GM Goes Bankrupt

Today is a sad day for auto companies in America, as thousands of people have lost their jobs due to the bankruptcy of GM and Chrysler. According to thehuffingtonpost.com, the companies were given $17.4 billion in emergency loans in December. "I believe that our government should provide short-term assistance to the auto industry to avoid a collapse, while holding the companies accountable and protecting taxpayer interests," Obama—as then president-elect—said before the companies were issued loans.

But in April, GM wrestled an additional $2 billion from Obama. And now that the companies have filed bankruptcy and the government has agreed to devote $30 billion into GM and an additional $8 billion into Chrysler during and after the bankruptcy period, the question on everyone's mind is: should we have just let the companies go, as stated by Conservatives in December?

Financial experts are saying no, at least not technically, since the impact of the closures would have been more devastating than it already is. Still, they say, the investment is risky business.

Douglas Elliot, with Brookings Institution, says that: "There's clearly an economic case to be made to defend the jobs that are there, and to avoid a shock to the economy that might send us spiraling further down." And according to economist Dean Baker, the government and the companies need plenty of time to work out the kinks of a revamping agreement. But economists across the board are somewhat hopeful, as long as the bankruptcy is controlled and not chaotic—which could result in as many as 3 million job losses from dealerships, parts manufacturers and other supportive businesses. "Firms go out of business. We've seen that before, and that's not the end of the world. But at this point in time, it would be," Baker said.