Reply #6: Failure of auto industry could set off catastrophe [View All]

[ozymandius]

DETROIT – Advocates for the nation's automakers are warning that the collapse of the Big Three — or even just General Motors — could set off a catastrophic chain reaction in the economy, eliminating up to 3 million jobs and depriving governments of more than $150 billion in tax revenue.

Industry supporters are offering such grim predictions as Congress weighs whether to bail out the nation's largest automakers, which are struggling to survive the steepest economic slide in decades.

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Even if just GM collapsed, the failure could bring down the other two companies — and even the U.S. operations of foreign automakers — as parts suppliers run out of money and shut down.

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If a bailout is approved, it's likely to come with significant strings attached. Even proponents like Brown would like to see limits on executive pay and a ban on shareholder dividends. Others have suggested management changes and tougher fuel economy requirements.

http://news.yahoo.com/s/ap/20081112/ap_on_bi_ge/meltdown_autos