Archives are the foundation of historical research. Without access to primary material—be it documents, photographs, financial statements, engineering or test reports—historians lack the building blocks necessary to write the chronicles that inform our understanding of the past and illuminate the future. To their credit, America’s automakers have gone to great lengths and expense to preserve and protect the historical documents which chronicle and define their existence. Until recently. As Chrysler and GM plunged into bankruptcy, they turned their back on their own heritage and destroyed a priceless part of our collective past.

Chrysler was incorporated on June 6, 1925. Over the following decades, the automaker centralized and organized its archives, records dating back to the very beginnings of the American automobile industry. And then the company’s new owners decided history is bunk. Cerberus eliminated its archivist position. They stopped funding the documents’ maintenance. The company limited access to their archives and then stopped it altogether.

Worse was to follow.

With little notice and no planning, Cerberus literally abandoned the engineering library at the Chrysler Technical Center. The library was shuttered and the librarian laid off. And then the real crime: all the library’s books and materials were offered to anyone who could carry them away. I repeat: the documents were free for the taking. Within a week, a collection spanning decades was scattered to the winds; the books and other materials will never again be available in any coherent, comprehensive form.

The rest of Chrysler’s historical archives remain intact in a central location. Intense work by dedicated archivists has, over the years, provided organization and access to historians. Will FIAT consider these archives worth preserving? Do they even know they exist?

The situation at GM isn’t quite so dire—yet. While GM continues to fund a Heritage Center, the center has sold off hundreds of their historical vehicles. It’s a travesty that denies writers (and GM insiders) a hands-on link to the company’s best—and worst—work.

The location and status of GM’s paper archives is unclear. Historically, GM has allowed each division to keep or discard archival material as they pleased. Some, like Oldsmobile, transferred many of their key documents to an independent museum. Upon enquiry, it’s clear that many of the remaining GM divisions no longer know the location of their historical documents, much less how they are organized or how researchers can gain access.

Rumor has it that GM Research (at the GM Tech Center in Warren) has a library of technical papers dating back to its beginnings: a treasure trove of information about the development of the automobile. Who’s protecting this legacy? In fact, who owns it: Old GM or New?

These irreplaceable records must not be lost in the confusion of bankruptcy and reorganization. There are a number of potential homes for the material. The National Automotive History Collection in Detroit, the Benson Ford Archives, the archives at Kettering University, the Ransom E. Olds museum, or the University of Michigan, are all possibilities. There are others in and around Detroit.

It will take two things to make this happen: money and talent.

All of the archives and records could be transferred to a safe haven for under $2 million dollars. That’s roughly 0.04% of the latest check the feds cut GM to ensure the company’s “reinvention.” As the federal government has already underwritten the reorganization of GM and Chrysler, as Uncle Sam more or less owns these carmakers, underwriting the preservation of their archives is the least our elected representatives could do for our money.

Detroit has plenty of talent to make the rescue. The National Automotive History Collection, the Society of Automotive Historians, and countless other museums and libraries all have employees with the knowledge and the motivation to safely transport and secure the archives. With a little financial support from the federal government, and a little “empowerment” from the same place, teams of historians could ferret out the records within GM and protect them for future generations.

Ironically (given Henry Ford’s supposed view of history), Ford has shown us how it should be done. All of the company’s records have have been transferred to the Henry Ford [Museum] and to the Benson Ford Archives—and made accessible to researchers. Ford’s actions should be a blueprint for saving the rest of our automotive heritage.

Thanks to the $100 billion plus taxpayer Detroit bailout, Chrysler and GM’s historical records now belong to all of us. I urge you to e-mail your congressmen and senators, asking them to ensure that Chrysler and GM’s records are preserved in the public’s interest.

Few politicians, if any, are interested in automotive history. Witness President Obama’s absurd assertion that “America invented the automobile.” But all elected officials are interested in votes. Let them know you care. Let them know that the companies that failed to learn from history shouldn’t lose it for those who can.

Toyota is the top automaker in the world and has grown to this point by using methods put into place by one lone individual crying in the American post-war industrial wilderness. His name was Deming, and his message was (paraphrasing) “make it right the first time and it’ll be less expensive, better for the customer and more profitable for the manufacturer.” He also laid out how best to continually improve. The Japanese took this message and ran with it, patiently decimating the competition over half a century.

Toyota supplanted GM as the world’s largest automaker—just as the world economy collapsed. Specifically, the US economy is tanked, kaput, flushed. For a long time to come. The Great Depression lasted from 1929-1942, after all; and that was when the nation was not trillions of dollars in debt (and adding $1.8 trillion more in 2009 debts alone).

Then, too, you have the Canadian and US governments tilting the playing field dramatically towards their domestic carmakers, by owning and supporting GM and Chrysler, as well as writing law and rebate language specifically for their benefits at the expense of free-market competitors. Toyota’s displeasure with the state of affairs recently surfaced when the Premier of Ontario aimed rebates at GM’s future hybrids—after Toyota have put thousands of new jobs into Ontario (while GM pulls jobs and sends them to China and Mexico).

In addition, multiple Chinese automakers stand ready to enter the US market with the tacit financial support of their government. How many US market “goods” are currently made in China that used to be made in Japan thirty years ago?

What if Toyota executives believe that the US economy is going to entirely collapse? Pulling out of a market temporarily is not unheard of, specifically for the on-again/off-again South American nations which have seen hyperinflation first hand over the past couple of decades.

Toyota as a company is, first of all, not used to losses. Where are their losses right now? Exclusively in North America. So says Toyota’s CEO in North America in the Detroit News. In plain English, Toyota says, “no level playing field, no profits, no prospect for profits; time to leave North America?”

I don’t just mean close down all of the plants and simply import cars. I mean, depart—as did Isuzu, Daewoo, Peugeot, Citroën, and many others.

Obviously, that’s an extreme scenario. If, in twenty or thirty years, the North American economy recovers sufficiently to again profitably export cars here, the company would no doubt wish to return under the guise of Daihatsu (50% owned by Toyota). A small remnant, Subaru, could stay if it is profitable in North America; Toyota just increased their ownership level of Fuji Heavy Industries (owner of the Subaru brand).

A Toyota withdrawal would be an enormous PR disaster for the current North American regime, in terms of showing a total lack of confidence in the US dollar, literally astronomical deficits and the NAFTA tied-economy (i.e. the lack of future economic health prospects for Canada and Mexico).

Backing off from the nuclear option, Toyota seems certain to pull the plug on NUMMI and close it down (having already been left to hold the bag by their “partner” GM), mothball the Mississippi factory indefinitely, consolidate production and use US plants for the US market, reduce hours of the workforce to match requirements, severely restrict the number and types of vehicle available to only the profitable and better selling lines, and massively lay off Ontario workers by curtailing exports to the USA.

The alternative (total pull-out) would be very damaging for the United States; therefore perhaps the US, Canadian and Ontario Governments should sit down with Toyota executives and have a frank conversation, starting with a great big “thank you” for first investing so much into North America, a second big “thank you” for investing so much into hybrid technology and finally by confirming that the playing field will be left level for everyone at the earliest possible timeframe.

Because if Toyota leaves North America, the only companies which would gain market share would be Honda, Hyundai/Kia, Nissan and Ford in that order (IMHO), as Toyota intenders would rarely, if ever, even consider GM or Chrysler products. Whether these companies could be profitable in North America even with Toyota out of the market is another matter entirely.

If the most profitable and efficient automaker cannot make a profit here, what of the lesser companies? Is North America a cesspit of money-loss for the automotive industry? The current regime believes they have forestalled a cataclysmic auto industry collapse. That market forces cannot overcome their magical thinking. History proves them entirely wrong.

