Archive for the ‘autos’ Category

Auto Bailout: Practicality Trumps Ideology

December 20, 2008

With depression now a genuine risk, the U.S. has wisely put practicality ahead of idealogy.

By Steven Pearlstein The Washington Post
Saturday, December 20, 2008; Page D01

At any other time, the day that the federal government stepped in to rescue the domestic auto industry would be a turning point in the history of American capitalism. The only reason it is not is that it was immediately preceded by similar rescues of Bear Stearns, Fannie and Freddie, AIG, and Citigroup. It was just another day in Bailout Nation.

Let’s be clear on one point, however: The story here is not that Americans have lost their stomach for the kind of “creative destruction” that is generated by open and competitive markets, which sometimes results in the big companies going under and thousands of jobs being lost. We never particularly relished it — who would? — but we tolerated it in the past, we are still tolerating it now (Circuit City, Lehman Brothers), and we will undoubtedly tolerate it in the future. Moreover, even when the government steps in to rescue these companies, it invariably involves a serious and painful restructuring that results in the loss of thousands and even tens of thousands of jobs. That’s not how you define bailout in French.

Workers leave the Daimler Chrysler North Assembly Jeep plant ... 
Workers leave the Daimler Chrysler North Assembly Jeep plant in Toledo,Ohio after their shift Friday, Dec. 19, 2008. Autoworkers took home an early holiday gift Friday with President Bush’s offer of $17.4 billion in emergency loans to beleaguered U.S. car makers.(AP Photo/Madalyn Ruggiero)

Read the rest:
http://www.washingtonpost.com/wp-dyn/conte
nt/article/2008/12/19/AR2008121903170.ht
ml?hpid=topnews

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Wednesday: OPEC Likely to OK 2 Million-Barrel Oil Cut; Your Price Will Go Up

December 17, 2008

OPEC oil ministers say they will likely approve a cut of 2 million barrels a day from their output as of early next year. And major non-OPEC producers will likely take hundreds of thousands more barrels off the market.

Saudi Arabia and other major OPEC producers are saying ahead of their meeting Wednesday that a cut of that magnitude is in the offing, as early as January.

Additionally, Russian media are quoting Deputy Premier Igor Sechin as saying Moscow is ready to take 300,000 barrels off the market. And the oil minister of Azerbaijan tells The Associated Press that his country is willing to cut back by the same amount.

A 2-million barrel cut would be the largest single reduction ever by OPEC.

–Associated Press

The Molikpaq offshore oil platform off Sakhalin island in far ... 
The Molikpaq offshore oil platform off Sakhalin island in far eastern Russia. OPEC is set to announce a significant cut in oil output as the cartel seeks to support plummeting crude prices and producers’ incomes, while non-OPEC oil exporter Russia may also slice production.(AFP/File/Ursula Hyzy)

Could $14 Billion Auto Bailout Reach $40 Billion?

December 15, 2008

The Bush administration is trying to determine whether to push U.S. automakers to file for bankruptcy, or send them government funding that could be worth more than the $14 billion package that was rejected by the Senate. 

A brand new Chevrolet is displayed at Santa Rosa Chevrolet December ... 
A brand new Chevrolet is displayed at Santa Rosa Chevrolet December 12, 2008 in Santa Rosa, California. The White House said Monday it was studying options for a bailout of the US auto industry without indicating when an announcement would be made.(AFP/Getty Images/File/Justin Sullivan)
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In weighing a much larger rescue effort for U.S. auto makers than originally envisioned, the Bush administration faces a complex set of decisions over what terms to seek — including whether to push the companies to file for bankruptcy — and how to raise necessary funds.

The administration is trying to determine how much money it will take to help the car companies, and is discussing a rescue totaling $10 billion to $40 billion or more.

One possible source of funding is the Treasury Department’s $700 billion fund set up to rescue the financial industry. Only about $15 billion remains uncommitted from the first tranche of $350 billion, so the Bush administration could be forced to request the second half to cover the car companies’ needs, people familiar with the situation said.

That likely would compel the administration to outline its plans for a range of other needs, including foreclosure prevention for struggling homeowners and possibly aid for state and local governments. That could spark another confrontation with lawmakers, who are increasingly divided over industry bailouts. Senate Republicans blocked a proposed bailout for the auto makers last week.

