“We have a good, proven process for dealing with companies that have short-term cash-flow problems and valuable underlying assets, and that process is called bankruptcy. There was a reasonable (though not ironclad) case to be made that government intervention was prudent in the case of the bank failures because of the risk of a systemic crisis in the credit markets. There is no comparable argument for GM. There may be a role for the government in softening the landing for GM, perhaps by offering some assistance in securing loans as the company reorganizes, specifically by guaranteeing the DIP — that’s ‘debtor in possession’ — financing that a bankrupt GM would need to restructure its operations (as opposed to having its assets liquidated to pay its creditors). There is no shame in bankruptcy. It can be a good thing — dozens of companies have entered bankruptcy, reorganized their finances, and emerged stronger than before.” (11/19/08)