Another classic example is Schaeffler, the ball bearings company who made Stretch Armstrong look positively stunted with their takeover of tyre manufacturers Continental last year. Needless to say, the debt mountain they took on to fund it didn’t get any smaller when the recession hit. Schaeffler’s stake has lost €8bn in value since the buyout began.

We’ve already seen how Maria Schaeffler, the owner of the company, turned to the German government for a bailout and got denied; she then had to deal with the ignominy of having her company accused of using the hair of Auschwitz victims to make textiles. Not now you understand, but back during the war – still not fantastic PR either way. Her recent appearance at a ski resort wearing the plushest fur imaginable didn’t go down too well either when she’s meant to be playing the role of the prudent CEO.

Now the debt-for-equity swap that banks were pressing for is starting to get hashed out, but it’s not looking quite as bad as first indicated for Schaeffler, when Maria was set to hold onto just 20%. Continental are set to regain operational control of the whole company, turning the original deal on its head. The FT’s sources say that Schaeffler is still set to retain its 90% stake in the company though, but that it might well have to give some of that up in order to fund a capital injection. So maybe not the worst case scenario for Maria, but the shame at rescinding control of your company to the one you bought out just 9 months ago must be pretty hard to bear. And the fact that the banks don’t want the equity isn’t really a ringing endorsement.

Of course, instead of buying out someone who’s much bigger than you, it’s a better idea to hang on to your cash and wait for a recession when all your rivals start dropping like flies. Then schmooze the PM of your country over cocktails, get him to waive some competition rules, and bingo! You’ve got more assets than you can shake a stick at, and for knockdown prices!

Talks that were meant to go ahead today have been postponed indefinitely, with this sniffy quote from VW’s spokesman: “Before we can take up talks again, it is necessary that Porsche adopts a clearly constructive attitude toward them”. Ooh, meow! Porsche took on €9bn of debt to fund the shares buyout of VW – now their cars aren’t proving a popular choice in a recession, they look a little precarious, and VW doesn’t want to end up bailing them out by hopping into bed with them.

Last week VW’s Ferdinand Piech said that Porsche must trim its debt before a merger could be considered; he dubbed a figure of €11bn for VW to buy Porsche as “definitely a few billion too high”. Porsche are concerned his remarks have been harming the company; he’s also set to hurt some feelings too, as he’s the grandson of Ferdinand Porsche, the founder of the company. Meanwhile Martin Winterkorn said Porsche needed to be more transparent about their financial status before talks could continue.

Porsche are saying the talks will continue as planned, as its obviously in their interests to have the protection of the bigger company during the recession. But VW obviously has the right to be cheesed off – if Porsche couldn’t afford the VW shares, then why did they heavily leverage themselves to buy them, and draw VW into their financial difficulty? Apart from some kudos and a slick museum, it’s hard to see what Porsche can really bring to the table. But both Porsche and VW are down in this morning’s trading - they’re going to have to sort something out, before a loss of confidence drags them both further downwards.

A quick recap: various hedge funds bet on a fall in VW’s share price last year, when Porsche revealed that – tada! – it actually owned the company after a creeping acquisition. Suddenly there were much fewer shares than previously thought, and the price was driven up 400% through a mad dash for them, so not quite the fall they predicted. The fallout was that VW staff cashed in their shares and sailed off into the sunset, Adolf Merckle lost so much he killed himself, and Porsche denied any manipulation of the market, though obviously their new acquisition has performed nicely out of this debacle – Porsche made €6.8bn from VW options trading, compared with €1bn from cars driven down Kings Road by guys called Stefan and Ollie.

The hedge funders are incensed, and are now having a mother’s meeting at their trade body AIMA to start “exploring what options might be open”, i.e. “let’s try and sue their asses off”. No actual lawsuits are expected until the summer, as the funds are waiting to see if Bafin, the German financial watchdog, condemns Porsche for manipulation, but they’re expected not to.

Porsche’s revenue sank 13% in the last six months, so they’re targeting the crucial “emissions-conscious, ugly-SUV fanatic with a £40,000 budget” demographic that is so coveted during a recession, with their diesel version of the somehow simultaneously bland and obnoxious Cayenne. Their other development is the Panamera, which thankfully goes back to their “sweet fruity cocktail + exotic destination x Italian phonetics” naming formula, but unfortunately looks like a frowning, self-hating Aston Martin dreaming of being a cheap Toyota. “Porsche considers itself well-armed to withstand a very difficult operating environment,” the company said. Well, just as long as they keep playing the markets – their cars don’t look ready to do it.

