The profit margins that these vehicles delivered for a few years left management unprepared for discontinuity: higher gasoline prices, changing tastes, a new world of competition and a historic recession. Meanwhile, basic good management was ignored, with vast debt accumulated and poor stewardship of the pension plan. (And, yes, lack of national healthcare put the Big Three at a disadvantage).

But what about Lee Iacocca, the savior of the early 1980s? He was a "car guy," the man behind the Mustang who was driven from Ford by the beancounters, or so went the mythology. Iacocca's K Car did improve quality, but the K's stacked up poorly against Hondas or Toyotas. Iacocca developed the minivan -- a big hit, but one of the gas guzzlers that would set Chrysler up for this fall. I'll leave it to business historians as to whether Iacocca did enough, or built a deep enough bench, to address the competitive challenges ahead. Or whether, like the Detroit culture, he was mostly inward looking, a fatal sin in business and much else.

One sure thing about bankruptcy court: The workers will be hurt worst -- and since the late 1980s, they had the least to do with the decisions that landed Chrysler into a succession of disinterested owners, and now the judge. A sad day for America.

The Back Story: If history is a guide, Ken Lewis' demotion from chairman and CEO to "just" chief executive will be the first step to his eventual ouster -- with the shareholders he has so ill-served footing the bill for a generous golden parachute.

Yet if the bank had previously had a separate chairman and chief executive, it might have avoided some of the worst missteps that landed it in its current mess (effective regulation and prevention of it becoming "too big to fail" would also have been helpful).

The chairman of the board is the chief steward of the shareholders. The CEO is the head of management -- the people who work for the shareholders.

The two jobs should be in tension, if not sometimes in outright conflict. The chairman should be there to, for example, say "no, we're not buying Merrill Lynch and paying for John Thain's pricey trashcan and bag o' bonuses." Unfortunately, most American companies combine the two positions, and we wonder why corporate governance repeatedly fails.

Today's Econ Haiku:

Consumer spending
Is that a green shoot I see?
Or a debt statement?