The Editorial director of Automotive News is claiming that General Motors Corporation (NYSE:GM) and DaimlerChrysler AG (NYSE:DCX) are in serious discussions for GM to acquire the Chrysler division from DCX. You gotta be kidding.

GM has its own share of issues to work out. Why compound its problems with a failure like Chrysler? If Daimler cannot make it work -- and it has the resources, manpower and expertise -- what's going to allow GM to make it work?

The inevitable question will be: Can one plus one make three in this potential scenario? GM, and Ford Motor Company (NYSE:F) have been losing market share to the Japanese car makers on the low end-to high end markets, not to mention the small truck and SUV market. Chrysler has not been exactly setting any new sales records itself.

If GM were to absorb Chrysler, the initial upshot would be instant market share gains, but are they sustainable and more importantly, profitable? If Daimler couldn't make it a go in the USA with Chrysler, in spite of all the so-called cultural clashes within DCX, what's going to make GM successful? I don't think so...

Georges Yared is the author of "Baby Boomer Investing...Where do we go from here?" and "Stop Losing Money Today." For more info on both books go to http://www.georgesyared.com

The news coming out of Detroit these days is sickening. Not so surprising, maybe, but nauseating nevertheless. The bloodletting at Ford Motor Company (NYSE:F) and the woes at General Motors (NYSE:GM) is like watching a train wreck in slo-mo.

But it's not surprising. With the SUV craze finally on the wane (thanks to gas prices that are only going to go up from here), Detroit doesn't seem to understand what regular folks want to drive: Well-made, fuel efficient cars. Doesn't hurt if they look cool, too.

Somehow Toyota learned that lesson a long time ago. What's extremely ironic is that its quality and production principals were learned from a U.S. Army education program during the Post-war era.

Whereas my parents, who came of age in the '50s, would never dream of driving a Japanese-made car, I learned to drive on a Toyota and would never drive anything else (OK, maybe a Honda...or a Beemer). My only experiences with American-made cars -- rentals all -- were less than impressive. And judging from Detroit's latest sales figures, I'm not the only American driver who doesn't like sluggish, gas-guzzling vehicles.

Toyota clearly sees the future. Jim Cramer's been jumping around about the stock for a while now, and all he cares about is the bottom line. Is there any hope for the fat, ugly Americans?

As I watch the retreating of prices on a selection of consumer goods I wonder where this is all going. Housing prices have dropped nationwide. Consumer electronics are sliding downward. The "big three", Ford Motor Company (NYSE: F), Daimler Chrysler (NYSE: DCX) and General Motors (NYSE: GM) are reducing sticker shock to the customer. Sure, these are nice things relative to the bottom line as consumers, but is this the signal of hard times to come? If I was seeing an overall increase of incomes at the same time as these price declines I'd be more excited about the "recession". Although the government says we're earning more, at ground level I just don't see it.

No, what I think is happening is the rising of a monster that I have feared for quite some time. We have lost such a significant share of the world's manufacturing output relative to our population that our economy is adjusting itself to compensate for the losses of those well-paying jobs. Don't let Washington fool you. Just because they say employment numbers are good doesn't mean you can sleep better tonight. When it takes three employees in the warehouse at a retail outlet like Best Buy (NYSE: BBY) to earn the same income as one dude used to earn building cars or vacuum cleaners, that's a sad state of affairs. Those three warehouse workers won't be buying flat screen TVs. The auto worker could have bought a couple of them.

Will our government wake up and send word to the World Trade Organization that we're starting to get a bit edgy over here? Maybe I'm wrong, but I think the WTO is a major obstacle to our success. They hold us to marketing price structures that are unrealistic by instituting tariffs and controls that strangle real free trade. At the same time, they refuse to have a hand in requiring the implementation of solid requirements regarding the compensation and treatment of the world's work force. Add in the inability of our own governments, both federal and state, to control spending and the continued upward spiral of out-of-control taxation and you have an economy that is being held hostage to the whims of a limited and scary percentage of power mongers. What can we as wage earners and consumers do about all this?

