As the Motown meltdown rushes towards its not-so-final denouement, a clear meme is emerging: blame the bankers. Last week, Detroit News columnist Daniel Howes suggested that Americans will finger Wall Street suits for Chrysler’s collapse. It was an odd not-to-say-jarring proposition—given that Chrysler’s management has done just about everything it could do destroy the automaker’s rep save impregnating car seats with swine flu. Ditto GM. And there’s a darker side to this idea, which I’ve previously resisted mentioning. I believe this line of thinking raises the specter of ye olde “international Jewish banking conspiracy.” I know, I know. Call me a paranoid fantasist (I’ve been called worse). But try reading this Automotive News “analysis” from an anti-Semite’s perspective: “The debate over the U.S. government’s bid to reshape the American auto industry through bankruptcy comes down to this: the spreadsheets of a handful of former investment bankers pitted against the street sense of thousands of U.S. auto dealers fighting to survive.”

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“I’ve heard of some updated information. It sounds like progress is being made and I hope they’re successful in their discussions together so that Chrysler can avoid liquidation,” Canadian Finance Minister Jim Flaherty told reporters after a meeting of G7 finance ministers and central bankers in Washington. And it’s timing Jim. But. Not. As we know. It. Reuters: “Minutes before Flaherty spoke, the Canadian Auto Workers Union postponed a press conference scheduled for 6 p.m. (1000 GMT), in which it was expected to announce an agreement.” [Thanks to Jules for the link]

Move over, Neil Barofsky. The SIGTARP may make the media rounds, but he’s got three trillion worth of TARP to cover. Which is why his recent Quarterly Report to Congress (PDF file available here) wasn’t exactly breathtaking for Chrysler/GM watchers. The Government Accountability Office, on the other hand, has just dropped a report specifically covering the Treasury’s execution of the auto bailout. If you’ve been following TTAC’s coverage through these strange days, the 48-page Summary of Government Efforts and Automakers’ Restructuring to Date (PDF file available here) won’t exactly brim with new insights either. It’s the fact that anyone in the government (sandbagging senators aside) is acknowledging some seriously inconvenient truths.

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For some reason, The Detroit News columnist Daniel Howes reckons the average Joe will blame the bankers when—sorry “if”—Chrysler goes Tango Uniform. Yes, the money men will take the hit “whether they deserve it or not. I say this not because it would be entirely fair, either, unless ‘fiduciary responsibility’ and the duty of lenders to determine whether a Chrysler allied with Italy’s Fiat SpA would have a shot at survival now are quaint notions that no longer apply. In normal times, lenders are supposed to decide where credit-worthiness ends and recklessness begins. But these are not normal times and bankers, as one of them quipped privately to The Detroit News, ‘are the most hated people in America.'” I know TTAC is guilty of first degree inside baseball, but I’m not feeling that at all. The average American will place the blame squarely on Chrysler for not building competitive products. But it’s interesting that Danny “I can’t get off the fence but I know who’s on either side” Howes would see it that way; it shows that Detroit still can’t take responsibility for its failures. Or admit defeat . . .

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The New York Times really pisses me off. This is not the first Gray Lady story I’ve read based entirely on a report by a “think tank”—where the reporter somehow fails to mention the organization’s ties to labor unions. In this case, scribe Elisabeth Malcolm is happy to share the results of a study from the “Economic Policy Institute, a Washington think tank that studies economic issues that affect workers.” In this report (download pdf here) EPI economist Robert E. Scott “argues that saving American automakers may instead end up saving — and even creating — Mexican jobs.” And that means that the feds should use the Motown bailout as a lever with which to undermine The Big 2.8’s plans to build cars in non-unionized Mexico. “The conditions Mr. Scott proposes: G.M. and Chrysler (and Ford, if and when it asks for money) should face a limit on their investments in Mexico. The way to do that would be a cap on imports from Mexico as a share of sales. He also suggests a domestic content requirement for American-made cars that would halt the increase in parts imports from Mexico.”

