The market reaction yesterday--to the news that Congress would not act now to assist Detroit, and would instead require a "plan" from auto manufacturers and possibly reconsider some aid in mid-December--was a quick-fire selloff at the end of the day taking the Dow down into the heart of bear territory. Andrew Leonard, over at Salon, considers whether this is a real causes-and-effect or whether the importance of the auto industry to the US economy is being overstated when one views yesterday's drop as instigated by Congress's inaction. Worth reading: As goes Detroit, so goes the Dow.
In the meantime, over on Economist's View, Mark Thoma has posted Paul Krugman's Friday op-ed. on the two related concerns of Deflation and Detroit, Paul Krugman: The Lame Duck Economy. The op-ed is certainly worth reading, but also read the commentary on the post. (See, e.g., the comment by Bakho about the interlinkage of the economy of many towns and counties around the country with auto-related jobs.) There are a lot of people thinking about the problems, both long and short-term, if there is nothing done to save US auto manufacturing. Let's hope Congress is watching (and reading and listening and thinking).
And, for a sobering perspective on both bailouts and self-help tax evasion, my colleague Jim Maule has an interesting post over on Mauled Again: Evading Tax = Self-Help Bailouts? Ultimately, Jim says, we're back to the question of education and integrity. I'd add that the Reagan revolution's resulting indoctrination of a generation or two or Americans into the "greed is good" ideology bears a good part of the blame.