Capitalism and the auto crisis

The US government intervened directly into the crisis of the American auto industry on Friday, pledging temporary loans to General Motors and Chrysler in exchange for massive concessions from auto workers and the destruction of tens of thousands more jobs.

The $17.4 billion in loans announced by the Bush administration amounts essentially to a three-month lifeline, providing the companies time to impose new concessions on their workers, make plans to become "viable," or else make preparations for an "orderly" bankruptcy.

In his public announcement Friday morning, Bush made clear that in providing loans, the government was insisting on certain conditions: above all, that workers would have to accept a drastic decline in living standards.

"Automakers must meet conditions that experts agree are necessary for long-term viability, including putting their retirement plans on a sustainable footing, persuading bond holders to convert their debt into capital ... and making their compensation competitive with foreign automakers who have major operations in the Untied States."

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