This editorial appeared in The State.
This week, the nation’s economic woes careened from Wall Street through Main Street and landed with a crash on suburban strip malls. Among other things, a drop in consumer spending caused Circuit City to seek bankruptcy protection and rival Best Buy to sharply reduce its revenue forecast going into the holiday season. Such developments were sufficiently alarming to cause Treasury Secretary Henry Paulson to shift the focus of the $700 billion Troubled Asset Relief Program from financial institutions to consumers.
On Thursday, the Dow Jones Industrial Average dipped below 8,000.
Meanwhile, the American auto industry sought a bailout of its own, and congressional Democrats were inclined to provide it. General Motors, the nation’s biggest auto manufacturer, predicted it could run out of operating funds by the end of the year, after posting a $2.5 billion quarterly loss last week.
Democratic leaders wanted to tap the TARP for $25 billion in emergency loans for Detroit in return for an ownership stake, while Republicans — still smarting from last week's economy-driven election losses — promised to block any such efforts, saying taxpayers shouldn’t buy into the troubled industry unless "root causes" were addressed.
Meanwhile, some analysts said the government should let G.M. go bankrupt, which would force the wrenching changes needed to make it a leaner, stronger company.
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