Tales from the Trail

from DealZone:

‘New GM’ Gets a Visit from a Shareholder

obamalordstown1 GM's Lordstown, Ohio assembly plant has become a symbol of both GM's hard times and its best hopes for a turnaround after a $50 billion federal investment. A recent bump in sales because of the government's "Cash for Clunkers" program has allowed GM to call back more than 1,000 workers from layoff.   So it was a natural backdrop for a return visit by President Obama, who held a roundtable with workers and then gave a stump speech from the factory floor for his economic policies and health care reform.   But this is not your father's GM anymore and nothing about it as clear-cut as it seems -- even if you are the leader of the free world and head of the government that holds a controlling stake in the automaker.     At one point, Obama -- veering from his prepared remarks -- suggested that health-care reform would allow the UAW-represented workers in the audience to negotiate better wages.

“Think about it. If you are a member of the union right now, you’re spending all your time negotiating about health care. You need to be spending some time negotiating about wages, but you can’t do it," he said.

 

In fact, the UAW locked itself into a contract limiting wages and changes to health care, without the ability to negotiate with a threat of strike, until 2015. These stands were agreed to by the union at the prodding of the Obama administration, which demanded that union autoworkers accept lower wages -- as a condition to the bailout that saved Lordstown -- to match non-union workers at Toyota plants in Kentucky and Honda plants in Ohio.

 

Even so, Lordstown is something of a success story for both the UAW and GM, and Obama's remarks were punctuated with enthusiastic applause.  After winning deep concessions from the UAW in 2007, GM agreed to invest $500 million to retool the plant to make a new fuel-efficient small sedan, the Chevy Cruze.

 

Obama had nice things to say about the Cruze, which GM expects to get more than 40 miles-per-gallon in highway driving.

The First Draft: another day, another $30 billion

It’s not yet 9:00 on a Monday morning, and the federal government has already dumped another $30 billion into the tottering financial system. The money goes to insurer American International Group Inc., which just announced a fourth-quarter loss of $61.7 billion — the largest quarterly loss in corporate history. WEATHER/

For those keeping score at home, U.S. taxpayers have now pumped $180 billion into AIG.

Some good news: consumer spending and incomes rose in January, buoyed by salary increases for government employees.

The First Draft: Bailout Bingo

Congress is nervous about spending more money.HUNGARY
    
In other news, pigs are flying, hell is freezing over and Democrats and Republicans are cooperating for the good of the country. 
     
Two of those things are actually true. The outgoing Bush administration and the incoming Obama administration are working together to get Congress to approve the second half of the $700 billion financial bailout, so Obama can hand it out quickly if needed. 
     
But Democrats on Capitol Hill want to attach more conditions to banks that accept federal cash — limits on executive pay, more oversight, and more help for homeowners facing foreclosure.  
     
“My colleagues in the Senate will not provide any additional funds unless they are assured by the Obama administration taht these provisions will be a part of it,” Senate Banking Committee Chairman Chris Dodd said on ABC’s “Good Morning America.”
    
Republicans, meanwhile, question whether the money is needed at all.
    
Obama is also urging Congress to approve an additional $800 billion economic stimulus package. Should be a stimulating week.
    
Obama also will discuss trade and the drug war with Mexican President Felipe Calderon today in his first meeting with a foreign leader since his election.
    
Bush, meanwhile, holds a press conference at 9:15 EST.

Photo credit: REUTERS/Laszlo Balogh (Pigs are hung at a butcher shop in Budapest)

For more Reuters political news, click here.

The First Draft, Tuesday Dec. 30

Israel’s military operations in Gaza continue to dominate front pages of major newspapers and morning talk shows. Wall Street is looking for a positive start as oil and gold prices ease back from the price spikes that followed the onset of the Israeli strikes against Hamas.USA-OBAMA/

President George W. Bush remains at his ranch in Crawford, Texas, while President-elect Barack Obama continues his vacation in Hawaii.

