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As the potential merger between General Motors and Chrysler becomes clearer in detail, it is beginning to look less and less likely due to problems with the financing necessary for GM to complete the deal. Government aid could bridge the gap, but so far nothing along those lines has been proposed.

Executives at GM are confident they can acquire what it wants of Chrysler and improve its own position, but outsiders think such a result neglects the financial realities of the purchase, reports Autmotive News. Acquiring Chrysler would cost GM a great deal of cash - something it does not have an abundance of at the moment, despite a large quantity on the books. Financing the purchase is likewise not a strong option given the current status of the United States' major lending institutions and GM's own credit risk rating.

Chrysler is also carrying $9 billion in debt that would need to be either paid off or refinanced upon acquisition, further complicating matters for the merger. GM had nearly $21 billion in cash at the middle of the year, but was using about $1 billion per month at the time, and likely even more now as the market continues to slide. It must still generate another $4-5 billion in cash to pay off 30,000 to 40,000 union jobs that could be cut in a merger between the two companies if the deal does move forward.

Government funding for the merger, if made available, could potentially salvage the deal and stave off some of the massive layoffs that would otherwise be necessary. Excess capacity for a combined and presumably streamlined operation would still necessitate some layoffs, but if the merged company wasn't forced to deal with raising billions in cash through cost-cutting, it might be able to hold on to more of the workers currently employed by both companies.

GM does have the possibility of trading its remaining stake - 49% - in GMAC to Cerberus, owner of Chrysler, for all or part of its 81% share in the company, but that, too is fraught with debt and other difficulties. Nevertheless, the parties are charging forward, with a possible announcement within two weeks time.