Economy

Bush bails out car makers, Obama’s recovery plans, local share slide: economy roundup

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US President George W. Bush says the $US17.4 billion in emergency loans offered to automakers is the only way to prevent the companies from collapsing.

US President George W. Bush says the $US17.4 billion in emergency loans offered to automakers is the only way to prevent the companies from collapsing.

The loans will be given to General Motors and Chrysler, with Ford saying it does not immediately require any loans. But the car makers must provide a restructuring plan by 31 March proving they are viable, or else they must pay back the loans.

The loans come after weeks of debate in the Congress over the bills, with both Republicans and Democrats opposing plans to bail the automakers out.

But Bush says the companies are capable of proving they will restructure themselves into viable entities.

“This restructuring will require meaningful concessions from all involved in the auto industry – management, labour unions, creditors, bondholders, dealers, and suppliers,” he said in his weekly radio address.

“The actions I’m taking represent a step that we all wish were not necessary. But given the situation, it is the most effective and responsible way to address this challenge facing our nation.”

Obama expands stimulus plans

Also in the US, president-elect Barack Obama has expanded his plans for economic recovery, pledging to save three million jobs and create a task force for helping struggling families.

The White House Task Force on Working Families, to be headed by vice-president elect Joe Biden, will attempt to boost education, training and to protect incomes and retirement securities. The Task Force will use the help of officials and industry representatives.

President-elect Obama and I know the economic health of working families has eroded, and we intend to turn that around,” Biden said. “We’ve got to begin to stem this bleeding here and begin to stop the loss of jobs in the creation of jobs.”

IMF’s gloomy outlook

The global economic crisis will continue to worsen unless governments offer further fiscal stimulus, International Monetary Fund chief Dominique Strauss-Kahn says.

Strauss-Kahn told BBC radio the IMF may need to cut its next economic growth forecasts.

“I’m especially concerned by the fact that our forecast, already very dark … will be even darker if not enough fiscal stimulus is implemented.”

“The threat is that big today that I think that between two different problems, increasing deficit — which is never good — and fighting against recession — which is even worse — we have to choose the less bad solution.”

Shares slide

The Australian share market has fallen slightly this morning, despite gains from Wall Street on Friday night. The benchmark S&P/ASX200 index was down 27.8 points or 0.77% to 3,587.9 at 11.08 AEDT.

The Aussie dollar has lost ground, reaching $US68 cents.

Babcock and Brown shares have jumped 36.5% to $0.071 after news it is reviewing non-binding take-over offers. The reviews come as the group is making a major overhaul to the group’s capital structure.

“The BBP board, in conjunction with its advisers, continue to review all submissions made with a view to determining what is in the best interests of BBP’s security holders,” it said in a statement.

“All submissions made to BBP at this point are indicative only and incomplete, and accordingly BBP will disclose further information to the market at the appropriate time.”

Commonwealth Bank shares have jumped 0.8% to $28.03 after it defended last week’s $2 billion capital raising plan. But Westpac have dropped 2.5% to $16.88, while ANZ have gained 1.5% to $14.86.

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