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So the government pushes GM’s CEO out the door – and American businesses shake their heads at the level of government inference… even though it is taxpayers’ money being begged for. The government gives GM 60 days to get real and Chrysler 30 days to get a partner. CEOs all over America “sweat fear” as the feds hint that banks may not be as strong as they are telling you, that some of the biggies may need some serious federal capital infusions to survive. As Wall Street shudders and the market plunges, a chorus of “wait until you see the terrible earnings and the horrible contraction-in-the-first-quarter-GDP reports” fills the business news channels.

GM’s plans still carry too many old and expensive “out of touch managers” and a healthcare and pension plan for workers that I would die for – so would most Americans (except, of course, federal employees). Chrysler killed innovation when they separated from Daimler-Chrysler – developing new vehicles and future-looking engineering was just too expensive. They literally have nothing new of any significance on the boards and have no real template for the massive construction of smaller, more fuel-efficient cars. To get the capacity for this huge market, they literally need a partner that is already in that smaller car business, like Nissan or, as luck would have it, Fiat. The government said what everyone already knew.

So the market elation of last week seems to be nothing more than traders’ feeling like they really did hit a bottom, and they had better climb on the bandwagon before market soared upwards. Everybody seemed to forget the government’s admonition (the Federal Reserve to be specific) that “bottom” may come late this year or early next year. It didn’t say “at the end of March of 2009,” even though the stock market is a “leading economic indicator.” It just doesn’t start leading that far in advance. The unemployment numbers will get worse long before they get better; we have a way to go.

But why would the government even care about letting Chrysler and GM continue? Why not save the taxpayers a bundle and just let them fail. Do we need them around just to provide customers with government-backed warranties? To make parts for all of those cars already on the road? You might like to know that the new government-backed warranty plan doesn’t help those who already own cars made by these companies. The March 30^th NY Times: “The administration’s plan to stand behind new-car warranties for G.M. and Chrysler is intended to reassure consumers worried about buying domestic vehicles. And to a large extent, the plan should do exactly that. But people who already own a G.M. or Chrysler vehicle are not covered by this program and it also does not cover safety recalls, which can occur years after the warranty expires.”

Are people even interested in buying Chrysler or GM products anymore? What do you think the resale value on a car from one of these companies will be? GM and Chrysler are already tagged by consumers as damaged goods. The March 29^th Los Angeles Times provides the indisputable truth: “Since the first congressional hearings on the auto industry in November, U.S. sales by GM and Chrysler have fallen a combined 45% compared with the year-earlier period; all other carmakers slid only 33% during that time… By comparison, Ford Motor Co., which has not accepted any government aid, saw its share of the retail car market rise for four consecutive months through January, the first time that's happened in 14 years… In the first two months of this year, the number of buyers considering a GM or Chrysler vehicle fell 12% and 33%, respectively, according to CNW Marketing Research, which specializes in the auto industry. At the same time, Ford saw a 12% increase in consideration.”

How’s this for truth? If GM and Chrysler fold, they take with them thousands of parts manufacturers who supply Japanese and German carmakers too. A vast portion of every American car made is an assemblage of components from long list of “out-sourced” parts suppliers. The build everything from seats to brakes. Ever drive through Wisconsin , Ohio , Indiana , western Pennsylvania … all over the U.S. , but particularly in the rust belt… and look at all those small factories? Ever wonder what a whole lot of them make? You got it! Car parts for almost every car manufacturer that makes cars in the U.S. , from Honda to Ford, from Toyota to General Motors. Take GM and Chrysler out of the mix, and virtually every one of those parts suppliers will fail too. Then the other car manufacturers will be up a creek, even those who were smart and managed their businesses well.

So if I get this right, we are being blackmailed by the insurance industry, particularly AIG, because if there is massive failure in this sector, Americans will be walking around without insurance (or have to rely on state-backed reserves)? And we are being blackmailed by the financial sector, because if we do not rescue the biggest failures, this managed depression will be around for at least a decade as markets struggle without credit. But on top of all of this, if Detroit fails (I mean totally liquidates versus restructuring in or out of bankruptcy), all of the rust in the rust belt snaps, and all car manufacturers in this country run out of parts. Even in Chapter 11 reorganization, GM and Chrysler can’t get the financing they need, in this shredded credit marketplace, without government intervention.

We can “just say no” and watch this malaise linger for a decade or more, or we can grit our teeth, swear loudly, and do the best we can with what we’ve got. Wonder how the G-20 economic summit will work out? Wanna guess? Our managed depression is already known all over the earth as an “American-caused” meltdown.

I’m Peter Dekom, and I approve this message.