When a bailout is a handout

(Thanks to freefoto.com for image, and BigHugeLabs for lolcat tool)

I was for bailing out the banks, and despite the fact that there are many aspects about the administration of the TARP that left much to be desired, I stand by my support for it.

But I am totally against the rescue package for the automakers.

As Matt Yglesias put it simply, “Bankruptcy is bailout.” After undergoing chapter 11 bankruptcy, both K Mart and United recapitalized and came back as viable businesses. This is in itself a bailout, as the law allowed them to screw a lot of people over in disgusting ways to do so…stockholders and pension holders and employees alike.

What the big three are asking for is really more like a handout than a bailout. Take a look at this article

What would a GM bankruptcy look like? It probably would be the most massive Chapter 11 filing of all time — a watershed moment in the history of American business, with far-reaching consequences for all of GM’s stakeholders. While the direct impact on the national economy would be relatively modest, the Midwest would be hit hard by the combination of job losses at GM and its suppliers and benefits cuts for the company’s retirees.

It was written in 2005.

Three years later, everything in that article pretty much still applies. If we loan GM $25 billion or whatever it is they want now, BusinessWeek will probably be able to recycle most of that article for 2010.

(X posted at AOTP)