Is GM the best partner for Chrysler?

By now, it is an old idea. General Motors (GM) should merge with Chrysler, cut weak brands, bargain with the UAW for better pay and benefit terms, and downsize plants. Based on news reports, the companies talked about merging several month ago.

The talks fell apart and it is not clear why. GM may have believed that Chrysler's weak sales and relatively high product development costs would be an anchor dragging on a combined firm.

But there have been reports in the last two days that Chrysler's potential marriage with Fiat could fall apart. The reason is the the European company does not think that the UAW has given up enough in negotiations to offer Chrysler any real chance of being profitable. Fiat may become frustrated and simply walk away.