Today’s Wall Street Journal headline gets right to the point: GM doesn’t have the money to do the deal with Chrysler. As for sources, you have to believe either A) The WSJ’s making this shit up or B) the ongoing leaks are official and intentional (otherwise the leaker would have been found and stopped by now). Anyway, getting the tax payers on the hook is clearly a key element of the scheme: “It is still early days, but to make people feel more comfortable or to get investors to buy in, you have to think a government role would be important,” said one person involved in the talks. “That role could take a lot of forms, but it would be very important. The government may need to make it happen.” American Leyland indeed. Back in the day, the British government was the shotgun toting papa who pushed the kids to the altar and provided a dowry. GM’s COO Fritz Henderson is said to be the driving force for doing some kind of deal here. Considering the job ol’ Fritz has been doing leading the General’s charge up recovery hill, you have to wonder why anyone is listening to him. “Meaningful cost rationalizations” is the rationale of choice for the deal’s advocates on the GM side. But over at Cerberus the motivation is simpler; get anyone to take this fracker off our hands! How exactly they expect to get the government to put taxpayer money into a plan predicated on firing tens of thousands of people remains a bit of a mystery. Sanity may yet rule the day, but don’t count on it. Meanwhile, Nissan is said to be pursuing an alternative alliance strategy with Chrysler based on a cross-shareholding arrangement. If so, they must not understand the simple fact that Cerberus wants out, stat.
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If I’m not mistaken, Cerberus is a rather large hedge fund with tons of cash. If they want out of Chrysler and also believe this is a fantastic opportunity for investors, why not throw a bunch of their own money into it?
I read an analysis that painted this merger in a different light. It posited that Cerberus is intent on getting rid of Chrysler and knows nobody in their right mind would take it so they are using their stake in GMAC to force it on GM.
If they can’t find the funds to do it now, it won’t happen. My guess…
guyincognito:
Cerberus is intent on getting rid of Chrysler and knows nobody in their right mind would take it…
In GM they have found that one company not in their right mind
Wait until the taxpayer learns that his hard earned dollars are going to fund $140K buyouts of UAW workers and millionaire car dealers.
Not to mention a billionaire hedge fund kingpin.
NICE on the pic, I wonder how many people will get it?
As for my straight-from-the-rectum idea/prediction for the outcome of all this?
I think the end result of all of this will be that GM and Chrysler will be one. I believe they will have jettisoned most of their collective brands and dealers. they will sell a whole new generation of competitive cars/platforms/tech. they will be whole new company, little remaining but a couple logos and some current real estate. the uaw shackles will be all but gone.
i think this, because its the only way to succeed, and they/the gov wont let them actually disappear. i don’t think that execs or politicians are actually stupid/incompetent (most of ’em). they are just bound by circumstance/others to choose among bad options.
the path to get there is less clear. first merge, then file c11? file c11, then get merged? do both at once somehow?
but in the end, if this happens, it WILL work. see, we have this wonderful thing in the usa, that england did not in the 70’s. free(er) market capitalism. BL was gov owned, so no one cared, and had a captive market that was ‘forced’ to buy their crap due to tariffs on ‘imports.’ no incentive to do well, from either end, so they floated along for a while. gm has a nice healthy toyondissan to compete with, or die.
A Democratic congress and president is about as likely to remove the UAW shackles as they are to piss up a rope.
If GM is smart (lol) they’ll accept some big ass loans for plant retooling, or building a car powered by hens teeth and dried unicorn horn or whatever, and do what they have to do. Getting the government involved beyond that is a recipe to get boondoggled to death.
OK, I’ll bite. I’m usually pretty quick on such things, but I don’t get the picture on this story.
“gm has a nice healthy toyondissan to compete with, or die.”
A little dose of “card check” leading to a massive UAW infection can fix that pretty quick….
thalter, the car is an Austin Allego. It’s one of the worst cars that British Leyland (the nationalized car company made up of a bunch of mongrel dog predecessor companies) which sucked much of the lifeblood out of the British economy from the early 1970’s through the 1980’s.
The British (never being shy about derision) called it the “All-agro” (as in all aggrivating).
The predecessor car to this (with which it shared much “technology”) was the Austin and Morris 1100.
Ever see the episode of Fawlty Towers in which the protagonist couldn’t get his “flaming” car to start, and in which he thrashed it? That was an 1100.
http://www.youtube.com/watch?v=L8vUFRkxie0
Yeah, when I lived there from 1976-1978, my fellow GI’s could never get their “flaming” Brit cars to start in the rain.
Know how much it rains in England, mate?….
So the photo is an “Allegro-ary” about GMC (GM-Chrysler), geddit? Right.
Not funny, old chep….
My only question is this, if the deal happens, does GM stay in the Renaissance Center (Downtown Detroit) or move to the Chrysler world HQ in Auburn Hills?
Neither. GM will in fact be going to Disney Land since it will now be a mickey mouse operation.
T2
Is it even legal for companies to merge on the basis that it would make it easier for them to get government bailouts?
Obama is going to send us all a check for $4,000 and cut our taxes so that we will each have so much money to buy a new GM car with, they won’t need government money.
Ya right.
Why do they need to come up with funds?
Isn’t that what taxpayers are for, to hand automakers bailout after bailout? We can pay them out of our own earnings to buy Chrysler, just as we have been paying them with our earnings to continue to fail.