The recent news that the US government will "rescue" GM is interesting. Of course, their version of rescue is one where half the company will be sold off and thousands will lose their jobs, but this is still a redemption when compared to what could have happened. But is it the right thing?

Many people think that because the banks were "saved" by governments around the world, now every big business will be saved. But this is not true, and neither should it be.

The saving of the banks around the world was massively important in that it prevented a world recession from becoming a global depression. In the 1930s Hoover let 2,000 banks go to the wall, and it drove the US economy, and then the world, into deep recession. With the interconnecting tendrils of today's finances around the world, this type of failure would have driven the economies of the world so far down that it would have taken decades to recover rather than years. Of course, one can only vilify the banks for the terrible way that they were run. But this is an argument for much greater regulation of the banks, rather than of the whole financial sector, and rescue was needed. Can you imagine if, say, HBOS failed; can you imagine what would have happened if everyone with money in Halifax and NatWest suddenly lost everything over the protected £50,000; if all bank accounts were frozen; if standing orders weren't paid; and if credit card payments bounced? It's an impossible scenario to consider, and so they had to be saved.

But is this the same for GM?

No, probably not. One of the things that a recession does is to weed out the weak and let new, fresh and more viable businesses grow. GM is an old, outmoded business that sells vehicles that people don't want any more. Of course it has good parts within it - Vauxhall, for example, is still profitable and, more importantly, makes modern cars that people want - but GM continues to make cars that the world no longer wants. To save it is a purely political move from a government that is more willing to get involved than any US government has in the past. It is a bad move, and one that will damage future prospects in the US.