GM and American Auto Industry Near Bankruptcy News and Discussion
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Can Washington save the Big Three automakers?
Nov 8 01:52 PM US/Eastern
With the Big Three US automakers teetering on the edge of insolvency, it appears Washington may finally be ready to come to Detroit's rescue.
Only hours after both General Motors and Ford Motor Co. announced large third-quarter losses -- and stressed that they are both rapidly running out of cash -- President-elect Barack Obama focused on the industry's plight during his first news conference since Tuesday's election.
"I have made it a high priority for the transition team to work on additional policy options to help the auto industry adjust," Obama told reporters gathered in Chicago.
Just how bad a situation the automakers are facing was hammered home on Friday, when GM reported a 2.5 billion dollar net loss for the third quarter, bringing to nearly 57 billion dollars its losses since the beginning of 2005.
Ford's 129 million dollar quarterly loss, meanwhile, brought to nearly 24.5 billion dollars the deficit it has run up since plunging into the red in 2006.
Yet the losses only partially state the true depth of the problem for the automakers.
Going into the third quarter, GM had 21 billion dollars on its books. By the end of September, that had plunged to 16.2 billion dollars, coming perilously close to the 11 billion to 14 billion dollars it says it needs on hand to keep the company operating.
Ford burned through 7.7 billion dollars in the quarter, though its reserves are nearly twice as richer thanks to a massive line of credit it acquired last year.
Though it doesn't report its full financial data, the privately-held Chrysler LLC is also thought to be fast running out of cash: one reason, analysts believe, why its parent, Cerberus Capital Management, was so eager to sell Chrysler to GM.
That deal, however, was scuttled by GM, and observers believe Cerberus may now rush to find another buyer as the economy continues to worsen.
"I doubt there's anyone who challenges the fact that we're operating in difficult times, perhaps as difficult as we've ever faced in the auto industry," GM Chairman and CEO Rick Wagoner said during a Friday conference call with reporters and industry analysts.
Detroit's situation has certainly worsened in the face of the current economic crisis that combines what many describe as a "perfect storm" of factors, such as high fuel costs, tight credit, job losses and rising commodity prices.
But the seeds of the current crisis date back to the last big oil shock, of 1979, which helped the Japanese gain a foothold for small, fuel-efficient products.
As gas lines faded from memory, the Asian automakers continued to gain ground by focusing on quality, something GM, Ford and Chrysler have only recently come to grips with -- and with varying degrees of success.
Further compounding the situation, Detroit has been consciously slow to embrace changes in the American automotive marketplace, especially the shift from big trucks to small, fuel-efficient passenger cars.
And even where it has, lamented Consumer Reports' auto analyst David Champion, it has needed "more models that were exciting for people to buy."
Again, Detroit has begun to address that complaint, and a flood of more fuel-efficient -- and exciting -- models are on tap to debut over the next several years. The challenge now will be to keep that flow going.
GM President Fritz Henderson said Friday the automaker will have to cut back on some product programs in order to ensure liquidity.
That creates a conundrum, of course: to stay alive, short-term, the Big Three might be curtailing programs that would ensure long-term success.
So federal aid becomes all the more important, said Joe Phillippi, an automotive analyst and head of AutoTrends Consulting.
"Both the current administration and the incoming administration recognize it will take at least 50 billion dollars to tide the automakers over through 2009, when they start to get some labor cost relief, and an improvement in demand," he told AFP.
Obama said Friday he would push Congress to accelerate the delivery of 25 billion dollars in loan guarantees aimed at helping automakers develop more fuel efficient vehicles ahead of upcoming regulation.
The Big Three asked for another 25 billion in loan guarantees for more general expenses during a meeting with top lawmakers in Washington Thursday.
"Automakers need immediate funding to stay on track during this difficult time," said National Association of Manufacturers president John Engler.
"We're talking about close to a million jobs in America -- we're talking about a lasting impact on our industrial production in the United States. We simply cannot afford to let the auto industry fail."
![](http://img.breitbart.com/images/2008/11/8/081108175210.5dfg9d6x/CPS.ODQ34.081108185004.photo02.photo.jpg)
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Nov 8 01:52 PM US/Eastern
With the Big Three US automakers teetering on the edge of insolvency, it appears Washington may finally be ready to come to Detroit's rescue.
Only hours after both General Motors and Ford Motor Co. announced large third-quarter losses -- and stressed that they are both rapidly running out of cash -- President-elect Barack Obama focused on the industry's plight during his first news conference since Tuesday's election.
"I have made it a high priority for the transition team to work on additional policy options to help the auto industry adjust," Obama told reporters gathered in Chicago.
Just how bad a situation the automakers are facing was hammered home on Friday, when GM reported a 2.5 billion dollar net loss for the third quarter, bringing to nearly 57 billion dollars its losses since the beginning of 2005.
Ford's 129 million dollar quarterly loss, meanwhile, brought to nearly 24.5 billion dollars the deficit it has run up since plunging into the red in 2006.
Yet the losses only partially state the true depth of the problem for the automakers.
Going into the third quarter, GM had 21 billion dollars on its books. By the end of September, that had plunged to 16.2 billion dollars, coming perilously close to the 11 billion to 14 billion dollars it says it needs on hand to keep the company operating.
Ford burned through 7.7 billion dollars in the quarter, though its reserves are nearly twice as richer thanks to a massive line of credit it acquired last year.
Though it doesn't report its full financial data, the privately-held Chrysler LLC is also thought to be fast running out of cash: one reason, analysts believe, why its parent, Cerberus Capital Management, was so eager to sell Chrysler to GM.
That deal, however, was scuttled by GM, and observers believe Cerberus may now rush to find another buyer as the economy continues to worsen.
"I doubt there's anyone who challenges the fact that we're operating in difficult times, perhaps as difficult as we've ever faced in the auto industry," GM Chairman and CEO Rick Wagoner said during a Friday conference call with reporters and industry analysts.
Detroit's situation has certainly worsened in the face of the current economic crisis that combines what many describe as a "perfect storm" of factors, such as high fuel costs, tight credit, job losses and rising commodity prices.
But the seeds of the current crisis date back to the last big oil shock, of 1979, which helped the Japanese gain a foothold for small, fuel-efficient products.
As gas lines faded from memory, the Asian automakers continued to gain ground by focusing on quality, something GM, Ford and Chrysler have only recently come to grips with -- and with varying degrees of success.
Further compounding the situation, Detroit has been consciously slow to embrace changes in the American automotive marketplace, especially the shift from big trucks to small, fuel-efficient passenger cars.
And even where it has, lamented Consumer Reports' auto analyst David Champion, it has needed "more models that were exciting for people to buy."
Again, Detroit has begun to address that complaint, and a flood of more fuel-efficient -- and exciting -- models are on tap to debut over the next several years. The challenge now will be to keep that flow going.
GM President Fritz Henderson said Friday the automaker will have to cut back on some product programs in order to ensure liquidity.
That creates a conundrum, of course: to stay alive, short-term, the Big Three might be curtailing programs that would ensure long-term success.
So federal aid becomes all the more important, said Joe Phillippi, an automotive analyst and head of AutoTrends Consulting.
"Both the current administration and the incoming administration recognize it will take at least 50 billion dollars to tide the automakers over through 2009, when they start to get some labor cost relief, and an improvement in demand," he told AFP.
Obama said Friday he would push Congress to accelerate the delivery of 25 billion dollars in loan guarantees aimed at helping automakers develop more fuel efficient vehicles ahead of upcoming regulation.
The Big Three asked for another 25 billion in loan guarantees for more general expenses during a meeting with top lawmakers in Washington Thursday.
"Automakers need immediate funding to stay on track during this difficult time," said National Association of Manufacturers president John Engler.
"We're talking about close to a million jobs in America -- we're talking about a lasting impact on our industrial production in the United States. We simply cannot afford to let the auto industry fail."
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GM Says It May Run Out of Operating Cash This Year
By Jeff Green and Mike Ramsey
Nov. 7 (Bloomberg) -- General Motors Corp., seeking federal aid to avoid collapse, said it may not have enough cash to keep operating this year and will fall ``significantly short'' of the amount needed by the end of June unless the auto market improves or it raises more capital.
The largest U.S. automaker reported a $4.2 billion third- quarter operating loss today and said its available cash fell to $16.2 billion on Sept. 30 from $21 billion at the end of June. Merger talks with Chrysler LLC were suspended.
``GM is making a pretty direct plea for help,'' said Pete Hastings, a fixed-income analyst at Morgan Keegan Inc. in Memphis, Tennessee. ``The message is, `we've done all the things we can do, and we need help.' And if we don't get help, fill in the blank.''
The cash drain reflected the strain of a 21 percent slump in U.S. sales in the quarter as the credit freeze deepened. It also added urgency to U.S. automakers' request for government aid. The companies are asking for $50 billion in new loans, a person familiar with the proposal said.
Chief Executive Officer Rick Wagoner and the CEOs of Ford Motor Co. and Chrysler renewed the push for assistance yesterday in meetings with U.S. House and Senate leaders in Washington. Wagoner said GM also has been in contact with the staff of President-elect Barack Obama.
GM rose 44 cents, or 9.2 percent, to $4.36 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have tumbled 82 percent this year.
$73 Billion in Losses
Today's outlook was the bleakest yet from the automaker, which has lost almost $73 billion since the end of 2004. Using $6.9 billion in cash last quarter pushed GM closer to the $11 billion minimum it says is needed to pay bills.
