Mitt Romney, struggling to regain the lead from Rick Santorum in national polls and facing a serious deficit in the key primary state of Michigan, has doubled down on his position against the auto industry rescue, arguing that the industry should have gone through a “managed bankruptcy,” mainly to squeeze out the United Auto Workers.

The biggest reason I can find for economic optimism in 2012 is a belief that people will eventually have to buy new cars and form households, so why not this year? That appears to be the animating thought behind Matt Yglesias’ cheery forecast in the new year. But the economic story is a lot more mixed.

In the couple months since Alabama passed HB 56, among the harshest immigration laws in the nation, they have: a) seen crops rot in the fields because farmers cannot find workers to pick the fruits and vegetables, which has cost the state potentially hundreds of millions of dollars in revenue; b) threatened the water service of potential undocumented immigrants; c) forced charities to seek citizenship papers from their recipients, even though that provision and others have been blocked by multiple courts; d) witnessed frustrated employers speak out about the loss of legal Hispanic workers, who have left the state in droves; e) led to 15% of Hispanic students being afraid to attend school; f) arrested top executives of two automakers, Mercedes-Benz and Honda, who were in the state overseeing their plants there.

The LA Times’ is running an excellent series on subprime auto loans. The first installment concerned “Buy Here Pay Here” used car dealerships, and how they hook low-income borrowers into high-interest loans, then repossess the car when the loans go bad and resell the car to the next mark. It echoes the housing mortgage scams, complete with securitization schemes.

The successful auto industry rescue is definitely a feather in the cap for the Administration, protecting up to a million direct and indirect auto industry jobs, and putting GM and Chrysler in a position to succeed. Now there’s a new contract with the United Auto Workers to share the success with labor.

One criticism of the rescue was that the UAW was forced to give up good wages for new employees and accept a two-tier structure for pay and benefits. But unless I have my timeline wrong, that all happened in a contract prior to the decision to forward additional loans to automakers in 2009. That contract expired, and the UAW just inked a new deal with GM that should serve as an industry standard. And they made some significant gains in this contract, a testament to how far back the industry has come.

For the moment it looks like just three things have worked to create jobs: the MIC, QE2 and other policies favoring commodities, and actual industrial policy.

So, South Korea would have to wait a bit to flood the US market with cars, but there’s no word on whether they would have to allow in more than a trickle of US-made cars into their market (the numbers from last year: 6,000 US vehicles to South Korea, 500,000 South Korean-made vehicles to the US). And what about beef producers, who also balked at blocked Korean markets?

The President wanted to ink this pact at the G-20 in Seoul, but they couldn’t reach agreement. It looks like those hurdles have been surmounted.

The US and South Korea are working on a revised free trade agreement that would differ somewhat from the original terms negotiated by George W. Bush’s Administration. It appears that President Obama would want to announce this reworked deal at the G-20 summit in Seoul this week. The plan would be to submit the free trade pact to Congress next year, when Republicans control the House.

I come to Steven Rattner’s Overhaul: An Insider’s Account of the Obama Administration’s Emergency Rescue of the Auto Industry from a very particular perspective. As a Michigander whose husband still works in the auto industry and whose town has benefited from battery subsidies, I’m a grateful direct beneficiary of the work the Obama Administration did to save the auto industry. But that also means I read this book, which might have been subtitled, “Wall Street gapes at Detroit” from the perspective, “Detroit gapes back at Wall Street.”

Remember when the right was calling Adolf Hussein Obamastalin’s rescue of the auto industry some sort of Communist plot? Remember all the “Government Motors” jokes? Here’s what today’s WSJ has to say about all that.