Detroit auto executives testified before Congress yesterday and media reports tend to cast the lawmakers' response as skeptical. Analysts and key senators, moreover, expressed doubts about the ultimate fate of a now $34 billion financial rescue package for Detroit's beleaguered auto industry. The Hill reports "prospects for a multi-billion-dollar auto industry bailout appeared to be slipping away." McClatchy describes the heads of the Big Three as "humble, contrite and specific," but adds "their bid still faces an uncertain future in Congress." The AP says members of both parties were "pressing the automakers to consider a pre-negotiated bankruptcy." The New York Times reports the execs confronted "years of pent-up anger, the harsh politics of an economic downturn and the sobering realization that even their strongest supporters might not be able to muster the votes to save them."
The Los Angeles Times notes Senate Majority Leader Harry Reid said "he didn't think there was enough support in Congress to compel the Bush administration to finance aid to US automakers from the $700-billion fund created to bolster financial institutions." The Washington Post notes the panel's top Republican, Sen. Richard C. Shelby, "said he continues to oppose a bailout and doubts the companies can reform themselves in any case." Under the headline "Detroit Bailout Hits A Bumpy Road," the Wall Street Journal says "there remained little momentum behind providing government relief." The Detroit Free Press and the Financial Times also report the story.
The Detroit News reports Michigan Gov. Jennifer Granholm "'implored' President Bush to 'step forward' and take emergency action to direct loan money to the automakers to help them survive in the short term." The Detroit Free Press reports Michigan "will lose 225,000 jobs 5% of its total payroll next year if two of the Detroit automakers file for bankruptcy." The Detroit News reports the Rev. Jesse Jackson said yesterday that "denying a federal bridge loan for the struggling Big Three would be devastating." The Detroit Free Press also reports Sen. Carl Levin said a failure by one of the Big Three "could have devastating effects not only on the economy but some of those same financial markets helped already" because of potential bond defaults.
The Big Three's home city newspapers offered a more optimistic spin of the day's events, with the Detroit Free Press' saying "key senators told Detroit automakers today they were willing to consider granting a portion of the $34 billion they were seeking." The Detroit News reports "some Capitol Hill aides said Congress may end up approving $10 billion in aid next week." And the Christian Science Monitor says this morning that there is now "a growing consensus among lawmakers once critical of the bailout that inaction or punting the decision to the Obama administration is no longer an option."
Meanwhile, the Christian Science Monitor reports about "the expansion of this 'other' auto industry one that's foreign-owned, nonunion, and based largely in the South," adding that it "stands in stark contrast to this week's dire reports from America's own Big Three."
Federal Reserve Chairman Ben Bernanke on Thursday called for additional government action to reduce the foreclosure rate, calling the housing market a "serious drag" on the economy. The AP reports, Bernanke "pleaded Thursday for more government action to relieve the foreclosure crisis and break a vicious cycle in which the housing meltdown is plunging the country deeper into recession."
The Financial Times notes Bernanke "offered proposals, including the government buying 'delinquent or at-risk mortgages in bulk' and refinancing them under federal programmes such as Hope for Homeowners." He said Congress "could also consider more incentives for refinancing home loans by reducing lender insurance premiums and possibly by subsidising the interest rate that borrowers pay."
McClatchy reports Bernanke "didn't offer any price tags, but he signaled that any approach is going to be costly and probably will favor some homeowners over others." The New York Times reports Bernanke "said that foreclosures were expected to reach 2.25 million this year, compared with 1 million in normal years." The Washington Post notes FDIC Chairman Sheila C. Bair is "advocating a plan in which private lenders would agree to lower mortgage payments to 31 percent of borrowers' income in exchange for the government insuring them against a potential default. Bernanke approvingly suggested a variation of that program, in which the government would share part of the cost of lowering the payment."
