This is the Cato Daily Podcast for Wednesday, November 12, 2008. I'm Caleb Brown.

GM's financial problems come at the same time as the meltdown of much of Wall Street.

Wall Street got its bailout now GM is hoping for some of that cash as well.

Dan Eekinson, Associate Director of the Cato Institute's Center for Trade Policy Studies

says the impulse at work is the same.

GM and Wall Street both want a payday after years of poor decisions. When you hear Nancy Pelosi and Harry Reed saying that we need to bail out the

industry, what they're saying is we need to give loans or give cash to three of the many

producers the big three the big three account for about 50% of US auto production

they account for about 50% of sales.

The other 50% are facing a similar contraction

and demand are facing similar troubles caused by the credit crunch, but they're not

marching on Washington for a bailout. And the main reason is that they're doing pretty well despite the current demand situation. The big three's

problems predate the financial crisis even though they're lobbyists and and

their representatives from the Michigan delegation and the leadership in Congress will tell you it has everything to do with the financial crisis.

They've made some very bad decisions which have made them uncompetitive from a cost perspective.

How long has this been coming for GM, specifically the serious problems that they're facing right now?

Earlier in the decade GM made major capitulations to the unions with respect to work rules,

compensation, benefits.

Basically, the work, UAW workers were given the Cadillac platter of benefits.

They were to be paid up to 90% of their salaries when they were laid off.

Basically, GM was disincentivized

from laying people off.

...