GMAC said it will resume financing auto loans following a $5 billion investment from the U.S. Treasury. The latest financial rescue also included a $1 billion loan to General Motors to purchase equity in GMAC.

Republicans hand Bush a goodbye defeat on auto bailout

Republicans in Congress effectively said good riddance to President George W. Bush this week, handing their unpopular leader a last big defeat by rejecting a $14 billion auto industry bailout the White House negotiated with Democrats.
BUSH 
“No one cares what the White House thinks,” scoffed a senior Republican leadership aide.
 
With Democrat Barack Obama set to replace Bush as president on Jan. 20, the aide said: “There’s frustration among Republicans that Bush doesn’t have a feel for our positions, and relief that he’s leaving.”
 
With Bush at the head of the party the past eight years, the Republicans’ reputation for fiscal conservatism has been shredded by record federal deficits.
 
Republicans, seeking to restore that reputation, say market forces, not U.S. taxpayers, should decide the fate of the auto industry. They charge the bailout would be no more than a downpayment on failure.

 In addition, they argue automakers would be better off to reorganize under bankruptcy protection.

“I’m not surprised Republicans wouldn’t listen to Bush,” a Democratic aide said. “This really shows how weak the president is.”
 
“Republicans figured this was about their political skins and their political message,” the aide added. “But I don’t think they win anything out of this. They just put on a political show with people’s lives at stake.”
 
Bush further upset Republicans Friday when he yielded to mostly Democratic demands and signaled he was willing to provide aid to automakers through the $700 billion bailout he pushed through Congress to help Wall Street.
 AUTOS-BAILOUT/
That rescue package generated plenty of voter backlash in the Nov. 4 election, particularly against Republicans.
 
Senate Republican Leader Mitch McConnell, who had a tougher time winning re-election than initially anticipated, seemed among those happy to see Bush go.
 
“Our members, in one way, are kind of relieved by the departure of an administration that became unpopular and made it very difficult for us to compete,” McConnell said shortly after the election.

The First Draft: Friday, Dec 12

BUSH/Gulp.
    
Senate brinksmanship kills a proposed $14 billion bailout for Detroit’s struggling “Big Three” automakers, so eyes turn back to the White House. 
    
The Senate is due back in session at 10 a.m. Eastern for what could be a quick round of final recriminations.
    
Analysts say the most immediate hope for help for GMC, Chrysler and Ford is now the Bush administration, which could possibly decide to use financial bailout funding to help the massive car manufacturers — if there’s any money left.
    
Bush, who had resisted this idea in the past, is headed to Texas A&M University where he is due to deliver a commencement address. The White House said this morning it was willing to consider steps to avoid an auto apocalypse.
    
There’s finger pointing in every direction — the UAW union, recalcitrant Republicans, overreaching Democrats, and the lame-duck White House — but nobody seems sure what happens next for companies which say they are responsible for one out of 10 U.S. jobs.
    
Stock futures were down, indicating that benchmark U.S. indexes could open down about 3 percent or more amid a worldwide sell-off. 
    
Meanwhile, whatever attention is left is fixed firmly on Illinois Gov. Rod Blagojevich, who is still in office three days after being charged with corruption in connection with allegations that he sought to “sell” the vacant U.S. Senate seat of President-elect Barack Obama.
    
Lots of people seem to want the man out — Obama described himself as “appalled” — but there’s no word on whether Blagojevich  intends to resign. Obama, who has sought to distance himself from the Democratic governor, has no public events scheduled today.

Click here for more Reuters political news. 

REUTERS/Yuri Gripas (Bush on South Lawn)

The First Draft: Friday, Nov. 5

Detroit CEOs drive their hybrid cars over to the House of Representatives for another serving of humble pie this morning. But it’s still not clear if they’ll get the $34 billion bailout they’re looking for, as several senators remained skeptical after yesterday’s testimony on that side of the Capitol. 
     
Testimony before the House Financial Services Committee begins at 9:30 a.m. 

