BANKRUPT BANKER
Detroit automakers are in line behind governors who are in line behind banks, seeking emergency aid from Washington. Nearly $8 trillion in federal commitments is already out the door, and half of the $700 billion October rescue package has been spent. The economic downturn is accelerating. And nobody is really in charge.
Three of the most storied companies in U.S. economic history - General Motors, Chrysler and Ford - face possible bankruptcy. With GM threatening to topple by the end of this month, House Speaker Nancy Pelosi reached a compromise with the Bush administration on a temporary loan for less than half the $34 billion the automakers wanted. It is aimed at keeping GM and Chrysler alive until the Obama administration takes office. Ford said it could survive without loans so long as the other car makers avoid bankruptcies that would disrupt shared supply chains.Horrendous job losses in November - 533,000, not including 422,000 who left the workforce - exceeded the gloomiest forecasts. Economists warn that failures in Detroit will intensify the contraction, but at the same time say $34 billion in emergency loans may not save the automakers anyway.Nobody in Washington wants the automakers to fail, fearing the fallout on the rest of the economy, which is now in the kind of decline that no one under 30 has ever experienced."The economy is now locked in a vicious downward spiral," wrote Nigel Gault, chief economist of economic forecaster IHS Global Insight. The problems have spread globally, greatly magnifying the danger of a long and painful downturn.
