It's a strawman, irrelevant. Fiat had funding and loans and everything to go forward. Several $billion. Not taxpayer money, not US money.
Your comment that GM and Chrysler were talking about a merger was irrelevant to the discussion, my analogy was pointing that out. To buy Opel, sure. That's a lot different than buying all of GM. Fiat buying Opel would have made the remaining portion of GM weaker. How is that a good thing in your mind? barfo
A merger between buick and gm might make sense. They don't need two accountants, two web sites, two CEOs ... two of a lot of things. The savings might have made it worthwhile. Closing car sales lots and many other things GM did during restructuring made it weaker. And... http://www.businessweek.com/bwdaily/dnflash/content/oct2008/db20081017_939535.htm As top executives at General Motors (GM) and Chrysler owner Cerberus Capital Management continue to talk about a merger, the most popular scenario at this point would still have all three companies joined at the hip. Talks between the two companies continue, and while a deal is far from certain, the two sides are narrowing in on a merger structure that both think could work, BusinessWeek has learned. The basic outcome has GM folding Chrysler's auto business into its own while Cerberus would merge lending arm Chrysler Financial Services and GMAC Financial Services. Cerberus owns 51% of GMAC while GM owns the rest. If that deal goes through, GM would end up owning a minority piece of the merged finance company and Cerberus would still have a stake in GM. While many analysts have figured that Cerberus would retreat from the car business, the private equity firm would remain deeply in the game. If the deal ends up working this way, every company involved has a vested interest in seeing the other succeed. It would still behoove Cerberus to run the combined lender so that it helps sell more GM and Chrysler cars. Such a deal would give GM the chunk of revenue from Chrysler's estimated 1.4 million customers and the $11 billion in cash on Chrysler's books. Meanwhile, Cerberus would acquire the merged lending business it has wanted since it acquired Chrysler from Daimler (BusinessWeek.com, 5/14/07) more than a year ago. A WIN-WIN Sources close to both companies say that if the two lenders and two automakers are combined, all would have better balance sheets. Then they can weather the storm and get to 2010, when executives on both sides think a new health-care deal with the United Auto Workers will save money, and auto sales will rebound from today's dismal levels.
Sure... but together they'd still have been bankrupt. Getting rid of accountants, websites, and CEOs wasn't going to fix the problems. The two homeless guys might be warmer, but they'll still be killed overnight by roving gangs angry about message board jokes. I don't see your point. And things got a lot worse starting in October 2008. barfo
Together they'd have $11B in cash. And the proceeds of the sale of the combined lending business. Read the article?
It's not a classic merger as described. They're spinning off and selling off 49% stake in GMAC and Chrysler's credit company as well.
Well, they didn't get the deal done, I think we can agree on that? As a result you and I are majority stockholders in GMAC. barfo
I think with the government guaranteeing you won't fail, there's no reason to make the deal happen. And the Union is the big shareholder as a result. Nice way to pay back the campaign donors.
That deal was dead prior to the bailout. In fact, this article says it died for lack of a government bailout. So, basically, you couldn't be more wrong if you tried. The union is not "the big shareholder". The US of A is the big shareholder. The UAW owns 17.5%. barfo
If you mean selling prices, they were artificially bloated beyond reality due to illegal loan procedures years before the bailouts, and actual selling prices crashed hard before Obama was even elected. Bush was the author of the bank bailout. Prices right now are about where they should be in a historical average, discounting a bit for the recession. You are right, they are still falling even though buying has picked up quite a bit. There is an amazingly large supply of foreclosures in the pipeline. Retirees, investors and first-time homebuyers are making the best investment of their lives right now. It's the rates, not the prices, that brings them to the table right now. When they raise the incredibly low interest rates again, which they will, buying will slow to a crawl.
The reuters article only reinforces what I've written. The deal wasn't dead prior to the bailout, it was dead because the expectation was the govt. would be the sucker to put up more capital. Geez. Bill Gates wasn't much of a shareholder in Microsoft, even though he owned 10% of the company. How much is he worth? $50B+ You can figure the unions were given at least that much wealth for their 17.5%.
Wow, you have no shame, do you? You'll just say anything to avoid admitting you were wrong. Black is white. Down is up. Bill Gates might well be described as "the big shareholder" in MSFT, since no one owns more than him. However, since the US owns 61% of GM, and the unions own 17.5%, it is incorrect to say that the unions are "the big shareholder" in GM. A big shareholder, would be perfectly acceptable. The big shareholder is incorrect. barfo
The government is selling off its stock, no? Isn't that how we get our money back! So the union is the big shareholder. When the dust settles. Or maybe China will own more, hard to tell at this point. And when the guys involved in trying to make a deal got a whiff the govt. would cover it, then not, the deal died. They were waiting for the sucker to get elected and take office who'd put taxpayer money in the deal.
It's not that hard to tell. The US will own about 43% of GM after the IPO. The union will own about 12.5% Right. They decided to bet their company on the possibility of Obama getting elected and bailing them out. I don't think GM has had that much foresight for at least 30 years. Besides which, the bailout removed both stockholders and top management. So how exactly was the bailout a good thing for GM decision-makers, something that they would be avidly hoping for? barfo
The Bush administration offered them a deal, they chose to wait for the next administration for a better deal. Read your own article. And nobody is denying the owners and investors and main street investors in GM got screwed.
But they didn't get a better deal from the next administration, did they? Obama administration didn't fund a GM/Chrysler merger either. So, if the merger was such a great opportunity as you claim, they pretty much blew it. Of course that wouldn't be surprising, since GM and Chrysler management was pretty much incompetent. On the other hand, maybe it wasn't quite such a great opportunity as you'd have me believe, and maybe a government bailout was the only way they could make it pencil out. That's what happens when you go bankrupt. barfo