Meanwhile, the Wall Street Journal reports the Treasury Department "is considering a plan that could enable banks to lend at rates as low as 4.5%, which is more than a full point lower than the prevailing rates on standard 30-year mortgages." The "possible move...has raised the hopes of home buyers, real-estate agents and economists -- and the share prices of residential builders and related businesses." But "the proposal...won't be a cure-all for the myriad problems that have curtailed buying."
Size, Allocation Of HUD Grants Under Fire The Wall Street Journal reports on the Neighborhood Stabilization Program "authorized by Congress in July," which is "barely up and running. But already, many states and localities are frustrated by the small sums involved and how the Department of Housing and Urban Development is allocating the grants. The problems are an indication of how federal efforts to halt the foreclosure crisis have proven inadequate to the task."
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With economists expecting the unemployment rate to reach 7% by the end of the year, a number of companies announced layoffs that could total 20,000. The AP reports a round of more than 15,000 layoffs announced Thursday by AT&T Inc., DuPont and Viacom Inc. suggests a yearlong wave of job cuts is accelerating, just as the government is expected to report a higher unemployment rate for November on Friday." Meanwhile, "Swiss bank Credit Suisse Group...announced 5,300 job cuts, although it's unclear how many will be in the United States."
The Wall Street Journal reports economists "widely expect the unemployment rate, which was 6.5% in October, to hover around 7% by year-end and top 8% by the end of next year." That "would make this recession the worst for the job market since the 1981-82 recession, when unemployment hit 10.8%." The Washington Post and USA Today run similar stories.
The worsening employment situation comes as same-store retails sales plunged. The Wall Street Journal reports US retailers reported "same-store sales for November fell by 2.7% from last year, according to the International Council of Shopping Centers Inc.'s index of 37 stores, the biggest drop since 1969, the first year that the council began collecting data." The Washington Post also reports the "dismal sales figures."
Stocks Finish Lower The AP reports a "period of relative calm on Wall Street ended Thursday as stocks tumbled in the final hour of trading on growing investor anxiety ahead of the government's November employment report." The major indexes "each slid more than 2.5 percent, including the Dow Jones industrial average, which dropped 216 points after rising in seven of the last eight sessions." The Financial Times, Wall Street Journal, Washington Post and New York Times also report the Wall Street numbers.
In a story titled "Is US Now Stuck With Irrational Pessimism?", the Christian Science Monitor reports, "Twelve years ago tomorrow, Federal Reserve Board chairman Alan Greenspan famously chalked up the boom in stock markets to 'irrational exuberance.'" But "now, with the US stuck in one of the worst bear markets in postwar history, the opposite seems to be true. ... So is this the era of irrational pessimism?"
The Dallas Morning News reports the White House confirmed Thursday President and First Lady Laura Bush "have purchased a house in Dallas' Preston Hollow neighborhood for the couple to live in after his presidency ends in January." While the First Lady's office "declined to specify where the house is...it appears likely the couple will live on Daria Place, a cul-de-sac in the upscale neighborhood." The home was valued "at $2,078,660."
The Wall Street Journal reports "the house believed to be the Bushes' new Texas home was built in 1959, but has been extensively renovated. It sits on slightly more than one acre." A "deed of trust indicates the buyer took out a $3,074,239 mortgage on the property from Community National Bank in Midland, Texas." The AP reports the Preston Hollow area is "where some of the state's wealthiest residents live in some of its most expensive houses."
Bush: "Good Marriage" Got Better The AP reports that President Bush, "increasingly reflective as he caps two turbulent terms in the White House, said Thursday that the pressures of the job have brought him closer to his wife, Laura." Bush told NBC, "I give her all the credit about why I can say a good marriage has gotten better."
As security in Iraq improves and the UN mandate for foreign troops nears its expiration, Tonga withdrew its contingent of 55 Marines. McClatchy the Tongans' "departure this week marks the exit of another member of the 'coalition of the willing,' the 49 nations that signed on to support the war in Iraq since 2003." McClatchy adds "most of the remaining 18 countries are shutting down their operations swiftly and heading home before the United Nations mandate that allows them to deploy their forces in Iraq expires Dec. 31." The Los Angeles Times reports, "Of all the coalition members, the South Pacific islanders may have seemed the least likely to embrace Iraq, where the climate, the geography and the food were all alien."
