Too Big To Fail?

Not to be too much of a cynic but see what I meant last week? There's no business case for a GM/Chrysler merger but.... maybe taxpayers will foot the bill.

GM/Chrysler Takeover/Buyout/Merger

A day later and it still doesn't seem like a good idea for GM. This article goes into a little more detail about the cash GM would get from Chrysler's coffers, which would be advantageous in the tight credit environment that currently exists. Let's be real. That $11 billion isn't going to save a company that is burning $1 billion per month, especially after it absorbs another company that's also bleeding. What's that going to buy? Another 6 to 12 months?

It seems like the real end game would be to create a company that has so much impact on the American economy, whether real or perceived, that it would not be allowed to fail. By merging the two they would have further bargaining leverage with governments, suppliers, and dealers, as well as the ability to drastically reduce industry capacity. That would (perhaps) help hasten a recovery by bringing supply more in line with demand.

However, I still think it's a bad idea and that adding two companies in crisis isn't going to result in anything but a big stinking pile of you-know-what.

Chrylser Up For Sale (Again)?

Chrysler, the oft troubled automaker, is rumored to be in merger talks with GM. Why should GM even consider doing such a thing?

As if it didn't already have enough problems of its own, the very idea of taking on a boatload more headaches makes as much sense as trying to teach a pig to fly.

There's no way to sugarcoat it. Chrysler is a basketcase and won't likely survive as an independent. The company makes vehicles the market doesn't want, has too much legacy cost, few products in the pipeline, and most importantly too few paying customers. On top of that the industry already has too much capacity. So there's even less room for mediocrity. It's amazing Chrysler has survived this long. And now it's clamoring for a lifeline.

But why should anyone throw it one? Throwing good money after bad isn't going to turn things around. This is a company that should've died long ago. Now it's a dead man walking.