But in both cases the real question is, what would the impact on the overall economy be if the firms and financial institutions in question were allowed to fail, and can we afford to pay that price?

I've heard economists state that as many as 1 out of 10 jobs in America is affected by the auto industry, and many of those workers have salary and benefits that are a lot lower than the figures in the article. Do we let them all suffer just to punish the auto company management and the UAW for their past mistakes?

The gov't ownership stake in the auto companies wouldn't be a no strings handout - there would be strict conditions calling for cost cutting, further closures of inefficent plants and product lines, and much better management for the long-term viability of the companies, and certainly the development of more fuel efficient vehicles.