WASHINGTON // Detroit car makers, teetering on the brink of collapse, are receiving strong signals from the White House that short-term help is on the way.
A key senator, who is an ally of the automotive industry, says the relief package could reach US$15bn (Dh55bn) for GM and Chrysler. President George W Bush said a bankruptcy in the US auto industry would hurt the economy while the US deals with the recession.
General Motors and Chrysler have said they could run out of cash within weeks without support from the government.
"An abrupt bankruptcy for autos could be devastating for the economy," Bush told reporters yesterday aboard Air Force One during a surprise trip to Iraq and Afghanistan. He said they were "now in the process of working with the stakeholders on a way forward."
In Detroit, Democratic Sen Carl Levin of Michigan said he expects GM to get $8bn and Chrysler $7bn from the Bush administration. He said the Treasury secretary would likely be a "Car Tsar" overseeing restructuring of the companies.
Bush would not give a precise timetable but said: "This will not be a long process because of the economic fragility of the autos."
Vice President Dick Cheney, in an interview with conservative talk show host Rush Limbaugh, cautioned that "if the automobile industry goes belly up now, there's a deep concern that would be a major shock to the system."
The Treasury Department has held discussions with GM and Chrysler and reviewed financial data from the car makers. It said yesterday that no decisions had been made on what type of support it may provide to the companies.
The administration, following the defeat of a $14bn bailout package in the Senate last week, is weighing several options. They include using money from the $700bn financial bailout fund to provide loans to the carmakers or using money from the fund as collateral for emergency loans the automakers could get from the Federal Reserve.
Bush reiterated that tapping the financial bailout fund remains an option. House Speaker Nancy Pelosi said the bailout funds were "the only recourse that they have" because of the failure to pass legislation in Congress. She said "something will have to happen imminently" but said requirements for restructuring should be attached to the funds. "Otherwise, we're just giving life support, rather than a lifeline for viability into the future," Mrs Pelosi said.
White House spokesman Tony Fratto said the administration was considering policy options, and that "when we have something to announce, we'll announce it. We'll take the time we have available to get the policy right."
The White House is keeping the President-elect Barack Obama and his advisers informed of the discussions. If administration officials choose not to provide the money now, the Obama team could wait for the new Congress, which will have stronger Democratic majorities. But the delay could risk bankruptcy filings by GM and Chrysler.
The White House previously had insisted on limiting use of the Wall Street rescue plan to helping financial institutions.
It changed course after the auto bailout bill failed in Congress, citing the consequences to the overall economy if US carmakers failed.
Mr Levin said he expects the Bush administration's plan to help the Detroit automakers will be similar to the previous deal the White House reached with congressional leaders. That plan providing loans for GM and Chrysler to help them survive until March 31 was passed by the House last week but blocked by the Senate, mainly by Republican senators, after the United Auto Workers union balked at making upfront wage concessions to take effect sometime next year.
Ford Motor said it has enough cash to survive 2009.
* AP
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Jawan
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Israel Palestine on Swedish TV 1958-1989
Director: Goran Hugo Olsson
Rating: 5/5
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SPECS
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If you go
The flights
Emirates and Etihad fly direct to Nairobi, with fares starting from Dh1,695. The resort can be reached from Nairobi via a 35-minute flight from Wilson Airport or Jomo Kenyatta International Airport, or by road, which takes at least three hours.
The rooms
Rooms at Fairmont Mount Kenya range from Dh1,870 per night for a deluxe room to Dh11,000 per night for the William Holden Cottage.
It’ll be summer in the city as car show tries to move with the times
If 2008 was the year that rocked Detroit, 2019 will be when Motor City gives its annual car extravaganza a revamp that aims to move with the times.
A major change is that this week's North American International Auto Show will be the last to be held in January, after which the event will switch to June.
The new date, organisers said, will allow exhibitors to move vehicles and activities outside the Cobo Center's halls and into other city venues, unencumbered by cold January weather, exemplified this week by snow and ice.
In a market in which trends can easily be outpaced beyond one event, the need to do so was probably exacerbated by the decision of Germany's big three carmakers – BMW, Mercedes-Benz and Audi – to skip the auto show this year.
The show has long allowed car enthusiasts to sit behind the wheel of the latest models at the start of the calendar year but a more fluid car market in an online world has made sales less seasonal.
Similarly, everyday technology seems to be catching up on those whose job it is to get behind microphones and try and tempt the visiting public into making a purchase.
Although sparkly announcers clasp iPads and outline the technical gadgetry hidden beneath bonnets, people's obsession with their own smartphones often appeared to offer a more tempting distraction.
“It's maddening,” said one such worker at Nissan's stand.
The absence of some pizzazz, as well as top marques, was also noted by patrons.
“It looks like there are a few less cars this year,” one annual attendee said of this year's exhibitors.
“I can't help but think it's easier to stay at home than to brave the snow and come here.”
Greatest of All Time
Starring: Vijay, Sneha, Prashanth, Prabhu Deva, Mohan
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The Perfect Couple
Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5
THE SPECS
Engine: 1.5-litre turbocharged four-cylinder
Transmission: Constant Variable (CVT)
Power: 141bhp
Torque: 250Nm
Price: Dh64,500
On sale: Now
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