Really So Serious meh?

[melvin]

Asian stocks tumble as US car industry fights for survival

HONG KONG - Concerns for the future of the US auto industry as well as fears over a global recession saw shares in Asia tumble on Wednesday.

As heads of the Big Three US car-makers appealed for a government handout in Washington, the outlook for world economies weighed on investors.

Tokyo lost 0.66 per cent, while Hong Kong slid 0.77 per cent as dealers were unable to find any recent positive news as the worst financial crisis in decades dragged on.

"A strong sense of caution lingers," said Motoki Ichikawa, investment information chief at SMBC Friend Securities in Tokyo.

"The market lacks a clear direction," he said, adding investors were watching for additional economic stimulus measures in the United States as well as a possible rescue for the Big Three: General Motors, Ford and Chrysler.

Sydney was 0.7 per cent off, Seoul lost almost two per cent, Taipei ended 0.49 per cent down and Singapore fell 1.59 per cent.

However, Shanghai soared 6.05 per cent on bargain-hunting a day after plummeting 6.31 per cent.

US Treasury Secretary Henry Paulson warned there was no immediate relief in sight for the American economy, but ruled out using a giant Wall Street bailout package to help automakers.

GM boss Rick Wagoner warned the US economy faces "catastrophic collapse" if the government does not step in, while Chrysler's chief said the firm could run out of cash without "immediate" help.

"Investors are increasingly wary about the situation because the likely aftermath would be significant if the (US) carmakers collapse," Yukio Takahashi, market analyst at Shinko Securities, told Dow Jones Newswires.

Japan's Nissan Motor chief executive Carlos Ghosn warned the company was likely to make "zero" profits in the second half of the current fiscal year.

Japan, Hong Kong and Germany are already in recession, while it is widely expected the United States and Britain will follow.

The financial crisis continued to pressure shipping firms and airlines. Neptune Orient Lines (NOL) said it would cut about 1,000 jobs, blaming an "unprecedented" industry downturn, and Air New Zealand announced 200 layoffs.

Hong Kong pumped 600 million US dollars into the forex market to defend the local currency's peg to the greenback. South Korea said its corporate bankruptcies hit a three-year high in October.

The Asian losses came despite modest gains overnight on Wall Street, which finished 1.83 per cent higher.

- AFP/ir

 

[melvin]

Automakers plead for funds to prevent "collapse" of US economy
Posted: 19 November 2008 1214 hrs

WASHINGTON: Automakers warned lawmakers Tuesday that the US economy faces a "catastrophic collapse" if the government does not come through with US$25 billion in loans needed to keep their businesses afloat.

But quick passage of the bailout seemed unlike amid opposition from the Bush administration and sceptical lawmakers who questioned whether General Motors, Ford and Chrysler would be able to pay back the loans or if the money would simply be used to "perpetuate failure."

After a heated four-hour long debate with members of the senate banking committee, executives from the Detroit Three were set to have another chance to press their case before a House of Representatives panel Wednesday.

Both GM and Chrysler have warned they could run out of money without immediate assistance from the government, and analysts have warned this would likely lead to a liquidation rather than restructuring under bankruptcy protection.

Ford is in somewhat better shape, but warned that a failure at its competitors would devastate the industry's interdependent supply base and potentially grind production to a halt at all US auto plants.

That would result in the loss of three million jobs and more than US$156 billion in government tax revenues in the first year, a recent study found.

"This is about much more than just Detroit," GM chairman and chief executive officer Rick Wagoner testified Tuesday.

"It's about saving the US economy from a catastrophic collapse."

Wagoner defended GM's effort to restructure its business said the company would do "everything we can to ensure the money is paid pack with interest."

"What exposes us to failure now is the global financial crisis, which has severely restricted credit availability, and reduced industry sales to the lowest per-capita level since World War II," Wagoner said.

"Our industry, which represents America's real economy, Main Street, needs a bridge to span the financial chasm that has opened before us."

Both the White House and US Treasury Secretary Henry Paulson voiced opposition to the bailout plan Tuesday, saying Congress should instead adapt an existing US$25-billion loan programme aimed at helping the auto industry develop more fuel efficient vehicles.

Paulson told lawmakers that the US$700 billion US financial bailout programme "is not a panacea for all our economic difficulties" and that "there are other ways" to prevent the failure of the domestic auto industry.

“I believe any solution must be a solution that leads to long-term viability, sustainability viability," Paulson said at a hearing of the House of Representatives Financial Services Committee.

White House press secretary Dana Perino criticised the plan developed by Democrats because it "does not require viability."

"That is going to be a test for us to be able to actually reach a compromise," Perino said, adding that the White House would continue to work with Congress and hoped to forge and agreement "this week."

But Democrats countered that the long-term competitiveness of the US auto industry would be undermined if the loans intended to help underwrite technological development were used instead to help the Detroit Three weather the current economic downturn.

House Speaker Nancy Pelosi said Tuesday that assistance would come "with strict conditions" and that automakers would be required to submit a plan by March showing that they are "able to be viable as industry."

Chrysler chairman Robert Nardelli insisted that the Detroit Three had already made substantial progress and were capable of being profitable and competitive once auto sales rebound from their current slump.