There’s no doubt about it: the automotive landscape is changing. Carmakers around the globe are embracing electric propulsion, whether the volts are generated by a gasoline motor, a fuel cell, a distant power plant or a combination thereof. New companies seem to be springing up overnight to take advantage of the government’s desire (and money) to wean motorists from their petrochemical “addiction.”  While everyone rushes to produce politically-correct powerplants, one fundamental question that remains largely unexamined: from where will manufacturers secure the raw materials needed to mass produce this new technology?

Back in the good old bad old days, cars were literally lumps of iron. The bodies were made from steel. The engines from cast iron. Even as new features were added, the primary raw materials remained ore-based. New-fangled electrical accessories like starters, power windows, power seats and stereos brought copper into that mix. As metallurgical science progressed, aluminum and its alloys entered the mass market mix. No problem there: aluminum is the most abundant metallic element on earth. It’s lightweight and eminently recyclable (today’s beer can is tomorrow’s bumper). Dropping market prices continue to move the metal from exotic cars to daily drivers.

Along with various materials derived from petrochemicals, modern cars are made from iron, steel, aluminum and copper. Manufacturers use other metals (e.g., magnesium) in structural and other applications, but The Big Four reign supreme.

In the 1960s, a research effort between the Air Force and General Motors made a discovery: if you combine the rare earth element neodymium with boron and iron you can make incredibly strong magnets. These magnets are mission critical for the compact-yet-powerful motors used in today’s gas-electric hybrid vehicles. “Doping” the magnets with a bit of dysprosium (another rare earth metal) makes them even more effective, helping them withstand the automotive application’s high operating temperatures.

Industry expert Jack Lifton estimates that manufacturing the battery pack of a second generation Prius required 60 pounds of assorted rare earth metals. And there’s more. Carmakers use rare earths for catalytic converters, computer chips, UV-filtering glass, LCD screens and solar panels. In fact, many of the new technologies that inform advanced vehicles owe their existence—one way or another— to rare earths.

Thankfully, rare earths aren’t that rare. China has huge deposits of rare earth ores and (until very recently) little regard for the environmental impact of mining and refining them. In 2007, China exported 49k tons of rare earth products, down 14.93 percent. BUT the export value surged 51 percent to $1.179 billion. In 1992, Deng Xiaoping stated “There is oil in the Middle East. There are rare earths in China. We must take full advantage of this resource.” And so they have.

The U.S. used to be the world’s biggest producer of rare earths. That ended in the ’90s when the Mountain Pass mining operation in California shut down due to “market pressure” (i.e., cheap Chinese product). Environmental regulations also helped seal the mine’s fate; rare earth mining can produce some pretty nasty byproducts like thorium.

And so the Chinese rare earth industry has grown unchallenged to the point where it essentially owns the market.  Molycorp recently reopened the Mountain Pass operation. There are efforts underway to develop mines in Canada, Australia (where Chinese companies just bought big portions of two Aussie mining companies), Vietnam and India. As of now, none of these future mines offers significant competition to China’s efforts to dominate the rare earth market.

Adding to the problem: while there are mines producing rare earth ores and oxides elsewhere, China’s the only one country on earth where the ores are refined into the rare earth metals. For the time being, no matter where the rare earth materials are mined, the production pipeline flows through—and is controlled by—China.

So far, China hasn’t tried playing silly buggers with rare earth prices, as OPEC has been known to do with oil. However, any company that manufactures anything using rare earths is at the mercy of the Chinese government’s production and pricing.

China has raised the export tax on some rare earth metals as high as 25 percent. Foreign companies aren’t allowed to invest in exploration and mining. There are limits on foreign involvement in ore processing. Industries that use rare earth metals are “encouraged” to produce their end product there.

Because China hasn’t curtailed supplies (i.e., raised prices significantly), there’s no interest in recycling rare earths from discarded autos. When that wrecked hybrid is sent to the crusher, the copper, iron and aluminum in it will be recovered. The rare earth metals will not.

As the government pushes the automakers to improve mileage and cut emissions, they’re practically demanding carmakers produce electric or hybrid-electric vehicles. Even though the government and industry know how important these rare earths are critical to their environmental goals, they’ve failed to consider the potential impact of a “rare earth” gap, trusting that the free market will provide the required raw materials at a cost-effective price.

For now, yes. In the future, who knows?

Last night, make that early in the morning here in Beijing, I received a pleasant phone call. The lady identified herself as working for a large and reputable German newspaper. We exchanged German pleasantries, as much as they exist. Then she said: “You wrote about RHJ, Ripplewood and Opel? Do you know anything about Tim Collins’ connections?” I confessed that I know of a recording artist named Collins, but his first name is Phil.

“TIM Collins, the owner of Ripplewood,” she said. “Sorry, never met the guy” was my answer. She says: “Okay, maybe I have to dig around his old compatriots myself.” With these words, she bid me ta-ta.

This was not the first time I had received one of those calls. Usually, after a juicy installment of the Porsche/Piech soap, people call me and say they are from some news organization. They usually want my sources. On the off-chance that they may be plumbers looking for a leak, I usually refer them to people I don’t particularly like: “Maybe he knows something.”

This lady sounded different. She was a professional journalist. So this morning, I fire up my laptop and peruse the big disintermediator of investigative journalism: Google.

Wait, before I google through gadzillions of pages, a quick glance at Reuters: “Merkel back’s Magna’s Opel bid” it says here. On the occasion of Russian President Dmitry Medvedev’s visit to Munich, Germany, Angela said that except for some minor issues that need cleaning up, “the Magna concept offers excellent starting points. It offers Opel a chance and also creates the possibility of establishing a strategic partnership in the car sector with Russia.” Medvedev was pleased to hear it. A rare endorsement straight from the top, even before the final bids are in? Sure looks like a slam-dunk to this reporter.

The other bidder, Ripplewood/RHJ, appears to be in deep doo-doo. Their plan to grab Opel and as much government money as possible, close some plants, fire some workers, and then sell a squeaky-clean Opel back to GM got out too early. The states where Opel has factories basically told Ripplewood/RHJ to take a hike. Germany’s central government echoed the notion. Message as follows: If GM sells its European car business to anyone other than Magna International Inc., then Germany might (make that: definitely will) withdraw its offer of state aid. 10-4?

To my utter amazement, today’s Reuters also carries the headline: “RHJ offers $388 million for Opel stake.” The article reveals that RHJ has the nerve to offer chump change to the sad tune of €275m for a 50.1 percent stake in General Motors’ Opel business. They also offer “production cutbacks and pay cuts for staff.” RHJ’s spreadsheet “sees Opel posting a positive cash flow before funding of €1b by 2011.” (Outline of RHJ’s plan here. It won’t sit well in Belgium, Spain and the U.K.)

$388m for a majority of Opel? I beg your pardon? That’s all they’ve got? China’s Geely wants to shell out $2b for tiny Volvo! And what’s with “before funding?”  For RHJ, there won’t be any funding from the lender of last resort, the German taxpayer, that has just been made abundantly clear.

I nearly had forgotten about last night’s call.

I never cared before to look behind the curtain of RHJ, they were a dark horse which nobody took seriously. The Germans have an ingrained aversion against strip-and-flip private equity houses. Too many companies were stripped naked, flipped over and left dead.  RHJ was a sideshow. Car guys want to deal with car guys. RHJ has been told to scram, there will be no government support for them, and NOW they are back with a $388m charitable donation? (They need a public handout worth several billions. Their plan is mute on that topic.)

Who ARE those people?  RHJ is one of a bunch of companies owned by Ripplewood Holdings LLC, a New York private equity firm. It owns companies such as Interstate Bakeries Corp. and good old Reader’s Digest (good luck with that.) RHJ International is based in Belgium, they have investments in a number of companies. Ripplewood was founded 1995 by Tim Collins, after he had left Lazard, one of the world’s largest investment banks.

Tim Collins is one of the few people who publicly acknowledge that they are a member of the Trilateral Commission. Tim Collins is also reported as a frequent attendee at the secretive Bilderberg conferences.

