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After Monday's rout, stocks were rallying sharply midday Tuesday thanks in part to semi-hopeful comments from Ford CEO Alan Mulally.

While seeking a $9 billion "bridge loan" from the government, Mulally said Ford:

Does not foresee a liquidity crunch in 2009.
Aims to be cash-flow positive in 2011.
Will accelerate its cost-cutting efforts, including the suspension of executive bonuses and raises for salaried employees.
Is accelerating development of hybrid and electric vehicles.

Mulally's comments came amid slumping November auto sales and ahead of Congressional hearings (take two) later this week regarding a government bailout for all U.S. automakers.

"Under normal circumstances," bailing out the "Big Three" would not be justifiable, says Nariman Behravesh, chief economist of IHS Global Insight and author of Spin-Free Economics. "But this is a time in the economy were we cannot exercise tough love. The cost of letting one or more automaker go under would be huge."

But what about the cost of a bailout? Behravesh says the $25 billion figure being discussed is "chump change" and the Big Three need closer to $100 billion in government aid. But any government funds should be tied directly to restructuring aimed at assuring the long-term viability of the industry, which has put itself in a thin, perilous predicament, he says.