Did the government bailout of Chrysler in 1979 create a "moral hazard" that led to the bad shape of the big 3?

Question

As you all know, GM, Ford, and Chrysler are all in bad shape as opposed to their Asian and European counterparts. So did they not care about running a tight ship because they knew if they ultimately failed, the gov't would bail them out?

Answer 1

It created a moral hazard but since there was no guarantee that it would happen again, the overall effect was small. The problem  of Autos in the US stems form other factors that are more important like the  increase in the price of oil and the cost of previous commitments to retirees which were not funded adequately when the companies were profitable and had a lock on the US market. The moral hazard  in the financial market is much greater because the bailouts happen time and time again, and everybody knows that some banks are too big to fail.