GM is hot again

Let this be a lesson in trusting the naysayers. Less than a year ago, it was assumed that a General Motors bankruptcy would be a disaster for the economy. And now? Look at this weekend's cover story in Barron's:

The auto maker, long synonymous with bloat and mismanagement, has undergone an impressive turnaround since it emerged from a brief stay in bankruptcy last year. GM still is no Honda or BMW, but it's probably in its best shape since its heyday in the 1960s. It operated at a narrow loss in the third quarter, and fourth-quarter results, due later this month, could show an operating profit.

GM's U.S. market share is up, its costs are down, its inventories have declined, and its resale values have risen. Also helping push sales are the mega-problems at Toyota. On Wall Street there's talk about GM going public later this year, a development that would return much of the $50 billion that taxpayers shelled out last year (bondholders, some of whom challenged President Obama over the bailout plan, would fare the worst).

The bankruptcy filing, rather than ruining the company by scaring away car buyers, was a huge benefit because it let GM do things that critics said it should have done decades ago -- including closing about 40% of its U.S. dealerships, getting rid of most of its debt, culling its brands, reducing its workforce and rationalizing elements of its UAW relationship.

Actually, GM could turn out to be one of the administration's biggest success stories, even though Republicans keep using the bankruptcy to feed into those wild and crazy fears about having a socialist president. When considering the complexity of such a bankruptcy, not to mention the heavy-duty politics involved, it's amazing that the company was in and out of Chapter 11 in just a few weeks. This doesn't mean smooth sailing, of course. GM still faces mountainous debts, and there's no assurance that the company can take its creaky corporate culture and turn it into a smooth-running operation. The Barron's piece finishes this way:

Barron's hasn't always been right on GM -- most notably we recommended buying the stock about a year before the company went bankrupt -- but this time the auto maker's dawn seems real. Bottom line: GM is on the mend, thanks in large part to the bankruptcy that its former leaders had warned would destroy it -- and thanks, most of all, to the generosity of Uncle Sam.