A bankruptcy filing ``would be a disaster far beyond General Motors and a sad chapter in American history,'' Wagoner, 55, said in a Bloomberg Television interview. GM said on Oct. 24 that bankruptcy ``is not an option.''
Should GM take such a step, the result would be 2.5 million jobs lost in the first year among automakers, suppliers and related businesses, according to a Nov. 4 report by the Center for Automotive Research, based in Ann Arbor, Michigan. Ford, which reported using $7.7 billion in cash last quarter, said today it has ``sufficient liquidity.''
Bailout Optimism
A U.S. rescue package for GM, Ford and Chrysler is likely before President George W. Bush leaves office in January, said Dennis Virag, president of Automotive Consulting Group in Ann Arbor.
``Either the federal government provides money for a bailout and lets the industry retool, restructure, and move ahead, or the industry dies,'' Virag told Bloomberg Television.
While GM didn't specify any prospective partners in saying merger discussions were being halted, the biggest U.S. automaker had been in negotiations on a tie-up with Chrysler, according to people familiar with the plans.
Consideration of a strategic acquisition was ``set aside'' to focus on ``immediate liquidity challenges,'' Detroit-based GM said in a statement.
Chrysler CEO Robert Nardelli, who hadn't acknowledged the talks, sent a note to employees that included the wording of GM's statement. The company, owned by Cerberus Capital Management LP, will ``continue to explore multiple strategic alliances or partnerships,'' Nardelli said.
GM Loss, Estimates
GM's per-share operating loss was wider than the average estimate on an adjusted basis of $3.94, based on 10 analysts surveyed by Bloomberg.
Including a non-cash, $4.9 billion one-time gain related to unloading retiree medical bills, GM had a net loss of $2.5 billion, compared with a $38.9 billion year-earlier loss on a tax-accounting charge.
GM's cash use in the fourth quarter should be closer to the levels in this year's first and second quarters, when it was about $3.6 billion, Chief Financial Officer Ray Young said on a conference call.
GM said it is trying to boost cash by $20 billion by the end of next year, an increase from a July 15 plan for $15 billion.
Asset sales, a part of the strategy, have been hampered because potential buyers can't get financing, Chief Operating Officer Fritz Henderson said. GM's Hummer brand of sport-utility vehicles is among the businesses on the block.
Paring Spending
Capital spending is being trimmed in 2009 to $4.8 billion, down $2.4 billion, by delaying the debut of some vehicle programs in North America and Europe by as long as a year. GM will also save $1.5 billion by cutting advertising and dealer promotion support and by reducing production starting next quarter.
GM will further pare engineering and cut back on discretionary expenses, including travel, consulting and unscheduled overtime.
Working-capital spending will be reduced by $500 million by lowering reserves of parts and inventory, the company said. GM also said it will try to slash 30 percent of salaried-workforce expenses, up from a goal of 20 percent.
GM will protect the capital budget for the electric Chevrolet Volt and the Chevrolet Cruze compact car, Henderson said on a conference call.
GM's debt rating was lowered by one grade to CCC+ by Standard & Poor's, which said it was ``cautious'' regarding GM's ability to raise capital.
Ceding a Crown
The latest retrenchment for GM comes two months after its 100th birthday. After 77 years as the world's largest automaker, it is poised to be surpassed in 2008 global sales by Toyota Motor Corp. It employs about 266,000 people around the world with factories in 34 countries.
Today's release on GM's results was delayed 48 minutes past its scheduled 10:30 a.m. arrival because of the need for a wording change, said Julie Gibson, a spokeswoman.
GM's $3 billion of 8.375 percent bonds due in July 2033 fell 4.3 cents to 24 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt yields 34.83 percent.
Credit-default swaps protecting against a GM default for one year rose to a level that implies the market has priced in a more than 66 percent chance of default, according to CMA Datavision.
One-year credit-default swaps were quoted at a mid-price of 51 percentage points upfront, compared with 50 percentage points yesterday, CMA data show. That means it would cost $5.1 million initially in addition to $500,000 over one year to protect $10 million of GM bonds. The contracts reached as high as 52 percentage points upfront on Oct. 16.
By Jeff Green and Mike Ramsey
Nov. 7 (Bloomberg) -- General Motors Corp., seeking federal aid to avoid collapse, said it may not have enough cash to keep operating this year and will fall ``significantly short'' of the amount needed by the end of June unless the auto market improves or it raises more capital.
The largest U.S. automaker reported a $4.2 billion third- quarter operating loss today and said its available cash fell to $16.2 billion on Sept. 30 from $21 billion at the end of June. Merger talks with Chrysler LLC were suspended.
``GM is making a pretty direct plea for help,'' said Pete Hastings, a fixed-income analyst at Morgan Keegan Inc. in Memphis, Tennessee. ``The message is, `we've done all the things we can do, and we need help.' And if we don't get help, fill in the blank.''
The cash drain reflected the strain of a 21 percent slump in U.S. sales in the quarter as the credit freeze deepened. It also added urgency to U.S. automakers' request for government aid. The companies are asking for $50 billion in new loans, a person familiar with the proposal said.
Chief Executive Officer Rick Wagoner and the CEOs of Ford Motor Co. and Chrysler renewed the push for assistance yesterday in meetings with U.S. House and Senate leaders in Washington. Wagoner said GM also has been in contact with the staff of President-elect Barack Obama.
GM rose 44 cents, or 9.2 percent, to $4.36 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have tumbled 82 percent this year.
$73 Billion in Losses
Today's outlook was the bleakest yet from the automaker, which has lost almost $73 billion since the end of 2004. Using $6.9 billion in cash last quarter pushed GM closer to the $11 billion minimum it says is needed to pay bills.
A bankruptcy filing ``would be a disaster far beyond General Motors and a sad chapter in American history,'' Wagoner, 55, said in a Bloomberg Television interview. GM said on Oct. 24 that bankruptcy ``is not an option.''
Should GM take such a step, the result would be 2.5 million jobs lost in the first year among automakers, suppliers and related businesses, according to a Nov. 4 report by the Center for Automotive Research, based in Ann Arbor, Michigan. Ford, which reported using $7.7 billion in cash last quarter, said today it has ``sufficient liquidity.''
Bailout Optimism
A U.S. rescue package for GM, Ford and Chrysler is likely before President George W. Bush leaves office in January, said Dennis Virag, president of Automotive Consulting Group in Ann Arbor.
``Either the federal government provides money for a bailout and lets the industry retool, restructure, and move ahead, or the industry dies,'' Virag told Bloomberg Television.
While GM didn't specify any prospective partners in saying merger discussions were being halted, the biggest U.S. automaker had been in negotiations on a tie-up with Chrysler, according to people familiar with the plans.
Consideration of a strategic acquisition was ``set aside'' to focus on ``immediate liquidity challenges,'' Detroit-based GM said in a statement.
Chrysler CEO Robert Nardelli, who hadn't acknowledged the talks, sent a note to employees that included the wording of GM's statement. The company, owned by Cerberus Capital Management LP, will ``continue to explore multiple strategic alliances or partnerships,'' Nardelli said.
GM Loss, Estimates
GM's per-share operating loss was wider than the average estimate on an adjusted basis of $3.94, based on 10 analysts surveyed by Bloomberg.
Including a non-cash, $4.9 billion one-time gain related to unloading retiree medical bills, GM had a net loss of $2.5 billion, compared with a $38.9 billion year-earlier loss on a tax-accounting charge.
GM's cash use in the fourth quarter should be closer to the levels in this year's first and second quarters, when it was about $3.6 billion, Chief Financial Officer Ray Young said on a conference call.
GM said it is trying to boost cash by $20 billion by the end of next year, an increase from a July 15 plan for $15 billion.
Asset sales, a part of the strategy, have been hampered because potential buyers can't get financing, Chief Operating Officer Fritz Henderson said. GM's Hummer brand of sport-utility vehicles is among the businesses on the block.
Paring Spending
Capital spending is being trimmed in 2009 to $4.8 billion, down $2.4 billion, by delaying the debut of some vehicle programs in North America and Europe by as long as a year. GM will also save $1.5 billion by cutting advertising and dealer promotion support and by reducing production starting next quarter.
GM will further pare engineering and cut back on discretionary expenses, including travel, consulting and unscheduled overtime.
Working-capital spending will be reduced by $500 million by lowering reserves of parts and inventory, the company said. GM also said it will try to slash 30 percent of salaried-workforce expenses, up from a goal of 20 percent.
GM will protect the capital budget for the electric Chevrolet Volt and the Chevrolet Cruze compact car, Henderson said on a conference call.
GM's debt rating was lowered by one grade to CCC+ by Standard & Poor's, which said it was ``cautious'' regarding GM's ability to raise capital.
Ceding a Crown
The latest retrenchment for GM comes two months after its 100th birthday. After 77 years as the world's largest automaker, it is poised to be surpassed in 2008 global sales by Toyota Motor Corp. It employs about 266,000 people around the world with factories in 34 countries.
Today's release on GM's results was delayed 48 minutes past its scheduled 10:30 a.m. arrival because of the need for a wording change, said Julie Gibson, a spokeswoman.
GM's $3 billion of 8.375 percent bonds due in July 2033 fell 4.3 cents to 24 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt yields 34.83 percent.
Credit-default swaps protecting against a GM default for one year rose to a level that implies the market has priced in a more than 66 percent chance of default, according to CMA Datavision.
One-year credit-default swaps were quoted at a mid-price of 51 percentage points upfront, compared with 50 percentage points yesterday, CMA data show. That means it would cost $5.1 million initially in addition to $500,000 over one year to protect $10 million of GM bonds. The contracts reached as high as 52 percentage points upfront on Oct. 16.
