“Is $25 billion enough? Is this the end or just the beginning? A lot of people think you already failed, that your model has failed.”
The market doesn’t believe GM, Ford and Chrysler will get a bailout without being forced into bankruptcy first.
Both Republicans and Democrats were balking at bailout out these money hemorrhaging behemoths.
Bluntly put, there is no saving a company that has lost money for 10 years straight… thru good economic times and bad. This monster NEEDS to die.
Company Bond Risk Rises Near Record on GM, Ford Default Concern: “The cost of protecting corporate bonds from default rose to near a record on concern U.S. automakers won't get a bailout in time to prevent them failing.
Credit-default swaps on the Markit iTraxx Europe index of 125 companies with investment-grade ratings climbed 9 basis points to 173, according to JPMorgan Chase & Co. prices at 11:41 a.m. in London. That matches the previous record closing price on Oct. 24. Contracts linked to auto suppliers Valeo SA, GKN Plc and Continental AG rose to all-time highs.
General Motors Corp.,Ford Motor Co. and Chrysler LLC will later plead for government aid for a second day before a House Financial Services Committee. They are seeking $25 billion in unconditional loans to prevent what GM's Chief Executive Rick Wagoner said yesterday would be a “catastrophic collapse” for the economy.
“These guys are begging for money,” said Andrea Cicione, a credit analyst at BNP Paribas SA in London. “Given the amount of debt outstanding and the amount of credit-default swaps, it could be a problem.”
The bankruptcy threat is driving up the cost of default protection around the world, with credit-default swaps on Valeo, France's second-largest auto-parts maker, climbing 43 basis points to 523, according to CMA Datavision prices. Redditch, England-based GKN, which generates about two-thirds of its revenue from automakers including GM and Ford, jumped 39 basis points to 635. Continental, Europe's second-largest car-parts maker based in Hannover, Germany, increased 60 to 765.”
Carmaker Failure Would Be Catastrophe, Wagoner Says (Update4): “The U.S. economy would suffer a “catastrophic collapse” if domestic carmakers fail, General Motors Corp. Chief Executive Rick Wagoner said, as the nation's auto industry renewed appeals to Congress for federal aid.
Three million jobs would be lost within the first year, personal income would drop by $150 billion and government tax losses would total $156 billion over three years, Wagoner told a Senate panel.
“Such a level of economic devastation would far exceed the government support that our industry needs,” he said. “This is about much more than just Detroit. It's about saving the U.S. economy from a catastrophic collapse.”
The Big Three chief executives, Wagoner, Alan Mulally of Ford Motor Co. and Robert Nardelli of Chrysler LLC, testified today at a hearing called by Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat. The companies are seeking $25 billion in loans to keep them operating.
Congressional Democrats propose tapping the recently enacted $700 billion financial-rescue package for the aid. President George W. Bush and Senate Republicans said they oppose that approach and instead prefer using $25 billion that was earlier approved by Congress to retool auto plants.”