“Trilateral Commission” and “Bilderberg” makes many true blue Americans grab their guns, head for the hills, and scan the skies for black helicopters.

Before you brand me as a total nutjob, the Trilateral Commission and the Bilderberg Group actually do exist. Whether they own black helicopters, I don’t know.

Now guess who is also listed as a Bilderberger? Steven Rattner, the recently departed head of the Presidential Task Force On Autos. So is Timothy Geithner by the way, he was seen at the recent Bilderberg meeting in Athens, Greece, in May.

Collins and Rattner have more in common than rubbing shoulders at meetings that give plain people New World Order nightmares.  Collins and Rattner were colleagues at Lazard. Rattner joined Lazard in 1989 as General Partner. Collins was Vice President at Lazard from 1984 to 1990. Both are listed at Statemaster.com as “notable employees” of Lazare.

Was that what the nice lady meant when she recommended to dig around old compatriots?

Let’s back up to May: When Opel was put up for bid in May, it was the Magna v.v. Fiat show. Car guys. The day before the bids were to be surrendered in Berlin, Bloomberg suddenly floated Ripplewood/RHJ. RHJ handed in a surprise bid. It was ignored. After a spat in Berlin that nearly caused a diplomatic incident, Fiat dropped out and Magna was declared winner pro tem. Then, as the negotiations bogged down, the bidding was open again.

Speaking of Bloomberg: The New York Times says that Rattner “is friends with the mayor of New York City, Michael R. Bloomberg, and Quadrangle manages the mayor’s personal fortune.”

In the meantime, pension funds in New York and New Mexico are unhappy. Accusations involving Quadrangle were included in an S.E.C. complaint.

Bloomberg’s report on the German/Russian meeting downplayed Merkel’s magnanimous Magna endorsement to a “We’ll express our support for this deal.” If you are a conspiracist, you could make the case that Bloomberg is more sympathetic to RHJ than to Magna.

Want more conspiracy? Google “Trilateral Commission” “Bilderberg” “Steven Rattner” “Tim Collins”  So why couldn’t the nice lady on the phone do that herself?

Question to the Best & Brightest: Which plan will GM recommend? Magna or RHJ? Which plan will Berlin accept? Any dark choppers?

Glenn sent us a link to this list on oddee.com. And the winners are:

10. AMC Gremlin – Wikipedia: “Gremlin is an English folkloric creature, commonly depicted as mischievous and mechanically oriented, with a specific interest in aircraft. Although their origin is found in myths among airmen, claiming that the gremlins were responsible for sabotaging aircraft, John W. Hazen states that ‘some people’ derive the name from the Old English word gremian, ‘to vex’. Since World War II, different fantastical creatures have been referred to as gremlins, bearing varying degrees of resemblance to the originals.” Such as . . . Howie Mandel. The AMC Gremlin wasn’t known as much for mechanical malfunctions as its questionable styling. That said the name didn’t stop 671,475 American and Canadian customers from buying one. Well, I assume it was one.

9. Dodge Swinger – Actually, it was the Dodge Dart Swinger. Which, I suppose, adds to the sexual connotations. But what’s wrong with that? Especially as the Swinger had the stones for the job. “The Swinger 340 was the lowest-priced high-performance Dodge in ’69, and the 340 4-bbl. V8 delivering 275 hp with Rallye Suspension, wide tread tires, and Firm Ride shocks certainly delivered performance bang for the buck,” legacydiecast.com reports. “The heavy-duty Rallye Suspension, Firm Ride shocks, and Red Line wide tread tires completed the package . . . Both the Swinger 340 and GTS proudly wore the distinctive ‘bumblebee stripes’ to claim their places of honor in the Dodge Scat Pack.” While Ella Fitzgerald fans would be happy with that term, I’m so sure how zoologists would take it.

8. Daihatsu Charade – For Americans, the name calls up images of a benefit to help pay for Cher’s cosmetic surgery. For Brits, it’s intellectual foreplay leading to a little late-night country house bed hopping. I take oddee’s point: “It’s not really a car, it’s just pretending!” But by 1977, most Americans were more familiar with the Talking Heads than . . . two words, first word, first two syllables, kill hat, stomp on hat, die hat! It could have been worse. Anyone remember the game Cootie? Kerplunk?

7. Honda Fitta – Yes, it’s true: “fitta” means “cunt” in Swedish and Norwegian. But Honda caught the mistake before launch and dropped the T&A for the U.S. market. Outside the U.S., Honda markets the car as the Jizz. I mean, Jazz. Under which the vocal technique scat falls. Spooky.

6. Opel Ascona – oddee says “ascona” means “female genitalia” in Northern Spain and parts of (I would have thought southern) Portugal. Is that an anatomical term, as opposed to, say, the aforementioned “cunt”? Online dictionaries aren’t much help here—an indication of electronic prurience rather than a gap in the hive’s collective knowledge. Perhaps the Best and Brightest would like to fill it—I mean us in.

5. Chevrolet Nova – Perhaps the most famous poorly named automobiles, meaning “doesn’t go” in Spanish. But oddee repeats a commonly held misconception: Chevy marketed the Nova as such in “Central and South America”. Not true. From ’62 to ’74, the model was called the “Chevy 400” in Agentina. Until it was rechristened the “Malibu.” During its last year of production, it was the “Opus 78.”

4. Buick LaCrosse – Also notorious, this time for meaning “masturbation” in Quebec. Yes, well, it’s a pretty obscure piece of slang. You don’t find tens of thousands of male and female lacrosse (small “c”) players sniggering about whackin’ off, despite the obvious, infantile possibilities presented by a lacrosse stick with an ascona-like shaped net. To my mind, the real problem here is that lacrosse was American Indian’s ritualized warfare (complete with dead players). With the Buick Wildcat confined to the scrapheap of history, and Maximum Bob talking about the brand as a soft-riding Lexus competitor, I’m not seeing the intersect between name and reality.

3.  Nissan Moco – oddee tells us that “moco” is Spanish slang for booger (again, the e-dictionaries take a pass). As the Moco was marketed in Japan, it’s no biggie. I am, however, wondering what oddee’s opprobrium means for the lyrics to Lady Marmelade’s Voulez Vous Coucher Avec Moi. “Mocha chocalata ya ya?” Ew.

2. Mitsubishi Pajero – Wikipedia says the model was named after the “Leopardus pajeros, the Pampas Cat which inhabits the Patagonia plateau region in southern Argentina.” Yes, well, it’s the Spanish equivalent of LaCrosse. Again, the car was renamed for Spanish-speaking markets. In fact, “Thanks to their success, the Pajero, Montero and Shogun names were also applied to other, mechanically unrelated models, such as the Pajero Mini kei car, the Pajero Junior and Pajero iO/Pinin mini SUVs, and the Mitsubishi Pajero/Montero/Shogun Sport.”

1. Mazda LaPuta – oddee kind of messes this one up, by capitalizing the “p” (“LaPuta”). In fact, the vehicle was named after the flying island in Gulliver’s Travels, “a kingdom devoted to the arts of music and mathematics but utterly unable to use these for practical ends.” Not an auspicious name for car. And there’s no getting around this one: “puta” means whore in Spanish. Personally, I’m not so sure it’s an inappropriate name for a small Mazda. I called my Mazda GLC the english equivalent many times.

That’s right, the CEO in charge of Government Motors. (Okay, don’t really ask me why I think I’m qualified; let’s just suspend belief for a few minutes shall we?) So what would I do? First, I’d insist on a new wardrobe for every person at every level. Gone are all the suits for the white-collar workers. Factory workers can’t wear jeans and t-shirts or whatever. Nope, everyone in the company now wears the GM uniform, kind of like the military. The new GM garb consists of coveralls in blue and white with a GM logo on the back, and each worker gets a name tag to pin on the front. Ranks are determined by stripes, bars and stars, just like the Army. As CEO, I get four stars on the shoulder epaulets. And, of course, there’d be a “dress uniform” for outside events.