You may remember that Porsche revealed that it owned the majority of the common stock of VW, sending the price of the rest through the roof (with VW staff cashing in their personal stakes and presumably buying really nice summer houses). This wasn’t what some hedge funds thought would happen – fair enough, considering the state of the car industry post-recession – and they lost big through short selling. One of the biggest losers was Adolf Merckle, who went on to commit suicide amid the ruins of his business empire.

Now the fact that this trade by Porsche wasn’t the only time they’ve played the markets to their advantage means that their opponents are calling them a speculator rather than a company, potentially adding weight to allegations of market manipulation, over which Porsche are already being investigated by financial watchdog Bafin.

Frankly, it sounds awfully like sour grapes from the loss-making hedge funds, though they may have the last laugh even if their legal challenges don’t amount to anything. It’s not known how heavily Porsche is leveraged over their acquisition of the VW stake, but we do know they bought the shares at €117 each. That looks favourable when you see that the current share price is nearly €250, but compare it with that of other European car companies this morning: Renault: €16.33. Peugeot: €14.68. Fiat: €4.38. As the FT notes, VW haven’t ruled out a loss for the first quarter – their own sales are faltering, Audi sales are down, Porsche too, with only Skoda proving a success over the last couple of quarters. Give them a year or so in the current climate, and that share price could easily dip below what Porsche spent.

Porsche were legally obliged to buy out Scania after the VW buyout, but that deal has gone through without a hitch – they’ve passed on the shares to VW for the same price they bought them for. What’s more worrying is having to sort out the refinancing of a €10bn loan in less than a month, which even if they manage they’ll still face major increases to their rates of interest, which they’ll pay for… how? 

According to an analyst that the FT spoke to, Porsche had €31bn in stock liabilities last summer. Considering they’re dealing in a product that people are buying a lot less of these days, they could be the next company to have overextended and overexposed themselves at just the wrong time. Still, at least they can go and look back on the good times in their new museum. I can see their CEO Wendelin Wiedeking stumbling around it at night, drunk and Kane-like, stroking an 80’s 911 before shouting incoherently about oil prices and recession…

And ringing in this new week? Well, the ENTIRE automotive industry.

Suppliers of car parts, who have obviously been feeling the knock-on effects of car companies slowing production, are to request $10bn-worth of TARP funds in the US; last year 40 automotive companies, many of them suppliers, filed for bankruptcy protection. And the car parts pain continues in Germany, where Continental and Schaeffler are both asking the governments in their home states for help with their combined debt of €22bn. Of course if you happen to supply Porsche, you’ll have already been conspicuously bailed out by their CEO Wendelin Wiedeking, who recently took the opportunity to turn the plight of suppliers into a tidy bit of positive spin for himself.

Governments are also bailing out workforces. Japanese workers at Mazda and Mitsubishi are to have their earnings propped up by government aid while the companies slow down production; companies must pay at least 60% of wages on days when shifts are cancelled, and the government will be funding at least half of those sums. European companies, like Daimler, Bosch and Cartier, are using similar schemes to prevent redundancies during this hopefully short period of reduced production. 

Not joining the party though are Canadian GM and Chrysler, who refused the government loans extended to them last week, surprising given the lust for cash displayed by their American counterparts. But UK car companies will get the bailout they’ve been waiting for this week, as Mandy announces on Wednesday his plans for the industry. In short, companies will be able to access credit from the Bank of England to fund attractive financing deals for new customers.

So what of the green New Deal promised by Brown, Cameron and Obama? The Telegraph reports that some of the UK bailout money will go on “grants for ‘green’ research and development”, while the FT says that “Obama’s government is also studying other measures that could help parts suppliers over the longer term, including support for research and production of advanced batteries”. While the electric car could be the New Deal for the auto industry (just as long as Bolivia, with half the world’s lithium, doesn’t squeeze everyone trying to make electric car batteries too tightly), it all still sounds suspiciously vague – let’s hope it doesn’t get swept under the carpet amid the clamour for short-term solutions.