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U.S. Democratic presidential candidate Senator Barack Obama (D-IL) (C) shakes hands with a worker at a General Motors plant in Janesville, Wisconsin.
Wed Nov 5, 2008 6:20pm EST
By John Crawley
WASHINGTON, Nov 5 (Reuters) - President-elect Barack Obama courted distressed U.S. automakers during his campaign and pledged to help them, but the industry's health is so bad it may not be able to wait for him to take office.
"He's not here until January (20th) and that's a long time in the life of these companies at the moment," John Engler, a former Michigan governor and president and chief executive of the National Association of Manufacturers, said on Wednesday.
Engler expects fundamental changes in industry before Obama's inauguration. Engler was not specific. General Motors Corp said on Wednesday it plans to reveal new cost cuts when it reports quarterly earnings on Friday. Results at GM and Ford Motor Co are expected to be dismal.
Both GM and Ford congratulated Obama on his election and associated overall U.S. economic weakness with Detroit's worsening financial prospects.
Automakers hold out hope the Bush administration, reluctant to bail out Detroit, will act before yielding power to Obama. Carmakers, their allies in Congress and other industries have called on the Treasury Department to extend loans or other capital as a stop gap.
In coming weeks, companies and their lobbyists plan to "dial up" their urgency. Industry plans to underscore its belief that its immediate problems are not of its own making -- that the dire predicament is closely linked to the global credit crunch and survival depends on federal intervention.
While GM and Ford struggle, prospects at Chrysler LLC are the most uncertain. People involved in discussions about its future say the smallest of the U.S. manufacturers could merge, be spun off or be pushed into bankruptcy if not helped soon.
Engler said a Chrysler failure could cost up to 1 million jobs throughout the economy.
"It's not just the three auto companies, it's suppliers, all the way down the chain," Engler said.
While Obama is not yet in office, industry sources say he could still pressure the Bush administration and exert leverage on the Democratic-led Congress, if he believes action is needed to avert a broad economic crisis in manufacturing.
House of Representatives Speaker Nancy Pelosi called on Wednesday for a $61 billion stimulus plan to spur the U.S. economy, but said passage later this month would depend on Senate Republicans and the mood of the White House.
Pelosi met on Monday with auto industry allies in Congress and key committee chairmen. There is no consensus yet on an aid proposal for Detroit.
Carmakers, their lobbyists and congressional officials have suggested up to $25 billion in direct loans with few or no strings attached to help them through the current crisis, officials said.
Government red tape is holding up another $25 billion in advanced technology loans for automakers that was approved in September. During the campaign, Obama called on the Bush administration to accelerate that financing.
The United Auto Workers (UAW) has suggested billions in congressionally approved aid could go to covering retiree health care costs, freeing up money that companies would otherwise have to contribute for benefits.
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Obama Win Emboldens Auto Bailout Backers
![](http://d.yimg.com/us.yimg.com/p/ap/20081031/capt.b00c2779016447068e3298f39f3370fd.candidates_auto_industry_nybz106.jpg)
Democratic presidential candidate Sen. Barack Obama, D-Ill., shakes hands with workers at the GM Flint Engine South plant in Flint, Mich. With thousands of auto workers in Rust Belt states, Democrat Barack Obama promises government aid key to rebuilding U.S. automakers.
By Alex Ortolani
Nov. 5 (Bloomberg) -- General Motors Corp., Ford Motor Co. and U.S. auto-parts makers will greet President-elect Barack Obama with the same plea they have been making for months: We need help from Washington, and fast.
GM, the biggest U.S. automaker, must get government aid because ``time is very short,'' said Roger Altman, the former Treasury official advising the company in its merger talks with Chrysler LLC. ``The consequences of a collapse by GM or all three could be very severe,'' Altman, 62, said in an interview.
The industry's agenda for the new president will be topped by intensified calls for an immediate disbursement of $25 billion in low-interest loans signed into law by President George W. Bush Sept. 30. While the money is supposed to be for the development of fuel-efficient vehicles, automakers argue it should be freed up to meet current capital needs.
Sympathetic lawmakers also have been calling for auto lenders, if not the manufacturers themselves, to get some of the $700 billion bailout fund set aside for financial institutions.
``Time is critical when it comes to availability of capital for this industry,'' said Dave McCurdy, chief executive officer of the Alliance of Automobile Manufacturers, which represents GM, Ford, Toyota Motor Corp. and eight other automakers.
Needed `Right Now'
``That $25 billion is not hitting the street yet, and that's of major import to some of the companies right now,'' McCurdy said.
GM sought about $10 billion from the government last month, with CEO Rick Wagoner lobbying in person, people familiar with the matter said.
One or more automaker failures ``would be a difficult way for a brand-new administration'' to take office, said Altman, an Obama supporter whose Treasury Department service included working as deputy secretary under President Bill Clinton.
Companies dependent on the automakers are also at risk, said Ann Wilson, spokeswoman for the Washington-based Motor and Equipment Manufacturers Association, which represents parts suppliers such as Johnson Controls Inc. and Lear Corp.
``We have a lot of members who are having trouble with the credit crisis right now,'' `she said. `We've got to figure out a way to keep the manufacturing base in this country.''
Plunging Sales
Automakers and lawmakers are seeking aid amid decade-low auto sales in the U.S. this year and tight credit markets that caused $28.6 billion in first-half losses in 2008 at GM, Ford and Chrysler, owned by Cerberus Capital Management LP. GM said Nov. 3 its October sales plunged 45 percent in what it called the industry's worst month since 1945.
Obama said in a speech Oct. 13 that funding for automakers should be on a ``fast track,'' and the government should provide ``more as needed.'' During his campaign, he promised to help keep auto manufacturing jobs in the U.S. with measures such as incentives for building vehicles that use less fuel.
The outcome of the merger talks between GM and Chrysler may hinge on whether the companies can get government aid. The negotiations may intensify this week after the election, according to people familiar with the matter.
Michigan lawmakers including Representative Joseph Knollenberg started a campaign in October for aid to the auto industry through the Emergency Economic Stabilization Act, which authorizes the Treasury to spend as much as $700 billion to provide liquidity to the credit markets.
Governors' Letter
On Oct. 30, six governors from states including Michigan and Ohio sent a letter seeking help for automakers to Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson, saying the economic crisis ``threatens to create an unmanageable disaster at the state level.''
The highest priority for Obama will be to ``put the United States on the right track for an economic recovery by fixing the credit markets and restoring consumer confidence,'' Ford spokesman Mike Moran said in an e-mailed statement. He declined to comment on specific actions the automaker would prefer.
A GM spokesman, Greg Martin, didn't respond to an inquiry about key issues for the automaker under the new administration. A Chrysler spokeswoman, Lori McTavish, declined to comment.
The suppliers association also will work on getting a number of bills passed under the new president, spokeswoman Wilson said.
Fuel Standards
One law that has failed to pass this year and may come up again would crack down on the selling of counterfeit products that break intellectual property laws, such as brake pads and tires. Another would provide tax credits for heavy-duty vehicle suppliers that provide safety systems to drivers, Wilson said.
Fuel-emissions standards in the U.S. and globally will also be an issue for automakers and the Obama administration, McCurdy said. The Corporate Average Fuel Economy standards passed this year require manufacturers in the U.S. to have car-and-truck fleets getting an average 35 miles per gallon by 2020.
``We've made a commitment to not only meeting those standards but recognize those standards will continue to rise in the future,'' McCurdy said.
Obama said during his campaign he wanted to put at least 1 million so-called plug-in hybrid vehicles that would get as much as 150 miles per gallon on the road by 2015. He also said he would give consumers who buy the vehicles a $7,000 tax credit.
![](http://info.detnews.com/pix/news/2008/06272008_obamabiz/Obama_2008_PAKS104.jpg)
Democratic presidential candidate Sen. Barack Obama, D-Ill., left, talks with General Motors Chairman Rick Wagoner on Thursday, June 26, 2008, during a panel discussion with business, labor and academic leaders in Pittsburgh.
![](http://d.yimg.com/us.yimg.com/p/ap/20081031/capt.b00c2779016447068e3298f39f3370fd.candidates_auto_industry_nybz106.jpg)
Democratic presidential candidate Sen. Barack Obama, D-Ill., shakes hands with workers at the GM Flint Engine South plant in Flint, Mich. With thousands of auto workers in Rust Belt states, Democrat Barack Obama promises government aid key to rebuilding U.S. automakers.
By Alex Ortolani
Nov. 5 (Bloomberg) -- General Motors Corp., Ford Motor Co. and U.S. auto-parts makers will greet President-elect Barack Obama with the same plea they have been making for months: We need help from Washington, and fast.
GM, the biggest U.S. automaker, must get government aid because ``time is very short,'' said Roger Altman, the former Treasury official advising the company in its merger talks with Chrysler LLC. ``The consequences of a collapse by GM or all three could be very severe,'' Altman, 62, said in an interview.
The industry's agenda for the new president will be topped by intensified calls for an immediate disbursement of $25 billion in low-interest loans signed into law by President George W. Bush Sept. 30. While the money is supposed to be for the development of fuel-efficient vehicles, automakers argue it should be freed up to meet current capital needs.
Sympathetic lawmakers also have been calling for auto lenders, if not the manufacturers themselves, to get some of the $700 billion bailout fund set aside for financial institutions.
