GM joins Chrysler in Chapter 11; International Partnerships Form

General Motors filed for Chapter 11 bankruptcy protection the morning as part of the Obama administration's plan to shrink the automaker to a sustainable size and give a majority ownership stake to the federal government.

GM's bankruptcy filing is the fourth-largest in U.S. history and the largest for an industrial company. The company said it has $172.81 billion in debt and $82.29 billion in assets.

As it reorganizes, the fallen icon of American industrial will rely on $30 billion of additional financial assistance from the Treasury Department and $9.5 billion from Canada. That's on top of about $20 billion in taxpayer money GM already has received in the form of low-interest loans.

GM will follow a similar course taken by smaller rival Chrysler LLC, which filed for Chapter 11 protection in April. A judge gave Chrysler approval to sell most of its assets to Italy's Fiat, moving the U.S. automaker closer to a quick exit from court protection, possibly this week.

The plan is for the federal government to take a 60 percent ownership stake in the new GM. The Canadian government would take 12.5 percent, with the United Auto Workers getting a 17.5 percent share and unsecured bondholders receiving 10 percent. Existing GM shareholders are expected to be wiped out.

Albert Koch, who helped Kmart Corp. through its Chapter 11 reorganization, will serve as GM's chief restructuring officer.

— NPR.org Story

In related International News:

Germany has agreed a deal with Magna International, a Canadian car parts maker, to take over Opel, part of the European wing of US carmaker GM.

Talks in Berlin continued into early Saturday before Germany's finance minister announced the rescue deal.

The German government is expected to provide an immediate loan facility of 1.5bn euros ($2.1bn, £1.3bn).

The Magna deal should protect Opel if GM files for bankruptcy protection in the US on Monday, as is expected.

The Canadian company has said it will put more than 500m euros ($700m; £435m) into Opel, which employs more than 25,000 people in Germany.

Significant numbers of workers are also spread around Spain, Belgium, Poland and the UK, where Opel cars are branded as Vauxhall for British customers.

Magna's bid was backed by Russia's state-run bank Sberbank and Russian magnate Oleg Deripaska's truck firm Gaz. The consortium hopes to see GM expand its reach into the Russian market.

— BBC News

Trying to get into the spirit of things

It just doesn't feel like the holidays (or as the TV ads in Miami say, I guess to get around that controversy, the Holy Days).

December is not one of my better months. My best friend of 30 years died two years ago on December 22; my Grandmother died on Christmas Eve; My Father died on Boxing Day; and an Uncle died on New Years Eve. But, as we use to say, we have to keep our spirits high for the sake of the kids (what kids?).

Hope this little movie will brighten up your day and help you get into the spirit of the season despite the real possibility that you might be one in six Americans who will lose their job in the next eight months.

Bah Humbug!

European, Asian markets bounce back this morning

A woman walks past a display showing stock index in Hong Kong Monday, Oct. 13, 2008. Hong Kong's key index surged more than 9.7 percent as Asian markets rebounded after last week's dramatic sell-off. The Hang Seng Index was up 1515.29 points, or 9.7 percent, at 16312.16. Associated Press © 2008

Wells Fargo wins Fed approval on Wachovia bid

Thank God that has been decided. What a roller coaster ride us depositors have had!

WASHINGTON (Reuters) - The Federal Reserve on Sunday gave its stamp of approval to the takeover of Wachovia Corp by Wells Fargo & Co of San Francisco, which had battled New York-based Citigroup for ownership of the wounded bank.

In an unusual Sunday afternoon announcement that appeared timed to precede the opening of shaky global financial markets, the Fed said it already had been in touch with the U.S. Department of Justice and banking regulators about the deal.

"Those agencies have indicated that they have no objection to the approval of the proposal," the Fed assured.

The fight between Wells Fargo and Citigroup over Wachovia, which is based in Charlotte, North Carolina, was acrimonious right up to the point when Citigroup finally backed out last Thursday.

It had drawn particular attention because it took place amid the frantic scramble by the U.S. government and regulators to devise ways for shoring up hard-pressed financial institutions, including through possible direct injections of capital into banks.

The Fed cited the "unusual and exigent circumstances affecting the financial markets, the weakened financial condition of Wachovia and all other facts" in its decision, saying it had shortened the usual notice period it generally gives regulators about such takeovers.

