The latest on the GM/Chrysler saga

[XDCX]

There have been so many conflicting stories written about the GM/Chrysler merger that it's difficult to determine exactly where we are in the process.

Here's the situation as I see it:

1. This deal is not about Chrysler - It's about GM's need for cash
2. Cerberus wants to dump Chrysler but they want to do it on their terms
3. Cerberus will use GMAC to put pressure on GM to extract the best possible terms
4. GM needs capital to put this deal together but Wall Street refuses to issue new debt because of bankruptcy fears
5. GM will need to go to the Federal Government for the capital to put this deal together
6. The Federal Government will rationalize a loan to GM by indicating that it is less risky then letting GM fail and then being forced to take on GM's pension responsibilities
7. This deal will come together before the Presidential Election

If the Federal Government is involved my bet is that there will be less talk about lay-offs and the elimination of certain brands.

As always, it will be interesting to see what happens.