``Time is critical when it comes to availability of capital for this industry,'' said Dave McCurdy, chief executive officer of the Alliance of Automobile Manufacturers, which represents GM, Ford, Toyota Motor Corp. and eight other automakers.
Needed `Right Now'
``That $25 billion is not hitting the street yet, and that's of major import to some of the companies right now,'' McCurdy said.
GM sought about $10 billion from the government last month, with CEO Rick Wagoner lobbying in person, people familiar with the matter said.
One or more automaker failures ``would be a difficult way for a brand-new administration'' to take office, said Altman, an Obama supporter whose Treasury Department service included working as deputy secretary under President Bill Clinton.
Companies dependent on the automakers are also at risk, said Ann Wilson, spokeswoman for the Washington-based Motor and Equipment Manufacturers Association, which represents parts suppliers such as Johnson Controls Inc. and Lear Corp.
``We have a lot of members who are having trouble with the credit crisis right now,'' `she said. `We've got to figure out a way to keep the manufacturing base in this country.''
Plunging Sales
Automakers and lawmakers are seeking aid amid decade-low auto sales in the U.S. this year and tight credit markets that caused $28.6 billion in first-half losses in 2008 at GM, Ford and Chrysler, owned by Cerberus Capital Management LP. GM said Nov. 3 its October sales plunged 45 percent in what it called the industry's worst month since 1945.
Obama said in a speech Oct. 13 that funding for automakers should be on a ``fast track,'' and the government should provide ``more as needed.'' During his campaign, he promised to help keep auto manufacturing jobs in the U.S. with measures such as incentives for building vehicles that use less fuel.
The outcome of the merger talks between GM and Chrysler may hinge on whether the companies can get government aid. The negotiations may intensify this week after the election, according to people familiar with the matter.
Michigan lawmakers including Representative Joseph Knollenberg started a campaign in October for aid to the auto industry through the Emergency Economic Stabilization Act, which authorizes the Treasury to spend as much as $700 billion to provide liquidity to the credit markets.
Governors' Letter
On Oct. 30, six governors from states including Michigan and Ohio sent a letter seeking help for automakers to Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson, saying the economic crisis ``threatens to create an unmanageable disaster at the state level.''
The highest priority for Obama will be to ``put the United States on the right track for an economic recovery by fixing the credit markets and restoring consumer confidence,'' Ford spokesman Mike Moran said in an e-mailed statement. He declined to comment on specific actions the automaker would prefer.
A GM spokesman, Greg Martin, didn't respond to an inquiry about key issues for the automaker under the new administration. A Chrysler spokeswoman, Lori McTavish, declined to comment.
The suppliers association also will work on getting a number of bills passed under the new president, spokeswoman Wilson said.
Fuel Standards
One law that has failed to pass this year and may come up again would crack down on the selling of counterfeit products that break intellectual property laws, such as brake pads and tires. Another would provide tax credits for heavy-duty vehicle suppliers that provide safety systems to drivers, Wilson said.
Fuel-emissions standards in the U.S. and globally will also be an issue for automakers and the Obama administration, McCurdy said. The Corporate Average Fuel Economy standards passed this year require manufacturers in the U.S. to have car-and-truck fleets getting an average 35 miles per gallon by 2020.
``We've made a commitment to not only meeting those standards but recognize those standards will continue to rise in the future,'' McCurdy said.
Obama said during his campaign he wanted to put at least 1 million so-called plug-in hybrid vehicles that would get as much as 150 miles per gallon on the road by 2015. He also said he would give consumers who buy the vehicles a $7,000 tax credit.
![](http://info.detnews.com/pix/news/2008/06272008_obamabiz/Obama_2008_PAKS104.jpg)
Democratic presidential candidate Sen. Barack Obama, D-Ill., left, talks with General Motors Chairman Rick Wagoner on Thursday, June 26, 2008, during a panel discussion with business, labor and academic leaders in Pittsburgh.
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#5
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Ok Mr. Obama, do your thing man, please help save our precious auto industry.
![The Patriot !!](https://ls1tech.com/forums/images/smilies/LS1Tech/gr_patriot.gif)
And fellow Americans, please feel free to do your part as well...buy GM/Ford/Chrysler vehicles.
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![The Patriot !!](https://ls1tech.com/forums/images/smilies/LS1Tech/gr_patriot.gif)
And fellow Americans, please feel free to do your part as well...buy GM/Ford/Chrysler vehicles.
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I voted for the other guy, but please Mr. Obama help save our auto industry. We CANNOT let any one of the big three die! People stop buying Camrys and Accords. The Malibu, and the Fusion are great cars.
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#8
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I've worked in the auto industry for quite a while now (white collar exec type stuff) so I have a vested interest in seeing the Big 3 succeed...and that's what I hope happens. Regardless whether it's Ford, GM, or Chrysler...we need all 3 of them to be successful.
Here is my primary concern that no bailout package will fix:
We sold 17M vehicles annually a few years back. That is the total number of vehicles purchased regardless of OEM in one year. Now, we are on track for 10-12M vehicles. Insiders have told me that they expect to sell 5M vehicles annually before things improve.
Now, tell me how a bailout package from the government (which is really us - the taxpayers - will help a broken business model that is down a third at a minimum in volume? The cash flow injected into the business will be burned up by operating costs in a period of less than 2 years.
Here is my primary concern that no bailout package will fix:
We sold 17M vehicles annually a few years back. That is the total number of vehicles purchased regardless of OEM in one year. Now, we are on track for 10-12M vehicles. Insiders have told me that they expect to sell 5M vehicles annually before things improve.
Now, tell me how a bailout package from the government (which is really us - the taxpayers - will help a broken business model that is down a third at a minimum in volume? The cash flow injected into the business will be burned up by operating costs in a period of less than 2 years.
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Now, tell me how a bailout package from the government (which is really us - the taxpayers - will help a broken business model that is down a third at a minimum in volume? The cash flow injected into the business will be burned up by operating costs in a period of less than 2 years.
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#11
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We sold 17M vehicles annually a few years back. That is the total number of vehicles purchased regardless of OEM in one year. Now, we are on track for 10-12M vehicles. Insiders have told me that they expect to sell 5M vehicles annually before things improve.
Now, tell me how a bailout package from the government (which is really us - the taxpayers - will help a broken business model that is down a third at a minimum in volume? The cash flow injected into the business will be burned up by operating costs in a period of less than 2 years.
Now, tell me how a bailout package from the government (which is really us - the taxpayers - will help a broken business model that is down a third at a minimum in volume? The cash flow injected into the business will be burned up by operating costs in a period of less than 2 years.
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Reid, Pelosi Urge Treasury to Extend Aid to Automakers
By Lori Montgomery
Washington Post Staff Writer
Sunday, November 9, 2008; A01
With the nation's automotive industry hemorrhaging cash, congressional leaders called on the Bush administration yesterday to offer government assistance to the car companies as part of the Treasury Department's $700 billion emergency rescue program.
The call came one day after General Motors, the nation's largest auto manufacturer, announced another multibillion dollar loss for the third quarter and said it was running out of money fast. Ford, the second-biggest car company, also reported heavy losses. Unless the government steps in, analysts warned, GM could face bankruptcy, endangering the livelihoods of about 100,000 North American autoworkers and hundreds of thousands of others whose jobs depend on the industry.
In a letter to Treasury Secretary Henry M. Paulson Jr., House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry M. Reid (D-Nev.) asked Paulson to "review the feasibility . . . of providing temporary assistance to the automobile industry during the current financial crisis."
The letter notes that Congress granted Paulson broad discretion to use the bailout money to "restore financial market stability. A healthy automobile manufacturing sector is essential to the restoration of financial market security," the letter continues, as well as to "the overall health of our economy, and the livelihood of the automobile sector's workforce."
If the request is granted, it would expand the federal government's role in private enterprise far beyond the financial sector. Critics have warned that a bailout of GM would attract a long line of other companies to Washington to argue that their survival, too, is critical to the economic health of the country. The move would push the Bush administration to decide winners and losers in yet another huge sector of the economy, and it would force President-elect Barack Obama to manage a complex restructuring of the ailing automotive industry.
The Treasury has so far declined to assist the automakers, which have been devastated by the twin shocks of a collapsing credit market and the sharpest drop in auto sales in more than two decades. But as the news from Detroit has grown increasingly grim, lawmakers from both parties, Michigan officials, auto industry executives and labor leaders have stepped up their campaign for federal aid.
A plan is in the works at the Treasury to use bailout money to take ownership stakes in a wide array of companies beyond the banking sector. But Treasury officials have indicated that participants in its recapitalization program must be financial firms subject to federal regulation. That means GMAC, GM's auto financing arm, may be eligible for quick help, but GM itself may not.
The rescue legislation gives Paulson authority to consider the automakers for future programs, such as auctions to purchase troubled assets. But the Treasury has yet to establish rules for those programs, which means such help could be months away.
Treasury officials declined yesterday to comment directly on the request from Reid and Pelosi.
"We continue to work on a strategy that most effectively deploys the remaining funds to strengthen the financial system and get lending going again," Treasury spokeswoman Jennifer Zuccarelli said.
In recent days, top auto industry executives have been making the rounds in Washington, trying to shake loose federal cash from a variety of sources. And there are strong indications that Democrats, newly empowered in Tuesday's election, are inclined to oblige.
Obama and other key Democrats vowed during the campaign to support as much as $50 billion in low-interest loans for the car companies. On Friday, during his first news conference since his election as president, Obama spoke at length about the "hardship" the industry faces and referred to the auto industry as "the backbone of American manufacturing."