While Reuters gets all po-faced and semi-poetic (“On Tuesday pale blood stains still dotted the snow along the railway track where he died. The area looked deserted apart from a police car nearby”), let’s look not at his death itself but rather at a rather cruel juxtaposition of events today, considering the circumstances of Merckle’s downfall.

What really stung his businesses was a hedge on the price of VW shares going badly wrong, making a massive loss after Porsche revealed that they were well on the way to owning 75% of VW and spiking the share price; Merckle had hedged on a fall, and lost big. Previously Porsche announced its employees were making out like bandits from selling their shares, just as Merckle was entering talks and putting up his personal fortune as collateral; the two companies’ fortunes bifurcated even more sharply today, as while Merckle’s family mourn and try to save their family business, Porsche increased its stake in VW to more than 50%. It must now make a bid for Swedish truck manufacturer Scania, 69% of which is owned by VW; it’s also challenging, in the European courts, the block on it owning 20% of the company currently owned by the state of Lower Saxony. 

Not that Porsche is being crass in doing this, but the fallout from that one share announcement is astonishing. It’s testament to the strain placed on companies by highly leveraged speculation, and the potential enormity of gains and losses, both financial and emotional, from playing with such high stakes. If Merckle’s death can bring anything, it’s a moment of sobriety and reflection from those dancing between the poles of absolute poverty and unimaginable wealth, who often, as Merckle had, have a thousands-strong workforce relying on your judgement. I don’t want to do a Time and suggest that Merckle’s death symbolises or means anything outside of a personal tragedy, but I think it’s inevitable that he will come to represent the end of wild hedges, as the fund industry contracts and the party of the last few years comes to a sad end.

You may remember that Merckle was murked by short-selling shares in VW, which then skyrocketed after Porsche revealed they owned much of the company, thus losing Merckle, and many others who similarly hedged wrongly, hundreds of millions of euros. Porsche got criticised by some in the financial community, generally the hedge funders who lost big and presumably smashed up their own Porsches in acts of misplaced retribution.

So Merckle won’t be heartened to know that, in a moment of glorious financial symmetry, VW’s employees have made hundreds of millions of euros in selling their shares during the price spike. The board members themselves got in on the action, making €25m between them; meanwhile Merckle is having to dip into his personal fortune to help provide collateral to banks. God, that’s got to hurt.

VW has sensibly tried to morally legitimise this shameless exploitation of good fortune/share manipulation, with the executives announcing that they’re giving 10% of their windfall to charidee, helping little kinder in Wolfsburg where VW is based. Not sure that’s enough – I think you’d need to pay Wolfsburg’s college education and provide free school milk to prevent the inevitable howls of rage over the next few days. Yes, this truly is a classic week for unconvincing PR from major car manufacturers.

I like this bit of padding from the FT when they reported this story today: “The windfall for VW senior management is likely to create political controversy in Germany, where executives of large listed companies are commonly criticised for earning big bonuses”. I think that’s more of a non-Germany-specific thing really.

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…

Merckle is the world’s 94th richest man according to Forbes, Germany’s fifth, but his fortunes have been scuppered of late by those flash bastards Porsche. You may remember a couple of weeks back when Volkswagen briefly and ludicrously became the world’s largest company, thanks to Porsche letting slip that they actually now owned it, sending the VW share price rocketing. Merckle, like lots of hedge funds who didn’t see this coming, sold his shares in the company short, leading to a large three-digit million euro loss. Doesn’t look like Merckle is going to be troubling the Mittals and Ambanis in the next year’s Rich List.

In normal times, Merckle would probably have to have a lie down, nurse his wounds, and fire a lot of people. But these are crazy times, remember! So he’s asking his home state of Baden-Wurttemberg to bail him out, according to a banker who spoke with the FT yesterday.

Before you vom in anger at this apparent willlingness to blag state funds to patch up personal speculation errors, consider that he employs 100,000 people, many in Baden-Wurttemberg, and the state wouldn’t want them to lose their jobs. This news coming out is already hurting his companies – Heidelberg Cement, of which Merckle owns 80%, saw their share price drop 22% yesterday.

So if you are feeling the recession impinging upon your wealth, maybe you should give Darling a call. I know I speculated heavily on Spanish beer and cheap flights this summer, and now I’m left exposed. Help a brother out!