I read yesterday that President-elect Barack Obama favors bailing out GM, saying that in an up-economy it would be preferable for General Motors to enter restructuring bankruptcy, but not now:

"Well, you know, under normal circumstances that might be the case in the sense that you'd go to a restructuring like the airlines had to do in some cases," Mr Obama told a curious Kroft. "And then they come out and they're still a viable operation.

"In this situation, you could see the spigot completely shut off so that it would not potentially permit GM to get back on its feet."

Bosh.

Not that I'm surprised by Obama's decision.


But former airline executive Michael Levine laid out a very compelling case in today's Wall Street Journal that letting Gm go bankrupt is the best course:

Why Bankruptcy Is the Best Option for GM
Chapter 11 would better preserve the valuable parts of the company than an ad hoc bailout.

by Michael Levine

General Motors is a once-great company caught in a web of relationships designed for another era. It should not be fed while still caught, because that will leave it trapped until we get tired of feeding it. Then it will die. The only possibility of saving it is to take the risk of cutting it free. In other words, GM should be allowed to go bankrupt.
[Commentary] AP

Consider the costs of tackling GM's problems with some kind of bailout plan. After 42 years of eroding U.S. market share (from 53% to 20%) and countless announcements of "change," GM still has eight U.S. brands (Cadillac, Saab, Buick, Pontiac, GMC, Saturn, Chevrolet and Hummer). As for its more successful competitors, Toyota (19% market share) has three, and Honda (11%) has two.

GM has about 7,000 dealers. Toyota has fewer than 1,500. Honda has about 1,000. These fewer and larger dealers are better able to advertise, stock and service the cars they sell. GM knows it needs fewer brands and dealers, but the dealers are protected from termination by state laws. This makes eliminating them and the brands they sell very expensive. It would cost GM billions of dollars and many years to reduce the number of dealers it has to a number near Toyota's.

You can read the rest here.

I'm still waiting to here America's leading liberals outraged at Obama's support for corporate welfare.