Crazy? Perhaps. But everyone needs to get on board that the car business is like a war where the fight begins with winning the hearts and minds of fickle customers. It’s not just the folks at Dearborn down the road with whom we do battle, but it’s a worldwide onslaught of talented engineers, designers and workers from other car companies that want to sell their products to my customers. GM needs to defend the little bit of turf it’s got left and conquer new ground, especially with those folks who won’t even consider a GM product at any price.

Next, I’d fire all of the advertising agencies that work on the GMNA business. Frankly, you can’t really blame the agencies for the lousy messages of the past; it’s more the fault of GM’s executives for giving them little to work with to start and corporate blandness requirements second. A bad car still sucks no matter how good the advertising might be.

C’mon, what could anyone really come up with creative to say about the Aveo? And how chicken-shit was it for GM to not allow that hot woman driving the CTS with her fancy high heeled strappy shoes to say the truth that her CTS does turn her on?

So I’d look all around the country for the most creative, daring, and provocative ad agencies—and I’d pick one for each of the four remaining brands. Different car/truck lines need different messages. Of course, this begs the questions of exactly what are the four brands and what do they stand for? So I’m going to define them for everyone once and forever.

Chevrolet: the mass market brand for every man, woman, and teenager in America offering a full line of cars and trucks. Mass market means Walmart, Sears, and Penney’s shoppers.

Buick and GMC: the affordable luxury brand of cars and crossovers. More upscale than Chevrolet with better finishes, upgraded powertrains, and refined NVH characteristics. Think Nordstrom.

Cadillac: let’s get back to its roots and go for the “Standard of the World.”  The most technologically advanced, powerful, and stylish vehicles. The brand has to become more of an adjective rather than a noun. Harrod’s in London for example. Everyone comes to see the merchandise, but few can afford to make a habit of shopping there. Yet, everyone buys something.

Third, I wouldn’t hire a single MBA except perhaps in the finance department to deal with Wall Street (’cause we’ll be back there soon enough). But finance will be a dead-end department for advancement to the top since a skilled finance guy can’t sell a car to a Grandma in Peoria if he tried. I want kids from the state schools, particularly engineers and designers. Guys and gals who got their hands dirty tinkering with cars or drawing them in high school.

But the biggest challenge still will be getting skeptical consumers out of their Toyotas and Hondas. There’s only one way—and that’s to put an American face (mine) in front of the public all the time telling them they’ve got to try a GM product.

And most importantly, tell them the truth. Let them hear from the CEO of GM about the particulars of each model in the line up. (OK, I won’t talk about how really awful that tin-can Aveo is, or that the Cobalt is a warmed-over Cavalier. But we’ve got some good stuff too that really does compete with the Japanese, so that’s what I’ll say.)

I’d personally go out and visit all my big suppliers and thank them for standing by GM even though we tried to screw every last nickel out of them in the past. That’s now history. Everyone needs to play nice and profit isn’t a dirty word. But we want their best efforts with higher quality controls than before even if it costs another nickel or two. Sure, they’ve got to be cost-competitive but we’re going to put a premium on quality, on-time delivery, and superior engineering. Just like the Japanese.

Finally, I’d get my dealers behind me. A car company can’t win without its dealers going whole-hog on the brand and the products. I’d put a stop to practices that make no sense, like loading the channel up with cars and then blowing them out at huge discounts. And I’d put more money into the regional dealer ad groups. Let the dealers tell the story to their buyers about the new GM. They’re a creative bunch with money at risk—if they win, we win. It’s just that simple.

So that’s my strategy for GM in the USA. Basic blocking and tackling, no miracles needed. I really want to pay the taxpayers back for the money we got, and I certainly want GM buyers to take pride in their vehicles. It’s time to get in the game of making and selling cars, and it’s a game GM can’t afford to lose.

The most definitive difference between Chrysler’s swift conversion from Old to New Chrysler and the General’s “reinvention”: the element of surprise. Or lack thereof. The General’s list of creditors on GM’s court filing (dealers, parts manufactures, advertising media, bondholders, et al.) are all painfully aware of what happens when “The Fix” is in. They now know what it means when The President of the United States promises the public that “we will get this done in a swift and expeditious manner.” Forewarned is forearmed. And there’s another crucial difference between Fiatsler’s transformation and the plans for Government Motors: the GM dealer body is a wealthier, more connected group of businessmen than the Chrysler dealer body. In other words, “Old” GM may not go so quietly into that good night.

While much has been made about GM’s financial face plant, the automaker’s dealer body as a whole has enjoyed decades of immense profits, largely on the back of Suburbans, Tahoes and Silverados. The GMT900 SUV platform wasn’t enough to save the corporate mothership, but it’s been a profit center to the GM dealer that the public cannot even begin to fathom.

When the new Suburban was introduced in 1992, the majority of the metro GM dealers retailed the product for up to $3,000 over MSRP. For several months. The Y2K Suburbans and Tahoes were sticker plus units. I recall buying three new Suburbans from Troy Aikman Chevrolet for full MSRP, titling them on my dealer license and selling them to dealers that same week at the Dallas Auto Auction for $1,500 over MSRP. When the supply caught the demand curve, dealers discounted the model—all the way down to full MSRP. Dealers still made thousands of dollars per unit.

The same story unfolded for the Suburban’s horizontally-challenged little brothers (Tahoe/Yukon). The truck trough didn’t dry up even (especially?) when GM built a $75,000 Suburban called Escalade EXT. The Suburbans delivered huge profits to dealers all through the ’90s, into the next century. Same story for GM’s pickup trucks, only more so. If the gas price shock hadn’t happened, if the economy was still relatively robust, a GM franchise would still be a license to print money. Why do you think there were so many of them?

Up until the crash, GM dealers amassed huge fortunes. They used this money to gain tremendous political power, on every level (local, country, state and federal). As TTAC points out, car dealer cash fueled the political ambitions of presidential aspirant and current Secretary of State Hillary Clinton. Some dealers, being dealers, pissed-away their money. Others, many of whom recently received their walking papers from GM, have a significant war chest and an embarrassment of riches stashed in the political favor bank. As you can imagine, they’re not afraid to use either.

GM dealers witnessed the shellacking that Chrysler dealers just received. Even the ones that survived the recent dealer cull know that their time may be at hand. The Chrysler dealers took a few swings at the Obama politico machine but did not have the raw muscle to connect their punch. Take it from me, the GM dealer body is tooled-up, ready for a brawl.

Chrysler was “sold” to Fiat, the UAW and American taxpayers. There is no “buyer” for GM other than the feds. It’s just a default with a forgiveness. This would be a realistic strategy—if The General was not disowning a large percentage of its dealer body during this transition. But they are. Which puts the company’s new owners, politicians, straight in the middle of the dealers’ crosshairs.

The General’s bankruptcy will get hamstrung in court. The National Automotive Dealers Association and state dealer associations are going to have more success wrestling this bear back into its cage than we saw with Chrysler. GM’s C11 is in real danger of becoming so convoluted with legitimate legal concerns that the bankruptcy will end up converting to a Chapter 7 liquidation. The brands and assets will be carved out into packages and sold to the top dollar suitors.

The news story of the future is not which dealer was terminated but that all dealers are suspended until the liquidation sales have commenced. Dealers will put on their best-pressed suits to court the new owners of their family heirloom name plates, while rapidly encouraging them to become their districts’ new Chevrolet, Cadillac, Buick, Hummer, and possibly even Pontiac dealers, just as many of their grandfathers and great grandfathers did in the middle of the twentieth century.

Either that or The Presidential Task Force of Automobiles will dip into the public purse once again and arrange enormous payouts to abandoned dealers. After all, politicians can resist anything except political pressure. But any such payoffs will worsen GM’s reputation as a welfare queen, and sour voters to the whole project. No matter how you look at it, this dog won’t hunt.