With Detroit’s car makers facing bleak short-term prospects due to a collapse in consumer demand for vehicles, the Bush administration was rushing to determine the extent of the companies’ financial problems. Late last week, some officials thought the government might be able to provide as little as $8 billion to tide the companies over until early next year. On Sunday, a person familiar with the situation said the companies’ collective needs could range from $10 billion to more than $30 billion. The administration spent the weekend poring over the auto makers’ books to assess their financial needs.

The Bush administration must also figure out whether, and how, to try to wring concessions from affected parties, including factory workers, dealers and holders of the companies’ debt. Without such concessions, the companies are likely to need cash infusions long into the future, congressional critics say. 

Read the rest:
http://online.wsj.com/article/SB122930098160805305.html

Obama faces huge challenges; growing fast

December 14, 2008

President-elect Barack Obama, relatively young and inexperienced, is facing a rapidly growing list of monumental challenges as he prepares to take the reins of a nation in turmoil.

“I do not underestimate the enormity of the task that lies ahead,” Obama said after his historic election a little more than a month ago.

It was a sobering assessment at the time, but the country’s problems have only worsened since then. Now, Obama sounds dire, particularly as he talks about the economy: “We’re in an emergency.”

He spoke during a week in which Congress killed a bailout of the failing auto industry, the government reported that jobless claims spiked to their highest levels in more than a quarter-century, and the Treasury Department said the nation registered a record federal budget deficit for November.

By LIZ SIDOTI, Associated Press Writer

President-elect Barack Obama gestures during a news conference ... 
President-elect Barack Obama gestures during a news conference in Chicago, Thursday, Dec. 11, 2008. Obama, relatively young and inexperienced, is facing a rapidly growing list of monumental challenges as he prepares to take the reins of a nation in turmoil.(AP Photo/Charles Dharapak)

With woes foreign and domestic on more fronts than even Franklin Delano Roosevelt encountered when he took office in the midst of the Great Depression, Obama will be sworn in as the country’s 44th president in January.

His leadership will be tested immediately and in many ways. His performance from the outset could well set the tone for his presidency.

Not only is Obama saddled with lingering wars in Iraq and Afghanistan that he is inheriting from President George W. Bush, but he also must deal with:

-a deepening recession in the U.S. and a spreading global economic crisis.

-an automotive industry on the brink of collapse and soaring national debt.

-increasing unemployment and its ripple effects.

-the threat of terrorism amid a historic transfer of power.

At the same time, Obama may be drawn into an unfolding political scandal over Illinois Gov. Rod Blagojevich‘s alleged efforts to trade the president-elect’s former Senate seat for personal gain. The ongoing federal investigation could ensnare some of his top advisers and taint the self-styled reformer who has tried to steer clear of notorious Chicago politics.

The president-elect says he’s “absolutely confident” his aides did not try to cut deals with Blagojevich, but at the very least, the scandal is a distraction for a leader facing the magnitude of problems on Obama’s plate.

Read the rest:
http://news.yahoo.com/s/ap/20081214/ap_on_
go_pr_wh/obama_mounting_challenges

With Unions, Republicans Ring Death Knell

December 13, 2008

Festering animosity between the United Auto Workers and Southern senators who torpedoed the auto industry bailout bill erupted into full-fledged name calling Friday as union officials accused the lawmakers of trying to break the union on behalf of foreign automakers.

By Tom Krisher and Kimberly S. Johnson
The Associated Press

United Auto Workers (UAW) union president Ron Gettelfinger (R) ...
UASW president Ron Gettelfinger (R) holds a press conference at union headquarters to discuss the failure of the bailout plan in Congress in Detroit, Michigan. The White House said Friday that it may tap a 700-billion-dollar rescue package to save US automakers from immediate collapse, a policy reversal hailed by Democrats and a major labor union.(AFP/Getty Images/Bill Pugliano)

The vitriol had been near the surface for weeks as senators from states that house the transplant automakers’ factories criticized the Detroit Three for management miscues and bloated UAW labor costs that lawmakers said make them uncompetitive.

But the UAW stopped biting its tongue after Republicans sank a House-passed bill Thursday night that would have loaned $14 billion to cash-poor General Motors Corp. and Chrysler LLC to keep them out of bankruptcy protection. The Bush administration later stepped in and said it was ready to make money available to the automakers, likely from the $700 billion Wall Street bailout program.

Still, autoworkers remain angry with the senators who tried to negotiate wage and benefit concessions from the union, then scuttled the House-passed bill that would have granted the loans and set up a “car czar” to oversee the nearly insolvent companies and get concessions from the union and creditors. Their top targets were Senate Minority Leader Mitch McConnell, R-Ky.; Sen. Bob Corker, R-Tenn., who led negotiations on a compromise; and Sen. Richard Shelby, R-Ala., who has been a vocal critic of the loans.