The deal could be completed in five days, the Fed said.

— Full Reuters story

Obama fights back

This is a short version of an ad due out today at noon.

— www.keatingeconomics.com

Asia stocks fall after US failure

Japan's benchmark Nikkei stock index has fallen almost 5% in early trading, hours after a US financial rescue plan failed to gain Congressional backing.

The US House of Representatives on Monday rejected a $700bn (£380bn) plan aimed at bailing out Wall Street.

The Dow Jones index fell 7% and suffered its biggest ever one-day points fall, ending 778 down.

President George W Bush is to make a statement on the deadlock over the bail-out plan early on Tuesday morning.

A White House spokesman said that the president was "very disappointed" by the vote's result.

Congress will not meet again until Thursday, with another vote unlikely before the weekend, the BBC's Jonathan Beale in Washington says.

— Full BBC Story

PR: Wachovia Announces Bank Subsidiary Divestitures to Citigroup

From the Wachovia Website:

September 29, 2008
Wachovia Corporation to become a focused leader in retail brokerage and asset management.

CHARLOTTE, NC—Wachovia today announced intentions to sell its retail bank, corporate and investment bank and wealth management businesses to Citigroup. Wachovia Corporation will remain a public company with two main operating subsidiaries: Wachovia Securities, the nation's third largest brokerage firm, and Evergreen Asset Management, a leading provider of asset management services.

"During recent weeks, the financial landscape has changed significantly and presented us with unprecedented challenges," said Robert K. Steel, CEO and President of Wachovia. "Today's announcement is the best alternative for the company, enabling a resolution on the Golden West portfolio."

Under terms of the transaction, Citigroup will pay $2.1 billion to Wachovia and assume the senior and subordinated debt of Wachovia Corporation.

The transaction is expected to close before year-end. It has been approved by directors of both companies and is subject to shareholder approval of Wachovia and the appropriate regulatory approvals.

Customers of both companies should continue banking as usual, and feel confident that their deposits are secure. Also, employees and vendors should continue to operate business as usual.

At this time, there are no changes to Wachovia's board of directors and two Wachovia directors will join Citigroup's board.

Wachovia Corp. will remain headquartered in Charlotte, NC. Wachovia Securities will continue to be headquartered in St. Louis, MO. Citigroup will headquarter the retail bank in Charlotte and the investment bank in New York.

Wachovia's investment bankers were Goldman Sachs, Perella Weinberg Partners and Wachovia Securities, and its legal advisors are Sullivan & Cromwell and Simpson Thacher & Bartlett.

---

About Wachovia
Wachovia Corporation (NYSE:WB) is one of the nation's largest diversified financial services companies, with assets of $812.4 billion and market capitalization of $33.5 billion at June 30, 2008. Wachovia provides a broad range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services to customers through 3,300 retail financial centers in 21 states from Connecticut to Florida and west to Texas and California, and nationwide retail brokerage, mortgage lending and auto finance businesses. Globally, clients are served in selected corporate and institutional sectors and through more than 40 international offices. Our retail brokerage operations under the Wachovia Securities brand name manage more than $1.1 trillion in client assets through 14,600 financial advisors in 1,500 offices nationwide. Online banking is available at wachovia.com; online brokerage products and services at wachoviasec.com; and investment products and services at evergreeninvestments.com.

Citigroup buying Wachovia banking operations

FDIC says Wachovia didn’t fail, and that all depositors will be protected.

NEW YORK - The government said Monday that Citigroup will acquire the banking operations of Wachovia in a deal facilitated by the Federal Deposit Insurance Corp.

The FDIC says Wachovia didn’t fail, and that all depositors are protected and there will be no cost to the Deposit Insurance Fund.

The sale of Wachovia Corp. comes just days after the government’s seizure of Seattle-based Washington Mutual Inc. — the largest bank failure in U.S. history.

— Full MSNBC Story

Sleepy George W. speaks to Congress/Nation

A sleepy looking President came out at 7:35 am and spoke to the Nation this morning. As a one-person pep-rally, he urged congress to pass the bailout bill. He then turned on his heels and walked back to the Oval Office.

The neighbor's dog must have kept him up last night!





Wait... that was me..