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The Globe and Mail reports that the Canadian government is negotiating (with whom?) to provide $6 billion in post-bankruptcy financing to Chrysler and GM. It gets worse/better. The six bil represents a fixed percentage of a larger post-bankruptcy fund, currently under construction over at the US Treasury. That would be 15 percent. Which puts the size of the US fund at $40 billion. A pittance, apparently. “The companies had initially proposed that governments lend or guarantee a staggering $125 billion in bridge or long-term loans, but the number was whittled down over months of difficult negotiations led largely by Treasury officials in Washington. In recent weeks, sources said, talks shifted to a plan for the governments to provide financing and guarantees for debtor-in-possession, or DIP, loans. These are used for day-to-day operations while companies restructure their debt under the protection of court supervision.”

Fiat, the great Italian hope for the American auto industry, has a lot of expectations to live up to right now. Not only are the Torino boyz tackling the miasma of despair that was the Chrysler corporation, but Automotive News [sub] reports that Fiat could “form an alliance with General Motors’ core operations in Europe and Latin America.” Italian-American Leyland, anyone? Fuhgeddaboutit. According to anonymous sources, talks with GM are in the “early phases,” which means that nobody has suggested that an allied Chrysler, Fiat, Opel/Vauxhall and GM Latin America might be too much concentrated fail for one corporation to handle. And Fiat’s got the usual unnamed competition for Opel to contend with. “More than six people have expressed interest, serious people,” says GM CEO Fritz Henderson of his firm’s unwanted Opel/Vauxhall operations. Why so serious? Did previous offers come from folks wearing giant shoes, tiny hats and rubber noses? More importantly, if one of these “more than six serious people” comes from Fiat, might it not be time for a reality check on that firm’s transformative power?

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It’s nice when Detroit News auto journalist Mark Phelan and I agree. We recently had a head-to-head on BBC World Service where I called GM and Chrysler zombie automakers, and Phelan didn’t. In a piece in this morning’s Free Press—“Bankruptcy no fast cure for GM“—the Irish scribe shares my belief that a GM C11 will be, as the Brits might say, the bunfight to end all bunfights. But first, let’s put the pro in prolepsis, and begin with Phelan’s final paragraph: “GM’s cost-cutting progress has allowed it to pass on some of the loan money the government has promised, but the company’s own projections say it could need another $4.5 billion to $12 billion if the economy remains moribund.” That’s what I call a big spread. But there’s something else about Phelan’s finale that gets my goat . . .

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Back at the beginning of March, GM and its camp supporters were touting the fact that they could go all the way ’til April without a fresh infusion of federal funds—sorry, “loans.” See? Things aren’t as bad as they seem, GM CEO Fritz Henderson pronounced. Cuts are paying dividends already! Deeper, faster, oh baby! Yes, well, as we said at the time, bullshit. The actual reason for GM’s small push away from the bailout buffet: GM’s outgoing CEO had sucked a cool half a billion dollars from The General’s Canadian subsidiary. And now it turns out that current CEO Fritz Henderson’s prediction that GM would need “between $2 and $4 billion” to get it to June 1 misled taxpayers by a billion dollars. “General Motors Corp. will get up to $5 billion and Chrysler LLC $500 million in short-term aid, according to a 250-page government report obtained Monday by The Detroit News.

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Got $652m in loose cash sitting around? Boy, does GM have a deal for you! If you are willing to invest that money into Opel/Vauxhall, then The General “is prepared to part with a controlling stake in Opel/Vauxhall for nothing,” Financial Times reports. It gets better . . .

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CEO Bob Nardelli is punting. Boot ‘Em Bob has told the troops that Chrysler would cede control of its board and senior management to Fiat if the two automakers “merge.” “The U.S. government and Fiat would appoint a board of directors for Chrysler, with a majority of them independent directors who are not employees of either automaker,” Nardelli said in an internal memo intercepted by Reuters. “The board will have the responsibility to appoint a chairman. The board also will select a CEO with Fiat’s concurrence.” Seeing as Nardelli walked away from Home Depot with over $240 million in severance pay, one wonders how much it would cost management (that’s Uncle Sam now) to get rid of him this time ’round. Cerberus exits stage right. American Leyland enters stage left. Anyway, here’s the weird part: Reuters is a bit more specific about the government’s participation in this newly formed Chrysler Board than Automotive News, even though Reuters credits Automotive News for the info.

