The holiday weekend was anything but a vacation in the automotive industry.  America's largest automaker spent the last three days trying to explain itself, amid media reports that General Motors sought merger talks with both Chrysler and Ford in recent months, and asked the federal government for $5 billion.  GM executives may have failed in a bid to refinance their headquarters building to raise cash as well.  Vice Chairman Bob Lutz hasn't been spotted panhandling on Detroit streetcorners yet, but the General has tried everything else to raise cash and market share.

On Friday, the New York Times reported that General Motors officials were "in preliminary talks about a possible merger with Chrysler, a deal that could drastically remake the landscape of the auto industry by reducing the Big Three of Detroit automakers to the Big Two."  According to "two people close to the process," the Times said, "chances of a merger were '50-50' as of Friday."

The business press and the automotive press had the same reaction to the news.  As NewsWeek's  Keith Naughton wrote, "You've got to be kidding me....If ever there was an example of the old saw 'two wrongs don't make a right,' this, surely, is it."

Motor Trend rejected the idea, arguing that GM "has way too many franchise dealers and would be taking on more just as the faltering economy starts to weed many of them out."  Chrysler's owner, Cerberus Capital Management, wouldn't want "to go from running a small, unprofitable automaker to running a large, unprofitable automaker."

Just as GM's public relations team was dealing with the fallout of the Chrysler story, the next morning's edition of the New York Times reported, "Before General Motors began exploring a possible merger with Chrysler -- talks that first came to light on Friday -- GM proposed a similar deal with its other cross-town rival, the Ford Motor Company."  Ford, however, "rejected the idea and ended the discussions last month."

If they weren't busy enough at that point, Monday morning Barron's added to the storm, reporting that "Cash-strapped General Motors, whose shares fell last week to an almost 60-year low, appears likely to seek a loan from the Federal Reserve's discount window."  Barron's added, "How much the car producer would seek is unknown, but it needs $5 billion to meet its goal of completing a $15 billion liquidity program, much of which actually is coming from cost cuts."

GM denied the report, according to Reuters, saying through a spokesman that the company "was not actively pursuing access to low-cost Fed loans it also wanted to keep all options open."

What does it all mean?  Industry analyst Erich Merkle of Crow Horwath LLP told Bloomberg that "merger talks and retrenchments by the world's largest automaker are signs that the 100-year-old company's continued existence may be in doubt."  He added, "Emotionally, I don't want to think so. Rationally and logically, I can't rule it out."

Investors, however, appear buoyed by the accumulated news.  The Wall Street Journal notes that GM was "the biggest percentage gainer on the Dow" in a Monday stock market rally, recovering 33% of its price. 

MarketWatch speculates that "reports over the weekend of a possible merger between GM and privately-held Chrysler and of prior discussions between GM and Ford apparently gave investors some hope that consolidation could help cure the ailing industry."

Forbes analyst Jerry Flint thinks that "going out of business is not likely" for the General, "and bankruptcy is now a political decision."  The government, he notes, once helped to bail out Chrysler in similar straits.  "The government," he notes, "could guarantee loans as it did for Chrysler. The cost would be a fraction of the bailout of AIG --and there is a good chance it would cost nothing."

We have no idea what to expect from GM this week...but stay tuned. Whatever the outcome, it's going to be interesting.

Tough times for automakers, though, have led to some great buying opportunities for consumers. Research the best car deals for October to take advantage while you can.