With the Bush administration finally extending a helping hand to the country's struggling auto industry, investors of the Wall Street, who have been closely watching the so-called "auto bailout" for months, at least have something to cheer for ahead of the holiday season, though the specter of a sweeping industry collapse lingers and may easily come back in just a few months.
The White House announcement on Dec. 19 to lend 17.4 billion U. S. dollars to cash-thirsty General Motors Corp. and Chrysler LLC, two of the American auto Big-3 that had jointly pleaded for government loan support, has bought the companies three months more of survival, and also granted the market a three-month reprieve from a widely-expected severe impact.
Ever since October, problems of the auto giants -- long seen as the pole of the nation's manufacturing industry -- have been gnawing at investors, many of whom believe that the failure of the automakers would result in a deeper and longer economic recession.
When GM and Chrysler, along with Ford Motor Co. which didn't see an imminent danger of bankruptcy with comparatively sufficient cash on hand, turned in early November to the U.S. government for 50 billion dollars in federal loans, investors' concerns about an industry collapse even offset the positive influence exerted by the Chinese government's 4-trillion-yuan (571 billion U.S. dollars) stimulus plan. GM shares alone tumbled 23 percent, while Dow Jones capped lower.
"I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight," said Senate majority leader Harry Reid after a 14-billion-dollar auto bailout deal, struck between the White House and Congressional Democrats after weeks of hard negotiations, died in Senate from strong Republican opposition on Dec. 11 despite its swift passing in the House of Representatives in the previous day.
"Christmas is approaching ...This will be a very very bad Christmas for many people," Reid added, referring to millions of people hired in the industry or other related sectors, as well as the investors.
Fortunately, President Bush and Treasury Secretary Henry Paulson, who had vehemently opposed the idea of injecting a portion of the earlier-approved 700-billion-dollar financial bailout fund into the auto industry, finally backed down and offered the carmakers an emergency rescue, saving many from a miserable or even disastrous holiday season.
Actually, all major indexes on the Wall Street were pushed higher by the news on Friday morning. GM shares climbed nearly 23 percent, while Ford, with no direct benefits from the package, also posted a moderate gain of about four percent.
The positive market response showed a great sense of relief for many investors, just as described by Seaport Securities President Teddy Weisberg: "The threat of bankruptcy is at least for the moment three month away."
However, the rescue plan has failed to bring a sustained boost to the market, with the Dow Jones industrial average recording losses for five consecutive sessions through Tuesday -- with a slight fall of 0.30 percent even on Friday.