Obama's team of economic advisers includes Michigan Gov. Jennifer Granholm (D) and former Michigan congressman David Bonior, who is considered a strong candidate for Labor secretary. With Granholm on stage with him Friday, Obama said his transition team is already working on "policy options to help the auto industry adjust, weather the financial crisis and succeed in producing fuel-efficient cars," either under existing law or through the passage of "additional legislation."
In the meantime, however, the automakers have gotten little but sympathy. Congress recently voted to fund a $25 billion low-interest loan package intended to help the car companies retool their factories to produce fuel-efficient vehicles that meet tough new emissions standards. But that money has been hung up by red tape. Obama and other Democrats have discussed providing another $25 billion in loans, bringing the total federal aid to $50 billion. But unless the Bush administration agrees to work on an economic stimulus package when Congress returns to Washington later this month, that money would have to wait until at least January.
Analysts fear the firms may not be able to hold on that long. GM and Ford posted big losses Friday as they continued to pay out more in salaries and other expenses than they are taking in from sales. GM said it would cut spending and sell some product lines but nonetheless expects to "fall significantly short" of the cash it needs to operate next year. The failure of GM or one of the other Detroit automakers could wipe out 2.5 million jobs and $125 billion in personal income in the first 12 months, according to a report released this week by the Center for Automotive Research.
This is not unfamiliar territory for the auto industry. In 1979, Chrysler nearly went bankrupt and lobbied the government for assistance. A $1.2 billion loan, coupled with deep executive pay cuts and major union concessions, helped turn the troubled company around. Under Lee Iacocca, Chrysler invented its iconic minivan, popularized the SUV and repaid the loan in four years. The government even made money off the deal.
Asked Friday whether future assistance could mirror the Chrysler bailout, GM executives told investors that they consider the Treasury program a more modern means to solving the crisis.
In their letter to Paulson, Reid and Pelosi wrote that Friday's earnings reports "only reaffirm the need for urgent action."
If the Treasury does decide to assist the auto industry, they wrote, its chief executives should be subject to the same "limits on executive compensation" as other participants in the program and should be required to give the government equity stakes in their firms "to provide taxpayers a return on their investment upon the industry's recovery."
Spokesmen for Ford and GM issued statements thanking the lawmakers for their request.
"We appreciate Congress recognizes the urgency to help the auto industry weather this troubled economic period," GM spokesman Greg Martin said. "We hope Congress and the administration can work together to provide immediate aid."
By Lori Montgomery
Washington Post Staff Writer
Sunday, November 9, 2008; A01
With the nation's automotive industry hemorrhaging cash, congressional leaders called on the Bush administration yesterday to offer government assistance to the car companies as part of the Treasury Department's $700 billion emergency rescue program.
The call came one day after General Motors, the nation's largest auto manufacturer, announced another multibillion dollar loss for the third quarter and said it was running out of money fast. Ford, the second-biggest car company, also reported heavy losses. Unless the government steps in, analysts warned, GM could face bankruptcy, endangering the livelihoods of about 100,000 North American autoworkers and hundreds of thousands of others whose jobs depend on the industry.
In a letter to Treasury Secretary Henry M. Paulson Jr., House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry M. Reid (D-Nev.) asked Paulson to "review the feasibility . . . of providing temporary assistance to the automobile industry during the current financial crisis."
The letter notes that Congress granted Paulson broad discretion to use the bailout money to "restore financial market stability. A healthy automobile manufacturing sector is essential to the restoration of financial market security," the letter continues, as well as to "the overall health of our economy, and the livelihood of the automobile sector's workforce."
If the request is granted, it would expand the federal government's role in private enterprise far beyond the financial sector. Critics have warned that a bailout of GM would attract a long line of other companies to Washington to argue that their survival, too, is critical to the economic health of the country. The move would push the Bush administration to decide winners and losers in yet another huge sector of the economy, and it would force President-elect Barack Obama to manage a complex restructuring of the ailing automotive industry.
The Treasury has so far declined to assist the automakers, which have been devastated by the twin shocks of a collapsing credit market and the sharpest drop in auto sales in more than two decades. But as the news from Detroit has grown increasingly grim, lawmakers from both parties, Michigan officials, auto industry executives and labor leaders have stepped up their campaign for federal aid.
A plan is in the works at the Treasury to use bailout money to take ownership stakes in a wide array of companies beyond the banking sector. But Treasury officials have indicated that participants in its recapitalization program must be financial firms subject to federal regulation. That means GMAC, GM's auto financing arm, may be eligible for quick help, but GM itself may not.
The rescue legislation gives Paulson authority to consider the automakers for future programs, such as auctions to purchase troubled assets. But the Treasury has yet to establish rules for those programs, which means such help could be months away.
Treasury officials declined yesterday to comment directly on the request from Reid and Pelosi.
"We continue to work on a strategy that most effectively deploys the remaining funds to strengthen the financial system and get lending going again," Treasury spokeswoman Jennifer Zuccarelli said.
In recent days, top auto industry executives have been making the rounds in Washington, trying to shake loose federal cash from a variety of sources. And there are strong indications that Democrats, newly empowered in Tuesday's election, are inclined to oblige.
Obama and other key Democrats vowed during the campaign to support as much as $50 billion in low-interest loans for the car companies. On Friday, during his first news conference since his election as president, Obama spoke at length about the "hardship" the industry faces and referred to the auto industry as "the backbone of American manufacturing."
Obama's team of economic advisers includes Michigan Gov. Jennifer Granholm (D) and former Michigan congressman David Bonior, who is considered a strong candidate for Labor secretary. With Granholm on stage with him Friday, Obama said his transition team is already working on "policy options to help the auto industry adjust, weather the financial crisis and succeed in producing fuel-efficient cars," either under existing law or through the passage of "additional legislation."
In the meantime, however, the automakers have gotten little but sympathy. Congress recently voted to fund a $25 billion low-interest loan package intended to help the car companies retool their factories to produce fuel-efficient vehicles that meet tough new emissions standards. But that money has been hung up by red tape. Obama and other Democrats have discussed providing another $25 billion in loans, bringing the total federal aid to $50 billion. But unless the Bush administration agrees to work on an economic stimulus package when Congress returns to Washington later this month, that money would have to wait until at least January.
Analysts fear the firms may not be able to hold on that long. GM and Ford posted big losses Friday as they continued to pay out more in salaries and other expenses than they are taking in from sales. GM said it would cut spending and sell some product lines but nonetheless expects to "fall significantly short" of the cash it needs to operate next year. The failure of GM or one of the other Detroit automakers could wipe out 2.5 million jobs and $125 billion in personal income in the first 12 months, according to a report released this week by the Center for Automotive Research.
This is not unfamiliar territory for the auto industry. In 1979, Chrysler nearly went bankrupt and lobbied the government for assistance. A $1.2 billion loan, coupled with deep executive pay cuts and major union concessions, helped turn the troubled company around. Under Lee Iacocca, Chrysler invented its iconic minivan, popularized the SUV and repaid the loan in four years. The government even made money off the deal.
Asked Friday whether future assistance could mirror the Chrysler bailout, GM executives told investors that they consider the Treasury program a more modern means to solving the crisis.
In their letter to Paulson, Reid and Pelosi wrote that Friday's earnings reports "only reaffirm the need for urgent action."
If the Treasury does decide to assist the auto industry, they wrote, its chief executives should be subject to the same "limits on executive compensation" as other participants in the program and should be required to give the government equity stakes in their firms "to provide taxpayers a return on their investment upon the industry's recovery."
Spokesmen for Ford and GM issued statements thanking the lawmakers for their request.
"We appreciate Congress recognizes the urgency to help the auto industry weather this troubled economic period," GM spokesman Greg Martin said. "We hope Congress and the administration can work together to provide immediate aid."
![](http://media.washingtonpost.com/wp-srv/ssi/globalnav/wpdotcom_190x30.gif)
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Obama set to push ‘big bang’ reform package
By Edward Luce in ‘Washington
Published: November 9 2008 19:17 | Last updated: November 9 2008 19:17
US President-elect Barack Obama intends to push a comprehensive programme of social and economic reform beyond an immediate emergency stimulus package, Rahm Emanuel, the next White House chief of staff, indicated on Sunday.
Mr Emanuel brushed aside concerns that an Obama administration would risk taking on too much when it takes office in January. He said Mr Obama saw the financial meltdown as an historic opportunity to deliver the large-scale investments that Democrats had promised for years.
Tackling the meltdown would not entail delays in plans for far-reaching energy, healthcare and education reforms when all three were also in crisis, he said. “These are crises you can no longer afford to postpone [addressing].”
Mr Emanuel, Mr Obama’s first appointment after his emphatic victory over John McCain last week, added that Mr Obama would push hard during the 11-week transition before he is inaugurated for early assistance to the collapsing US car industry, which he described as “an essential part of our economy”.
His comments increased pressure on George W. Bush to approve a widely-touted $25bn emergency package for Detroit – possibly as part of a second emergency stimulus package to stave off further decline in the rapidly deteriorating US economy.
Mr Obama will meet Mr Bush on Monday and is likely to seek the outgoing president’s reassurance that he would not veto any stimulus package that could be passed as soon as next week when Congress meets for a “lame duck” session.
By Edward Luce in ‘Washington
Published: November 9 2008 19:17 | Last updated: November 9 2008 19:17
US President-elect Barack Obama intends to push a comprehensive programme of social and economic reform beyond an immediate emergency stimulus package, Rahm Emanuel, the next White House chief of staff, indicated on Sunday.
