The "no bailout?!" hysteria is about to hit a fever pitch, but I don't think it's the calamity many are declaring.
First, the Big 3 bailout question has been framed in terms of "we can't let them fail!" But bailout and bust are not the only two options. Chapter 11 bankruptcy is not the end of the world. It exists to help companies get their act together.
But some don't want them to file bankruptcy. Who and why not? Well, that should be obvious. Big labor knows that if the automakers go into chapter 11, all labor contracts are on the table for renegotiation. That's not good for the unions. The evidence for this is that the unions jumped up to offer concessions to keep them out of bankruptcy (e.g., suspending the "jobs bank). If they have to go back to the bargaining table in this climate, they're going to lose big, and they don't want that to happen.
You can't blame the labor unions for wanting to keep the deals they've gotten. Their job is to get the best deals they can for their people. The problem is that those deals are a big part of what's killing the domestic car companies.
Second, even if one of them does close its doors, it's not the end of the world. I understand the whole domino effect, and it would certainly be a hit to our limping economy, but we would survive.
What we may not survive is further strengthening the notions that the federal government holds the solution to all of our problems and that the American taxpayer is supposed to rescue poorly run companies.
We live in an increasingly consequence averse society. We don't like to let anyone fail -- be it students, little league teams, or poorly run businesses. Well, failure is a part of life, and it is frequently an important instructor. If one (or more) of the Big 3 has to close up shop, that will provide many important lessons for all the other car makers, "foreign" and domestic, and every other industry.
Most of all it well tell our society that failure is still an option in this country.