Read the rest:
http://finance.yahoo.com/news/Angry-UAW-memb
ers-lash-out-at-apf-13823458.html

Pontiac G6 and Chevrolet Malibu's are shown at the General Motors ... 
Pontiac G6 and Chevrolet Malibu’s are shown at the General Motors Orion Assembly plant in Orion Township, Mich., Friday, Dec. 12, 2008. Festering animosity between the United Auto Workers and southern Senators who torpedoed the auto industry bailout bill erupted into full-fledged name calling Friday as union officials accused the lawmakers of trying to break the union on behalf of foreign automakers.(AP Photo/Paul Sancya)

Global shares dive on US car deal collapse

December 12, 2008

Shares in London plummeted by nearly 180 points today, following the failure of US carmakers to secure a $14 billion rescue fund from the Government, raising the prospect that Chrysler and General Motors could file for bankruptcy within days.

The FTSE 100 index of leading shares tumbled 179 points to 4,209.49 as details of the US Senate’s refusal to back the bailout deal emerged. London shares followed Asia markets lower, with Japan’s Nikkei 225 Index, briefly falling over 7 per cent on massive selling of Toyota, Honda, Nissan and the other domestic automakers.

The Hang Seng plummeted nearly 7 per cent while the China Enterprises Index of mainland stocks dived 8 per cent. Asia investors are fearful that the market will become flooded with cheap US cars if America’s “Big Three” go bust after the Senate effectively threw out a $14 billion emergency bailout bill.

Pain was felt across Europe where stocks tanked, with Germany’s Dax down 3.9 per cent dragged lower by local carmakers, BMW, Daimler and Porsche. While in France, the CAC index fell 4.3 per cent on Renault and Peugeot’s tumbling shares.

From the Times (UK)

Read the rest:
http://business.timesonline.co.uk/tol/busin
ess/industry_sectors/engineering/article5329036.ece

Nationalization of Select Businesses: U.S. Government Perilously Close

December 9, 2008

Congress and the President-elect are doing a deal to “bail out” or provided “loans” to major American industries and businesses.  Then there is an idea that perhaps the Chief Executive Officers need to retire — a decision made for decades in America by stockholders and Boards of Directors…not by legislators or other politicians.  Are we on the slippery slope?  And to what?

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When President-elect Barack Obama talked on Sunday about realigning the American automobile industry he was quick to offer a caution, lest he sound more like the incoming leader of France, or perhaps Japan.

“We don’t want government to run companies,” Obama told Tom Brokaw on “Meet the Press.” “Generally, government historically hasn’t done that very well.”

By David E. Sanger
The New York Times

U.S. lawmakers Barney Frank, left, and Nancy Pelosi, right, speaking at a news conference on the proposed bailout of the U.S. automakers on Monday. (Doug Mills/The New York Times)

But what Obama went on to describe was a long-term government bailout that would be conditioned on government oversight. It could mean that the government would mandate, or at least heavily influence, what kind of cars companies make, what mileage and environmental standards they must meet and what large investments they are permitted to make — to recreate an industry that Obama said “actually works, that actually functions.”

It all sounds perilously close to a word that no one in Obama’s camp wants to be caught uttering: nationalization.

Not since Harry Truman seized America’s steel mills in 1952 rather than allow a strike to imperil the conduct of the Korean War has Washington toyed with nationalization….

Related:
Government Picks Winners, Losers, Calls Other Shots and Pays The Bills: Happy Now?

Read the rest:
http://www.iht.com/articles/2008/12/09/business/09nationalize.php

Iacocca says US auto execs shouldn’t be ousted

December 9, 2008

Lee Iacocca, the man who led Chrysler through a government bailout in the late 1970s, says the CEOs of Detroit’s automakers should not be forced to quit as a condition of getting government loans.

Iacocca, Chrysler’s retired chairman and chief executive, said in a statement Tuesday that now is not the time to make executive changes, as suggested by Senate Banking Committee Chairman Chris Dodd, D-Conn.

“Having been there, I do not agree with the sentiment now coming out of Congress that the management should be changed as a condition of granting loans to the Detroit automakers,” Iacocca said. “You don’t change coaches in the middle of a game, especially when things are so volatile.”

He added that the auto industry has been hit by an unpredictable series of events beyond its control.

