The Sale Of Volvo--Further Insight

Simon Johnson at Baseline Scenario provides more detail, actually chilling detail, about the purchase of Volvo from Ford.

Geely Automotive has acquired Volvo from Ford. This is a risky bet that may or may pay off for the Chinese auto maker – after first requiring a great deal of investment.

Goldman Sachs’ private equity owns a significant stake in Geely, with the explicit goal of helping that company expand internationally. Remember what Goldman is – or rather what Goldman became when it was saved from collapse by being allowed to transform into a Bank Holding Company in September 2008 (which allowed access to the Federal Reserve’s discount window, among other advantages). Goldman’s funding is cheaper on all dimensions because it is perceived to be Too Big To Fail, i.e., supported by the US taxpayer; this allows Goldman to provide more support to Geely (and others).

Our Too Big To Fail banks stand today at the heart of global capital flows. People around the world – including from China – park their funds in the biggest US banks because everyone concerned believes these banks cannot fail; they were, after all, saved by the Bush administration and put completely – gently and unconditionally – back on their feet under President Obama. These same banks now spearhead lending to risky projects around the world

In other words, if this deal ends up going titties-up, the American taxpayer could again be on the hook to rescue Goldman and its investors from the consequences of a mistaken decision.

('ScuzMe while I gather my thoughts: !!!!!******!!!!!***%%%%!!!!!****&&&&&!!!!!: !!)

There. That's better.

This stuff is making money for some folks now, but will hasten the day when my children will have both a lowered standard of living and significantly higher tax burdens.

Ford Sells Volvo To the Chinese

It wasn't pretty. But it was probably inevitable.

The Chinese car maker Geely has signed a deal to buy Volvo from US car giant Ford for $1.8bn (£1.2bn).

The agreement, which was first announced in December, is the biggest overseas purchase by a Chinese car manufacturer.

"Today represents a milestone for Geely," the company's chairman Li Shufu said.

Loss-making Volvo has been on the market since 2008, when Ford put it and several other brands up for sale.

Jaguar and Land Rover in the UK have already been sold to India's Tata Motors.

Ford hopes that the sale of Volvo will help it pay off its debts and focus on its core brands, following a dire period for the global car industry.

The deal represents a loss for Ford, however, having bought Volvo in 1999 for $6.5bn.

Wowee! That's a haircut! But it is indicative, as Robert Peston elegantly points out, of how the ground has shifted under our feet.

Engineering Matters! (Or, Why We'll Be Shopping for a Volvo)

Thursday night late, two miles from home after a four-hour drive, and out steps a nine-point buck into the path of our 1995 Volvo wagon. (Dark, narrow state road, I drive it ten miles under the speed limit.)

My bride says:  'Watch out for that(WHAM!)'

The airbags worked, the seat belts worked, the brakes and steering systems remained intact, as did the battery cables. The desperate 'Are you OK?' question, and 'Let's get out of the car, this smells hot.  Grab the laptops, and let's go!'

The doors opened without a hitch, and we walked away with bruises only. The emergency flashers worked, and a good Samaritan found us and called 911. (It took 35 minutes for the deputies to arrive. A volunteer fireman drove up on the scene and directed traffic in the pitch black.)

So, a public word of thanks to the Volvo engineers and technicians we will never meet, who in the mid-1990's designed and assembled the car that kept us alive.  The people who made sure the airbags were properly installed come to the top of the list.

And, literally, we thank Heaven.  A few inches either way, and one of us may have had to plan a funeral.  No shoulder on the road, ditches on either side, bounded by thick forest.

When we encountered the buck, the car had just shy of 418,000 miles on it, original engine and tranny. The suspension didn't eat the tires. We kept the oil changed,  would need the brakes inspected at the next oil change and rotation. The paint job was faded, and we needed to order a new cruise control kit. 

It just ran. And saved our lives.