Fallout for Chrysler from Cerberus and GM

General Motors and Chrysler may or may not merge. At this point, though, both will be weaker from the rumors that have been flying.

Analysts and journalists have been fairly unanimous in their belief that neither company deserves to live. The jobs of tens of thousands of people - hundreds of thousands when suppliers are added to the mix - are irrelevant, apparently, to those who deal in the financial world.

Chrysler has been almost universally described as having nothing of value but Jeep. Even the Chrysler Technical Center is leased. The Chrysler and Dodge brands are generally seen as worthless; those who know better referred to the upcoming V6, which has not yet reached production, as being inferior to just about anything made by just about anyone else.

At Chrysler, the dual-clutch automatics appear to have been dropped - or maybe just the factory was. Maybe Chrysler is planning to use excess GM capacity to build it. Hard to say — they’re still working on the Phoenix engines after reportedly/possibly dropping one of the factories.

General Motors was not treated much better, and now stories are flying around about who will take over GM. Will it be Volkswagen? Hyundai? Tata? There is now an assumption that GM cannot survive all by itself. Thanks to that assumption, GM might not be able to survive alone. Financiers are very good at making assumptions come true. (Remember how they were all dead certain DaimlerChrysler was a great idea?)

Chrysler… is pretty much a goner at this point. Cerberus can’t get its credibility back when they talk about being in it for the long haul. They showed what they really thought with this one. Pete DeLorenzo turned out to be right after all, at least about their eagerness to leave the deal with Daimler; on the other hand, I think their motivation is not fear of the auto industry, but their desire to get their hands on GMAC, and then get a fat bailout as payment for taking so many Party rejects on board.

There’s still a possibility we’ll get a GMopar. The current administration could arrange the financing; the Fed and Treasury are happy to print money for their friends. Sweetheart deals with these people would not be much of a problem since they’re not burdened by the same rules as ordinary mortals. The government has already said it would loan money to corporations if they had good balance sheets; this could be an exception. Politically one has to wonder about spending billions to eliminate tens of thousands of jobs, but a lame duck president and his probably-lame-duck Treasury and Fed officials might not care. A disaster to the United States - well, sure, but so what? There are plenty of nice apartments in Dubai.

Excuse me if I’m reaching here. I know I’m talking “what ifs.” My hope is that by talking about the “what ifs” with our Congressmen and Senators, they will not become reality. One senator has already called for the government to fund GM’s “rescue” of Chrysler (which I’m sure would end up like the “rescue” of Chrysler by Daimler.) People can actually suggest this with a straight face.

As for the future, again, Chrysler is gone. We have had a self fulfilling prophecy, so to speak. One moment the financial and business-reporting world was fine with Chrysler running under Cerberus, believing the claims that it was a long term arrangement; Jim Press would surely not knowingly lie to us. (As far as I know, he hasn’t.) However, it’s hard to still believe that now, and all the stories and speculation and snide remarks about Chrysler’s uselessness and lack of assets will both make it inevitable that the company be sold - and equally inevitable that it will be sold more cheaply than it would have before.

It seems sad that, a mere year after celebrating the exact same events happening to Daimler, we’re back to where we started - or far worse off. I still remember the euphoria of freedom from Daimler - and the crushing blow of Bob Nardelli taking over on top, with his Campi friend sabotaging suppliers. The roller coaster continues, with a few structural supports missing.