There's plenty of blame to go around. some of it falls upon us, the people who buy the industry's product.
Are the "Big Three" US auto makers' problems a result of bad labor contracts? Maybe they make lousy products. Perhaps they have been plagued by incredibly incompetent management. A combination of all of those factors and a few more likely contributed to this mess.
To be sure, Ford, GM and Chrysler do deserve a share of the blame for the financial mess their industry is now in. So do unions who forced some ridiculous contracts years ago that are no longer practical. But as much as anyone, the American auto buyer is at fault too. As a culture, we have always had a love affair with the automobile. Cars are an extension of our individual personas. They are a form of self expression, telling the world that we are sporty, strong, practical, efficient, green, or have tiny penises. Detroit was only giving us what we wanted.
The US auto makers blew it in the 70s, like Genius Caller pointed out. When people first started looking for fuel efficiency, we got the Chevy Vega, Ford Pinto, AMC Gremlin and K cars. Meanwhile, Japanese auto makers got it, and companies like Honda, Datsun (now Nissan) and Toyota jumped in. That's why I drove one of these lovely Datsun F10s from the time I turned 17 until I was out of college and working. It wasn't the prettiest thing, but I got 120,000 miles out of it, and most of them came 40 to the gallon.
I have no idea what we should do about the Big Three. But I have to think that they can't be allowed to all fail. Too many dependent and attendant jobs and industries would go with them. Maybe this is a good time to think again about national health care, since that alone will make the US auto industry much more competitive with foreign counterparts.