Hard to imagine a worse way to spend $40 billion

Read it and weep:

The filing also disclosed that GM will not repay the loans it has already received from the government or any additional federal aid it will get as part of the bankruptcy. When all is said and done, total assistance to GM is expected to reach nearly $40 billion.

Instead, the government will convert that debt into a 72.5% stake in the new company. This means that for taxpayers to make back any of the money loaned to GM, it will have to be because shares of the new GM increase in value following an exit from bankruptcy.

I would rather the government spend it on a national toilet paper reserve.  Why this is so much worse than similar bank deals is that GM is not likely to recover any time soon, and everyone knows that.  Banks suffered from a sudden lack of market confidence, which government replaced to some extent with its explicit backing.  GM suffered from a chronic quality problem, and there is no reason to think this will be fixed with government backing.  You can make the same kind of argument with banks, and I do think to so some extent it is a matter of degree.  But fundamentally, the government is good at providing liquidity but bad at providing quality.  Nevertheless, I'm not betting on GM or the banks.