Auto de fé

In the US, the debate is hotting up over the automobile industry’s access to state aid. The WSJ reports today that Dems are seeking to outflank the immobile Republican administration with a broadside from the Hill; pushing legislation for a Detroit bailout as early as next week.

All this, of course, comes on the heels of a worsening outlook for General Motors, which by most accounts, does not have the cash to survive the year.

There are naturally broader issues at stake, though. Automakers might be an iconic US industry, but they’re not the only US industy, and they’re certainly not the healthiest industry, crunch or no crunch. The truth of the matter is that Detroit has been languishing for years as a result of a structurally altered economic world. And bailing out the carmakers has, with that altered reality, always been lurking in the background as a Democratic political totem, hitherto dormant, now suddenly awakened. Saving GM is Democratic wish-fulfilment.

What then will happen when the next all-American industry hits the wall? Because surely some will. Can we expect a bailout of WalMart? Boeing?

The briefest of glances at US corporate bond spreads will tell you something pretty clearly: there is indiscriminate carnage in the debt market, which may well drag a host of large companies down and damage others for years.

The auto-industry though, does look like it’s next. Over in Europe, BBC business editor Robert Peston writes on Wednesday:

For me, the most interesting story of the past 24 hours is that VW, the stressed German carmaker, is trying to raise