A Treasury Department official says no decisions have been made on what type of support to provide Detroit automakers. A Treasury spokeswoman says department officials are continuing to assess the information they have received from the auto companies. She says the White House is being kept informed through regular briefings, but did not estimate how long it may take the administration to reach a decision.
President George W. Bush is promising a bailout plan for automakers "will not be a long process." The Big Three and the White House are hashing out conditions to be attached to the money. Still, White House officials say they don't anticipate announcing funding for the companies today. During his trip to Afghanistan, Bush reiterated that the use of money from the $700 billion financial bailout fund to provide loans to the carmakers is still on the table. Bush says the administration is not quite ready to announce a plan yet, but noted that it won't take long because of how fragile the industry is right now. Discussions involve the amount of funding and any potential conditions for GM and Chrysler. Ford says it can survive 2009 but asked Congress for a line of credit in case the financial markets deteriorate further.
U.S. Senator Carl Levin says he expects President Bush's solution to help the Detroit automakers will follow the previous deal Bush reached with Congressional leaders. The deal approved by the House provided loans for Chrysler and General Motors to help them survive until March 31st, but it was blocked by some Republican Senators. Levin says he expects GM to get $8 billion and Chrysler $7 billion under the Bush administration's plan. The Michigan Democrat says the Treasury Secretary likely would become the "car czar" and oversee restructuring the automakers.
There's no celebrating the troubles of U.S. carmakers among their Japanese competitors. In fact, Japan's automakers say that what's bad news for Americans is bad news for them as well. One major problem stems from the fact that the manufacturers share some of the same suppliers in the United States. If Detroit automakers were to collapse, suppliers could follow, setting off a chain reaction that could spell doom for Japanese production. A Toyota spokesman says the damage would be "tremendous" if that happened. And plunging sales problems are hitting all the automakers. Japan's top automaker has already slashed its profit forecast for the fiscal year through March.
CDX Gas has filed for voluntary Chapter 11 bankruptcy protection. CDX will continue to operate throughout the bankruptcy process as it develops a reorganization plan to restructure debt and resolve liquidity issues. CDX develops and produces onshore North American unconventional gas resources in coal, shale and tight sandstone formations.
A new government report says the federal deficit for 2008 would top $1 trillion if the government had used the same accounting methods as private companies. And that doesn't even account for the huge costs of the Wall Street bailout, which didn't really start until the new budget year began on October 1st. The new report also warns that the government is promising $49 trillion more than it can deliver on social security, Medicare and other benefit programs over the next 75 years unless the system is shored up. The report found that under the accrual method of accounting used by businesses, which requires up-front payment of long-term costs like veterans benefits, the deficit for 2006 would have totaled $1 trillion not the $455 billion reported in October using cash accounting.
The Federal Reserve is holding a two-day meeting at which it is widely expected to reduce a key interest rate — perhaps to an all-time low — to prevent the sinking economy from getting worse. Fighting what many have labeled the worst financial downturn since the 1930s, the Fed already has pushed down its main lever for influencing the economy — the federal funds rate — to one per cent, a level seen only once before in the last half-century. Some economists predict the Fed will cut its rate in half—to just 0.5 per cent — when the session wraps up tomorrow. Others think the Fed could take even more forceful action — lowering the rate by a three-quarter percentage point or more. If the larger cut occurs, it would be the lowest rate ever, tracking rates going back to 1954.
Interest rates on six-month treasury bills have fallen to the lowest level on record at the weekly treasury auction. The government said that the Monday auction saw rates on six-month bills drop to 0.3 per cent, that was down from a rate of 0.27 per cent last week. Heavy demand for treasury securities by nervous investors has pushed rates to very low levels. While rates on three-month bills edged up slightly at Monday's auction, they still remained close to zero. The rate for a three-month bill rose to 0.050 per cent, up from 0.005 per cent last week.
OPEC ministers are gathering in Algeria to discuss a big production cut, but attention is also focused on the question of what Russia will do. Unprecedented price declines have severely strained the economies of oil producing nations, including Russia's. Previous OPEC cuts have had little effect and the group is lobbying Russia to help take more crude off the market. Russia has robustly defended its energy independence, in part because it is much more difficult for it to make voluntary production cuts. Russia's oil producers operate in harsh climactic conditions that make it difficult and costly to shut down production temporarily. And unlike OPEC member nations, Russia's oil industry is a mixture of state-owned and private companies — many with shareholders that do not answer to the Kremlin.
The National Association of Home Builders says its housing market index remained unchanged at a record low this month as the worsening U.S. economy, rising unemployment and foreclosures continued to dampen builders' confidence. The Washington-based trade association said the index held at nine in December for the second month in a row. Index readings lower than 50 indicate negative sentiment about the market. The report reflects a survey of 426 residential developers nationwide, tracking builders' perceptions of market conditions. Builders' expectations for sales over the next six months declined two points to 16.
Industrial output fell slightly less than expected in November as manufacturers continued to suffer from weakness in autos and many other areas. The Federal Reserve says industrial activity dropped by 0.6 per cent in November. Economists expected a decline of 0.8 per cent. The manufacturing sector is suffering like the rest of the economy through the deepening recession, which has cut consumer demand for many products. Tomorrow, reports on building permits and consumer prices are due. Then on Thursday, the Conference Board releases the index of leading indicators.
