President Bush on Thursday said he has not yet decided what governmentassistance to provide the distressed U.S. automobile industry. The president says he worries about theeconomic consequences that an automaker bankruptcy could cause.
Mr.Bush said he is concerned about how an uncontrolled bankruptcy couldaffect the psychology of financial markets. He said he is also worriedabout putting good money after bad.
The administration is near adecision on what kind of government assistance to provided U.S. carcompanies. They have asked for $14 billion in loans to assure theirsurvival.
"Thepresident is not going to allow a disorderly collapse of thecompanies," said White House Press Secretary Dana Perino. "That is not an option. Some people have assumedthat is one of things we would decide. That is not going to be thecase."
In Detroit, the U.S. automotive capital, the mood issomber. Chrysler - the weakest of the "Big Three" carmakers - isclosing all of its U.S. assembly plants for a month, beginning nextweek. General Motors and Ford are also closing some plants beyond theusual two-week end of year production break. Unionized workers at theplants will continue to receive at least 85 percent of their pay, asstipulated in their contracts.
The credit squeeze andrecession have caused U.S. car sales to plummet - down 37 percent inNovember, 25 percent for the year overall.
Jack Nerad is a marketing analyst for Kelley Blue Book, which keeps close watch on the auto industry.
"Ithink it is devastating," Nerad spoke to Bloomberg Television. "It is hard to overestimate theimportance of this industry and the importance of what is going onright now. It is as if sales absolutely hit a wall in October. They're not recovering. And one of the major industrial corporationsof the world-of all time [General Motors] could be on the brink."
Itis not just the U.S.-based auto industry that is suffering. Sales ofBritish-made cars in the United Kingdom were down 33 percent inNovember. And Fiat in Italy is closing all of its production plantsfor one month because of lagging car sales in Europe.