We’ve got a poll running on our homepage asking visitors (unscientifically, of course) what should be the solution to the “Detroit problem”:

No bailout: Those of us who prefer the “no bailout” approach tend to do so for one or both of two reasons: it’s the most expedient resolution; and it’s the fairest, inasmuch as it does not expand the problem to those who currently have no stake in it.

Bailout: Supporters of a federal bailout have reasons, too. They emphasize the long-term value of maintaining a “domestic” auto industry. And, they offer numerous examples of the ways that the failure of Chrysler, Ford, and GM would rupture the domestic economy, and they believe that this disruption would be too great to endure.

Bankruptcy: The third option, a structured bankruptcy, would try to preserve some of the value of Chrysler, Ford, and GM, while addressing the problems that make them uncompetitive.

Only the no-bailout approach addresses the urgent questions about the cost of fixing the Detroit problem, and what becomes of the organizations in the aftermath. For example, if the federal government rescues them, what will that cost the taxpayers? Will the feds then own Chrysler, Ford, and GM? And, for how long?

The no-bailout approach gets a lot of attention, but it’s not realistic because the Detroit problem has become (at least for now) a Washington problem. This list of U.S. senators with assembly and/or parts plants in their states will demonstrate why there will be no no-bailout.

(As an aside, you can also interpret from that list why Michigan and Ohio are two states with such poor economies, and why those states prove to so many of us why further government involvement would be disastrous.)

Likewise, a straight-ahead federal takeover is unlikely to happen, though many in Congress believe that, one way or another, they can serve their constituents without concern for the most pressing issues in this debate — the cost to taxpayers, or consumers, and the competitiveness of the domestic industry.

So, with the structured bankruptcy approach there is a compromise, and a preview to the next problem. Specifically, after the federal money is exhausted in this effort, where will the new capital come from to charter the restructured entities?  Here’s a hint: foreign governments and their holdings. 

The core of every global economic problem today is the absence of investment capital, and the scarcity of credit created by that absence.  Unless the federal government is preparing to adopt a direct-ownership policy for the domestic automotive industry, sovereign wealth funds will be the only bailout available.