A week ago, we predicted that Volkswagen, buoyed by stellar numbers, would soon swat nuisance Wiedeking once and for all. It didn’t take long. Ferdinand Piech, chairman of the supervisory board of Volkswagen and co-owner of Porsche, pulled out a big gun and put it to the head of Wendelin Wiedeking, CEO of Porsche (and theoretically Piech’s employee). Piech said (we are paraphrasing in the interest of brevity): “Say uncle by Monday. Or you’re dead.” Nice family.

According to Der Spiegel, VW and the state of Lower Saxony set Wiedeking a deadline. If he doesn’t accept the offer by Monday, Porsche’s already dire financial situation will become untenable.

The joint ultimatum goes like this: VW buys 49 percent of the Porsche AG for anywhere between €3 and €4 billion. The money goes to the Porsche Holding, of which Piech owns a good chunk. As a next step, the Emir of Qatar will buy the options for 25 percent of VW stock, which are held by the Porsche Holding. Then, VW and Porsche will merge.

When everything is said and done, the Porsche/Piech families will end up owning more than 40 percent of VW-Porsche, Lower Saxony will keep its 20 percent, Quatar will have 15 percent, another unnamed sovereign wealth fund (any guesses?) will hold five percent. Less than 20 percent will be publicly traded, which should keep the stock scarce and high.

This plan is the joint work product of VW CEO Martin Winterkorn, VW CFO Hans Dieter Pötsch, Lower Saxony’s Premier Christian Wulff and of course Ferdinand Piech. Der Spiegel didn’t name sources for the story. The details of the transaction are fine grained. There must be a big leak in the executive washroom on the top floor of the Volkswagen Hochhaus.

What if Wiedeking says no? Will he find the head of a horse in his bed? This is Germany, and the dealings are more subtle: If he says no, VW will recall its €700 million loan they had given Porsche last March to save them from bankrutptcy.

Should it come to that, the Emir of Qatar will walk. He made clear that he’s only interested in a Porsche-VW company where the owners share a common goal and are off each others’ throats. With the Emir gone and the loan recalled, Porsche AG (the car company) is DOA. If Wiedeking gives in, his job is DOA.

The story jibes with the information collected by the Süddeutsche Zeitung. Bankers told the SZ that Qatar has its eyes on big Volkswagen. They were only talking to little Porsche to get their hands on the VW options. To sweeten the deal, Qatar could deliver a chopped head to Wolfsburg: Wiedeking’s. Qatar doesn’t want to “fight with Wiedeking against the rest of the world.” To win over Piech and Lower Saxony, Wiedeking has to go. Judging from the ultimatum, Piech, Lower Saxony, and Quatar are already in agreement.

There is no other white knight that may ride to Porsche’s rescue. Daimler was rumored to be interested. Today, Daimler’s Zetsche gave Die Welt an interview and Porsche the cold shoulder: “If we would be interested in Porsche, we would tell them.” And: “Porsche is closely integrated with Volkswagen’s activities. It doesn’t make sense contemplating to replace this integration with another one.”

Zetsche also intimated that Porsche had leaked the possible link-up with Daimler: “I can understand that spinning the same story again and again can get boring. One likes to drop other names.” In other words: Porsche, get lost. Daimler has its own problems.

So what’s left for Porsche? All they can do is fume.

“Porsche’s chairman is furious with Volkswagen AG. Wolfgang Porsche said in a statement Saturday that the sports car maker would not be “blackmailed” into a merger with VW,” Automotive News [sub] writes.

More than miffed, Wolfgang Porsche flames in the direction of Wolfsburg:

We are deeply concerned and irritated by the wording of the ultimatum. The 21st century is not the time for ultimatums. We wonder what the whole matter is really about and whether the focus is still on our common cause at all.

We will not give in to such pressure or blackmail. Such action does not help anybody. It is detrimental to the entire cause. This is not the way to support and uphold common interests.

We sincerely hope that the perpetrators of the ultimatum, in consideration of our common interests, calm down again and follow up their proposals in internal discussions and not through headlines. We are open to such talks at any time.

The missileve was co-signed by Uwe Hück, Wolfgang Porsche’s deputy on the board and representative of the worker’s council. Workers and managers, unite! They must have been close to tears when they wrote this. All smugness is gone. The strongly worded protest confirms that Der Spiegel has its details right.

On Friday, Porsche had bragged it was close to reaching a deal with Qatar. At the same time, Qatar, Piech, and Lower Saxony got a little cozier. Now, all that’s left to Porsche is to whine and to invoke noble principles. It won’t work.

Assume for a horrifying second that you are the chairman of the board of one of the world’s largest auto companies. You also own large chunks of a smaller auto maker. Your executive assistant brings in a letter from one of the top managers of that smaller automaker. The letter says you broke the law, you hurt the company, and he may hold you personally liable for the damage. To the tune of, oh, several billion. Euros. What would you do? Right. Send down security with a moving box and have the guy escorted to the factory gates. Ferdinand Piech, chairman of the board of Volkswagen, supervisory board member of Porsche, and one of the largest owners of Porsche received such a letter from Porsche CEO Wendelin Wiedeking. The letter arrived a month ago. Wiedeking still has a job. But the letter has been leaked to the press. The day before Wiedeking’s day of reckoning.

The Süddeutsche Zeitung is in possession of a personal letter from Wiedeking to Piech, sent on May 13, 2009. Your guess is as good as ours who revealed the reading matter. A day before the epistle was express-mailed, Piech had publicly called Wiedeking a loser. A few days later, Piech had offered Wiedeking a job after Volkswagen had done a reverse takeover and gobbled up Porsche: The job came with conditions. “He would have to step several rungs down the ladder. He would have to be demure,” said Piech. In the olden days, this would have been cause for a duel with pistols. It turned into dueling letters.

Wiedeking is still in charge of Porsche and is still trying to find the money to finance and finalize the takeover of Volkswagen by Porsche. “Apparently, Piech did not get support for firing Wiedeking,” muses Der Spiegel after reading the Süddeutsche. The support for an execution of Wiedeking at Porsche must come from the other factions of the Porsche/Piech families ruling Porsche. So instead of firing Wiedeking, Piech fired a letter back and denied all allegations.

The obviously premeditated leak is yet another chapter in the power struggle for the control of Volkswagen and Porsche. Porsche is looking at a debt of €9 billion and cannot complete the takeover of VW. They applied for a €1.75 billion government-backed loan, but the application has not been decided. The Sheikh of Quatar is ready to buy 25 percent of Porsche, but he wants to have a say in the company also.

“Even a Qatari investment, or a loan from the government, cannot revitalize the project for taking full control of VW,” says the New York Times today, citing analysts. “This does not create a chance for Porsche to resume the takeover of VW,” said Daniel Schwarz, an automotive analyst at Commerzbank in Frankfurt. “That scenario does not exist anymore.”

Today, Friday, is a day of double reckoning for Porsche.

Today, Porsche presents the numbers for the first ten months of the 2008/2009 fiscal year. According to Reuters, “reported pretax profit at its core sports car business declined on the back of a sharp drop in vehicle sales and revenue in the first nine months of its fiscal year. Consolidated profit before tax would significantly rise, however, thanks to a considerable boost in earnings from cash-settled stock options that benefited from a high underlying share price in Volkswagen ordinaries.” It may be the last time.

Today, Friday, June 19, is triple witching hour in Germany. Most options Porsche holds on Volkswagen stock expire. Porsche either has to exercise them, which costs money, or they go poof and result in a big loss. Reuters predicts a “potentially volatile session for Volkswagen shares on Friday due to the expiry of options, index options and futures on the Eurex derivatives exchange.”

The leaked letter exchange was strategically timed.