"We wouldn't be here today asking for this if we didn't have a high confidence level that we could weather the economic trough, continue to resize, make these gut-wrenching decisions to come out on the other side leaner, more agile, and for us, a higher quality, higher reliable product," he told the senate committee.

A credit crunch has made it impossible for the automakers to borrow money privately and US auto sales, which last month hit a 25-year low, are expected to sink to between 10 and 13 million vehicles next year from recent averages of 15 to 17 million.

Wagoner said GM will need US$10-12 billion to keep its operations running next year, while Nardelli and Ford chief executive officer Alan Mulally said they would each require about US$7-8 billion in loans.

None were willing to guarantee they would not be back for more help if the situation worsened.

- AFP/yb

 

[TheQuestion]

these 3 are one of the biggest empolyers in america...you say le if they collapse what will happen?

 

[diver-hloc]

these 3 are one of the biggest empolyers in america...you say le if they collapse what will happen?

And not forgetting all those 'Parts Supplier' and their employee..... and the other business than depends on the spending power of those layoff workers.....

The chain effect will pull everyone down..... :thumbsd:

 

[TheQuestion]

And not forgetting all those 'Parts Supplier' and their employee..... and the other business than depends on the spending power of those layoff workers.....

The chain effect will pull everyone down..... :thumbsd:

o yes thanks for adding that on.

 

[Big Kahuna]

these 3 are one of the biggest empolyers in america...you say le if they collapse what will happen?

American will fled the borders to Mexico or Canada for new jobs :think:

 

[TheQuestion]

And not forgetting all those 'Parts Supplier' and their employee..... and the other business than depends on the spending power of those layoff workers.....

The chain effect will pull everyone down..... :thumbsd:

also dun forget all the peripheral businesses that depend on the big 3 staying afloat; insurance, cleaning crew, diners etc...

 

[Nisa]

but when does the handout stop?
US cars are not exactly the top sellers around the world...

yeah it is THAT SERIOUSLY BAD!

 

[fotoudavid]

Let's all cry.....:cry:

 

[bartman]

But you need to consider the fact that some of the raw material used to produce the car comes from all over the world. The overseas suppliers will get hit. Raw material supplier will get hit. These are the ones that will kena first..
Next to be hit are those supporting that industry.

 

[TheQuestion]

but when does the handout stop?
US cars are not exactly the top sellers around the world...

yeah it is THAT SERIOUSLY BAD!

for the longest time the big 3's standing in the auto world dived because their management's been stupid and not listen to market demands like the japanese have...use gov can bail em out and bring in new management or something. but if they fail its not just bad for america...

 

[ianwurn]

Erm.... Japan's in recession too. Don't think it will be long before cuts etc are going to be announced in Japan as well....

 

[TheQuestion]

Erm.... Japan's in recession too. Don't think it will be long before cuts etc are going to be announced in Japan as well....

japan won't be in as much trouble as america they have lean manufacturing processes and other cost cutting measures they've mastered. besides they had a almost decades long recession in the 90s so they're prob prepared for this.

 

[zero o]

Dont forget the amounts GM Ford and Chrysler owes to the banks. Those would easily run into hundreds if not billions of dollars. Other than bank borrowings, these companies have also issued notes to raise funds. Once insolvent, banks and note holders will take a hit in their own books. This means banks will now have to go out and raise money again to meet capital adequacy ratios etc ... The banks will probably see their ratings downgraded again since loans to automakers are considered bad debts ... once downgraded, banks will find it more difficult and more expensive to find loans .. and the irony is that the 700 bil bailout package promised by the US govt is not even ready for disbursement ...

 

[pisduck]

for the longest time the big 3's standing in the auto world dived because their management's been stupid and not listen to market demands like the japanese have...use gov can bail em out and bring in new management or something. but if they fail its not just bad for america...

but good for japanese car makers right??? they will break into America car market. orders will go up

 

[TheQuestion]

but good for japanese car makers right??? they will break into America car market. orders will go up

they already control the bigger market share in america and globally...this will prob give them the opp to expand their share... might not stem the job losses that can come from the big 3 closing though...

 

[TheQuestion]

Dont forget the amounts GM Ford and Chrysler owes to the banks. Those would easily run into hundreds if not billions of dollars. Other than bank borrowings, these companies have also issued notes to raise funds. Once insolvent, banks and note holders will take a hit in their own books. This means banks will now have to go out and raise money again to meet capital adequacy ratios etc ... The banks will probably see their ratings downgraded again since loans to automakers are considered bad debts ... once downgraded, banks will find it more difficult and more expensive to find loans .. and the irony is that the 700 bil bailout package promised by the US govt is not even ready for disbursement ...

o yea good point as well. this is the thing that's kept them afloat since their big losses thanks to the japanese autos.

 

[night86mare]

gm has been getting owned for a while already, actually

volkswagen still the sexiest.. hurhur. :bsmilie:

 

[melvin]

OIC! At first i thought only car makers what, whats the big deal?... as American cars are not so popular..... err...maybe except Ford.

But the government is not helping or billing them out or maybe no respond yet!

I dun think the US$700billion budgeted for this kind of bail out? (not in the first place):sweat:

Maybe they need another US$700billion!:think:

 

[melvin]

gm has been getting owned for a while already, actually

volkswagen still the sexiest.. hurhur. :bsmilie:

VW