How fitting is it that Chrysler's majority owner, Cerberus, is named for the mythological three-headed dog that guards the gates of Hades?  In 2008 there's another three-headed dog, and unfortunately, it's no myth.  It has become increasingly apparent that one of those heads must be chopped off.  Perhaps a Sara Palin pardon is in order.  That should be good for at least one severed head.

If the government is not going to do what's right and insist on a pre-packaged Chapter 11 restructuring for the Detroit Three, then it needs to do the next best thing and force GM and Chrysler to merge (or preferably, sell itself to a foreign manufacturer).  There is simply too much capacity in the market, and Chrysler is the least viable long-term competitor.  It has fallen substantially behind the technology curve, and its only asset with legitimate value is the Jeep brand.  It makes no sense for the government to loan money to Chrysler, particularly without major participation from Cerberus.  If Cerberus isn't willing to put additional capital at risk, the taxpayer shouldn't bear the burden?  $7 billion for Chrysler is essentially a bailout for Cerberus prior to an inevitable merger with another auto maker.

During last week's hearings, one Congressman attempted to extract a commitment from Chrysler CEO, Bob Nardelli, that if Chrysler got its $7 billion loan, it wouldn't subsequently merge with GM.  Wonderful, a potential government-imposed obstacle to market efficiency.

It is reasonable, and probably even desirable, for the government to shore up the U.S. auto industry.  However, its support should be contingent upon a restructuring that puts the industry on the proper competitive footing.  What comes out the other end must be self-sustaining over the long haul.  Let's not help to perpetuate inefficiencies that have driven and will continue to drive our domestic auto makers toward insolvency.