Driven down
Peter Hoskin 10:12am
Does the failure of the bailout package for the US car industry mean we're going see another of those apocalyptic days in the markets? Things certainly aren't looking great so far. The Hang Seng index closed down 5.48 percent; the Nikkei was down 5.56 percent; and - at time of writing - our very own FTSE 100 index is down 2.63 percent. So far as the FTSE's concerned, the big losers are the banks. Lloyds TSB down 18.86 percent; HBOS down 17.81 percent; RBS Group down 13.01 percent; the list goes on. It will be interesting to see what the Dow Jones looks like when it opens later today. We'll keep you up to speed with any major developments.
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Ian C
December 12th, 2008 10:44am Report this commentThis is good news from the medium and long-term point of view, only bad for shareholders of the big 3 and a warning shot across the bows of worldwide car makers. Of course job losses are damaging but the Unions are to blame as they should have done the re-structuring while the sun was shining.
See Jo Stiglitz in today's FT. He's spot on. And the differences between the Republican and Democrat Senators will continue to matter past 19th January.
Dean
December 12th, 2008 10:56am Report this commentSo now we know, the Republicans are willing to drive the US economy into a deep slump for the sake of their beloved free market principles, and the US unions would prefer their members to lose their jobs than negotiate a pay cut. What in God's name has happened to America?
Maggie
December 12th, 2008 11:32am Report this commentWhy would anyone want to manufacture cars that nobody can afford to buy?
Susan Hill
December 12th, 2008 11:37am Report this commentThing is, people have realised their present car works perfectly well.
oldtimer
December 12th, 2008 12:03pm Report this commentI attended a Fidelity investment trust agm yesterday. In their presentation they pointed out that, as of yesterday, the current bear market in the USA was 50% below its peak. This compares with minus 86% in the 1929-32 depression and minus 55% in 1935-36. These were the only two bear markets with a bigger decline since 1900. Today it will get worse.
It is self evident that the US car industry has failed to adjust enough over the years to the competition from the rest of the world - partly because of its legacy cost structure. One way or another this cost structure will have to change (ie reduce) or disappear. altogether.
Austin Barry
December 12th, 2008 12:08pm Report this commentThe reason for the failure of the US car industry is epitomised by that Quasimodo of style, design, elegance and flair - the Chrysler 300, surely the most unaesthetic thing seen on the road since Jeremy Clarkson gave up cycling.
TomTom
December 12th, 2008 12:30pm Report this commentUS carmakers do not sell cars - they sell finance and that is their problem.
For decades GMAC has been the bank that offloads metal onto borrowers lured by 0% finance deals. It even expanded into dodgy mortgages and sold them to Bradford & Bingley by the truckload.
The simple fact is that Detroit ceased to manufacture cars and simply turned into a giant credit machine which is now faced with defaulters bankrupoting its financing model
TomTom
December 12th, 2008 12:30pm Report this commentUS carmakers do not sell cars - they sell finance and that is their problem.
For decades GMAC has been the bank that offloads metal onto borrowers lured by 0% finance deals. It even expanded into dodgy mortgages and sold them to Bradford & Bingley by the truckload.
The simple fact is that Detroit ceased to manufacture cars and simply turned into a giant credit machine which is now faced with defaulters bankrupoting its financing model
TGF UKIP
December 12th, 2008 7:07pm Report this commentAustin Barry, it just goes to show it lies in the eye of the beholder. For while I own a Subaru estate and wouldn't swap it for the world I do admire the looks of the Chrysler C300 both estate and saloon. Mind you, I will admit my grasp of aesthetics is somewhat tenuous.
On the proposed bailout, though, well done the Senate Republicans. $78 per hour Big Three labour costs in Detroit against $52 for the Jap and European car makers in the southern states says it all.
The additional point made by Fred Barnes on the Beltway Boys last week was the Democrats are also trying to further lumber the Big Three by requiring them to make more smaller, greener cars for which there is little US consumer appetite. Better build quality yes, feeble, cramped, little chuggers, no way babe!
Tankus
December 12th, 2008 10:07pm Report this commentshades of arthur scargill , but on a global scale .....
The companies cannot continue in the form that they are (in a free market) regardless of how much the unions want to hang on to past glory and nostalgia ! ....
It needs to be thatcher'd
The US better have the national guard on standby if they are going to bite the bullet.
It may also go towards resolving the middle east dependence in the long term ...The US has the technology, it just needs the will and the realization.
then the middle east can go back to selling dates and camels ... partway resolve the terrorism problem too.
lot of pain, hurt and deaths beforehand ! it will be that bad ..!
obama is no thatcher though
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