Washington
11 December 2008
Some Republicans in the U.S. Senate say they will block a plan to rescue the country's three major auto companies. Meanwhile, new claims for unemployment benefits reached their highest level in 26 years.
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| Sen. Richard Shelby, center, accompanied by, from left, Sen. Tom Coburn, Sen. Jon Ensign, Sen. David Vitter, and Sen. Jim DeMint, 10 Dec. 2008 |
Republican Senators like David Vitter of Louisiana say the $14 billion rescue package, which passed the House of Representatives on Wednesday, is not tough enough on the "Big Three" U.S. automakers.
"We need to see the commitment to bring down labor costs, to be competitive with folks like Toyota and Honda," he said. "We need to see the commitment to bring down what bondholders will get for their bonds, so that this infusion of taxpayer dollars is not just a bonanza for them. And we need to see a very concrete commitment to a new management structure at the companies."
Some Republicans say the car companies should declare bankruptcy.
U.S. President George Bush and President-elect Barack Obama are calling on the Senate to approve the bailout plan. White House spokeswoman Dana Perino says the collapse of even one of the automakers would be devastating.
"The economy is in such a weakened state right now that adding another possible loss of one million jobs is just something our economy cannot sustain at the moment," she said.
Mr. Obama also says the country cannot afford to let General Motors, Ford or Chrysler fail.
"I believe our government should provide short-term assistance to the auto industry, to avoid a collapse, while holding the companies accountable and protecting taxpayer interests," he said.
Meanwhile, some General Motors workers are anxiously waiting for word from the Senate.
"I think it would really hurt things around here real bad," said one worker. "Things are bad enough as it is."
"As of now, I will be laid off. For how long? Permanent," said another worker.
"I think certainly the government should stand behind us," one worker said.
Sweden's government on Thursday announced a $3.4 billion support package for its troubled auto industry. But the government in Stockholm said it will not buy Volvo from Ford or Saab from General Motors.
Layoffs throughout the U.S. economy have caused new claims for unemployment benefits to reach their highest level in 26 years. The Labor Department says first-time applications for jobless benefits totaled 573,000 in the week ending December 6 - far higher than the 525,000 claims Wall Street economists expected.
Stuart Hoffman, chief economist at PNC Financial Services Group, expects more bad news.
"It does not appear as though the end of the recession is anywhere in sight," he said. "I think we will see more layoffs, more people getting unemployment insurance."
Another government report says decreasing demand globally resulted in a two-percent drop in U.S. exports in October.
The U.S. central bank, the Federal Reserve, says American households reduced their debt levels by 0.8 percent from July to September. It is the first drop on records that go back more than 50 years.
The Federal Reserve says the net worth of American households fell by 4.7 percent in the third quarter of the year - to $56.5 trillion. Declining home values, stock market losses and a severe credit freeze are all said to be factors in the numbers.
Financial markets in Europe were mostly down on Thursday. In Frankfurt, the DAX closed down 0.8 percent, at 4,767. The CAC 40 in Paris was 0.4 percent lower, at 3,306. London's Financial Times 100 was up half a percent, at 4,389, largely because of a recovery in oil prices, which rose nearly 12 percent on Thursday.
Crude for January delivery surged more than $5, to $48.60 a barrel. The falling U.S. dollar was said to make commodities like oil more attractive.
Russian President Dimitri Medvedev suggested Thursday that Russia could coordinate its oil output with OPEC, as the cartel prepares for a major meeting next week.
In Asia, Tokyo's Nikkei index was 0.7 percent higher, at 8,721. Hong Kong's Hang Seng was up nearly a quarter of a percent, at 15,614.