Yes-Chrysler and GM, actually Chrysler having financial difficulties is nothing new-they have had this trouble since the early 80's, so this is old hat for them. But GM-really thought that mighty GM would never fall! Heh, I never thought I would have seen the day that GM stock would be "penny stock"!!!

The big dilemma here is not just the companies that have already filed for Chapter 11 like Chrysler has, but also those who would be in bankruptcy today had it not been for taxpayer funded bailouts--Fannie Mae, Freddie Mac, Merrill Lynch, GM, AIG and Citigroup all come to mind here.

The debate isn't about what to do about companies that have already gone down the tubes, but we also have to deal with the fates of companies that are headed in the same direction. Ford, along with a host of other large banks are on the brink. And the greatest challenge of all will not be strictly about the failure of giant corporations. It will also be about the next big shoe to fall--the failure of the US government to fund these bailout boondoggles without paying severe consequences. That's where I foresee things going.

Even with the bailouts, we have all the pain of failure but little hope of resolution. This worst of both worlds situation is readily evident in the case of Chrysler. Despite the infusion of $4.5 billion in taxpayer funds to finance Chrysler in bankruptcy, it's bankruptcy filing last week is wreaking havoc on the auto industry anyhow. We are seeing a temporary, but TOTAL, shutdown of Chrysler production, thus pushing auto-parts suppliers to the brink of bankruptcy too. Should we give them a bailout too? What's going on with Chrysler is also impacting GM and Ford, as the flow of auto parts is being disrupted by the lack of production. This has and will continue to have a cascading effect on the industry as a whole.

To top it off, we're seeing Chrysler dealerships going broke in large numbers and we're seeing a new phase in the collapse of auto financing, as lenders pull back. Folks, this isn't a very nice picture here. Despite massive commitments of taxpayer dollars to back up the warranties on Chrysler and GM cars (got to give consumers some confidence after all), consumer confidence in the auto industry remains at an all time low, helping to drive ALL auto sales into the ground.

Some numbers to illustrate: Chrysler got whacked with a 48% loss in total sales from last year. GM down 33%, Toyota down 42%, and even Ford, which is supposedly doing better than GM or Chrysler, is down 32%. Despite the hope and assurances that Chrysler's bankruptcy will be quick and painless, I can already foresee an imminent attack of creditor lawsuits and claims hitting the courts, thus complicating matters. The creditors are going to demand that they liquidate the company, sell off the assets, and distribute the cash based on a certain contractually guaranteed pecking order that gives first dibs to secured creditors over everyone else. It's just not as simple as it's being painted now.

So basically, we have both a huge burden to the taxpayers AND widespread pain to all of those who derive their livelihoods from the auto-industry. That's what I call a lose-lose situation.

It's a big deal in that it shows what amateurs the administration is comprised of. The hand-in-glove solution of marrying Chrysler up with Fiat (have you driven a Fiat lately?) was the rationale for an unrealistic time frame to do two years worth of negotiating, positioning/financing and put Chrysler (of course, the American company) in the worst possible bargaining position. Why, I'm shocked. The only viable option is bankruptcy. Imagine that.

But, the really comical part of this situation is that the US government AND THE UAW!! have become 57% shareholders in Chrysler! Somebody please, tell the class the last time government AND/OR a union takeover/ownership resulted in a company SURVIVING. And how ironic that the organization most singularly responsible for the company going into bankruptcy should now become the organization most responsible for their 'profitable" survival. What could possibly go wrong here? It's not great, but it is rich!