GM AND CHRYSLER IN MERGER TALKS!!!

[GP99GT]

i hope toyota buys GM

[SteveR]

Originally Posted by GP99GT

i hope toyota buys GM

That would be ironic, given the scandal that happened a few years ago.

[BonzoHansen]

Related article...

Uncle Sam Goes Car Crazy
Your government gets into the auto business.
By HOLMAN W. JENKINS, JR.
Wall Street Journal OCTOBER 22, 2008, p A15

If it makes him feel any better, Rick Wagoner is by a long shot not the CEO to have presided over the greatest destruction of shareholder wealth while retaining a decent reputation. The record keeper is Cisco's John Chambers, who lost nearly half a trillion dollars in market value in 2000-2001.

Sadly, the comparison quickly runs out of relevance. GM was never raised to lofty heights by any bubble, but has been a distressed property even in the best of times. Now the company, facing the Detroit doomsday scenario, seems close to taking on the extra burden of private equity firm Cerberus Capital's disastrous stake in Chrysler.

The talk is of synergies and cost-cutting, of tapping new lodes of cash to ride out the storm. Don't believe it. These negotiations are about one thing: creating a political last stand of American auto making that a Democratic Congress and president won't be able to resist bailing out.

All parties to the Chrysler talks have adopted Election Day as a deadline, the better to trap both presidential campaigns into committing to support a deal. But it also slipped out that iconic Ford had been GM's first choice of partner -- a prospect that could yet be resurrected now that superinvestor Kirk Kerkorian has withdrawn his vote of confidence in Ford's survival.

Congress has already agreed to provide the Big Three with $25 billion in loans to help with a shift to green cars -- likely to become plain survival cash in the event. And Congress's very nature requires throwing good money after bad, specifically financing a GM-Chrysler merger if Michigan Sen. Carl Levin has his way. Don't be surprised if President-elect Obama is dropping hints in two weeks that this also would be a good use of the $125 billion Washington just injected into J.P. Morgan, Citigroup and friends. The government could even end up owning a car company directly before it's over, as the U.K. government once owned British Leyland.

Our other concurrent bailout -- of the banking industry -- has been accompanied by a debate of laissez faire versus intervention. How amusing. Banking in fact illustrates what might be called the GM Effect, for both industries have been around long enough to have accrued an almost incalculable baggage of government intervention, which explains why more intervention is demanded today.

Why don't the auto makers limit themselves to paying competitive wages and benefits in line with what workers could earn elsewhere? Because, in the 1930s, Congress passed the Wagner Act with the nearly explicit purpose of imposing a labor monopoly on Detroit to keep wages at higher-than-competitive levels.

Why doesn't Detroit rationalize its musty brand lineups and dealer networks? Because, in the 1950s, legislatures across the country imposed franchising laws, including the federal "dealer day-in-court clause," to make such rationalization prohibitively expensive.

Why don't the auto giants do as Whirlpool and other manufacturers have done, and move their production to cheaper offshore locales? Because, in the 1970s, Congress enacted fuel economy rules to penalize homegrown auto makers if they don't build the lion's share of their cars in high-wage, UAW-staffed domestic factories.

No, Detroit's troubles don't arise because its executives are morons. The human factor nets out over time. Nor is it the diktat of nature that companies get old and senile and die. The only thing wrong with corporate longevity are the legal encrustations that accumulate along the way. Look today at the desirable, fuel-efficient cars that GM and Ford sell in large numbers in Europe. Does anybody imagine the U.S. public derives any benefit from keeping these cars out of our country? Yet they are kept out to preserve the amour propre of the regulators who enforce our emissions and safety standards, however trivially different from Europe's standards.

Cerberus, stars in its eyes, perhaps didn't quite understand all this about the auto industry when it bought Chrysler thinking it would be free to make business-like decisions. Now it does.

Any business would be hard-pressed to survive if obliged to make consistently maladaptive choices. Any rescue mounted today in Washington won't be so much a "rescue" as a final admission that the industry can no longer bear its regulatory burdens without direct subsidies. Any life supports GM, Ford and Chrysler are hooked up to now, for that reason, will have to be permanent.

[BigAls87Z28]

Toyota would never want GM's problems. GM is the Anti-Toyota and vise versa.

[BigAls87Z28]

That is an OUTSTANDING article. Outstanding. Please send me the link, or suggest it as an article on GMI!
Bob Lutz has come out and asked that the US drop its current crash and emissions testing and adopting the European standard so that they can import or build the same great cars that are made in Europe in America.

[LTb1ow]

I just did my economy report on this all deal, big thanks for all the links guys!

[sweetbmxrider]

alls i know is big al is smart when it comes to this.

[BigAls87Z28]

Not that smart, but there is really a million ways to play this out, but knowing GM...they will pick the worst way.