Mr Emanuel brushed aside concerns that an Obama administration would risk taking on too much when it takes office in January. He said Mr Obama saw the financial meltdown as an historic opportunity to deliver the large-scale investments that Democrats had promised for years.
Tackling the meltdown would not entail delays in plans for far-reaching energy, healthcare and education reforms when all three were also in crisis, he said. “These are crises you can no longer afford to postpone [addressing].”
Mr Emanuel, Mr Obama’s first appointment after his emphatic victory over John McCain last week, added that Mr Obama would push hard during the 11-week transition before he is inaugurated for early assistance to the collapsing US car industry, which he described as “an essential part of our economy”.
His comments increased pressure on George W. Bush to approve a widely-touted $25bn emergency package for Detroit – possibly as part of a second emergency stimulus package to stave off further decline in the rapidly deteriorating US economy.
Mr Obama will meet Mr Bush on Monday and is likely to seek the outgoing president’s reassurance that he would not veto any stimulus package that could be passed as soon as next week when Congress meets for a “lame duck” session.
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Auto Makers Force Bailout Issue
![](http://s.wsj.net/public/resources/images/OB-CQ536_pelosi_D_20081108121541.jpg)
Government Finds It Difficult to Deny Aid to Detroit in Wake of Wall Street
GREG HITT in Washington and JOHN D. STOLL in DetroitArticle
NOVEMBER 10, 2008
The auto-industry crisis is forcing a broader debate over how far the government should go to prop up ailing industries, as the Bush administration resists Democrats' request to use part of the $700 billion financial-rescue fund to aid Detroit's three struggling car makers.
House Speaker Nancy Pelosi of California and Senate Majority Leader Harry Reid of Nevada, in a letter Saturday, formally requested that Treasury Secretary Henry Paulson consider giving "temporary assistance to the auto industry" using money originally appropriated to shore up the banking system.
The Democratic lawmakers said federal aid should come with "strong conditions," such as requirements that car makers build more fuel-efficient vehicles, and equity stakes for the government so taxpayers could profit if the companies recover.
Senior economic advisers to President-elect Barack Obama said he broadly backs the appeal by Mrs. Pelosi and Mr. Reid on behalf of the auto industry. Mr. Obama, who on Friday called the industry "the backbone of American manufacturing," is scheduled to meet President George W. Bush at the White House Monday.
Rahm Emanuel, chief of staff for Mr. Obama, said Sunday on ABC's "This Week" that Mr. Obama wants the government to move faster to release $25 billion of low-cost federal loans already approved for the auto industry. He said the Bush administration has other authorities it should "use at this immediate time," but didn't specifically call on it to tap financial-rescue funds to help Detroit.
So far, the administration has balked at pleas from auto makers and their allies on Capitol Hill to use money from the Treasury's Troubled Assets Relief Program, or TARP, to help companies outside the financial sector.
"It was not set up for anything else," said Bush spokesman Tony Fratto. He said the only assistance authorized by Congress for the auto industry is a $25 billion loan package meant to help the industry retool to meet higher fuel-economy standards.
Auto-industry executives and the UAW president seek more federal money, putting lawmakers on the spot after their move to rescue Wall Street.
Auto-industry officials and allies are concerned that the rules governing the retooling loans are too strict, requiring that companies accepting the money meet standards of "viability" -- which might exclude money-losing General Motors Corp., Ford Motor Co. and Chrysler LLC.
GM warned Friday that it might not have enough cash to operate its business by the middle of 2009. Tapping into the $700 billion would be the fastest way to inject government cash into the sector, since doing so wouldn't require action by Congress.
Aides said Mr. Obama's economic-transition team is looking into a more flexible definition of "viability" for the $25 billion program.
The push by the Detroit Three for more federal money underscores a bigger problem that will confront the Obama administration and Congress: After riding to Wall Street's rescue, the government could find it hard to refuse other industries seen as teetering on collapse.
Detroit auto executives told top lawmakers last week that the collapse of one or more of their companies would have economywide consequences, putting as many as three million jobs at risk.
Democratic leaders want to convene a lame-duck session of Congress in two weeks to begin dealing with the nation's economic challenges.
Mrs. Pelosi has suggested a short-term stimulus package of as much as $100 billion, including spending for road and bridge projects, extended jobless benefits, funds to help states cover Medicaid costs and food assistance for low-income families. An auto-industry bailout could be added to the stimulus package, or moved separately.
But the Democratic leadership is waiting for a signal from the White House that Mr. Bush would sign a new stimulus bill.
Aside from questions about the wisdom of government intervention or putting taxpayer money at risk, bailing out Detroit could put Washington in the position of subsidizing job losses. The car makers have at least 10 assembly plants more than they need to meet demand, according to Oliver Wyman Consulting. That translates to roughly 30,000 factory jobs plus significant numbers of engineers and other salaried personnel. GM estimates it needs to slash its salaried-employee costs in North America by 30%.
Car makers would likely use federal money to subsidize these job cuts, buying out older workers to make room for new, lower paid replacements.
United Auto Workers President Ron Gettelfinger has said more union concessions are out of the question, union lobbyist Alan Reuther said in an interview with Dow Jones Newswires on Friday. "We feel we've already stepped up" by giving ground last year on future workers' pay and benefits and retiree health care, Mr. Reuther said. The UAW wants assurances a bailout would help secure its members' retirement and health-care benefits.
"Certainly we're speaking to the UAW," a senior Obama aide said Sunday.
—Jonathan Weisman and Joshua Mitchell in Washington contributed to this article.
![](http://s.wsj.net/public/resources/images/NA-AT870_BAILOU_D_20081109181048.jpg)
Auto-industry executives and the UAW president seek more federal money, putting lawmakers on the spot after their move to rescue Wall Street.
http://online.wsj.com/article/SB122616278065311225.html
![](http://s.wsj.net/public/resources/images/OB-CQ536_pelosi_D_20081108121541.jpg)
Government Finds It Difficult to Deny Aid to Detroit in Wake of Wall Street
GREG HITT in Washington and JOHN D. STOLL in DetroitArticle
NOVEMBER 10, 2008
The auto-industry crisis is forcing a broader debate over how far the government should go to prop up ailing industries, as the Bush administration resists Democrats' request to use part of the $700 billion financial-rescue fund to aid Detroit's three struggling car makers.
House Speaker Nancy Pelosi of California and Senate Majority Leader Harry Reid of Nevada, in a letter Saturday, formally requested that Treasury Secretary Henry Paulson consider giving "temporary assistance to the auto industry" using money originally appropriated to shore up the banking system.
The Democratic lawmakers said federal aid should come with "strong conditions," such as requirements that car makers build more fuel-efficient vehicles, and equity stakes for the government so taxpayers could profit if the companies recover.
Senior economic advisers to President-elect Barack Obama said he broadly backs the appeal by Mrs. Pelosi and Mr. Reid on behalf of the auto industry. Mr. Obama, who on Friday called the industry "the backbone of American manufacturing," is scheduled to meet President George W. Bush at the White House Monday.
Rahm Emanuel, chief of staff for Mr. Obama, said Sunday on ABC's "This Week" that Mr. Obama wants the government to move faster to release $25 billion of low-cost federal loans already approved for the auto industry. He said the Bush administration has other authorities it should "use at this immediate time," but didn't specifically call on it to tap financial-rescue funds to help Detroit.
So far, the administration has balked at pleas from auto makers and their allies on Capitol Hill to use money from the Treasury's Troubled Assets Relief Program, or TARP, to help companies outside the financial sector.
"It was not set up for anything else," said Bush spokesman Tony Fratto. He said the only assistance authorized by Congress for the auto industry is a $25 billion loan package meant to help the industry retool to meet higher fuel-economy standards.
Auto-industry executives and the UAW president seek more federal money, putting lawmakers on the spot after their move to rescue Wall Street.
Auto-industry officials and allies are concerned that the rules governing the retooling loans are too strict, requiring that companies accepting the money meet standards of "viability" -- which might exclude money-losing General Motors Corp., Ford Motor Co. and Chrysler LLC.
GM warned Friday that it might not have enough cash to operate its business by the middle of 2009. Tapping into the $700 billion would be the fastest way to inject government cash into the sector, since doing so wouldn't require action by Congress.
Aides said Mr. Obama's economic-transition team is looking into a more flexible definition of "viability" for the $25 billion program.
The push by the Detroit Three for more federal money underscores a bigger problem that will confront the Obama administration and Congress: After riding to Wall Street's rescue, the government could find it hard to refuse other industries seen as teetering on collapse.
Detroit auto executives told top lawmakers last week that the collapse of one or more of their companies would have economywide consequences, putting as many as three million jobs at risk.
Democratic leaders want to convene a lame-duck session of Congress in two weeks to begin dealing with the nation's economic challenges.
Mrs. Pelosi has suggested a short-term stimulus package of as much as $100 billion, including spending for road and bridge projects, extended jobless benefits, funds to help states cover Medicaid costs and food assistance for low-income families. An auto-industry bailout could be added to the stimulus package, or moved separately.
But the Democratic leadership is waiting for a signal from the White House that Mr. Bush would sign a new stimulus bill.
Aside from questions about the wisdom of government intervention or putting taxpayer money at risk, bailing out Detroit could put Washington in the position of subsidizing job losses. The car makers have at least 10 assembly plants more than they need to meet demand, according to Oliver Wyman Consulting. That translates to roughly 30,000 factory jobs plus significant numbers of engineers and other salaried personnel. GM estimates it needs to slash its salaried-employee costs in North America by 30%.