A fresh round of bad economic news is adding to concern that the recession will be long and severe. As Moody's economy.com chief economist Mark Zandi sums up: "Eerything is going wrong in the fourth quarter."' Last week ended with a new batch of data showing retail sales dropped by 1.8 per cent last month. That's the fifth monthly decline in a row and was led by the worst sales month for cars in more than a quarter century. The commerce department Friday also reported that all stages of production suffered a record drop in October, with more layoffs and production cuts expected in the months ahead. And the Labor Department said November wholesale prices dropped by 2.2 per cent--the fourth consecutive monthly decline. The expanding problems have put a lid on inflation but at the same time, are raising fears of deflation, which could drag down incomes, shrink corporate profits and further clobber the value of homes.
Signs that shoppers are continuing their frugal ways this holiday season, despite a decent Black Friday spending surge. Spendingpulse, a data service provided by Mastercard advisors, says from the day after Thanksgiving through December 6th, luxury sales dropped 34.5 per cent compared to the same period last year. Overall apparel sales fell 22.9 per cent. Electronic sales fell 22.3 per cent. Michael McNamara, vice president at Spendingpulse, says consumers are resisting big-ticket items priced at $1,000 or more. And this past weekend, shoppers were enjoying steep discounts on clothes, toys and electronics over the weekend but they're still making fewer purchases. Based on early reports from analysts and malls, sales results were generally mixed to moderately down for the second-to-last weekend of the holiday shopping season that can make or break many retailers.
The busy holiday mailing season gets especially busy this week. The Postal Service believes that Monday will turn out to be the busiest mailing day of the year, with about 960 million cards and letters being processed. That's nearly twice the average daily volume. And, they all have to get delivered somewhere. Officials think Wednesday of this week will be the busiest delivery day of the year.
Kuwaiti oil and gas producer Aref Energy says it has found close to five trillion cubic feet of recoverable natural gas in south-central Texas. The company said in a statement that a survey of its joint venture operation in Dewitt County found about 25 per cent of the roughly 19 trillion cubic feet of gas in the concession was available for production. That's about 4.75 trillion cubic feet. The statement did not name the company's partners, who hold the remaining 50 per cent stake. But Aref said Houston-based project manager Halliburton was "taking preliminary steps to commence gas production operations." Aref set up the Dewitt Tract Company in 2007 as a subsidiary to oversee operations in the county.
Huntsman will end a $6.5 billion deal to acquire Hexion Specialty Chemicals. That deal unraveled because of the global credit crisis and sparked a string of lawsuits. The Woodlands-based Huntsman said last night that hedge fund Apollo Global Management and some of its affiliates will pay $1 billion to settle claims against Hexion by huntsman. Apollo-owned Hexion agreed to buy Huntsman in July 2007 for $6.5 billion. But then Hexion tried to back out, citing the specialty chemicals maker's deteriorating finances. A Delaware judge ordered Hexion to keep the buyout on track, essentially dismissing pleas the combined company would not be solvent. But Credit Suisse and Deutsche Bank, which had been slated to fund the deal, backed away in October and a New York judge declined to extend a financing agreement. After Deutsche Bank and Credit Suisse declined to fund the sale, it caused Huntsman to file suit against them earlier this year in Montgomery County, Texas. Trial is expected to start February 9th in Conroe.
Charles Schwab will be cutting at least 100 jobs in an effort to improve operating efficiency. The brokerage firm and investment manager also plans to review further actions to improve efficiencies, which could include further job cuts. Schwab had about 13,500 full-time equivalent employees as of September 30th. The company says it hopes to trim expenses by seven per cent to eight per cent annually. Expenses--excluding interest--came to $752 million during the third quarter and totaled $2.35 billion through the first nine months of the year.
American Airlines and the union that represents its baggage handlers say they'll seek federal mediation after failing to reach agreement on a new contract. Neither side is saying specifically why the talks broke down. But the union has been seeking to restore the wages and benefits its members had before making concessions in 2003 when American narrowly avoided bankruptcy. Fort Worth-based American and the Transport Workers Union had set a deadline of midnight Saturday to see if they could make a deal on their own. American spokeswoman Tami McLallen said the airline and the union both signed a request for mediation beforehand, which the union was sending to the National Mediation Board on Monday. American's union contracts became amendable on May 1st. Under federal labor law, airline contracts don't expire.
Indiana Attorney General Steve Carter has filed suit against a Texas company that sent unwanted faxes advertising stocks and investment opportunities. Carter says Indiana consumers waste time and money sorting through unsolicited junk faxes. The suit filed in Hamilton County names Texas-based Envarion. Carter says this is the largest violation since the state's Do Not Fax law began in 2007, with 1,842 complaints. The company could be fined up to $1,500 per violation, for a total of more than $2.7 million. No telephone listing for Envarion could be found in Texas telephone directories.
The M-I SWACOProduction Technology group won the International Platinum Award at the Energy Institute Awards in London for their extraction technology for trapped in at the attic space of the sub-sea storage cells in the North Sea. The technology was utilized in the Dunlin oilfield 150 miles northeast of Lerwick, Shetland and 311 miles northeast of Aberdeen, Scotland.