What you need to look at is the ratio of the loan to the value securing it, the same as you would for a mortgage. You would probably gladly loan a hundred thousand bucks on a mansion worth many times that much, but you wouldn't expect to see that money back if you loaned the same amount on some dilapidated four-figure ranch in a slum of Detroit. It's not so different with business loans. Whether you should expect to see your money again is largely dependent on the value of the company you're loaning it to, relative to the amount of money you're loaning.

In the case of GM, we loaned about $58 billion to a company that, as recently as December, was worth about $1.8 billion. That's a lot like loaning someone $580,000 with him offering his $18,000 shack as collateral. Don't hold your breath about seeing that money again. That's where the historical analogies to the 1979 bailout fail. I don't have the exact loan/equity ratios at my fingertips, for that earlier bailout, but we weren't loaning thirty times the value of the company back then, like we were this time.

I'm not saying the government should insist on the same equity standards a private lender would -- the whole point of government loans is that they're for times when the private lenders aren't stepping up and for various broader reasons we think the loan is going to benefit the country, even if our government doesn't recover all the money directly. But let's not deceive ourselves into thinking that the loans we made to GM and Chrysler were good investments in the sense of expecting to see that money back with interest. We handed those companies many, many times as much money as the market thought the entire operations were worth, and we're unlikely to ever get it back.