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Sunday, November 9, 2008

Auto Industry Crisis

From The Hoss's Mouth

The auto industry crisis is reviewed in today's Hoss Cents Free Financial Money Magazine.


The wheels are falling off of the auto industry.

On Friday, General Motors Corp. and Ford Motor Co. reported massive third quarter losses.
GM reported a loss of 25 billion dollars US in the third quarter and stated they would cut 3,600 jobs. Yes, you read it correctly, that is billion not million dollars.

GM has indicated that there is a good possibility that they could run out of cash in 2009 if economic conditions do not improve.

The auto industry crisis is wide spread. Ford reported losses of $129 million and Chrysler's problems are well known and reported in numerous money magazines.

Several news reports indicate Ford plans to cut somewhere between 500 to 2000 white collar jobs in North America.

This dire economic situation has prompted the auto industry to request $50 billion in low cost loans. This is in addition to the 25 billion in loans that Congress passed in September 2008 to help re-tool auto plants to build more fuel-efficient vehicles.

Speaking in Chicago at his first new conference, President Elect Barack Obama indicated that the Bush administration remains in charge of government until his inauguration. However, he and his transition team are looking at ways to help the auto industry. He urged the Bush administration to "do everything it can" to accelerate the distribution of the $25 million approved in September.

Obama stated: "Immediately after I become President, I will confront this economic crisis head-on by taking all necessary steps to ease the credit crisis, help hardworking families, and restore growth and prosperity."

The Hoss does not envy the task that confronts President Elect Obama. The current economic situation is serious and will require fresh and innovative ideas to solve the auto industry crisis. A complete overhaul of the financial system may be required. The result may be something that does not even come close to today's economic models. Money as we know it may become obsolete.

Stay on track,

The Hoss

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