In my new book I rant incoherently about several different subjects, including the domestic auto industry and the bailout of Chrysler -- the original bailout of Chrysler -- that occurred thirty years ago. The dominant narrative on that bailout has held it up as a success, because Chrysler continued to fog a mirror, kept its workers employed and even paid back its government loan with interest.

It seems to me that ye olde Chrysler bailout can only be viewed as a success if one stubbornly refuses to acknowledge the big picture. Let's be realistic about what happened to this company. It was never back in the game, it made mediocre products, its bright spots being the minivan and K-car, it got bounced around like a hot potato between a few companies and it finally came back to lock its giant mouth entirely onto the grotesquely distended U.S. government teat. Sorry for the most unpleasant visual. Chrysler became somehow far more voracious for and dependent on public money than it was under Iacocca, when it was profoundly dependent on it. And not just Chrysler this time but the whole domestic auto industry. That 1.5 billion-dollar bailout turned into a near 100 billion-dollar bonfire. As I write on page 156, "with interest, my ass."

"Would it have been a better choice to let Chrysler go down in '79? It was hard to imagine all those folks losing their jobs, but look what's happening now. If we had let the failed business fail in '79, would this have helped the remaining domestic auto industry to grow richer, stronger, less clueless? We'll never know." [p. 156]

These haven't been very popular questions to ask. In fact the Chrysler bailout has been nominated by members of the new administration as a model for bailouts to come, and the same criteria used to judge the Chrysler bailout a success are now being trotted out to whitewash the much larger bank bailout. Lately, however, I have noticed more authoritative voices speaking up to clarify the Chrysler story. One is Barry Ritholtz, who, in his book Bailout Nation  (inadvertantly sharing a title with a chapter in my book, I swear), wonders what might have happened had Chrysler been allowed to fail.

In a recent interview with Bloomberg's Tom Keene, Ritholtz says "part of the reason we're rescuing GM and Chrysler right now is because we didn't let Chrysler go through its normal process."

Expanding on my lament that 'we'll never know' what might have been, Ritholtz says "We don't have counterfactuals. We don't have the situation where, what would have happened if we didn't bail out Lockheed, if we didn't bail out Chrysler. ... Imagine Chrysler was allowed to fend for itself in 1980 and died. What would have happened. And unlike you or I, corporations don't just, you know, shuffle off this mortal coil, never to be heard from again. They have intellectual property, and physical plants, and manpower and knowhow and markets and partners. So someone would have come along, some vulture would have bought them for pennies on the dollar, and a) that would have created a new, lean Chrysler, but more important to our story, what it would have done was b) scared the bejeezus out of GM and Ford management, and c) really put the fear of God into the UAW. That never happened, and that's a classic unintended consequence of the bailout."

We constructed a political system in which it is somewhat inevitable that elected representatives will succumb to pressure to prolong the miserable existences of giant failed companies llke Chrysler -- to kick the can down the road to their successors. We should all be forced to buy and drive new Chrysler/Fix-It-Again-Tony F-Car hatchbacks as punishment. Actually I think I just described Obama's energy policy.