Adolf Merckle, Like Some Financial Crisis Jack Bauer, Has Just 24 Hours To Find The Cash To Save VEM

Adolf Merckle, he of disastrous short-selling of Volkswagen shares and German cement fame, is rushing around trying to find some coins down the back of the sofa so that his investment company and family business, VEM, doesn’t fail. He’s only got til tomorrow morning! How exciting!

With consummate German efficiency, WEM issued a three-word statement today: “Negotiations are continuing”. From that we can deduce they haven’t got any money, and whoever’s going to give them some is playing hardball, considering negotiations have been going on since the 20th, when Merckle had to give banks guarantees from his personal fortune after VEM stock plunged. Among the banks involved in this charmingly personal bailout are RBS – must be nice for them to be on the normal side of a deal once again.

Merckle has hopefully avoided the papers today lest he become enraged at the sight of Wendelin Wiedeking, chief executive of Porsche, saying he had nothing to do with the massive inflation of VW’s shares, and it was all the fault of the hedge funds for running short. You will remember that Porsche quietly bought a lot of shares in VW, and then announced that it effectively owned it, causing the remaining 5% of shares to rocket in price and send Porsche’s profits similarly skyward, while those like Merckle who had bet on continuing falls lost big. But Wiedeking has said that to blame Porsche is absurd – after all, they want to increase their stake in VW to 75% soon, and they can’t do that at the current price.

Wiedeking joins Essex council today as people acting like benevolent socialist Care Bears, by pointing out that it’s been paying suppliers in advance, in order to bolster their liquidity in these times of crisis when the mean old German government won’t help them out. With banks refusing loans while trying to maintain minimum reserves, he warned that many healthy companies could go out of business very quickly without them: “We need banks to give credit, not just talk about credit ratings but start real actual lending to companies. These rules are choking us today. Stabilisation of the financial system has to take place rather than banks shifting hundreds of billions of euros to the European Central Bank to earn interest. They should be injecting money so healthy companies survive.”

I love that during this crisis everyone’s on their soapbox, but because no-one knows the answers, titans of business are flexing their political muscles and everyone’s actually listening. Of course Porsche have a vested interest in supplier chains staying strong, but isn’t this all a bit of a PR-pampering exercise from Wiedeking? Porsche goes from producer of CO2-burping twatmobiles to champion of the little guy – just the sort of image boost they need just as no-one can afford their product anymore.

Only 18 hours now Merckle! Boop beep boop beep…

Posted by Ben Beaumont-Thomas in Hot Money | December 1, 2008 1:23PM |