Filed under: Government/Legal, Earnings/Financials
Scorched-Earth Monday: Bad news for Wall St. is bad news for auto industry
Writing about cars for a living is a beautiful thing. Aside from doing what we love, we're able to keep ourselves somewhat insulated from the bigger issues ailing our world, content to avoid those unsavory subjects like a Klingon-filled elevator at a Star Trek convention. But we can't elude reporting on the current economic crisis any more than we can keep our lunch down while watching our meager savings fall through the floor.
The Dow fell 777.68 points today – almost 7% -- to 10,365.34 after the House voted against the $700 billion bailout of the financial industry. The world's biggest automakers were far from immune. General Motors' stock dropped by 12.81%, going for $8.51 a share, while Honda lost almost 10 percent, Ford and Toyota lost over 8% and Tata dropped some 13%. And that's just the tip of this chilly iceberg. Shares of both auto suppliers and massive retailers dropped accordingly, while oil futures tanked by 10%, selling for $96.37 a barrel.
While it's certain that all the government's men and women are going to put this humpty-dumpty bill back together again and attempt to vote on revised terms by the end of the week, the automakers and those of us playing the home game of "Rebuild Your Failing Economy" are forced to wait idly by while our futures shuffle off this mortally-wounded coil. And what are the chances of Detroit's Big 3 getting their $25 billion? Stay tuned sports fans, the
[Sources: NYT, Google, Automotive News | Image: Nicholas Roberts/Getty]
Reader Comments (Page 1 of 3)
DC 7:06PM (9/29/2008)
I am hearing that if things continue the way they are going, GM is going to run out of credit which means they may end up selling assets or that GMAC may even throttle back on giving out loans to auto buyers! I wonder how Ford Credit is going to do.
Car site or not, this needs to be at the top of everyone's minds.
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old blighty 1:06AM (9/30/2008)
Cramer seems to think GM will go bankrupt without the bailouts.
Drill baby, Drill. 7:59PM (9/29/2008)
Well those who are smart, did not run up a huge credit card debt and did not buy a huge house and did not buy a huge SUV they could not afford.
We are an open market economy, let markets work. For every dead bank or an investment bank a new one will come.
The republicans have done some much to screw this country in the last 8 years, it is simply undescribable. But it looks like their final act will be the RIGHT one. They stopped the bailout. They believe in markets, like we all should.
J M C 3 8:15PM (9/29/2008)
@ Drill baby drill...Nancy Pelosi ? Is that You?
geo.stewart 9:15PM (9/29/2008)
Believe it or not, there were recipients of big lobbying dollars in both parties over the years.
Clinton started this in 99 with Rubin, with the Republicans on board. there is enough blame for both parties.
stratojet 9:27PM (9/29/2008)
Let the free Market run?
You mean that this is what you wished for by letting the free market go?
-Short selling large corporation titles and destroying the faith of ordinary people?
-Let speculator and private funds buy oil contracts when they don't need it?
- Ninja loans?
- Let CEO go with golden parachute by running their businesses to the ground?
- Ousting all of the manufacturing out of USA; you can't even find a golf club made there.
I must be a little uneducated...
The Republican created this mess and , with their clever Harvard graduates, cannot solve it.
tekd 4:04AM (9/30/2008)
drill, you do realize that pretty much every business out there uses credit to run themselves, right? Even profitable businesses use credit to make large purchases (like new factory equipment that can be used for a decade) then pay it off over time.
So all those companies that need to replace old equipment? They can't get any credit since the credit markets are seized up due to the panic. No bailout for wall street might sound nice but it also means no credit for the hundreds off thousands of small, medium and even large businesses out there.
So if GM needs to retool a factory and it want to borrow money? Nobody's there to lend it to them even if they weren't in such crappy financial straits.
This will apply to everyone from Boeing to the restaurant down the street that wanted to redecorate.
Only the most simple minded people don't realize just how intertwined everything is. This is going to domino into lost jobs-already businesses are cutting workers because they can't get enough credit to both buy needed equipment and pay employees, and if the equipment is necessary to keep the business going the employees get laid off first.
So keep telling your congressman not to bail out Wall Street, but don't be surprised when you're out of a job.
J 7:07PM (9/29/2008)
great pic, if anyone wants it I found an unedited version.
http://tenpercent.files.wordpress.com/2008/09/6a00d8341bf82953ef010534d60091970c-500wi.jpg
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Kumail 7:10PM (9/29/2008)
haha, you can tell they spelled it wrong and then fixed it!