Never mind.

Wachovia Update

Citigroup is near a deal for Wachovia, a move that would concentrate power within the nation’s banking industry in the hands of a few giant lenders, The New York Times’s Eric Dash and Andrew Ross Sorkin reported Monday morning.

Citigroup executives are meeting to complete the deal Monday morning, these people said, cautioning that the talks could unravel. Wells Fargo, which had also been in talks with Wachovia, could also revive its bid.

Although the Federal Reserve and Treasury Department were pushing for a sale, the government was resisting pressure to provide financial guarantees to the buyer, which both Citigroup and Wells Fargo had sought.

A sale to Citigroup would further concentrate Americans’ bank deposits in the hands of just three banks: Bank of America, JPMorgan Chase and Citigroup would control more than 30 percent of the industry’s deposits.

— NYTimes Story

World News: Shares slide despite rescue deal

President Bush is expected to talk to the nation about the economy at 7:30 am today. Of course, most of the nation will be driving to work at the time.

Meanwhile, in markets around the world ...

Shares in Europe and Asia have fallen after news of an agreement on a $700bn (£380bn) US finance sector rescue deal failed to calm investors' nerves.

Confidence was also hit by the part-nationalisation of finance group Fortis, and the nationalisation of UK lender Bradford & Bingley.

The main European share markets all fell sharply, with the UK FTSE 100 down 2.5% and Germany's Dax 2.8% lower.

In Japan, the benchmark Nikkei 225 index closed down 1.3%.

However, news that a US rescue deal was set to be approved boosted the dollar, which climbed strongly against the pound and the euro.

In early trade in Europe, the euro was down 1.8% against the dollar at $1.4344, while the pound fell 1.9% to $1.8094.

— Full BBC Story.

From Secretary Paulson

Japanese May Buy Part Of Lehmans

Japanese bank Nomura is in talks to take over Lehman Brothers' European operations.

The move centres on the investment and private equities arms of the collapsed US investment bank.

It comes as Nomura said it had reached a deal to buy the company's Asian operations.

Meanwhile, Barclays has completed its purchase of the US arm of Lehman Brothers.

— Full Story

Issue #1

Barack Obama outlines the major points of his economic plan.

Troubles in Hershey, PA

On the Campaign Trail

Can Obama keep Hershey sweet?

Free trade - and the job losses that the unions say come with free trade pacts - are big news in Hershey.

The Hershey company - the town's biggest employer and America's biggest confectionery manufacturer - last year announced plans to shed 1500 jobs in the US, 900 of them in Hershey itself.

The firm also announced its intention to move some of its operations to Mexico, where labour is cheaper.

The unions say that the job losses are a direct result of the North American Free Trade Agreement (Nafta) between the US, Mexico and Canada, and that more deals - like the proposed free trade agreement with Colombia - will mean more job losses.

Mr Obama has pledged to renegotiate America's trade deals to include greater protection for workers and the environment, partly in order to level the playing field and reduce the flow of American jobs abroad.

— Full BBC Story

The Two-Minute Ad

Notice to McCain: It's the economy, Stupid!

Great Response

Yesterday's Response:


Today's ad:

McCain: Out of touch; Out of sync

From my New Oxford American Dictionary:

fundamentals |ˌfəndəˈmentl|
adjective
Forming a necessary base or core; of central importance : the protection of fundamental human rights | interpretation of evidence is fundamental to the historian's craft.
   • affecting or relating to the essential nature of something or the crucial point about an issue : the fundamental problem remains that of the housing shortage.
   • so basic as to be hard to alter, resolve, or overcome : the theories are based on a fundamental error.

noun (usu. fundamentals)
a central or primary rule or principle on which something is based : two courses cover the fundamentals of microbiology.
   • a fundamental note, tone, or frequency..

In a day of buyouts and bankruptcy on Wall Street, McCain again says the fundamentals of the economy are strong.

Green Revolution

Watched this today on CNN. If you didn't see this interview with Tom Friedman, please take a little time and watch it.

The Issues

Let's get down to the brass tacks of this 2008 Presidential Election.

The following videos explore Obama's views of the main issues that are (and should be) the driving force of our President selection and our future:

Economy


Education


Environment


Foreign Policy


Immigration


Healthcare