Editorial: Bailout Watch, German Edition, Vier: Merkel To Opel: "You Wait Until Mommy Comes Home!"

This weekend’s G20 meeting was pretty much a non-event. A Bretton Wood it was not. While German Chancellor Angela Merkel and her Finance Minister Peer Steinbrueck were still in DC, an urgent e-mail was sent to Carl-Peter Foster, chief of GM Europe. Also on the To: line: Hans Demant, head of GM’s German Opel subsidiary. They were ordered to get their glutei maximi to Berlin. They were furthermore told to bring Opel’s workers council chief Klaus Franz along. Bloomberg reports that the sit down’s set for the Kanzleramt, right after mammy comes home and emerges from her Airbus 310 (named “Konrad Adenauer,” after Germany’s first chancellor, who’s busy rotating in his grave).

Anywhere between €1b and €2b in governmental loan guarantees will be on the table. Before any money is doled out, Foster and Demant will be in for a serious upbraiding. Economy Minister Glos already dropped the ominous remark. “When tax money is on the line to save international auto makers, there will be demands and conditions.” After Angela is through with Carl-Peter, Hans, and Klaus, and class is dismissed for some serious homework, Merkel’s Finance Minister Steinbrueck and Economy Minister Glos will hammer-out details with the federal states the next day. Berlin will underwrite €1b, the states underwrite another €1b. Or somesuch. And then …

And then, there is the A-word. Not “A ” as in Arschloch (although that word may have come up in discussions). That’s “A” as in assets. Only fools with think the Germans will give without taking.

Germany’s mass publication Bild am Sonntag says that GM will have to fork over €1b worth of assets, which Opel could use as guarantees for €1b of loans. Again, bet your sweet assets that when the loan guarantees go to €2b, concomitant GM-owned assets will have to be put in hock. Far from saying “we told you so.” But didn’t we tell you so?

Also assume that Opel’s books will receive an intensive colonoscopy. Anything GM may remotely owe Opel will come up. Assuming GM’s unwillingness (or inability) to pay, the debts will go to the appropriate collection agencies.

At first glance, GM owing Opel €2b and Germany getting ready to pony-up €2b in guarantees is way above coincidental. Then there is the always sticky matter of “unzulässige Gewinnentnahme,” or siphoning-off profits by a parent before they are properly-declared as profits and taxed to the gills. A lowly tax auditor can create havoc at the stroke of his red pen. Rest assured, with the books open to scrutiny, something along these lines may come up. Unless given to a good cause, such as supporting Germany’s farmers, or dotting the landscape with windmills, Germany rarely gives out free lunches. Especially not to Ausländer (foreigners.)

Like BS has a tendency towards walking, money has an inkling towards talking. Things will be different once Opel hangs on the financial drip, shoved up its vein by the German government, and their states that have Opel plants and therefore a political interest (as in “jobs, jobs, jobs”, also as in “taxes, taxes, taxes”) in keeping Opel operative.

As Opel’s dependency on the Government-administered money-methadone grows, GM’s adopted daughter may slowly be brought back to her German parents. Or rather be given to a dark knight who may already be lurking in the hedges.

As the B&B rightly opined, the German government(s) have no interest in running Opel. They have a big interest in keeping Opel alive and its profits back in Germany. The usually well informed German newspaper Welt says today, loan guarantees may not be the only topic discussed with Frau Merkel: “Government support, or a disentanglement of GM’s European activities from the parent will be on the table.” Wowie: “Disentanglement.” And not just Opel. “GM’s European activities.”

In related news, Opel’s captive financing arm GMAC now finally received the memo from back home, outlining the sortof-bank’s dire straits. GMAC Germany finally expressed interest in Germany’s government money as well, Autohaus reports. That money, earmarked for banks, is there for the taking.

In a departure from reality, all too common at GM, GMAC Germany had said last Monday that there’s no need, we have a rich aunt in America. TTAC receives hundreds of hits per day from a network called “General Motors Corporation,” and at least one of them must have picked up the phone and yelled in the direction of Rüsselsheim:”WTF are you doing? It’s free money! Get as much as you can!” It will be most welcome.

As per November 1, GMAC Europe already stopped loaning money for cars to customers in the Czech Republic,Finland, Greece, Norway, Portugal, Slovakia, and Spain. “We won’t stop lending in Germany,” said a speakstress in Rüsselheim. Of course not, no money to customers, no money from Berlin. And then they are Weissbrot. Or make that toast.

PS: Just in case you are wondering where Angela Merkel’s automotive heart lies, on the job, she’s being chauffeured in either a Mercedes S Class, a 7-Series Beemer or an Audi A8 (all Germans are equal under the law). At home, she drives a Golf.