Obama 'helped' Opel rescue deal (BBC)

[eppur_se_muova]

German Chancellor Angela Merkel has revealed the US president helped swing a deal to save carmaker Opel from the imminent bankruptcy of its parent firm.

She said Barack Obama helped clear some hurdles threatening the transaction during a phone conversation.

Earlier, Germany agreed the deal with Magna International, a Canadian car parts maker, to take over Opel, part of the European wing of US carmaker GM.

It should protect Opel if GM files for bankruptcy protection in the US.

GM is expected to do this as early as Monday.
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more: http://news.bbc.co.uk/2/hi/business/8075234.stm

[Oregone]

1. Why is Obama helping a Canadian company buy a primarily Euro manufacturer?

Am I missing something?

[gcomeau]

2. Let's see...

Just to rattle some possible reasons off the top of my head:

1. Because it's a global economy. Bad things happening elsewhere make bad things happen here.
2. Because it's diplomatic, and earns him good will.
3. Because it's at least associated with the GM bankruptcy drama here in the U.S., which he happens to find himself rather closely involved in already.
4. Because he could...?

[Oregone]

3. The relationship to GM is the only consistent reason,

Remember the buy USA procurement clause? The USA doesn't care beyond its pristine borders.

How does this significantly help GM? Is the capital it was bought with go straight to GM coffers? Does it first go to its creditors though prior to protection (so its zero sum)?

[gcomeau]

4. Care to elaborate...

...on what exactly rules out the other reasons?

Yes, there are efforts specifically directed at boosting American domestic manufacturing. Surprise, that happens to be part of the American government's job. How exactly does that rule out also lending aid elsewhere when it basically costs nothing beyond a short investment of Obama's time and produces a net benefit on both the economic and diplomatic front?

[Oregone]

5. My main question really is:

How this boosts domestic production.

"Yes, there are efforts specifically directed at boosting American domestic manufacturing."

Perhaps paying off debt to domestic vendors (with GM gains from sale) will help them, but that may not lead to further production of auto parts. As I originally said, maybe Im missing something.

Maybe their profits were too low and liabilities too high to be part of restructuring

[gcomeau]

6. I didn't say it did.

I was referring to your "buy American" remark.

[Oregone]

7. Ah, well maybe you can see the context I am evaluating this within then

My Buy American remark indicates that yes, their main concern is stimulating domestic production. So, I would not see this as an attempt to stimulate a global economy (its inconsistent with their previous actions). Hence, it probably is more concerned with stimulating production domestically. I am merely asking how so.

[gcomeau]

8. I don't think that's the point.

I don't think it has anything to do with stimulating domestic production. Not directly anyway. It appears to me that you think that taking steps to shore up the global economy and taking steps specifically to boost domestic production are mutually incompatible pursuits and either one must be pursued or the other. That is not the case.

Obama has to look out for the domestic automakers. Hence, "buy American" to try to direct some domestic spending in their direction. Does that dome at the expense of some other foreign automakers? Yes. But they're not Obama's primary responsibility.

But that does not mean that, given the completely separate opportunity to spend a little time on the phone to help out Merkel with an issue in her back yard with one of her auto manufacturers at no real cost to himself or the American manufacturing sector, he would only do it if that boosted domestic U.S. auto production also. He can do both. And anything that helps prop up Germany's economy a little bit improves the health of the global economy and ultimately aids in spurring a recovery for everyone. Which, in the big picture, DOES help the U.S. auto makers eventually insofar as it helps everyone eventually as the rising tide lifts all our little dingys... plus he gets brownie points for doing a favor that he can maybe cash in later in a round of diplomatic discussions over some other issue.

I just don't see where the confusion over his motivations for doing this is entering into the picture. Why wouldn't he?

[Oregone]

9. "Why wouldn't he?"

Because we may not benefit directly from it. That seems contradictory to the underpinning philosophy of the United States of America. :)

[Mopar151]

10. not really

It's only contradictory to greed and selfishness. I have always thought that " was You scratch my back, and I'll scratch yours" was one of our bedrock philosiphies.

[snowdays]

11. the NYT story today gives some explanation.........

http://www.nytimes.com/2009/05/30/business/global/30auto.html?_r=1&th&emc=th

[eppur_se_muova]

12. Thanks. What a lot of details there are! nt