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OK, so here’s the latest chapter in GM’s decades old inability to face reality. GM CEO Fritz Henderson told Automotive News [sub] that there’s nothing wrong with GM’s viability plan (or the company’s management leading up to its $22.8 illionb federal “loans”). GM simply failed to, uh, perform. “The viability plan, when you look at the finding, they basically said they appreciated what had been done—actually quite a bit of what had been done is correct. What they really said was they wanted things to go deeper and faster.” Uh, not as I recall it: “The plans submitted by GM and Chrysler on February 17, 2009, did not establish a credible path to viability,” pronounceth The Presidential Task Force on Automobiles (PTFOA). “In their current form, they are not sufficient to justify a substantial new investment of taxpayer resources.” Of course, the PTFOA  gave GM $4.4 billion to tide them over to C11 anyway. And if you think I’m just milking this “deeper faster” thing for cheap laughs, well, here it is again . . . and again . . .

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Someone. Make. This. Stop. Now that the MSM has woken up to GM’s impending government-sponsored, C11, they’re beginning to understand that this is the only the end of the beginning, not the beginning of the end. The New York Times headline (and Autoblog) may proclaim a “surgical” bankruptcy for The General, but the bottom line is buried with in the text. “Treasury officials are examining one potential outcome in which the “good G.M.” enters and exits bankruptcy protection in as little as two weeks, using $5 billion to $7 billion in federal financing, a person who had been briefed on the prospect said last week.” Using the top figure, that brings our total “investment” to $25.8 billion, of which $18.8 billion is a total write-off. And, as I’ve pointed out here many times, then there’s the next bit. “The rest of G.M. may require as much as $70 billion in government financing, and possibly more to resolve the health care obligations and the liquidation of the factories, according to legal experts and federal officials.” So call it $100 billion just to get going. Government Motors (a.k.a. American Leyland) is born.

“Shanghai car-maker SAIC makes approach for Vauxhall,” headlined London’s Telegraph over the weekend. Of course SAIC doesn’t want just the Vauxhall badge, they are interested in the whole Opel/Vauxhall enterprise. What looks like “Opel” through German eyes looks like “Vauxhall” to the British. It’s one and the same.

According to the Telegraph, “Shanghai-based SAIC has requested a sale document from General Motors (GM), the stricken US car-maker, which has warned that it may file for bankruptcy in an effort to ensure its survival. Commerzbank, the German banking group, is orchestrating the sale process on behalf of GM, which is to establish a new subsidiary comprising Vauxhall and Opel, the German car manufacturer. A new investor would be invited to acquire a controlling stake in the company, with GM potentially retaining a minority interest.”  Saab and Chevrolet Europe would not be part of the deal. More Chinese interests are lining up:
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Did I say laugh? I meant to say “analyze.” As in pore over spreadsheets, crunch numbers, make projections, hold meetings, exchange emails, examine market trends and fill out endless time sheets and expense reports. I imagine that TTAC’s Best and Brightest could save the Presidential Task Force on Automobiles (PTFOA) some money; how much does it cost to make up a rubber stamp that says “FUHGEDDABOUTIT”? So, anyway, Bloomberg winkled-out the payment from the PTFOA to The Boston Consulting Group. “‘A very significant portion’ of work will be to analyze GM’s restructuring plan and Chrysler’s proposed alliance with Fiat SpA, according to the notice posted on FedBizOpps.gov. Boston Consulting must work with the Treasury Department and GM to craft a ‘financial plan acceptable to the government.'” Meanwhile, LinkedIn profiles PTFOA chief Steve Rattner’s former employer, Quadrangle Group. And wouldn’t you know it: “Quadrangle Group employees are most connected to:” Lazard (hired by the United Auto Workers to investigate GM’s finances in 2005; and by Chrysler last August to sell the Viper model as a business), JPMorgan (big time Chrysler debt holders and bailout recipients) and The Boston Consulting Group. Click on BCG, and “The Boston Consulting Group employees are most connected to:” McKinsey and Company. Whose clients include GM and Ford. Small word. Big bill. Yours.