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The rumors of a Chrysler/GM merger may be the best thing Ford has heard in a while, as they’ve largely drowned out the news that the big blue oval is losing one of its biggest investors. Edmunds Inside Line reports “Kirk Kerkorian, the billionaire investor and gaming magnate who has dabbled for years in the stocks of U.S. automakers, said Tuesday that his Tracinda Corporation has begun dumping its shares of Ford Motor Company.” Under the headline, “Kerkorian’s Ford Stake Goes the Way of the Pinto,” the New York Post adds, “The surprise slap hit the legendary investor after he hopped onto a beat-up Ford this spring - his third recent big gamble on an automaker - in hopes of shaking more cash from a Detroit money tree. Instead, he lost his shirt..

And an expensive shirt it was. The Detroit News reports, “Ford’s plunging share price has cut the value of Kerkorian’s nearly $1 billion investment by two-thirds.” The loss has “jeopardized his continuing control of MGM Mirage because he has been forced to put up more shares in the casino company to secure a $600 million line of credit he used to buy Ford stock.” Incredibly, Kerkorian is apparently pulling out of Ford at the suggestion of Ford officials. The News reports, “Privately, Ford executives suggested Kerkorian began selling off his shares in the automaker to protect his MGM Mirage investment.”

The move comes after Ford “saw two board members depart last week, lost its chief financial officer the week before that and posted $8.6 billion in red ink for the first two quarters of the year. Through September, Ford’s U.S. sales have declined 17% compared with the first nine months of 2007,” according to the Los Angeles Times.

Ford is not believed to be in immediate danger of collapse because the automaker secured $23 billion worth of credit in better economic times in 2006, according to the Detroit News, giving it a store of cash that might help it weather market conditions that have driven GM and Chrysler to search for merger partners.

But the Los Angeles Times reports that Ford is “burning roughly $1 billion in cash per month,” with little hope of an automotive market recovery until at least 2010.

The losses, and the loss of Kerkorian’s backing, may force Ford into a drastic step. Bloomberg reports, “Ford Motor Co., reeling from plunging U.S. car sales, may cut its stake in Japanese affiliate Mazda Motor Corp. to raise cash.”

Severing ties with Mazda would free some cash in the short term. But longer term, automakers need to develop more fuel-efficient cars and alternative fuel vehicles in order to compete in the post 2010 market. At that point a new Toyota Prius, the highly-anticipated Chevy Volt, a Nissan electric car and other products may change what buyers expect in terms of fuel economy. Mazda has been developing an extended-range electric vehicle and a hydrogen-powered car — Ford’s only publicly disclosed green car research projects. Both of the technologies could be key to a post-2010 Ford strategy. If Ford is forced to cut Mazda loose to save money, will it be left dependent on the 2009 F-150, with no green car plans, as the Volt and the Honda Insight hit the market?

At the moment, there are still three struggling U.S. automakers, and even more foreign makes, competing for your business with heavy incentives. Research the best car deals for October with U.S. News’ car rankings and reviews