General Motors Driven to Brink

General Motors, once the symbol and pride of the American automobile industry is facing huge debts and is desparately hoping that the Government will give it a huge loan to stay afloat. It raises the thorny question of to what extent governments should intervene in declining firms.

If General Motors wasn’t so big and employed so many people, there would be no question of a bailout. Why would the government want to subsidise a loss making firm, producing goods that cannot be sold?

Yet, economic arguments may not prevail given the emotive importance people will attach to the survival of the firm.

• General Motors - Should it Be given a subsidy