Mi key 7:11PM (9/29/2008)
Thanks J for the pic.
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Alone On Board 7:18PM (9/29/2008)
What is written next to "you"?
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TigerMil 7:19PM (9/29/2008)
So buy at the bottom. It WILL go up. It's just a matter of sweetening the pot for McCain and company. Of course, who has any money, LOL.
But those getting year end bonuses (which have, funny thing, maybe been paid ahead of time for, umm, tax reasons, for like, to fund $50K 401K contributions, might have an opportunity.
The rich WILL get richer on this one, trust me.
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tuna 7:41PM (9/29/2008)
The rich have always gotten richer since the dawn of civilization. There will always be those who have and those who have not. Individually the masses are too selfish to be able to band together and do something about it. The 3 accounts where the masses did unite, disaster ensued.
The French revolution, Bolshevik revolution of Russia and the cultural revolution of China. None of it changed anything; they only gave opportunities for a small number of those masses to jump class to the "haves".
This is just another tiny slice of another cycle. Question is how far/close are we to boiling over. I'm just glad I am not too dangerously close to retirement. Can you imagine what it'd be like if Social Security did become privately managed funds as some (you know who) have proposed?
James Sonne 8:01PM (9/29/2008)
And the poor get poorer ... because they don't give a flip about managing their money.
This is great news, I hope they don't pass the bill. $700 billion worth of inflation is a frickin lot! If we pass the bill, no one will be able to buy food in the grocery store because a green pepper suddenly costs $5.00 instead of $0.50.
And I lost a boat load of money on the market today. But we have to de-leverage the market at some point so that it can start back up. If we just keep inventing money we'll get nowhere. I am 100% for a federal spending freeze. Our tax dollars should go to paying of the deficit and the military only until we get this sorted out.
Sonne Times: Social and Political Commentary
http://jsonne.blogspot.com
AZZO45b 12:56AM (9/30/2008)
James: Where the f*ck are you buyin' 0.50 green peppers bud??? Last green pepper I bought was $2.50 - $3.00... tack on $0.25 or so, for a yellow or red pepper.
Diesel prices have been effecting a lot of food costs for about 15 months... Since this is not Food Blog, I hope my fuel reference ties my question back to an AutoBlog topic in some small way... !!! :) :) :)
bms404 8:17PM (9/29/2008)
That is exactly right, a government ran program always does better than a privately ran program. Just look at the government ran healthcare of Canada. Their government does such a great job, the come to America for treatment. But our Social Security does a good job, it only takes 3 working citizens to pay for one individual on Social Security, but is going to go to five within the next few years and will eventually run out. The government always does a better job than the citizens
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jeremyk 8:25PM (9/29/2008)
You're right, look at U.S. public schools, the worlds best! And how about government housing and government medical like the VA hospitals, I mean if you want quality health care, go there my friend.
In fact other than spend our money what does the government do right?
I'm glad the 135 Republicans and 94 Democrats took a stand against this s**tty bill. Did anyone happen to notice that the dollar made huge gains on the pound and the Euro today? That would have gone the other way if they had passed that bill.
snakesausage 11:56PM (9/29/2008)
Jeremyk said: "Did anyone happen to notice that the dollar made huge gains on the pound and the Euro today? That would have gone the other way if they had passed that bill."
And oil fell ~$10
bms404 8:44PM (9/29/2008)
Hey don't get me wrong, I am glad this bill didn't pass. This was nothing more than Socialism. By the way I did hear the Euro fell today. It was also reported, that several banks in Europe were on the verge of collapse. It was all triggered by the mortgage crisis, which all comes down to individuals making poor decisions to buy houses they could never afford, and mortgage companies loaning money to business who didn't deserve the loans in the first place.
A financial risk is taken in the hopes of getting a profit, but with the knowledge you could lose money. Buying a house is a risk, and so is loaning money. The government is not and should not be in the business of bailing people out.
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rjmhotrod 8:59PM (9/29/2008)
Thank goodness this bill came during an election cycle. Politicians are actually listening to the people they represent (because they want to get re-elected) instead of rolling with the party. Most folks I talk to are against the bailout.
GM must be sweating. After having Bill Heard drop off the map, now the bill being stopped (in it's current form) you know sphincters are tightening somewhere. I drove by both the Tampa and Orlando Bill Heard lots this weekend. Ghost towns of Suburbans and Tahoes.
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