Those of you who insisted that the first bailout was necessary will now see just where this insanity is taking us:
http://www.abc.net.au/news/stories/2008/10/29/2404399.htm
General Motors stalls, asks for $15b bailout
Posted Wed Oct 29, 2008 11:49am AEDT
GM has lost nearly $30 billion this year. (AFP)
Having already bailed out America's banks the US Government is now considering an emergency rescue package for the country's biggest carmaker General Motors (GM).
GM has asked for $15 billion in assistance as it careers towards the corporate wrecking yard.
It is feared the collapse of any of the big three US carmakers could have catastrophic economic consequences.
GM has lost nearly $30 billion this year and its share price is down 80 per cent from where it was in January.
The credit crisis has accelerated what was already a steep plunge in car sales.
GM wants to merge with that other ailing car maker Chrysler to ensure its survival, but more immediately it needs a big injection of cash.
Chief executive Rick Wagoner has gone to Washington pleading for a $15 billion rescue package, arguing that if the banks can get a leg up, why can't the country's biggest car company?
White House press secretary Dana Perino says the Bush administration will consider the request.
"No doubt that the auto makers are big important companies, important to a lot of families, and important to a lot of regions in this country," Ms Perino said.
"But they also are dealing with some decisions that they've made in the past, and we are in a global environment and they're competing globally."
'Millions' of jobs at risk
David Cole, chairman of the Michigan-based Centre for Automotive Research (CAR), says the Government must do everything it can to keep the big three car companies in business.
"What we do know it that a potential failure of a GM or a Ford could cause a cataclysmic problem overall in the economy," Mr Cole said.
"There's a very tight fabric with manufacturers and suppliers, and we know the suppliers are very very vulnerable right now.
"If this thing begins to get away from us it could cause easily a one- to two-million very quick job loss."
But Peter Schiff, the president of Euro Pacific Capital, says car companies should not be rewarded for bad business decisions.
"Why would we want to prop this company up? So they can go on losing billions more? Why not just let them fail?" Mr Schiff said.
"We need an automobile industry in this country and I'd like to have one but we don't need GM and we don't need Ford and Chrysler, these guys have run the industry into the ground."
Heading for recession
The debate over the future of the US car industry comes as fresh evidence emerges the US economy is heading for recession.
New figures show national house prices have fallen 17 per cent and consumer confidence has tumbled to a record low as the global financial crisis bites.
Citigroup's chief economist Lewis Alexander says it points to a dismal few months ahead.
"Confidence has been shocked very severely right here, and I think that has near term consequences for spending that it's very hard for policy to arrest," said Mr Alexander.
The US Federal Reserve is doing its bit to provide some cheer through another interest rate cut. A decision on that is expected tomorrow.
Based on a report for AM by Michael Rowland