GM is shutting down production of the Pontiac Vibe at the New United Motor Manufacturing, Inc. (NUMMI) plant in California. GM has sold some car or another based on the Corolla ever since they jointly opened the plant with Toyota. GM doesn’t need them to produce another small car, as they’re looking at plants in Michigan, Wisconsin and Tennessee for that. That’s the first dot. And away we go!

Toyota spent $1.3 billion to build and man a new plant in Blue Springs, Mississippi. Originally, Toyota Motor Manufacturing Mississippi (TMMS) was set to construct Highlanders. And then the SUV market crashed. As gas prices rose, ToMoCo couldn’t import enough fuel-sipping Priora to satisfy demand. In July 2008, they announced a change in plan. The Hospitality State facility would be converted to Priora production. And then gas prices cratered. As did the entire US new car market, including the Prius. With all excess capacity in other factories, Toyota’s mothballed the half-built Mississippi factory.

Then Toyota released the 2010 Prius. Despite the depressed global new car market worldwide demand for the model is strong. Toyota needs more manufacturing capacity to meet that demand. It’ll take a while to finish the on-off-on Mississippi manufacturing plant. Dot two.

Third dot: The new Prius shares some parts (such as underbody frame) with the Corolla. In fact, they could be built at the same facility. Rumors are flying that Toyota will add the Prius to NUMMI’s repertoire. It makes sense. NUMMI has the capacity to build Priora; all the high-tech parts they’d need will come from Japan to the west coast. Toyota would cut shipping costs considerably by parts close to their west coast port of entry.

Now here’s where it gets interesting.

GM and Toyota still jointly own NUMMI. GM’s historically sold a Toyota-based small car since they started the venture. Will Toyota build another? We’ve href=”https://www.thetruthaboutcars.com/toyota-to-gm-need-help-say-the-magic-word/”>reported that Toyota’s President Katsuaki Watanabe said, “If some talk about supporting GM comes up, we would like to consider it earnestly.”

It’s the same party line ToMoCo adopted back in ’05, when GM first acknowledged that it was kinda maybe heading for disaster. In fact, as we reported at the time, GM CEO Rick Wagoner flew to Tokyo and met with Toyota’s CEO. Although the substance of those talks was never revealed, it was widely speculated that Wagoner was exploring the possibility of licensing Toyota’s hybrid technology (if only).

Dot four.

New CAFE regulations are full of loopholes, but Government Motors has to do something to at least appear to be satisfying their high mileage provisions. They need to fulfill the “greener” part of their short-lived “Leaner, Greener, Faster, Smarter” reinvention campaign.

GM’s going to build the Cruze, their own small car, in Lordstown Ohio and Son of Aveo somewhere (where the tax breaks are easy). But their dance card at the hybrid car cotillion is empty. The General’s pulling the plug on their light hybrids (VUE, Aura and Malibu) and put the PHEV drivetrain for the Saturn VUE on hold (the model’s going bye-bye). The Hail Mary plug-in hybrid Volt has been conspicuously absent from the news and press releases lately. So there’s no telling what’s going on there. GM needs hybrid help to appease its new government overlords post haste.

Final dot.

So . . . what are the chances of Toyota building a small hybrid vehicle for GM when they gear-up to start Prius production at NUMMI? Connecting all the dots shows it would fill an important niche for GM, give them sorely-needed green creds and would improve capacity utilization at NUMMI.

“No way” you say? That’s exactly what they said about the idea of GM and Toyota cooperating on anything before NUMMI opened a quarter century ago. Stranger things have happened. Given the state of the auto industry, anything’s possible now.

The automotive retail landscape has been dramatically reshaped as both Chrysler and GM together have terminated almost 2,000 dealers as part of their on-going restructuring efforts. They were able to use the bankruptcy process to circumvent strong state franchise laws to shed dealers. At times there appeared to be no rhyme or reason to the selection process, leaving both dealers and consumers perplexed. Last week, as new details and documents surfaced on thetruthaboutcars.com on why certain GM dealership agreements would not be renewed in 2010, Automotive Traveler took an in-depth look at the closing process.

Over the past three weeks, both GM and Chrysler informed many of their dealers that they are now redundant as the restructure. While it was expected that many small rural dealers would be among those cut loose, in Chrysler’s case, many dealers that sold just one of their three (Chrysler, Dodge, and Jeep) brands were shut down. In some cases this was unexpected given that some dealerships were in major metro areas and boasted modern facilities. The reason given? That the company was “overdealered” meaning that there were too many dealers and it was impacting all dealers profitability.

In the case of the reasons why that certain Chrysler dealers were terminated, it appears that five criteria were evaluated.

Financial Viability

Dealership Upkeep and Appearance

Competing Brands at the Same Location

Number of Units Sold

Customer Satisfaction Index Scores

Chrysler dealers who might question why they were targeted for elimination probably need only answer the following seven questions:

Did you try and combine your store with a Dodge or Jeep dealer (or sell out to them) if a standalone dealership?

Did you update your showroom and service facility to the franchise-specific plan?

Did you consistently exceed your quota, and strive to increase your market share, even at the expense of gross margins?

Did you support the manufacturer, and exceed your stocking requirements by taking on extra inventory?

Are you financially viable, and consistently profitable (while trying not to hide any excess profits)?

If you have a competing brand, is it at least in a separate location/showroom/facility?

And are you selling more used product than new?

If the dealer answered NO to questions one thru six and YES to question seven, then each dealer can surmise why they were eliminated.

Over at GM, the problem is more complicated given that the Pontiac brand is being eliminated after GM’s recent efforts to build its Buick-GMC-Pontiac sales channel, and that GM is in the process of selling its Hummer, Saturn, and Saab brands. GM dealers will be evaluated based on four criteria to judge their viability. These criteria include:

Profitability

Capitalization

Customer service

Sales effectiveness.

To be part of the new, post-bankruptcy GM, these dealers have to perform well in all four categories.

For those dealers being eliminated, GM is offering some dealerships from $20,000 to $1 million to wind down their businesses over the next 17 months, the payment based on factors such as brands carried, regional sales rank, and current inventory.

But this payment comes with a cost; if the dealer accepts the payment, GM will not buy unsold inventory, the dealer must agree not to sue GM until their franchise agreement expires, the terminated dealers also will not be allowed to order new cars from GM, and they must stay in business until January, 2010.

And what might be the most onerous condition, a gag order that prohibits terminated dealers to talk to anyone other than its employees without GM’s permission.

Some GM dealers are not accepting the decision without a fight. Some are appealing individual decisions, seeking reinstatement, while others have gone public.

No one has been as public than Gretchen Carlson, host of “Fox and Friends” on the Fox News Channel. Her parent’s dealership, Main Motors in Anoka, Minnesota has been slated to be closed. On June 9 she appeared on “The Glenn Beck Program”, also on FNC, to plead their plight.

To respond, GM had Susan Docherty, its North America Vice President Buick-Pontiac-GMC appear on “Fox and Friends” on June 12 to respond to Ms. Carlson’s charges. The exchange wasn’t pretty, calling into question just how fair and balanced Ms. Carlson and Fox News Channel are, who along with the Fox Business Channel has taken a very vocal and pronounced anti-bailout stance with regard to the auto manufacturers, including saying that the selection of some dealership closings was politically motivated.

[For additional details, including seven supporting videos, read the entire report on Automotive Traveler]

China is becoming the new America, while America is becoming the old China. Jack Perkowski thinks it’s happening right now. Jack is an Old China Hand and a colleague in the automotive parts business. He’s an American and a Yale graduate. Fifteen years ago, he came to China and started ASIMCO, an auto component manufacturing company. In January, Perkowski left the company. The global decline in the business didn’t spare ASIMCO. Perkowski is a true Lao Wai, which literally translates into “Old Foreigner” in Mandarin. From one of the first in China, we inherited a lot of his experience. Some is chronicled in Perkowski’s book Managing the Dragon, which made the bestseller lists. Most is regularly updated in Perkowski’s blog that goes by the same name. In a recent post, he left us some interesting thoughts. Some may find them revolting, even seditious.

