Aww, crap. Yves over at Naked Capitalism makes the case against a GM bankruptcy in The Ill-Considered Problem of a GM Bankruptcy. You should read it.

Now, why I still disagree: While there is a discussion of the consequences of a bankruptcy, there’s no discussion of the consequences of a bailout. Car dealers are going to lose their jobs even if a bailout happens. Cars aren’t selling. Furthermore, there will be jobs lost at suppliers. GM is cutting production. Look at it this way: The overall aggregate demand for cars, and therefore car parts, is not going to be significantly influenced by a bailout. As a consequence, there’s going to be a similar loss in jobs on the top and bottom of the chain whether a bailout happens or not. It’s just the distribution of jobs that changes.

Another consequence of a bailout is the bailout precedence. Rescuing the auto industry guarantees that there will be a next group. There will likely be a “next group” anyway, thanks to the bank bailout. Eventually, however, a line must be drawn.

I still think a bailout will happen.