“So, Detroit has been shielded from economic reality in the US by a curtain of cheap oil and cheap carbon. Suddenly the curtain is pulled back and, uh-oh, Detroit is caught on stage with its pants around its ankles.”

However, I have to disagree a bit. You mentioned that part of the reason that Japanese, Korean, and European auto makers are faring better is that the Kyoto Protocol legally required them to be greener. That does make sense to me.

Take a look at Toyota, who is a model for 6-sigma efficiency and innovation. They began research and development on alternative fuel cars in 1993 — that was 4 years before the Kyoto Protocol (http://www.toyota.com/html/dyncon/2007/september/birthday.html).

They are now being rewarded by the market for such foresight. The big 3 auto makers lacked this drive because of cheap oil in the 90′s and early 00′s.

This really reminds me of the old tale of the Ant and the Grasshopper (http://en.wikipedia.org/wiki/The_Ant_and_the_Grasshopper). The US auto makers were out “playing” creating gas guzzling SUV’s that were selling out. If they didn’t ever expect gas prices to rise, then they weren’t paying attention. They didn’t prepare for winter and now they could be left out in the cold.

I read a statement from the Governor of Michigan that 1 out of every 10 jobs in America rely on the US auto industry, which is why we need to save them. What gets lost in all of this is that if they request bankruptcy protection, they won’t disappear. GM and Chrylser will still merge, creating efficiencies, and they can begin to restructure. People will lose their jobs, but they have only their poor leadership to blame.

If we use any of that $700 million for the auto industry, you can be certain the airline industry will be next in line, and the credit card industry won’t be far behind.

Good article.

Thanks.