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At this point it is not clear that GM (NYSE: GM) can get the money to merge with Chrysler. The plan would be to cut 50,000 people. That is a lot of severance. Closing plants and combining product lines cannot be done for free.

Chrysler has figured all of this out and has begun to focus on a partnership with Renault and Nissan, both of which are run by former auto whiz kid Carlos Ghosn. He has been trying to buy into the US market for several years without success. Now, he may have his chance.

If Ghosn can set up a deal where he takes a modest equity stake in Chrysler he may expand his reach into American for a small investment. According to The Wall Street Journal, "Chrysler would have a better chance of keeping much of its operations intact in an alliance with Nissan and Renault than in a merger with GM."

The deal would not really make any sense and may simply be a way to push GM into a merger. While putting Chrysler into a marketing and product development pact with both a Japanese and European car manufacturer, the savings would be modest. Since Chrysler's problems are huge cash losses and falling sales in North American it is hard to see how anything short of an outright merger with large cost cuts does the company any good.

But, there is sense of panic in Detroit which leads to grasping of straws. Panic clouds the mind. Chrysler could do a bad deal because it sees the options as better than no deal at all.

Douglas A. McIntyre is an editor at 247wallst.com.

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