Washington
09 December 2008
Representatives of the White House and the Congress say they are making progress in negotiations on rescuing the embattled U.S. auto industry. Meanwhile, stock prices in New York have ended a two-day surge.
U.S. Senate Majority Leader Harry Reid says he hopes a $15-billion agreement to keep General Motors, Ford and Chrysler running for several more months will be ready for a vote by Wednesday.
One proposal includes a government-appointed overseer for the restructuring of the "Big Three." House of Representatives Speaker Nancy Pelosi, interviewed by NBC television, says the so-called "car czar" would ensure that the U.S. auto industry fully reforms itself.
"...not oversee, necessarily, [but] even more proactively, supervise this restructuring," said Nancy Pelosi. "I think it is very important, because left to their own devices, it is clear that the auto industry has not taken the initiative."
General Motors Vice Chairman Bob Lutz says if the bailout is approved, government oversight is inevitable.
"They are not going to lend us the money and just say 'Do the best you can with it and tell us when you need more.' Obviously, there is going to be some kind of oversight, and I think that is a reasonable thing to expect," said Bob Lutz.
The president of the United Auto Workers, Ron Gettelfinger, says American automakers need government support to compete with other countries' government-subsidized car industries.
"This problem is not of the auto industry's making," said Ron Gettelfinger. "This problem is worldwide. Other industrial countries around the world are giving consideration to their [auto] industry because they recognize the importance of it."
Public opinion polls show that a majority of Americans oppose a government bailout of the auto industry. But the Bush administration and President-elect Barack Obama have said the United States cannot afford to lose the auto industry and its millions of related jobs.
A two-day rally on Wall Street ended Tuesday. The Dow Jones Industrial Average lost almost 243 points, or 2.7 percent, finishing the day at 8,691. The S&P 500 lost 21 points, or 2.3 percent, to close at 889. And the NASDAQ was down 24 points, or 1.5 percent, at 1,547.
Major European stock markets closed higher. London's Financial Times 100 index gained almost 89 points, or two percent. In Paris the CAC-40 rose more than 50 points, or 1.6 percent. And the DAX in Frankfurt was up more than 63 points, or 1.3 percent. A new survey on German investor confidence (by the ZEW Institute) increased unexpectedly in December.
Asian markets were mixed on Tuesday. Tokyo's Nikkei index was up 0.8 percent, but the Hang Seng in Hong Kong was down 1.9 percent.
A World Bank report says world trade will shrink by two percent next year, the first contraction since 1982. The new report predicts exports from developing countries will decrease, and the prices of commodities including oil and food will drop.
Oil prices are down again. On the New York Mercantile Exchange, crude oil for January delivery fell by $1.65, or 3.8 percent, to $42.06.
The Japanese electronics company Sony plans to cut 8,000 jobs, or four percent of its workforce. Sony says it will complete the layoffs by April, 2010, to cut costs by more than $1 billion a year.
Economics professor Donald Atwater, at Pepperdine University in California, expects more layoffs from big companies in the coming months.
"I think we are, as part of this whole global contraction, going to see a response from companies that will be a cautious one - a first response, and then a second and perhaps a third - over the next six to nine months," said Donald Atwater.
One big company has some good news. The world's largest airline, Delta, says it expects to turn a profit of about $7.5 billion in 2009. The Atlanta-based Delta is also getting $1 billion after a credit card agreement it reached with American Express.
Mining officials in the Democratic Republic of Congo say the global economic downturn has caused 200,000 miners to lose their jobs, and the figure could reach 300,000 by the end of the year. The officials blame a collapse of cobalt and copper prices on world markets.