Thursday, November 20, 2008

More on Autos

Over at the Center for Global Development they have a good post on how policy distortions (the light truck exception to the CAFE, tax subsidies to oil companies, and the smallness of our gasoline taxes) have led to our prevalence of non-fuel efficient cars.

Matt Yglesias makes the argument for congestion pricing in Urban areas.  He makes the point that those who would pay the fee ultimately are the beneficiaries as they experience less congestion and spend less time commuting.  Duh, but nonetheless it bears repeating.

The Wall Street Journal has an article discussing auto execs claiming for the umpteenth time that they can't go into bankruptcy because there are no funds availbe, thus they need the bailout.  This logic is maddening.  Supporters of the bailout agree with the fact that the Big Three need to be streamlined and reorganized.  They also agree that chapter 11 is an optimal means of achieving a reorginazation. They proceed to claim that Chapter 11 is not a viable option because of the lack of financing available, and then turn around and say that the Government needs to bailout the Big Three, or put in other words, provide the financing they are not able to obtain on their own in credit markets.  But if the government can provide the Big Three with funds for a bailout it could just as well provide DIP financing.  

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