At the end of December 2007, Daimler’s 20-percent stake in Chrysler was valued at about $1.18 billion.

At the end of June, Daimler valued that investment at about $219.6 million.

Today, Daimler said the book value of that 20-percent stake is zero.

That’s right, zero.

To put that zero in perspective:

A year ago, after Daimler sold 80 percent of Chrysler to U.S. private equity firm Cerberus Capital Management, the German automaker listed the value of its minority interest at $1.8 billion.

Ten years ago, Daimler paid $36 billion for all of Chrysler.

For Daimler to disclose that the book value of its stake has come to nothing, and to do it at a time when it is in talks to sell that stake to Cerberus, is bad news for Chrysler.

In a move equally telling, Cerberus is trying to offload Chrysler and is talking to various parties about multiple options including a full sale or an asset swap, according to people familiar with the matter. In order to make any such deal simpler, it is also in talks with Daimler for the remaining stake.

Chrysler has been hit hardest by slumping U.S. auto sales. Industry-wide October auto sales are expected to hit 18-year lows. Chrysler’s sales are down 25 percent so far this year as tight credit conditions, high oil prices and a weak housing market have whacked vehicle demand.

Cerberus founder Stephen Feinberg, who bought Chrysler in a $7.4 billion deal last year, is eager to cut his exposure to the auto business and to increase his 51-percent stake in GMAC, the finance arm co-owned by GM, sources have said.

The write-down is partly bookkeeping (Daimler took a huge charge for the vanished value) and the carrying value may or may not reflect the stake’s value in a sale.

But if you couple that move with the difficulty in valuating auto assets (already considered distressed) and the poor visibility in the sector today, Daimler’s disclosure points to a fearful observation. It’s one that a few analysts and industry experts have recently cautioned about: Chrysler’s auto operations as a whole may, indeed, be worthless.

U.S. senators want bankers to eat their broccoli before gorging on taxpayer bread.

The Senate Banking Committee took a Treasury Department official to task for committing $250 billion of the $700 bailout money to buy stakes in banks without getting any guarantees that those firms wouldn’t pocket the cash or use it for acquisitions.

“I remain especially concerned that, in the Treasury’s zeal to make the capital injection program easily digestible for the banks, we’re feeding them a little too much dessert and not making them eat enough of their vegetables,” says New York Democratic Sen. Charles Schumer.

Schumer had welcomed the Treasury’s decision earlier this month to shift the focus from buying troubled assets to directly injecting capital in troubled firms, but like many of his colleagues thought there should have been more strings attached.

The senators were particularly distressed over news reports that several of the banks that took the government’s money said they were in no hurry to lend it out. If banks hoard the cash, that doesn’t provide an immediate lift to the economy.

Taking the beating on behalf of the Treasury was Neel Kashkari (above),  the wunderkind who was put in charge of the $700 billion bailout program.

“Secretary Kashkari,” said Sen. Richard Shelby, the Alabama Republican.  ”Why did Treasury not attach a requirement to increase lending as a price for receiving the government money?”

“We completely agree with the spirit of that and we want our banks to lend,” Kashkari said. ”But we also didn’t want to be in a position of micromanaging our banks.  We wanted to create a program where thousands of institutions across our country would volunteer to participate.  And if we came in with very specific guidance on you must do this, you must do that, we were afraid that we would discourage firms — discourage healthy institutions from participating.”

He did not specify which firms might still be considered “healthy” some 14 months into the credit crisis.

Kashkari also said it would be unwise to block banks from using taxpayers’ money to acquire weaker rivals.

“If we have a small bank, a failing bank, in a community, that bank is not in a position to write loans for its small businesses, its homeowners. If a larger bank, a stronger bank, is able to acquire that and capital is put into that combined entity, that community is now better served,” he said.

“So we have to be very careful about not discouraging prudent acquisitions because that can actually help us get through these troubled times that we’re in right now.”

