GM’s Sale of Opel Roils Europe

The GM bankruptcy or anticipated bankruptcy (it’s supposed to be announced at 8 AM tomorrow) is actually moving along pretty smoothly in this country. Not so in Europe where the sale of its Opel subsidiary is roiling governments.

A quick recap. After it looked like Fiat had the inside track on Opel a consortium of a Russian government owned bank, an auto parts manufacturer GM and the employees of Opel ended up being the buyers. Magna International (20% interest), the parts manufacturer and an Austrian-Canadian owned company, Sberbank (35% interest), the Russian government owned bank, GM (35% interest) and Opel employees (10% interest) are going to be the new owners. The German government is putting up 4.5 billion euros in loan guarantees and bridge loans to get the whole thing off the ground.

That’s where the problems in Germany crop up. A conservative member of German Chancellor Angela Merkel’s cabinet has been raising holy hell about the loans. He contends that the company should have been put into receivership and then brought back out at far less cost. This is of a piece with the mentality of the Germans throughout the economic crisis. They have been highly reluctant to dedicate state funds towards fiscal stimulus or bailouts, preferring instead to hew to their conservative fiscal philosophies.

In Italy, politicians are having a hissy fit about Fiat losing the deal and falling all over themselves to point fingers and assess blame. Meanwhile, European countries in which Opel maintains manufacturing facilities are sweating out the fate of those factories. The fear is the Russians will use their leverage to close European facilities and move the manufacturing operations to Russia. Germany has an agreement that prohibits Russia from doing that to them but that agreement extends no further.

Ironic isn’t it that in the supposedly most free market of all — the U.S. — the effective nationalization of a major slice of the economy elicits very little turmoil while the Europeans are running around in circles over a small piece of the pie. Draw your own conclusions.

more: here

Disclaimer: This page contains affiliate links. If you choose to make a purchase after clicking a link, we may receive a commission at no additional cost to you. Thank you for your support!

About Tom Lindmark 401 Articles

I’m not sure that credentials mean much when it comes to writing about things but people seem to want to see them, so briefly here are mine. I have an undergraduate degree in economics from an undistinguished Midwestern university and masters in international business from an equally undistinguished Southwestern University. I spent a number of years working for large banks lending to lots of different industries. For the past few years, I’ve been engaged in real estate finance – primarily for commercial projects. Like a lot of other finance guys, I’m looking for a job at this point in time.

Given all of that, I suggest that you take what I write with the appropriate grain of salt. I try and figure out what’s behind the news but suspect that I’m often delusional. Nevertheless, I keep throwing things out there and occasionally it sticks. I do read the comments that readers leave and to the extent I can reply to them. I also reply to all emails so feel free to contact me if you want to discuss something at more length. Oh, I also have a very thick skin, so if you disagree feel free to say so.

Enjoy what I write and let me know when I’m off base – I probably won’t agree with you but don’t be shy.

Visit: But Then What

Be the first to comment

Leave a Reply

Your email address will not be published.


*

This site uses Akismet to reduce spam. Learn how your comment data is processed.