Car makers would likely use federal money to subsidize these job cuts, buying out older workers to make room for new, lower paid replacements.
United Auto Workers President Ron Gettelfinger has said more union concessions are out of the question, union lobbyist Alan Reuther said in an interview with Dow Jones Newswires on Friday. "We feel we've already stepped up" by giving ground last year on future workers' pay and benefits and retiree health care, Mr. Reuther said. The UAW wants assurances a bailout would help secure its members' retirement and health-care benefits.
"Certainly we're speaking to the UAW," a senior Obama aide said Sunday.
—Jonathan Weisman and Joshua Mitchell in Washington contributed to this article.
![](http://s.wsj.net/public/resources/images/NA-AT870_BAILOU_D_20081109181048.jpg)
Auto-industry executives and the UAW president seek more federal money, putting lawmakers on the spot after their move to rescue Wall Street.
http://online.wsj.com/article/SB122616278065311225.html
#16
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The UAW is a cancer, that needs to be purged.
"Labor Costs: The three automakers lost $15 billion last year. Chrysler pays an average $75.86 an hour in wages, pension and health care benefits, GM pays $73.26 and Ford pays $70.51. Toyota pays U.S. workers about $48, U.S. automakers say."
http://www.usatoday.com/money/autos/...w_N.htm?csp=34
"Labor Costs: The three automakers lost $15 billion last year. Chrysler pays an average $75.86 an hour in wages, pension and health care benefits, GM pays $73.26 and Ford pays $70.51. Toyota pays U.S. workers about $48, U.S. automakers say."
http://www.usatoday.com/money/autos/...w_N.htm?csp=34
![](http://img.photobucket.com/albums/v85/samichlaus/wages.jpg)
#18
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GM's Shares Tumble on Rising Cash Concerns
![](http://s.wsj.net/public/resources/images/OB-CQ634_gm_111_D_20081110114751.jpg)
By JENNIFER HOYTArticle
NOVEMBER 10, 2008, 12:26 P.M. ET
General Motors Corp.'s shares Monday plummeted to a price it hasn't seen since 1946, on rising concerns the auto maker will run out of cash in the next few months and that any government bailout won't be beneficial to shareholders.
Shares of GM fell 23% to $3.34 in late-morning trading, after earlier hitting a 62-year low of $3.02, as analysts at both Barclays Capital and Deutsche Bank cut their target prices and investment ratings on the stock.
Barclays now targets GM shares at $1, while Deutsche Bank slashed its target price to zero.
Jeff Embersits, chief investment officer of Shareholder Value Management, said GM's freefall reflects investors' growing concern about the company's liquidity, and how little faith the market has in the benefits that a government bailout would have for shareholders. Another problem with the potential bailout, Mr. Embersits added, is that it may cause foreign auto makers to ask their governments for similar aid. If this occurs, it will wash out the benefits of any aid to GM.
Barclays Capital cut its rating on GM to "underweight" from "equalweight", saying the company will probably burn through its existing cash by February, necessitating a bailout that is likely to come at a big cost to existing shareholders.
"While further government assistance would decrease the likelihood of a GM bankruptcy, we believe any government assistance would likely significantly dilute GM's equity," analysts at Barclays Capital said.
Deutsche Bank analysts, who cut their rating on the stock to "sell" from "hold," gave GM a shorter liquidity timeline, saying the company might not be able to fund its operations beyond December. Even with government intervention, the analysts said GM's future is "bankruptcy-like," and shareholders are unlikely to get anything.
Unicredit also said GM faces an imminent cash crisis. It said that, by extrapolating the average monthly $2.3 billion cash burn of the last 12 months into the future, without government intervention, GM will completely run out of cash by the end of April. Unicredit maintained its sell recommendation on GM bonds, given the risk of a liquidity crisis at the company in the near future and the further declining recovery values for senior unsecured bondholders.
GM Friday posted a net loss of $2.5 billion in the third quarter, and said it ran through $6.9 billion in cash, leaving the auto maker with only a thin cushion between its current cash reserves and the minimum funding requirements for day-to-day operations. The auto maker said it is scrambling to add $5 billion of new cost cuts to an already aggressive plan to bolster liquidity, and it is seeking to raise new financing from banks, private investors and through a government bailout.
http://online.wsj.com/article/SB1226...oo_hs&ru=yahoo
![](http://s.wsj.net/public/resources/images/OB-CQ634_gm_111_D_20081110114751.jpg)
By JENNIFER HOYTArticle
NOVEMBER 10, 2008, 12:26 P.M. ET
General Motors Corp.'s shares Monday plummeted to a price it hasn't seen since 1946, on rising concerns the auto maker will run out of cash in the next few months and that any government bailout won't be beneficial to shareholders.
Shares of GM fell 23% to $3.34 in late-morning trading, after earlier hitting a 62-year low of $3.02, as analysts at both Barclays Capital and Deutsche Bank cut their target prices and investment ratings on the stock.
Barclays now targets GM shares at $1, while Deutsche Bank slashed its target price to zero.
Jeff Embersits, chief investment officer of Shareholder Value Management, said GM's freefall reflects investors' growing concern about the company's liquidity, and how little faith the market has in the benefits that a government bailout would have for shareholders. Another problem with the potential bailout, Mr. Embersits added, is that it may cause foreign auto makers to ask their governments for similar aid. If this occurs, it will wash out the benefits of any aid to GM.
Barclays Capital cut its rating on GM to "underweight" from "equalweight", saying the company will probably burn through its existing cash by February, necessitating a bailout that is likely to come at a big cost to existing shareholders.
"While further government assistance would decrease the likelihood of a GM bankruptcy, we believe any government assistance would likely significantly dilute GM's equity," analysts at Barclays Capital said.
Deutsche Bank analysts, who cut their rating on the stock to "sell" from "hold," gave GM a shorter liquidity timeline, saying the company might not be able to fund its operations beyond December. Even with government intervention, the analysts said GM's future is "bankruptcy-like," and shareholders are unlikely to get anything.
Unicredit also said GM faces an imminent cash crisis. It said that, by extrapolating the average monthly $2.3 billion cash burn of the last 12 months into the future, without government intervention, GM will completely run out of cash by the end of April. Unicredit maintained its sell recommendation on GM bonds, given the risk of a liquidity crisis at the company in the near future and the further declining recovery values for senior unsecured bondholders.
GM Friday posted a net loss of $2.5 billion in the third quarter, and said it ran through $6.9 billion in cash, leaving the auto maker with only a thin cushion between its current cash reserves and the minimum funding requirements for day-to-day operations. The auto maker said it is scrambling to add $5 billion of new cost cuts to an already aggressive plan to bolster liquidity, and it is seeking to raise new financing from banks, private investors and through a government bailout.
http://online.wsj.com/article/SB1226...oo_hs&ru=yahoo
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An Open Letter to President-Elect Barack Obama
By Ken Elias
November 10, 2008
Dear President-elect Obama,
Upon taking office, you will immediately face some tough decisions about the future of the government’s role in “saving” Ford, GM and Chrysler. As you know, the Detroit-based automotive industry has already bent the ears of your political colleagues, particularly Speaker Pelosi and Senate Majority leader Reid. These Democratic leaders in Congress seek membership approval to provide taxpayer dollars to prevent these automakers from impending collapse. While we respect the efforts of Congressional leadership, and we share their desire to enhance and protect America’s industrial base and employment therein, we ask that you spare a moment to listen to the opinions of people who do not share their belief that massive federal funding will achieve these goals. First, our qualifications.
We have been involved with the American automobile industry for decades. We are factory workers, designers, engineers, managers, mechanics, dealers, part suppliers, enthusiasts, journalists, and consumers. Together, we represent the combined voices of the “front lines” of our industry. We are loyal to our country’s economic self-interest and seek but one outcome: an American auto industry that builds vehicles admired and desired by the American public.
Over the last three decades, for reasons too numerous to elaborate, the majority of Americans (especially passenger car buyers) have switched their loyalties to foreign-owned brands. You will hear various explanations for this failure from the men in charge of Detroit: unfair foreign trade, currency manipulation, fuel economy regulations, health care costs, union collective bargaining agreements, the current credit crisis and more. We urge you to discard these explanations and only look at sales trends for the past three decades. Again, for whatever reasons, American consumers mostly abandoned Detroit.
By the same token, American automakers abandoned their customers, by failing to invest its profits in flexible assembly techniques, new powertrains and platforms, and better design. By failing to spread their investments in a range of vehicles to meet consumer needs, or fully embrace the fuel efficient future that Congress has dictated. To rectify this situation, urgent action is required. But you, as president-elect, must face this crisis with a clear understanding of the limitations you face.
First, accept the fact that jobs will be lost no matter what you do. The American automobile industry has too many products, brands, bureaucrats and dealers relative to the size of its market share. Until it can recapture– or at least maintain– market share, it will continue to contract. As any process of recovery will be slow and arduous, Ford, GM and Chrysler will have to shed thousands more jobs. With or without federal aid, this “downsizing” should continue, and sometimes with less than gracious outcomes.
Second, admit that Chrysler has no future. Actually, it had no future when Daimler sold it to Cerberus. Worse, Cerberus never had any intentions to invest the capital necessary to make a go of it. It has no future products in the pipeline today, and hence is undeserving of rescue. To best protect Chrysler’s past and present employees’ pensions and interests, Chrysler must be allowed to fail and be liquidated. At least some jobs will be saved as the company’s best assets get sold to other automakers, and proceeds will be returned to the debtor’s estate for apportionment among its stakeholders.
