"Wise Man" Says Opel Should Be Nationalized
German governments have long relied on (and often ignored) the advice of a council of economic advisers, called the “Five Wise Men”. Peter Bofinger is a member of the council. According to Spiegel Online, he says the only way to deal with Opel’s problems is to nationalize the company– and forget about the billions that GM reportedly owes Opel. Bofinger says there are two important reasons why this is the only way to go. Once the markets stabilize after a few years, Germany would be able to sell Opel again, and regain some or all of its investment. And that sure beats pouring money down GM’s drain. Secondly, nationalization is a deterrence to the many other companies asking for help, and the scores of companies that are expected to grovel for billions in the months to come. Picture this dialogue: “So, your hubcap-stamping business is in the dumps, you need 300m to re-tool your factory for selling ‘green’ accessories? OK, we’ll take the company off your back, free of charge.” So is Bofinger a Wise Man or a wise guy?
Economic conservatives might agree that anything that reduces moral hazard is a good thing. Personally, I think the Swedish banking rescue would have been the model for how to deal with the financial crisis, and that nationalization is better than Chapter 11. And way better than “here’s your money, no questions asked.”
Out of curiosity for people living in Germany/Europe; would Germany ever allow/was able to swallow if the Chinese wanted to buy Opel? I believe that British would allow Vauxhall sale without any issues but I can't imagine Opel and Germany doing the same thing.
Well, maybe finally some good will come out of this: A bidding war between the Germans and the Chinese. However, in automotive matters, the Germans have always been tight with the Chinese. The timing of both stories appears to be too coincidental.
off topic, but there's a great movie that nobody saw.
Sure, I vote yes, the Germans take Opel in lieu of payment and the Chinese get stuck with Vauxhall. After all if market cap for all of GM is 1.6b, and they owe Opel 1b, even they come out way ahead in the deal.