Baby, You Can Drive My Volvo

Story Highlights:

• The Supreme Court today decided not to delay Chrysler's bankruptcy reorganization, clearing the way for its sale to a government consortium and Fiat.
• Markets largely ignored news of both GM's and Chrysler's bankruptcy.
• Auto-making isn't as important to the US economy as it once was. And, America's auto industry is now crowded with plenty of foreign brands.

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If you had asked anyone 30 years ago if two major US automakers filed for bankruptcy in the space of just a few weeks, what would the market do, the answer would have been nothing short of complete mayhem. Except, GM filed for bankruptcy last Monday and stock markets roared. And Tuesday, the Supreme Court got out of the way of Chrysler's sale (oddly) to the US government, Canada, the UAW, and Fiat, and markets yawned. What's happened here? Are we simply callous to the fate of these once booming bellwethers?

Seems like it. Folks who feared the downfall of the Big Three (Ford seems to be surviving, for now) don't appreciate that the American economy, nay, the world economy has evolved far past its heavy reliance on cars and even manufacturing. We listen to impassioned speeches on Capitol Hill about how America's automakers built the American middle class. And it did, once. Sort of. Sure, if you lived in Detroit or South Bend in the 1950s, car-making was pretty important to you. But America's middle class has always been and continues to get more wildly diverse. And yes, for those who will lose jobs, GM and Chrysler's bankruptcy is a bitter pill. But for the economy overall? Not the Armageddon long predicted.

Fact is, companies go bankrupt all the time—in good times and bad. And, lest we forget, America's auto-making industry isn't just Ford, GM, and Chrysler. It includes Toyota, Volvo, BMW, Mercedes, and Honda—foreign firms who employ thousands here in the US—paying them in good old Yankee Dollars to build cars and produce parts in South Carolina, Georgia, Tennessee, even notoriously tax-unfriendly Ohio. And even those foreign brands whose cars aren't wholly or partially built on American soil have dealers, parts producers, mechanics, service stations, and other peripheral businesses—owned and managed by Americans who in turn employ more Americans.

Though GM and Chrysler are in the throes of bankruptcy, that doesn't mean those companies are erased and gone. Various politicians droned about the many millions of folks who'd lose their jobs if any one of the Big Three were shuttered. But just because GM and Chrysler are in bankruptcy doesn't mean those cars disappear from the streets and don't require servicing, new spark plugs, or gasoline. Keep in mind, both of these firms are in reorganization—which means they'll come out the other end eventually. They may look and function very differently than they did—which is a good thing because the old way of functioning frankly didn't work out so well for them. But these firms will continue to exist, ostensibly under superior management. (Though, for that, we'll have to wait and see).

America's automakers have been dying a slow, very public death for the last 30 years, so it's hardly surprising markets continue to shrug off their bad news. And though Americans love their cars, the dwindling industry just doesn't pack the wallop it once did.