The Detroit Three are not having an easy time in Washington as they beg lawmakers for $25 billion to avert bankruptcy. The Republicans and some government officials doubt that handing out billions of dollars on top of the $25 billion already pledged to boost environmental development is the way forward. Real fears are growing that there will be no political deal, no bailout and the carmakers will have to struggle on until the change of administration in January... if they can.

The plight of General Motors, Ford and Chysler throws into stark relief the problems of the real economy in the slowdown. Things are bad across the global car industry, with highly regarded and once seemingly invincible companies such as Toyota and BMW slashing forecasts and giving warning that forecasts are impossible in the current climate.

They are much worse in the United States. American vehicle sales have been particularly bad because of the credit squeeze. Rocked by growing environmental awareness and high fuel costs, the American motorist is doing what would have been unthinkable a little while ago and falling out of love with big cars.

Yet there is more to the parlous state of the US car industry than that. increasingly, the Big Three are being blamed for bringing some of their problems on themselves. They have had too many brands; they have been too late in developing small cars; they have not used their money wisely when they had some to throw around; they have not been alive enough to threats from Asian competitors.

Roy Kishor, an analyst with Kroll, the restructuring group, said: “General Motors has continued to live in its own world. At least Alan Mulally [chief executive] at Ford has gone to the door to have a look outside.” Some believe that only radical restructuring will save some of the US car industry and that could be achieved by simply allowing one or all of them to plunge into bankruptcy.

What is the price of teaching them a lesson? Projections of job losses vary, but are in the millions. The Big Three have given warning that three million jobs could go, while other forecasts have said that if output were halved, 2 million jobs would go. The collapse of the entire motor industry is also an unattractive prospect for an incoming president. President-elect Obama could have an opportunity not to say “bailout”, but instead “restructuring” - a loan of money that required substantial changes at the companies, including change among some senior managers. The loans could require high interest payments, netting the Government a decent return, but it would have to be confident that the companies could repay them. They do not look in shape to do so right now.

In Europe, calls for cash are not quite so desperate, but they are still there and European companies will not want to be disadvantaged with small state support if rivals across the pond get billions.

Governments are being asked to step up to the plate at a time of great uncertainty. The carmakers are finding it hard or impossible to call the market, so it is doubly difficult for politicians to confidently predict if taxpayers will ever see their billions again.

Meanwhile, the uncertainty over the future of the carmakers is doing its own damage to an already battered market. Rick Wagoner, chief executive of General Motors, told US politicians that customers would not want to buy cars from bankrupt companies. They probably will also shy away from companies under perpetual threat of bankruptcy.

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