President Bush on Thursday said he has not yet decided what government
assistance to provide the distressed U.S. automobile industry. The president says he worries about the
economic consequences that an automaker bankruptcy could cause.
Bush said he is concerned about how an uncontrolled bankruptcy could
affect the psychology of financial markets. He said he is also worried
about putting good money after bad.
The administration is near a
decision on what kind of government assistance to provided U.S. car
companies. They have asked for $14 billion in loans to assure their
president is not going to allow a disorderly collapse of the
companies," said White House Press Secretary Dana Perino. "That is not an option. Some people have assumed
that is one of things we would decide. That is not going to be the
In Detroit, the U.S. automotive capital, the mood is
somber. Chrysler - the weakest of the "Big Three" carmakers - is
closing all of its U.S. assembly plants for a month, beginning next
week. General Motors and Ford are also closing some plants beyond the
usual two-week end of year production break. Unionized workers at the
plants will continue to receive at least 85 percent of their pay, as
stipulated in their contracts.
The credit squeeze and
recession have caused U.S. car sales to plummet - down 37 percent in
November, 25 percent for the year overall.
Jack Nerad is a marketing analyst for Kelley Blue Book, which keeps close watch on the auto industry.
think it is devastating," Nerad spoke to Bloomberg Television. "It is hard to overestimate the
importance of this industry and the importance of what is going on
right now. It is as if sales absolutely hit a wall in October.
They're not recovering. And one of the major industrial corporations
of the world-of all time [General Motors] could be on the brink."
is not just the U.S.-based auto industry that is suffering. Sales of
British-made cars in the United Kingdom were down 33 percent in
November. And Fiat in Italy is closing all of its production plants
for one month because of lagging car sales in Europe.