage and changeover to more efficient vehicles, but without a government bailout that's not going to happen. Normally, bankruptcy would seem to be the most sensible course of action for a company in as bad a situation as GM, but that would take too long and damage too much of the rest of the economy. In addition to decimating their supplier companies if they took that route, doing even more damage to the manufacturing base in the US, there could be millions of more people dumped on the unemployment rolls when the economy is already very fragile. Trouble is, even with a bailout millions of jobs may be lost anyway. In that case, some argue, why dump the money into the companies - why not just spend it on the workers directly? The problem with that approach is that unemployment benefits and retraining and so forth won't help the companies make products that the market needs. There needs to be a pragmatic approach.
At the moment, I'm of the opinion that it's worth spending the money to keep GM running at least until the economy picks up again. After that, GM and the others can undergo a more-orderly shrinkage and the workers will have greater opportunity to change jobs without the risk of sitting unemployed for excessive periods. IOW, let's see what Obama and his team can do. We can always send GM to Chapter 7 later if it doesn't work out. With all of the money being dumped into "toxic paper", spending (ultimately) even a few hundred billion on saving the manufacturing base seems like a reasonable thing to consider to me.
Cheers,
Scott.