Automakers’ Bailout Hopes Fizzle, World Index Falls in Response
- Dec 12, 2008
The Senate’s refusal to bail out General Motors and Chrysler led to consequences felt worldwide as stocks tumbled around the world and the dollar slumped threatening to deepen the global recession, Bloomberg reported. Treasuries rallied and yields fell to record lows. The MSCI World Index lost 1.3 percent to 880.41 as of 9:43 a.m. in London after senators voted down the bill to provide $14 billion of emergency funds for General Motors Corp. and Chrysler L.L.C., according to Bloomberg. GM plunged 28 percent in Germany, while Honda Motor Co. and Daimler AG sank more than 6 percent. The dollar fell to a 13-year low against the yen, while the cost of protecting corporate bonds against default soared. Metals and crude oil slumped, according to the report. Bank of America said Thursday it plans to slash up to 35,000 jobs over the next three years as it absorbs Merrill Lynch and contends with the deepening recession, CNNMoney.com reported.The Charlotte, N.C.-based bank, which will be the nation’s largest financial services firm when the Merrill Lynch deal closes in coming weeks, said it will announce a final job reduction plan in early 2009. The cuts will come from both companies and will affect all lines of business. Bank of America had 247,000 employees, as of Sept. 30, while Merrill Lynch had 60,900 at the end of the third quarter, the report stated. Reuters reported that KB Toys Inc., one of the largest U.S. toy retailers, filed for Chapter 11 bankruptcy protection on Thursday, with a plan to close all of its 460 stores and begin liquidation sales in the middle of the holiday season. Alcatel-Lucent SA, the world’s largest maker of fixed-line networks, will cut $1.3 billion of costs in each of the next two years, including 1,000 more managerial jobs, Bloomberg reported. The new measures bring job cuts to 17,500 since Alcatel SA bought Lucent Technologies Inc. in 2006. The company also will eliminate 5,000 contractors, according to the report.