     
The last outstanding Senate race may finally reach a resolution today, as Minnesota could complete its recount in the contest between incumbent Republican Norm Coleman and Democrat Al Franken. 

But any resolution will be preliminary: there are still about 6,000 ballots that have been challenged and will need further review.

The First Draft: Wednesday, Dec. 3

President-elect Barack Obama will continue to fill out his Team of Rivals when he names New Mexico Gov. Bill Richardson as Commerce Secretary at a press conference scheduled for 11:40 a.m. EST For those of you keeping score at home, that means at least three members of his administration will be former Democratic presidential candidates – Richardson, Vice President-elect Joe Biden, and Secretary of State pick Hillary Clinton. 
     
We can’t wait to see what he has in mind for Dennis Kucinich. 
     
On the Hill, lawmakers will continue to weigh U.S. automakers’ restructuring proposals ahead of hearings later this week. The heads of Ford, General Motors and Chrysler, chastened from their skeptical reception last month, are driving from Detroit this time — and they’re confident they’ll get here in good shape. 
     
“Our cars don’t have car trouble,” GM president Fritz Henderson said on ABC’s “Good Morning America.” 

Chrysler officials hold a rally at a dealership in suburban New Carollton, Maryland, to build support for the bailout at 11:30 a.m. 
     
Bigwigs from Honda and Toyota are in town, too. But they’re not here to beg for cash — they’re talking about electric cars and other sustainable technologies at the Convention Center. 
      
Just how bad is this recession? We’ll know more at 2 p.m., when the Fed Releases its “Beige Book,” an antecdotal survey of economic conditions nationwide. 
    
Wall Street doesn’t need more gloomy evidence. Stocks are expected to open lower after Research in Motion, the folks who make the Blackberry, slashed their outlook and mining giant Freeport-McMoRan suspended its divident payments and slashed copper output.

REUTERS/Richard Clement (Richardson and Obama at campaign rally)

REUTERS/Fred Prouser (GM logo at LA auto show)

The First Draft: Tuesday, Nov. 25

Treasury Secretary Henry Paulson will announce a new program to increase the availability of student loans, credit cards, auto loans and other forms of consumer credit, according to the Wall Street Journal. It will cost between $25 billion and $100 billion, using the $700 billion already allocated through the Troubled Asset Relief Program.

Paulson speaks at 10 a.m. EST.

President-elect Obama holds another press conference today. Yesterday, he said he’d push for a massive increase in government spending to jolt the country out of a recession; today he’s expected to talk about what cuts he’ll make in the federal budget when he takes office on Jan. 20. 
    
He’ll speak at noon EST.

Other than that, things look pretty quiet as many begin their Thanksgiving holiday early.

The First Draft: Thursday, Nov. 20

Major indexes dropped  to their lowest level since 2003 yesterday and U.S. stock futures are pointing to another plunge today as investors worry about the fate of U.S. carmakers and the spectre of a prolonged economic downturn.
    
Just how bad is it? Well, here’s another sign of the impending apocalypse: the Labor Department reported at 8:30 a.m. EST that jobless claims are at their highest level in 16 years.   

After two days of petitioning Congress, Detroit automakers headed home without the $25 billion check they were angling for. Congressional leaders say a deal is doubtful until next January as they prepare to adjourn for the year.
    
President-elect Barack Obama remains in Chicago, piecing together a new administration that could include Hillary Clinton as secretary of state. His peeps are a little miffed by the leaks out of the Clinton camp, which they tell the New York Times are designed to force them to give her the post. Is this a sign that Obama’s formal rival might “go rogue” if she ends up working for him?
    
Happy Joe Biden’s birthday, everyone! The vice president-elect turns 66 today. 
    
And it’s not even Thanksgiving, but the Christmas Wars are starting up already. Two conservative Christian groups plan to set up a Christmas scene on the sidewalk in front of the Supreme Court as they talk about their plans to promote the display of nativity scenes across the country on private and public property.

Photo: REUTERS/Hannibal Hanschke (costumed angels in Berlin)