Third, understand that GM and Ford needs bespoke funding solutions. Your administration would be well advised to create a menu of funding options, each with different levels of security interest and control assumed by the federal government. Ford and GM’s executive management and their Boards will have the option to choose among a variety of solutions to resurrect their companies’ fortunes. If an initial solution does not work, any return to menu will incur significant costs and dilution. A “one size” solution to the problems of both automakers is not wise and simply doesn’t work.
For example, the cash needs of GM vastly outweigh those of Ford. GM does need a massive financial restructuring, Ford doesn’t. Taking a few billion here and there at GM won’t restore profitability at the company, it just prolongs the agony. Any analyst will tell you that GM needs perhaps $25 to $50b as part of a proper restructuring that includes a major “cramdown” on all stakeholders (including the United Auto Workers’ health care association). This “last resort” menu option then gives the taxpayers a significant interest in the company in return for the cash, with a small piece left for the creditors. And as its largest stockholder of sorts, the Feds get to call most of the shots at GM.
At Ford, the company has done most of the work necessary to restructure itself to long-term profitability in the near future – when auto sales come back to trend if not sooner. The amount of government assistance needed to ride through the crisis is considerably less than what’s required at GM. As a result, Ford will take a different menu option. Less money taken with less risk to taxpayers means less government influence and equity dilution for existing stockholders.
Fourth, the current management team at GM must be replaced, even if GM selects the lowest funding level option off the menu we prescribe. While we do not believe that government should involve itself in the highest levels of American enterprise, if it does, it should do so whilst protecting the financial interests of the American taxpayer. Any funds to GM must come with a wholesale revamping of this company’s Board of Directors and its senior management team.
Fifth, do not fall into the political trap of demands made by the UAW as deserving of a bail-out of their VEBA plan, regardless of what happens to each of the Detroit Three. The UAW itself is a business, with its own motivations for profit (for its members) and metrics of success. Its fortunes must rise and fall with its respective employers and not be treated as an independent party at the political bargaining table for government funding. If you grant a payout to the UAW, you set a future course for enterprise in this country that has long term negative consequences by insuring employment stability. Russia abandoned that principal two decades ago and for good reason.
We wish you all the best for your future and that of our country.
By Ken Elias
November 10, 2008
Dear President-elect Obama,
Upon taking office, you will immediately face some tough decisions about the future of the government’s role in “saving” Ford, GM and Chrysler. As you know, the Detroit-based automotive industry has already bent the ears of your political colleagues, particularly Speaker Pelosi and Senate Majority leader Reid. These Democratic leaders in Congress seek membership approval to provide taxpayer dollars to prevent these automakers from impending collapse. While we respect the efforts of Congressional leadership, and we share their desire to enhance and protect America’s industrial base and employment therein, we ask that you spare a moment to listen to the opinions of people who do not share their belief that massive federal funding will achieve these goals. First, our qualifications.
We have been involved with the American automobile industry for decades. We are factory workers, designers, engineers, managers, mechanics, dealers, part suppliers, enthusiasts, journalists, and consumers. Together, we represent the combined voices of the “front lines” of our industry. We are loyal to our country’s economic self-interest and seek but one outcome: an American auto industry that builds vehicles admired and desired by the American public.
Over the last three decades, for reasons too numerous to elaborate, the majority of Americans (especially passenger car buyers) have switched their loyalties to foreign-owned brands. You will hear various explanations for this failure from the men in charge of Detroit: unfair foreign trade, currency manipulation, fuel economy regulations, health care costs, union collective bargaining agreements, the current credit crisis and more. We urge you to discard these explanations and only look at sales trends for the past three decades. Again, for whatever reasons, American consumers mostly abandoned Detroit.
By the same token, American automakers abandoned their customers, by failing to invest its profits in flexible assembly techniques, new powertrains and platforms, and better design. By failing to spread their investments in a range of vehicles to meet consumer needs, or fully embrace the fuel efficient future that Congress has dictated. To rectify this situation, urgent action is required. But you, as president-elect, must face this crisis with a clear understanding of the limitations you face.
First, accept the fact that jobs will be lost no matter what you do. The American automobile industry has too many products, brands, bureaucrats and dealers relative to the size of its market share. Until it can recapture– or at least maintain– market share, it will continue to contract. As any process of recovery will be slow and arduous, Ford, GM and Chrysler will have to shed thousands more jobs. With or without federal aid, this “downsizing” should continue, and sometimes with less than gracious outcomes.
Second, admit that Chrysler has no future. Actually, it had no future when Daimler sold it to Cerberus. Worse, Cerberus never had any intentions to invest the capital necessary to make a go of it. It has no future products in the pipeline today, and hence is undeserving of rescue. To best protect Chrysler’s past and present employees’ pensions and interests, Chrysler must be allowed to fail and be liquidated. At least some jobs will be saved as the company’s best assets get sold to other automakers, and proceeds will be returned to the debtor’s estate for apportionment among its stakeholders.
Third, understand that GM and Ford needs bespoke funding solutions. Your administration would be well advised to create a menu of funding options, each with different levels of security interest and control assumed by the federal government. Ford and GM’s executive management and their Boards will have the option to choose among a variety of solutions to resurrect their companies’ fortunes. If an initial solution does not work, any return to menu will incur significant costs and dilution. A “one size” solution to the problems of both automakers is not wise and simply doesn’t work.
For example, the cash needs of GM vastly outweigh those of Ford. GM does need a massive financial restructuring, Ford doesn’t. Taking a few billion here and there at GM won’t restore profitability at the company, it just prolongs the agony. Any analyst will tell you that GM needs perhaps $25 to $50b as part of a proper restructuring that includes a major “cramdown” on all stakeholders (including the United Auto Workers’ health care association). This “last resort” menu option then gives the taxpayers a significant interest in the company in return for the cash, with a small piece left for the creditors. And as its largest stockholder of sorts, the Feds get to call most of the shots at GM.
At Ford, the company has done most of the work necessary to restructure itself to long-term profitability in the near future – when auto sales come back to trend if not sooner. The amount of government assistance needed to ride through the crisis is considerably less than what’s required at GM. As a result, Ford will take a different menu option. Less money taken with less risk to taxpayers means less government influence and equity dilution for existing stockholders.
Fourth, the current management team at GM must be replaced, even if GM selects the lowest funding level option off the menu we prescribe. While we do not believe that government should involve itself in the highest levels of American enterprise, if it does, it should do so whilst protecting the financial interests of the American taxpayer. Any funds to GM must come with a wholesale revamping of this company’s Board of Directors and its senior management team.
Fifth, do not fall into the political trap of demands made by the UAW as deserving of a bail-out of their VEBA plan, regardless of what happens to each of the Detroit Three. The UAW itself is a business, with its own motivations for profit (for its members) and metrics of success. Its fortunes must rise and fall with its respective employers and not be treated as an independent party at the political bargaining table for government funding. If you grant a payout to the UAW, you set a future course for enterprise in this country that has long term negative consequences by insuring employment stability. Russia abandoned that principal two decades ago and for good reason.
We wish you all the best for your future and that of our country.
#20
TECH Senior Member
iTrader: (11)
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Deutsche Bank sees GM shares as likely worthless
NEW YORK (MarketWatch) -- A Deutsche Bank analyst downgraded Monday shares of General Motors Corp. to sell from hold, saying the automaker was on the path to bankruptcy before the end of the year unless the U.S. government agrees to a bailout.
In a note to investors, Deutsche Bank said Detroit-based GM's cash position will likely fall below $5 billion by late December, leaving its operations underfunded for payables due in early January. To keep operations going and assist in restructuring, the U.S. would have to provide as much as $25 billion and at least $10 billion in loans to keep the company (GM:General Motors Corporation) afloat through next year.
"Even if GM succeeds in averting a bankruptcy, we believe that the company's future path is likely to be bankruptcy-like," analyst Rod Lache said in a research note, essentially calling the company's shares worthless with a price target of $0, reduced from $4.
Shares of GM, part of the Dow Jones Industrial Average, dropped nearly 24% to $3.33 in midday trading after falling as low as $3.02 earlier in the session. The stock has been trading at its lowest point on record after record-high gasoline prices pinched sales of its large sport-utility vehicles, followed by the recent credit crisis and general economic malaise across the country.
the rest is here
http://www.marketwatch.com/news/stor...D&siteid=yhoof
Not looking good for us
NEW YORK (MarketWatch) -- A Deutsche Bank analyst downgraded Monday shares of General Motors Corp. to sell from hold, saying the automaker was on the path to bankruptcy before the end of the year unless the U.S. government agrees to a bailout.
In a note to investors, Deutsche Bank said Detroit-based GM's cash position will likely fall below $5 billion by late December, leaving its operations underfunded for payables due in early January. To keep operations going and assist in restructuring, the U.S. would have to provide as much as $25 billion and at least $10 billion in loans to keep the company (GM:General Motors Corporation) afloat through next year.
"Even if GM succeeds in averting a bankruptcy, we believe that the company's future path is likely to be bankruptcy-like," analyst Rod Lache said in a research note, essentially calling the company's shares worthless with a price target of $0, reduced from $4.
Shares of GM, part of the Dow Jones Industrial Average, dropped nearly 24% to $3.33 in midday trading after falling as low as $3.02 earlier in the session. The stock has been trading at its lowest point on record after record-high gasoline prices pinched sales of its large sport-utility vehicles, followed by the recent credit crisis and general economic malaise across the country.
the rest is here
http://www.marketwatch.com/news/stor...D&siteid=yhoof
Not looking good for us
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