Nobel Laureate: U.S. Auto Industry WIll Eventually Vanish

Speaking to reporters in Stockholm, Krugman, a Princeton University professor and New York Times columnist said:

"It will do so because of the geographical forces that me and my colleagues have discussed. It is no longer sustained by the current economy."

Krugman also stated that plans by U.S. lawmakers to bail out the Big Three automakers were a short-term solution, resulting from a "lack of willingness to accept the failure of a large industry in the midst of an economic crisis."

This is the crux of the argument against the bailout of the U.S. auto industry; that it will be throwing good money after bad. Reports during the weekend stated that the White House and congressional Democrats are negotiating a bailout deal for the auto industry. It would provide about $15 billion in loans, short of the $34 billion the Big Three asked for.