Note to the M&A advisers: Eat your veggies. You’re going to need your strength.

What restrictions should the government put on banks who accept federal funds? Leave your answer in the comments section.

Will Ticketmaster’s new duet fend off a hot rival and help it rise above an economic climate that makes pricey concert tickets seem like an extravagance?

The ticketing giant has announced a complex deal to acquire top artist-management agency Front Line, home to artists including Christina Aguilera, the Eagles and Neil Diamond. Front Line honcho Irving Azoff will run the combined company — raising questions about how Ms. Aguilera’s manager will negotiate her ticketing fees with himself.

Ticketmaster already owns a minority stake in Front Line, and will pay $123 million to Warner Music Group for an additional 30 percent stake, as the Wall Street Journal was the first to report.

As the music industry has crumbled, the concert business has been one of the sole bright spots in recent years. But with a global recession getting top billing and upstart rival Live Nation scooping up exclusive deals with artists like Madonna, it could be a tough act for Ticketmaster to follow.

Are you less likely to go to concerts now that the economy is looking grim? Leave you answer in the comments section.

DEALS OF THE DAY

** New Zealand’s Port of Tauranga is expecting rival Ports of Auckland to bid for its container business, it said, as a declining shipping business has port operators looking at consolidation.

** The Australian government has approved a takeover of St George Bank , the country’s fifth-biggest lender, by larger rival Westpac Banking Corp , Treasurer Wayne Swan said.

** Norway’s oil group Det norske oljeselskap ASA said it was selling its 10 percent stake in Yme field licences to Polish peer Lotos .

** Volkswagen Chairman Ferdinand Piech expects the takeover by Porsche to move ahead smoothly and played down in a newspaper interview any differences in his extended family that owns Porsche.

** The European Commission will approve an Italian investor group’s takeover plan for struggling airline Alitalia but not a 300 million euro ($386 million) state loan, la Repubblica newspaper said.

** Russia’s flag carrier Aeroflot has asked the transport ministry to support its takeover of airline S7, which may bid for Austrian Airlines , Interfax reported, citing Aeroflot.

** Interactive entertainment company Bright Things Plc said it signed a relationship agreement for its social network site SocialGo with widget maker WidgetLaboratory LLC, sending shares up nearly 67 percent.

** Greek lenders Piraeus Bank and Proton Bank said their boards had agreed to cancel a share swap agreement, after Proton said it would seek to take part in a government bank rescue plan.

** U.S.-Swedish bourse operator Nasdaq OMX has won final approval to buy Nordic power exchange Nord Pool’s international business, Nord Pool said.

It was a busy day for global dealmakers, with some deals going ahead, some being scuttled and yet others being given further consideration. Here are some of the key deals of the day:

YES
** Russia’s National Reserve Bank (NRB), a mid-sized lender controlled by billionaire Alexander Lebedev, will buy out troubled Russian Capital bank for a nominal price, NRB Chairman Arkady Kolodkin said on Wednesday.

** Value investment firm Southeastern Asset Management has boosted its stake in Sun Microsystems Inc and has talked to the computer hardware company about its strategic alternatives.

** Saputo Inc said that it planned to buy the Neilson Dairy division of George Weston Ltd for C$465 million ($372.5 million), boosting its presence in the Ontario fluid milk market.

NO
** Media magnate Sumner Redstone does not plan to sell any more shares in Viacom Inc or CBS Corp, two companies he controls, he told cable television network CNBC.

** Deutsche Lufthansa is not in talks now to merge its Germanwings airline unit with TUI AG’s TUIfly carrier, a spokesman for Lufthansa said.

MAYBE SO
** General Motors Corp is exploring the sale of ACDelco, its global aftermarket parts business, to raise cash, the No. 1 automaker said.

** Icelandic bank Straumur-Burdaras is in talks with troubled Landsbanki to buy parts of its UK business after ditching a similar deal earlier this month, a source familiar with the situation said.