“The companies may not be perfect but the guys who are running them now are the only ones with the experience and the in-depth knowledge and understanding of how the car business really works,” he said. “They’re by far the best shot we have for success.”

Dodd said over the weekend in a television interview that Wagoner “has to move on” as part of a government-run restructuring. President-elect Barack Obama, without naming names, said current auto industry management should be ousted if it doesn’t understand the need to make changes. Dodd didn’t name Ford Motor Co. CEO Alan Mulally or Chrysler LLC’s Bob Nardelli.

Chrysler, General Motors and Ford are seeking up to $34 billion in loans to help them weather the worst auto sales climate in 26 years. Congress may vote this week on a plan to give them temporary relief while being held accountable for restructuring.

Related:
Government Picks Winners, Losers, Calls Other Shots and Pays The Bills: Happy Now?

Read the rest from the Associated Press:
http://news.yahoo.com/s/ap/20081209/ap_on_bi_ge/congr
ess_autos_iacocca;_ylt=Amr3e15ePZxEO9g9usxQNISs0NUE

Get the Feeling Russia and China Are Slicing Up The World and the U.S. Will Be Left Out?

December 6, 2008

The world is about competition.

Do you get the feeling that China and Russia are slicing up the world pie?  Or want to?

At Peace and Freedom, we get the feeling that Russia and China are grabbing all the economic value from the world and leaving the U.S. to happily make subsidized cars in Detroit. Case in point is the current global foray of Russian President Dmitry Medvedev  who is wrapping up a gigantic business trip to nations like Venezuela and India.

Russian President Dmitry Medvedev (R) waves as Indian Prime ... 
Russian President Dmitry Medvedev (R) waves as Indian Prime Minister Manmohan Singh looks on at a welcome ceremony in New Delhi. Singh hailed a landmark nuclear deal signed with Russia on Friday as a “milestone in the history of our cooperation” after meeting in India with Medvedev.(AFP/Raveendran)

Like it or not, where the U.S. isn’t, China and Russia thrive.

Earlier this year China’s President Hu Jintao completed a multi-nation trip to Africa.  Mostly, he seized opportunities to cheaply exploit raw materials desperately needed by China’s industrial dragon.  President Hu even went to Sudan despite international condemnation of the genocide in Darfur.

A Chinese bank employee counts stacks of hundred yuan notes ...

China also has recently completed the largest seaport in the world at Gwadar in Pakistan.

Russia and China often work in tandem — as they do in behalf of  Iran.  China and russia have the lions share of the business dealing with Iran, so when the U.S. proposes sanctions on Iran’s nuclear program, China and Russia block the effort together.

Human rights takes a back seat in Russian and Chinese business.  And both nations have their top guy out there globally beating the bushes in favor of homeland businesses.

When the U.S. was agast at human rights abuses in Myanmar, China objected and protested the junta.  China wants Myanmar’s oil.


Homeless, displaced refugees in Darfur.  But China still pours money into Sudan in exchange for oil….

Add this to the many challenges of Barack Obama.  Sitting in the U.S. watching the United Auto Workers kill off the car industry as we gear up to produce environmentally pure “Made in the U.S.A.” windmills might be fine for some; but we’d like to add our voice to those that believe the U.S. needs to be a major global business.

We need to think big.  We need to redevelop  the U.S. infrastructure with jobs and billions of dollars of spending.  But we also need to hunt out and drag home a lot more of the global market.

Wherever the U.S. is shy to go in the world: Medvedev and Hu Jintao do not fear to tread.  They have been — or they plan to go.

By John E. Carey
Peace and Freedom

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Extra:

China Now Holds Most of U.S. Debt

China passed Japan to become the U.S. government’s largest foreign creditor in September, the Treasury Department announced yesterday, reflecting the dramatic expansion of Beijing’s economic influence over the American economy.
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China’s new status — it now owns nearly $1 out of every $10 in U.S. public debt — means Washington will be increasingly forced to rely on Beijing as it seeks to raise money to cover the cost of a $700 billion bailout. China, in fact, may be the government’s largest creditor, period. The Treasury does not keep records on domestic bond holders. But analysts said China’s holdings are so vast that the existence of a larger stakeholder in the United States now seems unlikely.

By Anthony Faiola and Zachary A. Goldfarb
The Washington Post

Read the rest:
http://www.washingtonpost.com/w
p-dyn/content/article/2008/11/18
/AR2008111803558.html?wprss=r
ss_business%2Feconomy