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Originally Posted by FinMan
The selling of new shares to the public will pay off the debt. That's the good news. The moral hazard created with the bailout, right or wrong, will last decades.
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GM's success shows that the risks posed by bailing out a large company can be a positive thing when that company actually turns around the way it does business. GM is a sleeker, better company, and the products coming out of the new GM are impressive and profitable.
You're completely correct to point out that this was a dangerous decision. It was dangerous to bail out a company, and it would have also been dangerous to just let all of those employees—GM employees, supplier employees—lose their jobs. Keep in mind that multiple manufacturers use some suppliers. If a large percentage of their business goes away, other manufacturers could be affected by the same company going bankrupt, causing a much larger wave of layoffs.