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Re: Bush bails out auto industry
The US government has said it will provide $17.4bn (£11.6bn) in loans to help troubled carmakers General Motors and Chrysler to survive.
President George W Bush said allowing the US car industry to fail would not be "a responsible course of action".
Ford has said it hoped to get by without government help.
The government will use part of the $700bn originally pledged to rescue US banks. It has set a deadline of 31 March for the firms to become viable.
General Motors will get $9.4 billion and Chrysler $4 billion before the end of the year. A further $4bn will be provided later.
GM chief executive Rick Wagoner said his company would quickly start to restructure itself.
"Our focus now turns to fully and rapidly implementing the restructuring plan that we reviewed with Congress earlier this month in conjunction with all of our key partners," he told a news conference.
"It's really the blueprint for a new General Motors, one for our second 100 years."
'Hard choices'
GM CEO Rick Wagoner thanks President Bush for the bail-out
US President-elect Barack Obama urged the carmakers not to "squander this chance to reform bad management practices" in the industry.
"The auto companies must bring all their stakeholders together, including labour, dealers, creditors and suppliers, to make the hard choices necessary to achieve long-term viability."
His comments echoed those of President Bush, who said US carmakers must make hard decisions to reform the industry.
The restructuring would require "meaningful concessions from all involved in the auto industry", Mr Bush said.
Car dealers, some of whom have been waiting for payments from the manufacturers, welcomed the bail-out.
"The question now is how to excite consumers to buy cars from January to March. We're all sitting on millions of dollars of unmoving cars," said Raymond Ciccolo, a GM dealer in Boston.
'Critical situation'
An attempt to secure a $14bn (£9.4bn) rescue fund for the carmakers was rejected by the US Senate last week, raising fears of job cuts and a possible industry collapse.
The package announced by Mr Bush on Friday does not need Congressional approval, as it is part of the existing $700bn financial bail-out programme.
All car firms have announced production cuts as the economic slowdown has slashed car sales.
Detroi's Big Three carmakers, Chrysler, Ford and GM, have repeatedly warned that millions of jobs could be lost if the government does not agree to a package of loans to support the industry.
"These loans were desperately needed before the end of December, because the situation for the automakers is so critical," said Dennis Virag at Automotive Consulting Group.
Meanwhile, US Treasury Secretary Henry Paulson urged Congress to authorise the use of the second half of the $700bn Wall Street bail-out, as the first $350bn had already been committed.
http://news.bbc.co.uk/2/hi/business/7791999.stm
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They keep referring to it as a 700 bn package when in reality the current commitment is at 8.5 trillion as reported a few weeks back. And the car industry will get a lot more than 17bn. That's just covering the immediate demands. Only way they could get out of it is an increase in sales next year, and by the way of things that is not likely to happen. There's more debt coming, a lot more.
Re: Bush bails out auto industry
The government had no choice. They have to bail out these companies. Our manufacturing base has been destroyed because everyone wanted to save a nickel at Walmart, and the auto industry is pretty much the last thing remaining from when this country was a legitimate economic power.
Give them a blank check. Its all Monopoly money anyways.
Re: Bush bails out auto industry
It's like putting a band-aid on a guy having a heart attack. The problems here are so deep rooted, that simply giving these fools cash isn't going to solve anything. Some of them probably just need to go away & the ones remaining need to make a fundamental change in the way they do business.
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