During my time here, China has become the third largest economy in the world, the world’s largest market for cars, computers, cell phones and a host of other products, and the country has accumulated $2 trillion of foreign currency reserves. China is now the single largest investor in the United States, unthinkable in 1994 when China had less than $50 billion of reserves.

As the single largest creditor, is China worried about where the U.S. of A. are going? Perkowski sure thinks so:

Given all that has transpired, the leaders at Zhongnanhai must be scratching their heads, wondering what their counterparts in the United States are up to. It began with Enron, Worldcom, Tyco and a host of accounting scandals. In a flash, the financial statements of Chinese companies were just as believable and just as transparent, if not more so, than those of U.S. companies. Then it was Bear Stearns, Lehman, AIG, Bank of America, Freddie Mac, Fannie Mae, Citicorp and the meltdown of the U.S. financial industry. Hoping to learn how to develop its own financial system, China encouraged investments in its state-owned banks by leading U.S. players. Maybe they aren’t such good examples to follow after all?

While China is trying to divest itself from state-owned companies, what is China’s largest debtor doing? Just the opposite.

But the sharp left turn that the Obama Administration has taken since coming to power must really have China’s leaders wondering. Not just the banks, but now large industrial companies, are owned by the U.S. government, and the United States is doing what any government does when it owns companies—it meddles, and political, not economic, considerations are taking precedence.

The takeover of the car industry by the US government reminds Perkowski of the bad old days in China. The courts ignoring the law? Employment for the working masses trumps turning a profit? Where does one still find these egregious practices?

Rather than let the bankruptcy system work as it has over the years to restructure companies, billions of dollars, much of which will never be recovered, have been pumped into General Motors and Chrysler, two companies that represent less than 30 percent of the U.S. automobile market and have been losing market share to foreign-owned companies that now also happen to manufacture in the United States-all in the name of saving the jobs of the United Auto Workers, whose support played an important role in getting the current administration elected.

Central planners deciding the direction of the companies? Heads of state-owned enterprises serving at the pleasure of party bosses?

An administration-appointed car czar, not the company’s board of directors, has fired the General Motors chairman and CEO and installed a new CEO, president and chairman. General Motors is told what plants it cannot close and where its offices should be located. Barney Frank personally called the General Motors CEO to reverse a decision to close a GM distribution facility in his district, and President Obama himself assured Detroit’s mayor that GM’s headquarters would remain in Detroit, rather than move to a neighboring suburb. Undoubtedly, the Obama Administration and Congress will tell their management appointees what types of cars GM should produce. Toyota, Honda, Nissan, Hyundai and their U.S. workers must be delighted with this turn of events.

At least we can find solace in the fact that there still is justice in America. Perkowski is beginning to have his doubts.

As for the vaunted ‘rule of law’ that the United States has been known for, ask the GM and Chrysler secured bondholders what they think. And as for manufacturing statistics—Americans are being told that the administration will ‘save or create’ 600,000 jobs this summer, a statistic that the Wall Street Journal has labeled an ‘immeasurable metric.’

I there anything that doesn’t remind Perkowski of the times before Deng Xiaoping? Yes. China was never ruled by Russian Emperors, who were famous for mistreating their serfs:

A newly appointed pay czar (there are now more than 20 such ‘czars’ in Washington) will now review the compensation of the top 100 managers of any company that has received support from the government.

So what does Perkowski suggest?

Somewhere along the line, the United States picked up that socialist economic playbook that Deng Xiaoping was smart enough to throw away. Perhaps the U.S. should ‘follow Deng’ and go back to what got the United States, and now China, to where it is today?

In recent months we have seen the Obama administration nationalize the majority of the domestic automobile industry. A recent poll indicates that a decisive majority of Americans think this is a really, really bad idea. Furthermore, the action is illegal. The Constitution of the United States of America has endowed the congressional branch of the government with the sole power to spend money. Article 1, Section 9: “No money shall be drawn from the treasury, but in consequence of appropriations made by law [i.e., by the legislative branch].” This makes the financial seizure of General Motors with money appropriated by congress for the use of stabilize the banking system a brazen act of embezzlement. (The witless leader of the House of Representatives says that King Obama has not requested that they pass legislation authorizing expenditures to GM and Chrysler, so it must not be needed.) And so there has been cry among some right wing bombasts to boycott the purchase of GM cars. This too is a bad idea.

Twenty-six years ago my father traded in our family Buick for a Toyota Camry. It was the first time that a Buick had not darkened our family garage, but this car, a gas guzzling ’77 Skylark had been fraught with problems from the first day that we brought it home. I vividly remember watching the red vinyl-topped gray car get dragged by winch out of our La Mesa, California, garage onto a flatbed the morning after dad brought her home because the transmission had seized. The tranny was fixed and we had her back in a few days but at 30 thousand miles a multitude of other components began to fail. Before long my folks were ready for something much more dependable and something that provided a little relief at the pump.

The cream colored Camry was a breath of fresh air blowing in from across the Pacific. The Toyota felt light and maneuverable after the stodgy Buick and the high-revving I4 engine loved to sing while delivering 35 mpg on the highway.  The steering was nicely weighted and, other than excessive body roll, it handled reasonably well. And despite accusations to the contrary, it was safe, comfortable, and did not rust and blow away.

By the time the Camry arrived I was driving and was highly attuned to all things automotive. The country was in an uproar because the domestic steel industry was in full meltdown and Motown’s long decline was already underway. The mantra of those attempting to guilt trip the country into buying over-priced second-rate domestic manufactured goods was, “Buy American.”

My response was, “Buy the best.” Even then it was clear to me that sheltering the manufacturers from superior competition would only exacerbate the problem. Sure, “Buying American” might provide some short-term relief to the complacent industries, but it would rob American consumers the best goods and remove the incentive for what was left of domestic manufacturers themselves. If Americans “Buy the best,” the market will stay strong and healthy, fueling an economic engine that will continue to provide jobs and pull people—at home and abroad—out of poverty.

Today, to those that advocate boycotting General Motors, I say, “Buy the best.”  Right now The General has numerous products that should be on any consumer’s short list. Chevrolet Corvette, Cadillac CTS, Chevrolet Camaro, Chevrolet Silverado, Chevrolet Malibu, and the Pontiac G8, come to mind. In business we say, “Feed success and starve failure.” These cars are successes and deserve consideration—even if Mr. Goodwrench now lives at 1600 Pennsylvania Avenue.

The Obama administration, or anyone’s administration for that matter, lacks the expertise and motivation to make a success out of something as complicated as the manufacture and marketing of automobiles. If they remain control of GM for long, its products will undoubtedly become outclassed by stronger free competitors. But that day is not here yet, so “Buy the best” even if it means condescending yourself to buy from a government-owned company.

To those who think that a government-owned auto industry is a wonderful marriage of the greatest attributes of the public and private sectors, I would ask, would you trust the next George W. Bush (Sarah Palin?) that gets elected to manage the domestic auto industry? Eventually it will happen and there will be regret, even if Obama manages to make lemonade out of GM lemons in the near term.

Let political considerations be political considerations and let your choice of cars be for that car that best serves your needs and wants at the price you are willing to pay. Eventually Congress will become re-staffed by those that recognize their mandate in counterbalancing excesses and misuse of Executive Branch power. As in the 1980’s, politics must be remedied in polling booths, not in dealership showrooms.

US SecTreas Timothy Geithner quickly got out of DC for the Monday curtain call of the artist now known as Government Motors. Geithner went as far as Beijing to distance himself from the performance. Keeping a distance didn’t mean keeping his mouth shut. From Chrysler and GM, “we want a quick, clean exit as soon as conditions permit,” Geithner told students at Peking University in Beijing. Reuters took notes. “We’re very optimistic these firms will emerge from restructuring without further government assistance.” Strangely, everybody shares his optimism . . .

