Originally Posted by Villages Kahuna

Like anything else, the bailout being asked for by the auto companies turns out to be more complex than most of us can see.

My son runs a department for Ford that schedules all the North American car and truck assembly plants. They know the dire straights that GM is in. Ford, by itself, is in somewhat better shape, having enough cash to keep them going until the end of next summer with the current dramatically reduced sales and build rates. And he tells me that they have a terrific lineup of both fuel efficient and electric-gas crossover cars ready to launch in 2009 and 2010.

But if GM goes into bankruptcy, unless the suppliers can be paid very, very quickly using what's called "debtor-in-possession" financing, the suppliers will close down very quickly. Because many of the same suppliers serve GM, Ford and Chrysler, a GM shutdown will very likely shut all three companies down in a matter of days. With what they call "just-in-time" scheduling of the delivery of component parts to the assembly plants, all it take is one key supplier to shut down and assembly plants all over the U.S. will quickly follow. Ford has dozens of people analyzing their entire supply chain to determine the pinch points if GM goes down and brings suppliers with them. He tells me that it's not a pretty picture.

This situation is beginning to look like the Congress debating whether or not to authorize the bailout fund until the damage to the credit markets was already done and the damage to our economy that we now all see so well was unavoidable. It appears that the Congress is not inclined to provide any help to the auto companies--with or without conditions. If they don't and GM shuts down, bringing the others with them, we can forget about calling this a "recession". this will be come a near-1929 like depression.