The news from late last night is that the auto bailout is dead--and Congress is scheduled to cease legislative work until January:
Republicans, breaking sharply with President George W. Bush as his term draws to a close, refused to back federal aid for Detroit's beleaguered Big Three without a guarantee that the United Auto Workers would agree by the end of next year to wage cuts to bring their pay into line with U.S. plants of Japanese carmakers. The UAW refused to do so before its current contract with the automakers expires in 2011.
The breakdown left the fate of the auto industry -- and the 3 million jobs it touches -- in limbo at a time of growing economic turmoil. General Motors Corp. and Chrysler LLC have said they could be weeks from collapse. Ford Motor Co. says it does not need federal help now, but its survival is far from certain.Democratic leaders called on Bush to immediately tap the $700 billion Wall Street bailout fund for emergency aid to the auto industry.
Majority Leader Harry Reid, D-Nev., called the bill's collapse "a loss for the country," adding: "I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight."
And on that last note, world markets are already plunging in reaction to the news:
The FTSE 100 of leading British shares was down 127.87 points, or 2.9 percent, at 4,260.82, while Germany's DAX fell 185.22 points, or 3.9 percent, to 4,581.98. The CAC-40 in France fell 130.48 points, or 4.0 percent, to 3,175.65.
Earlier, Asian markets tumbled, with Japan's Nikkei 225 stock average down 484.68 points, or 5.6 percent, to 8,235.87. Hong Kong's Hang Seng index slid 5.5 percent to 14,758.39.U.S. stock index futures pointed to a big sell-off later on Wall Street. The Dow Jones industrial average was projected to drop 259 points, or 3.0 percent, to 8,311, while the broader Standard & Poor's 500 index was forecast to fall 32.90 points, or 3.8 percent, to 841.60.
Investors were rattled after the bailout for Detroit's struggling Big Three automakers failed in the U.S. Senate. The collapse came after bipartisan talks on the auto rescue broke down over Republican demands that the United Auto Workers union agree to steep wage cuts by 2009 to bring their pay into line with U.S. plants of Japanese carmakers.
The bankruptcy of any of the big American automakers would deal another blow to the world's largest economy, already in recession.
Whether Congress will decide to keep working beyond the usual end of legislative business, or whether the present stalemate in the Senate will remain until January, isn't known for certain, yet; nor is it clear whether President Bush will heed the call to free up some of the $700 billion from the already-passed bailout plan and direct it to the auto industry. What is pretty certain is that for the American markets, today is likely to be a pretty bumpy ride.
Add to Del.icio.us
Add to Technorati
Add to Digg
Add to Newsvine
Add to Facebook
Add to StumbleUpon
Subscribe
Well, I hate to keep pointing this kind of thing out, but since someone on a recent thread mockingly appointed me "hall monitor," I guess I may as well live up to my reputation. It's not really within the parameters of the Beliefnet code of conduct, to which we all implicitly subscribe by signing on here, to post personal attacks on other commenters. "Jerk" and "hypocrite" are insults, not any kind of rational argument. And they are directed against a person, not a position. Try again, Leicester Square, and this time try to say something reasonable. You can be sarcastic and clever, or even bitter and angry, but you can't just call someone names. Please apply the Kantian Imperative and realize how fast your behavior would get old if everyone did it.
Sig, I'm glad you did point it out; I was away from the blog for a bit, and missed the deterioration of tone.
Leicester Square, personal insults are not the order of the day, here. Attack positions, fine; attack people, not fine.
Let's all watch the civility level. I don't like being heavy-handed in the comment boxes as a guest host, but I will take action if it becomes necessary.
Interesting, isn't it? Congress passes all sorts of laws forcing banks to lend to people who can't afford it in the name of "equal opportunity".
All that bad paper starts bringing down the house of cards that is fractional lending. And no one thinks to point out the role the government had in horking things up; it's easier to blame it on those greedy bankers...as if all of us weren't living it up on the glut of easy credit...
Now we have a situation where these automakers have been parasitized by unions to the point where they have been dying a slow death for years. Despite the fact that the host is about to die, the parasite refuses to loosen its grip.
And it's the fault of the Senate Republicans???
Isn't that sort of like shooting the messenger???
I work for a small high-end financial services firm in the Hub-of-the Universe (aka Boston). I sat down and figured out how I much I make in terms of salary, company provided health care and 401(k) contribution.
It comes to $31.60/hr., a total of $65,728/year.
I guess that is quite a bit less than what the Big 3 auto workers are getting!
Yet, I am thankful to have a job (our CEO has said "no layoffs in 2009, but no raises either! Um, and bonuses (boni?) are "iffy".
My fellow workers and I are thankful that we have good, well-paying jobs, going forward into 2009.
Re: Congress passes all sorts of laws forcing banks to lend to people who can't afford it in the name of "equal opportunity".
This has been debunked so many times I'm surprised anyone is still saying it. The CRA was passed in the late 70s, odd that it took 30 years for it to be a problem. Also, CRA-conforming loans have lower default rates than mortgages in general.
Note on auto-workers: That $73/hr figure was bogus of course. A more exact analysis puts it at $55. But that's just an average, and averages can hide a lot. (The average salary between you and Bill Gates is astronomical, but that doesn't mean you can afford a mansion and a private jet). A handful of high-skilled (e.g., electricians) and high-seniority auto workers do make big bucks, but the grunt on the line makes no wher near that.
Post a Comment
By submitting these comments, I agree to the beliefnet.com terms of service, rules of conduct and privacy policy (the "agreements"). I understand and agree that any content I post is licensed to beliefnet.com and may be used by beliefnet.com in accordance with the agreements.