US automakers warn of bankruptcy if no bailout; Filipino rebels attack government convoy; Rice wants urgent action after Mumbai bombings; riots in Zimbabwe; and more
Top of the Agenda: Automakers Push Bailout
The "Big Three" U.S. automakers, Ford, General Motors, and Chrysler, increased the urgency of their calls for a government bailout, with both GM and Chrysler telling Congress that they could face bankruptcy by the end of the month if they don't get billions of dollars in emergency loans. In a new disclosure, GM said it needs at least $4 billion by the end of the year to stay afloat, and requested $18 billion total; Chrysler, meanwhile, requested $7 billion in loans from Congress and another $6 billion from the Department of Energy to promote fuel efficient vehicles. Ford is seeking $9 billion in emergency funds to be made available, though it says it may not need to tap that money. In total, the three automakers are pushing for $34 billion (FT).
As part of their push for bailout money, GM executives told Congress they would be willing to drastically cut operations (Detroit Free Press) to ensure long-term survival. The firm said it would cut jobs and executive pay, and would reduce its number of factories and brands. A columnist in the Washington Post says debate over the firms has reached a stalemate, and that neither the Big Three nor Congress is likely to emerge a winner.
The fallout could also have global implications. CFR's Matthew Slaughter, writing recently in the Wall Street Journal, argued that a government bailout of the U.S. auto industry could have deleterious economic effects beyond the sum of the bailout itself. Slaughter says a bailout would hurt:
- foreign direct investment coming into the United States;
- U.S.-headquartered firms that do business abroad and thus depend on their ability to access foreign customers; and
- the U.S. dollar, which Slaughter says could fall if investors think transparent competition in U.S. markets is crumbling.
Pacific Rim: Philippine Attacks
Communist rebels in the Philippines attacked a government convoy (BBC), killing five troops as talks between the government and rebels faltered in Oslo.
South Korea-North Korea: South Korea's foreign minister called for patience (Yonhap) in dealing with North Korea, following a move by Pyongyang to cut off rail traffic between the countries. Addressing members of the U.S. business community, the official said he felt the situation was tense and felt the need not to provoke North Korea at the moment.