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The Washington Times reports the Supreme Court plans to meet today "to decide whether to hear a case that could determine whether President-elect Barack Obama ever becomes the nation's president. Justice Clarence Thomas picked up the petition to hear New Jersey attorney Leo Donofrio's lawsuit after it was denied by Justice David H. Souter. ... The decision to put the case on Friday's docket resulted from more than a dozen lawsuits challenging Mr. Obama's right to be president based on his citizenship at birth." The Times notes that "Donofrio's case concedes that Mr. Obama was born in Hawaii as he claims," but argues "that Mr. Obama is not a 'natural born citizen,' as Article II, Section I of the U.S. Constitution requires" because his father was a Kenyan citizen, "and therefore subject to the jurisdiction of the United Kingdom at the time of" Obama's birth, and therefore was a British citizen.
The Minneapolis Star Tribune reports the Minnesota Senate recount "neared its final hours Thursday," and "at day's end, with 99 percent of the ballots counted, the gap separating Republican Sen. Norm Coleman and Democrat Al Franken was only 36 votes larger than it had been at the start. Coleman now leads by 251, according to Star Tribune tabulations." CQ Politics adds, "Several factors cloud that count, however. In addition to the lost and found ballots that have been the subject of so much attention this week, there also are the issues of challenged votes and rejected absentee ballots. In both cases, the decision on how to handle those votes will fall to Minnesota's canvassing board, which is composed of four state judges and Secretary of State Mark Ritchie. The two campaigns have now challenged a total of 6,508 ballots over the course of the recount, 3,311 by the Coleman campaign and 3,197 by the Franken camp. The canvassing board will begin reviewing those challenges Dec. 16."
The Houston Chronicle reports Texas Sen. Kay Bailey Hutchison (D) "looked at running for governor and backed away in 2006," but yesterday "she created a new gubernatorial campaign committee and transferred $1 million from her federal account to show she is serious about a run in 2010." Hutchison would likely face Gov. Ricky Perry, also a Republican, in the GOP primary. The El Paso Times says the move "set the stage for what promises to be an explosive" race. In his blog for The Politico, Josh Kraushaar writes "Hutchison was considered a possible running mate for John McCain during the presidential race." The senator "has long eyed the governorship, and has never been close with Perry."
The fireworks began yesterday. The Houston Chronicle reports, "Perry spokesman Mark Miner dismissed Hutchison's campaign filing as a false start." Said Miner, "Kay Bailout has been talking about running for governor and passing legislation for years, and neither has happened. ... Today continues her record of indecision." The Dallas Morning News notes that "on the day Congress took action on the economic bailout, Mr. Perry issued a statement urging action but later criticized the bailout when Ms. Hutchison voted for it."
Primary Could Cost Each Candidate As Much As $30 Million The Dallas Morning News says the race "could cost each Republican candidate $25 million to $30 million and would present both with a difficult task of soliciting money from many of the same Republican-friendly donors."
The New York Times reports Gov. Sarah Palin's "traveling makeup artist was paid $68,400 and her hair stylist received more than $42,000 for roughly two months of work, according to a new campaign finance report filed with the Federal Election Commission."
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Jay Leno: "What a difference a couple weeks make. You remember last month, the three auto company heads flew to Washington in private jets looking for the bailout? ... Well, this time, the three CEOs drove in their own hybrid cars." You "know what I think the government should have done here? Make it like 'The Amazing Race.' You drop these guys off. No money, no transportation. Give them some tools. They have to build a car. The first one to Washington, they get the bailout!"
Jay Leno: "President Bush and his lovely wife Laura have purchased a new home in Dallas, Texas, worth $2 million. See, this is where president Bush has outsmarted everybody. People underestimate this guy. Five months ago, he would have had to pay 10 million bucks for that house, but thanks to his economic plan, he got it at a bargain. The man is a genius!"
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