SocraticGadfly: The Chrysler bailout's limited applicability to today

November 23, 2008

The Chrysler bailout's limited applicability to today

While the 1979 bailout does offer a number of lessons, some of them are about how a 1979-style bailout probably WON'T work well today.

First, the $1.5 billion of 1979 is far less than $25 bil today. And, I'll adjust for inflation and for three carmakers.

Take that up to $5 billion to allow for three automakers. In inflated values, that's $15 billion today, still far less than $25 billion.

On the other hand, though, the formerly Big Three still were the Big Three in 1979. So, we should knock that inflationary $15 billion back to $10 billion. Now do you see how ridiculous, and worrisome, it is for the formerly Big Three to be seeking $25 bil? Sand down a rathole ridiculous?

And speaking of Big Three vs. formerly Big Three, in 1979, they had more than 75 percent of the market. Today? Only half.

And, as the story notes, Japanese cars are now on NASCAR.

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