Back home, Geithner’s subalterns at the Presidential Task Force on Automobiles (PTFOA) are digging in for the long haul. To paraphrase Richard Nixon, we’ll have the twenty-five member team (plus assistants) to kick around some more.

It’s not like they need the money; Bloomberg reports that PTFOA bureaucrat-in-chief Steve Rattner is worth some $188m. He’s in it to win it—now that he’s divested shares in Cerberus (Chrysler’s soon-to-ex-owners) and “sold guarantees of as much as $15 million on a credit-default swaps index tied to the secured debt of 100 companies, including General Motors Corp.’s senior secured loans, the filing shows.”

Reuters reports Steve-O will continue to earn his bankruptcy proof government pension “even if General Motors Corp and Chrysler LLC emerge swiftly from bankruptcy this summer.” That’s because “the Obama administration’s autos task force will stay in business—shifting to an investment manager role.” According to the principles laid out in Washington, the US government “will seek to dispose of its ownership stakes as soon as practicable.”

Define “practicable?”

Someone should. Not that the Obama administration isn’t trying. The Washington Post reports that following that infusion, the US Treasury “does not believe or anticipate that any additional assistance to GM will be required,” a senior administration official said Sunday night, calling the restructuring a ‘permanent’ solution.” Final answer?

According to Reuters, one of Geithners officials “declined to project when this would be or how much of the $50 billion in aid extended to GM will be recouped. The restructuring plan was aimed at ‘maximizing taxpayer proceeds’ by ensuring that GM could be profitable even if conditions in the industry remain difficult for years to come.”

Not realizing how deep the foot was in his mouth, Geithner went on to reassure the students and the Chinese government that China’s huge holdings of dollar assets are safe and that he has deep faith in a strong US currency.

“Chinese assets are very safe,” declared Geithner at the Beijing University, where he studied Chinese in 1982.

This time, loud laughter erupted from the student audience. They clearly didn’t buy this one. On the first day of Geithner’s visit to China, China Daily reported that seventeen out of 23 economists in China said they deemed the country’s vast holdings of US bonds “risky.” China Daily is a well-written, and occasionally entertaining government publication. Ever so politely, Geithner is being told that the Chinese government doesn’t share his convictions.

The market didn’t buy Geithner’s faith-based valuations either. The same day he praised the strong dollar in Beijing, the greenback plummeted against world currencies. At the time of this typing, one Euro buys $1.42. The dollar hasn’t been so cheap since last December.

As China sees its dollars getting ravaged by consumption with a different meaning (pulmonary phthisis), Geithner treaded carefully when it came to the Chinese currency. All he said was that it would be nice if China would “continue progress toward a more flexible exchange rate regime.” That remark was ignored as politely as it was made.

Meanwhile, Geithner tries not to be reminded of his major achievement when he had studied in Beijing. He helped organize an international badminton league among his fellow Beijing students, which included participants from Sierra Leone, Iran and North Korea, as the website of his alma mater can’t help to note.

Whether or not Chrysler and GM’s future (or lack thereof) forms a lasting part of Tim Geithner’s legacy is not in doubt. The question: what sort of reputation will be “enjoy?” Will his intervention make things better or worse? The early signals aren’t good. But they never are. And May’s American sales results are headed our way on the same day as GM’s filing. As the old joke goes, it’s always darkest before total black.

Then again, as Market Watch reminds us, “even if all 120,000 GM workers lost their jobs tomorrow, it’d be less than the daily average of 156,000 jobs that have been lost over the past three months.”

Further, “The lost production at Chrysler and GM will reduce gross domestic product by about 0.7 percentage points in the second quarter, not a ‘dramatic’ effect, said Abiel Reinhart, an economist for JPMorgan Chase Bank. Falling auto production cut 1.4 percentage points in the first quarter.'”

So, no matter what happens at Chrysler or GM, Geithner can always claim that a sinking tide lowers all boats. How great is that?

It was a long night again. Not as long as the disastrous Wednesday/Thursday meeting. And it didn’t end in invectives. At 2:15 in the morning, Finance Minister Peer Steinbrück stepped outside Chancellor Angela Merkel’s offices and reported: “I can tell you that a deal has been reached.” If you looked hard enough, you could see holy white smoke rising into Berlin’s night sky.

The German government got most of what they wanted. They got their partner, Magna; they got someone who brings expertise and money (provided by Russia’s Sberbank); and they got their trustee model. Until the last minute, GM’s new overlords in D.C. wanted to avoid that one like another bridge too far. They lost. This paved the way to bridge financing for Opel worth $2.1 billion. The lights will stay on in Rüsselsheim – for now.

Siegfried Wolf, co-chief executive of Magna, cautioned there are still details to be ironed out. A detail such as a contract with GM and its new owners. “In five weeks’ time we should have the formal signing of the contract,” Wolf said. Whoever did even the most simple M&A with a US entity knows that Wolf is an optimist. There’s an army of devils lurking in thickets of details. More “abrasive” negotiations are expected from a government-owned GM. That deal is far from closed.

Steinbrück said US Treasury representatives at the meeting endorsed the agreement. And he graciously abstained from making any new remarks about the qualifications of the Treasury reps. But Berlin is still grumpy about the old hat tactics of sending a good-for nothing delegate to humiliate the other side.

Berlin’s counter: Put a Heckler & Koch UMP to the other side’s hard heads and threaten Konkurs (bankruptcy) by Wednesday. “That created some movement on the American side,” reports Der Spiegel. Just to make sure that no more stupid junior-staffer-tricks are played, Chancellor Merkel had a transatlantic phone discussion with her American colleague Obama on Friday afternoon – principal to principal. And next time troop strength in Afghanistan is on the agenda, Berlin will send a descendant of Karl Valentin.

Friday evening’s discussions, led by Chancellor Angela Merkel, were “conflict laden,” Der Spiegel learned. Economy minister Freiherr von und zu Guttenberg (the Guttenberg bible carries the name of his family) favored a cleaner bankruptcy, recommended by his advisers and most German economists. He thought – still thinks – that the whole rescue operation is fallacious risky business. Von und zu even offered his resignation. Angela talked him out of it, and in the end, political expediency trumped sound reasoning. Why should it be different this time.

Under the new deal, GM and Russia’s Sberbank will — most likely, pending a written contract — hold 35 percent each in a new GM Europe, consisting mainly of Opel and Vauxhall. Magna will get 20 percent, the Opel workers will get 10. Russia’s automaker GAZ will get no shares—they will act as some kind of a strategic partner, at the pleasure or displeasure of Tovarich Putin.

The $2.1 billion won’t be the last note the German government will have to sign. For the next five years, Berlin has committed to loan guarantees worth $6.3 billion. That’s it . . . for the moment.

GM’s Carl-Peter Forster said that “currently” there are no additional monetary demands on the part of GM. How nice.

As for the plants and factories, Magna’s Wolf said that they want to keep all, and as many jobs as possible—in Germany. There was talk about job reductions of about 2,500, achievable through natural attrition or “the biological solution,” as the expression goes in Germany.

Not a word was said about the plants and jobs elsewhere in Europe. Probably part of the details that need to be ironed out. The Guardian is already worried that the Vauxhall van production could shift to Russia’s GAZ. But if Lord Mandelson puts pounds on the table instead of just pounding the table, the fix could be in on that one also. Gotta pay to play.

Compared to the $105 billion that have already been poured down various drains stateside (and the pouring continues, take from the poor, give to the rich), the sums involved in Europe are benign – for now.

Remember: All there is is a memo. They haven’t even begun writing a contract. Under the best of circumstances, getting a deal done with so many parties is hard enough. If nothing is signed, sealed and delivered by 9/27/2009 – election day in Germany – Opel is dead.