Blogs | Scam Diego
Rancho Santa Fe Mortgage Speculator Backs Out of Saab Deal
By Don Bauder | Posted August 27, 2009, 6:09 p.m.
Mark Bishop of Rancho Santa Fe has stepped down from the board of Koenigsegg Group AB, a tiny upscale Swedish automaker that plans to buy Saab from General Motors, according to the Associated Press. It has been rumored for two weeks that Bishop would be out. He was to have a 22.2 percent stake in the firm. The document announcing his departure didn't explain why Bishop opted out, and Koenigsegg officials were not available for comment. General Motors said last week that it had signed a deal to sell Saab, but the Swedish government warned that more capital was needed before the transaction could be closed. Bishop is managing director of Liquiddium Capital Partners of Westlake Village. The firm buys troubled commercial real estate mortgages, holds them for a few years, and tries to peddle them.
All the Swedes would need is a tiny and under-capitalized company taking over Saab auto production. That would guarantee a failure of the company, and the closure of the auto plants.
Why, one might ask, did both of the Swedish industrial giants that were producing autos find it impossible to make those cars profitable? Both had products that offered features that set them apart from the run-of-the-mill products offered by Detroit and some of the other Europeans.
While Saab never made much of an impact on the West Coast, as soon as GM owned the marque, it seemed to attract no notice. (Saab sold very well in, of all places, Maine in the 60's. It had some attributes that appealed to those downeasterners, whatever they might have been.) Since the takeover--phhht.
Volvo was a similar story, if not as severe. Ford is trying to rid itself of Volvo cars. Yet Volvo, the industrial powerhouse, does well with its trucks, machinery, and marine engines. (Is it possible that Volvo would buy back the car building company? Nevahappen!)
I suspect that Mark Bishop is smarter than the rest of Koenigsegg, and doesn't want the level of risk this takeover would entail, vs. the skimpy potential payoff.
By Visduh 7:22 p.m., Aug 27, 2009 > Report it
Response to post #1: With painstaking exactitude, you are relating a real Saab story. It's my understanding that Saab makes a good car. Best, Don Bauder
By dbauder 7:51 p.m., Aug 27, 2009 > Report it
Why would the Swedish Gov have ANY say in the terms and conditions of a private sale?
By SurfPuppy619 8:35 p.m., Aug 27, 2009 > Report it
Response to post #3: That's how things are done in Sweden. For that matter, that is how things are done in the U.S., too, although the market interference takes place behind closed doors. You must have been following the Fed's and Treasury's roles in GM, Bear Stearns, Merrill Lynch/B of A, etc. etc. Best, Don Bauder
By dbauder 7:50 a.m., Aug 28, 2009 > Report it
I recall reading that a deal Ford was attempting to do to sell Volvo cars required some financing assistance from the Swedish government. So, in addition to the normal socialist meddling in all facets of the Swedish economy, the government there was being asked to put funding into the deal.
When Saab-Scania sold their car business to GM and Volvo sold its car business to Ford, it was intended to avoid having those corporations abandon car manufacture. Neither found the car business profitable, but the Swedish government didn't want to lose the business. Hence it approved the sale to US corporations. Now that is backfiring on them, and must be highly galling.
Isn't it gratifying to know that the US is going down the same road with bailouts that the UK followed a generation ago? And the same road as socialist Sweden?
By Visduh 10:08 a.m., Aug 28, 2009 > Report it
OK-if the gov was putting $$ into the deal then I can see it-otherwise it is none of their business.
By SurfPuppy619 10:20 a.m., Aug 28, 2009 > Report it
Response to post #5: It's certainly not reassuring to know that the U.S. is headed down the same failed path of the U.K., Sweden, and other European countries. But at the same time, it was hardly reassuring to see how stupid and corrupt companies like GM, Citigroup, Bear Stearns, Bank of America, Merrill Lynch, Fannie Mae, Freddie Mac, ad nauseam behaved. I don't believe governments can run companies, but I question whether many managements can run them either. The same is true with the concept of regulation. Derivatives are too complex for regulators to understand. But derivatives are weapons of mass destruction when left in the hands of a corrupt, unregulated market. Best, Don Bauder
By dbauder 2:13 p.m., Aug 28, 2009 > Report it
Response to post #6: On the other hand, if government sees a pathetically undercapitalized company taking over a sick company, that sick puppy may wind up in the government's hands anyway. So some governments act preemptively. Best, Don Bauder
By dbauder 2:17 p.m., Aug 28, 2009 > Report it
I don't believe governments can run companies, but I question whether many managements can run them either.
======================
Agreed-and they should be allowed to fail when they cannot compete in a free market.
And that is what Samual Adams called the "invisible guiding hand of the free market", or something along those lines.
Companies start, grow, become obsolete, fold. Cycle repeats with innovation.
By SurfPuppy619 2:37 p.m., Aug 28, 2009 > Report it
Response to post #9: In the 2008 financial crisis -- which has not gone away -- the government was faced with the possibility of an international calamity. There can be an argument that the banks should have been rescued. But then the government should have said that from now on, there is no concept of "too big to fail." Those banks should have been broken up ASAP, so none would be too big to fail. Similarly, it's clear that the huge pile of worthless derivatives could have driven the international system off the cliff -- and still could. So an argument for assistance was rational. But immediately, governments all around the world should have instructed financial institutions to start unwinding the hundreds of trillions of dollars in derivatives. Both sides of these transactions should have been told to break the contracts. People would have screamed that the government can't tell parties to break a contract, but governments could have used the same arguments that they used in taking over companies and financial institutions: it was a crisis. Best, Don Bauder
By dbauder 4:06 p.m., Aug 28, 2009 > Report it
Good post Don, I agree 100%. Standard Oil was broken into 39 different companies in the ealry 1900's, and it put an end to the oil monopoly.
I also do not think that companies should be able to merge so that just a handful control a market-which is what big oil and big financial institutions are doing.
By SurfPuppy619 4:30 p.m., Aug 28, 2009 > Report it
Response to post #11: There is barely any antitrust activity now. Bring back Teddy Roosevelt! Best, Don Bauder
By dbauder 9:11 p.m., Aug 28, 2009 > Report it