I guess in the short term we'll now see what effect the failure of the bailout may have:
Automotive NewsTHE AUTO INDUSTRY BAILOUTIndustry aid fails in the SenateReid predicts a "very, very bad Christmas for many Americans"Harry Stoffer
Automotive News | December 11, 2008 - 10:43 pm EST
UPDATED: 12/11/08 11:57 p.m ESTWASHINGTON -- A bill to provide emergency loans to Detroit automakers is dead for now, Senate Majority Leader Harry Reid said late Thursday.
“We have not been able to get this over the finish line,” Reid said.
Reid said he dreads what will happen on Wall Street on Friday. “It’s not going to be a pretty sight,’’ he said. He also said the failure of negotiations will mean a “a very, very bad Christmas” for many Americans.
General Motors and Chrysler LLC say they need federal loans to avoid running out of cash within weeks.
``We are deeply disappointed that agreement could not be reached tonight in the Senate despite the best bipartisan efforts,’’ GM said in a statement. ``We will assess all of our options to continue our restructuring and to obtain the means to weather the current economic crisis.’’
Economists, researchers and some lawmakers have warned that failure of one or more of the car companies will shatter a U.S. economy already in recession.
Markets across the Asia-Pacific region were down more than three percent after news the talks had collapsed, with Japan's Nikkei average and Hong Kong's Hang Seng both down more than five percent.
U.S. crude prices fell by nearly $2 to $46.11 a barrel.
The White House said it would evaluate its options in light of the collapse of the bailout legislation.
White House spokesman Tony Fratto declined to say what those options included. The Bush administration has resisted Democrats' past demands to use some money from the $700 billion bailout package approved in October to help struggling financial institutions to help the automakers.
Reid’s assessment followed a day of negotiations in which senators tried to reconcile a House-passed bill that had been negotiated by the Bush White House and Democratic leaders of Congress with an alternative favored by some Senate Republicans.
Sen. Mitch McConnell of Kentucky, the Republican leader, blamed the UAW for being unwilling to accept GOP demands that Detroit 3 workers accept parity in pay, benefits and work rules with import-brand factory employees.
Sen. Bob Corker, R-Tenn., author of the GOP alternative, said workers would not accept a deadline for the parity demand.
"We are three words away" from a deal, Corker said.
Senate Banking Chairman Christopher Dodd, D-Conn., said the failure of negotiations was political, but he worries what it will mean for the broader economy.
Together the Detroit 3 CEOs say they need at least $34 billion in federal money to get through the economic downturn.
A subsequent procedural vote confirmed Reid’s assessments. Sixty “yes” votes were needed to move ahead with industry-aid legislation. The vote was 52-35 in favor of aid.
Some options for the industry remain.
Congress could come back early next year -- when Democrats have a wider majority in the Senate -- with new legislation.
Or the Bush administration could relent and decide at any time to make direct loans to automakers from the $700 billion that has been approved for rescue of the financial system.
Democratic lawmakers have maintained all along that the administration had that authority. Reid reaffirmed that view Thursday night.
Some lawmakers have contended that the Federal Reserve always has authority under laws enacted during the Great Depression to make emergency loans to almost any economically important entity that can’t get credit elsewhere.
Reuters contributed to this report
http://www.autonews.com/apps/pbcs.dll/article?AID=/20081211/ANA02/812112862/1200