Bottom up: A better way to approach auto bailouts


There has been much discussion over how best to tackle the issue of bailouts. When it came to the bad mortgages banks held on their books, the government chose mostly -- at least at first -- to aid the banks in a top-down approach. The idea was that if the banks failed, the economy would collapse, so best to start by propping up the institutions. Only recently did the government also decide to help out homeowners.

Similarly, when it came to bailing out the auto industry, loans and guarantees to the manufacturers and their suppliers seemed the most logical way to go. In other parts of the world, however, governments have chosen to take a different path -- a bottom-up approach -- that aims to boost the car market rather than the car makers.