I'm open for suggestions.

Looks like new Ford CEO Alan Mulally has made his first executive level move at Ford. With a penchant for finding operational inefficiencies and with the job of cutting fat off a laggard automaker, Mulally has tapped Derrick Kuzak to run product development for the entire company instead of just the U.S. Hey, that's 'going global' in a sense, yes?

As industries have changed from segmented, hierarchical silos that have disconnected strategies on global product development and marketing, Mulally apparently wants to get Ford in league with other companies who have a cohesive global strategy and the savings that come along with that. Mulally said, "An integrated, global product development team supporting our automotive business units will enable us to make the best use of our global assets and capabilities and accelerate development of the new vehicles our customers prefer, and do so more efficiently."

It was no surprise that Mulally is making changes this early, as he indicated in an interview with Forbes recently that the company had too many teams working on similar products. This means that Mulally is a change agent for the better, something Ford needs as its costs spiral out of control. In what I consider an ultimate statement of why Ford needed to relearn the cost sensitivity of its customers, Mulally said "Ford has grown up as very independent, different Fords ... different teams do each car, so they are different. And a lot of that complexity customers don't want to pay for."

Roger that, Alan.

Just call it an eastern hemisphere hedge for DaimlerChrysler AG (NYSE: DCX).

DaimlerChrysler announced Thursday that it plans to buy 297 million shares of China's Beiqi Foton Motor Co. LTD at 2.75 yuan per share for 816.7 million yuan or about $104 million. Those 297 million shares would represent a 24% stake in Beiqi Foton

Beiqi is China's largest truck maker, and one analyst/economist who follows European / Asia business and trade flows says Daimler's investment is both a hedge and a potential solid-win tactic.

"You have to like this move," said David Chandler, analyst/economist with the Econometrics Group. "Daimler gets a potential low-cost production source for medium and heavy trucks, while at the same time better-positioning itself in the promising Chinese truck market. There are always opportunity costs when you invest, but very rarely does a company get this type of hedge / market opportunity for $100 million. It's a bargain and a solid move."

Chandler said Daimler trails General Motors Corporation (NYSE:GM) in joint-venture deals with China-based companies, so the Beiqi deal represents progress against a major U.S. competitor, as well.

DaimlerChrysler's shares traded slightly lower Thursday at mid-day, down 15 cents to $58.29. Meanwhile, General Motors was down 43 cents to $29.07 and Ford Motor Co. (NYSE: F) had dipped 2 cents to $8.14.

Investment Analysis: The best way for the typical investor to play DaimlerChrysler? Investors who can tolerate a moderate level of risk should buy DCX now, in stages, over the next two weeks: 50% of your position today, 50% next week. Conservative investors -- those who can tolerate only a low level of risk -- should wait and see if DCX pulls back to $56. If it does, and bounces off $56, consider adding a small amount of shares to your portfolio.

Joseph Lazzaro is a news editor at Theflyonthewall.com (subscription required), based in New York.

Top executives from General Motors, Daimler-Chrysler and Ford met with President Bush to discuss the state of the American auto industry in light of all the recent financial mishaps and pension situations that continue to drain cash from the industry and starve it of profits, while foreign competition -- without all this baggage -- continues to design better-looking vehicles and sell their image of reliability more effectively than ever.

President Bush, Vice President Dick Cheney, and other administration officials met in the Oval Office for just over an hour with top executives of Ford, General Motors, and DaimlerChrysler AG's Chrysler Group yesterday to talk about what to do as U.S. automakers continue to face obstacles that don't make for a level playing field in a global automobile selling and manufacturing economy.

Execs from the "Big Three" told reporters they'd had a good meeting. Newly minted Ford CEO Alan Mulally stated "The president clearly understands the importance of the business to the United States and the global economy." The auto executives heavily emphasized their concerns on health care and trade issues but also stated that the troubled American auto industry does not want a federal bailout like what has happened in the airline industry recently. If not, big solutions should be just around the corner.