It is looking like Saab is toast. This comes from Dagens Nyheter, a Swedish daily (note: I originally saw this covered in the Austrian daily Kurier):

It seems that the Obama Administration is playing hardball with GM and Chrysler. They may force the companies into bankruptcy to protect American taxpayers from having to pony up yet more money for the beleaguered automakers.
I see this as a positive development — although a pre-packaged Chapter 11 solution is the way this should [...]

General Motors, struggling under the weight of a mountain of debt, is finding it difficult to raise cash. For one, the U.S. automaker is finding no buyers for its Swedish Saab unit, according to Swedish Daily “Dagens Nyheter.”

Nevertheless, GM executives are putting on a brave face with the news media. In fact, I found an article in another newspaper, the Australian daily “Sydney Morning Herald” claiming the opposite under the title, “No problems in finding Saab buyers: GM.”

Coming on the heels of the Rubin resignation as it does, the resignation of Ezra Merkin as Chairman of GMAC makes it seem like a bit of shake up in financial services management is underway as 2009 begins. Merkin was tainted by the Madoff scandal, making his situation more difficult at GMAC, the auto finance company which has needed a $6 billion bailout to continue as a going concern.

The numbers for December are in and they are grim. 2008 was a year to forget in the auto industry. Sales plummeted around the globe as recession took hold. In the United States, every major car company saw sales fall at least 30% compared to 2007.

In truth, the global auto industry has been working in a situation of overcapacity for some time (much as the airline and financial services sectors have). However, the industry was propped up artificially by unsustainable excess demand that was a direct result of low interest rates (think zero percent financing). Now that this excess demand has evaporated, the auto industry is in dire straits. Expect the trend to continue into 2009. The auto industry desperately needs to consolidate if it expects to return to profitability anytime soon.

Bankruptcy is a necessary part of a free market. I certainly believe this to be so. Rick Newman, who writes the blog “Flow Chart” over at U.S. News, is putting forward the provocative idea that failure is exactly what we needed more of in 2008 and what we should want in 2009.

It may sound counter-intuitive to loosen credit standards when we are on the cusp of major job losses and bankruptcies. But, this is exactly what the newly minted bank GMAC is going to do with its free money from the TARP (Troubled Asset Relief Program).

Opel is a well-respected brand in Germany. As a result, the German subsidiary of General Motors has been profitable while the parent company was hemorrhaging losses. Many Germans see the parent as an albatross around their neck, leading to job losses and despair. Why not cut the cord?

Yesterday, I mentioned an article I caught in the German newspaper Die Welt which outlined the desire for VW and Daimler Benz to receive bailouts in response to the state aid being offered to American car makers. I warned that a competitve bailout situation was underway. Now, this competition has spread to Sweden, where the Swedish government has introduced a bailout package for its auto makers Saab and Volvo.

It seems that the bailouts are now turning into a “Beggar Thy Neighbor” policy of aid for specific sectors of the global economy. First, it was finance as the banks were savaged by massive writedowns to their property and derivative holdings — with each nation competing with the next for the largest handouts to this vital sector of the economy.