GM – Page 3 – Infinite Unknown

Bush Gives Emergency Loans to Automakers: A $17.4 Billion, 3-Month Lifeline

December 19, 2008 by Infinite

WASHINGTON – President Bush agreed to an emergency bailout of General Motors and Chrysler, giving them a few months to get their businesses in order, but left to President-elect Barack Obama the difficult political decision of ruling on their progress.

The president’s plan gives carmakers until March 31 to restructure.
Doug Mills/The New York Times

The plan pumps $13.4 billion by mid-January into the companies from the fund that Congress authorized to rescue the financial industry. But the two companies have until March 31 to produce a plan for long-term profitability, including concessions from unions, creditors, suppliers and dealers.

The bailout plan sets “targets” rather than concrete requirements about what those concessions may be, meaning that Mr. Obama and his advisers have enormous latitude to decide how to define long-term viability.

Stocks Jump, Then Slide Back, After Auto Bailout

December 19, 2008 by Infinite

A huge bailout for Detroit was barely able to budge Wall Street on Friday.

Stock markets surged in early trading after President Bush announced plans to extend $13.4 billion in emergency loans to the troubled automakers General Motors and Chrysler. But Wall Street’s reaction cooled, the morning’s early gains eroded, and markets ended mixed.

General Motors to Idle Most Plants for About a Month

December 12, 2008 by Infinite

DETROIT – The General Motors Corporation said Friday that it would idle all of its assembly plants in the United States and Canada for at least part of the first quarter and build 250,000 fewer cars and trucks than it had planned.

At G.M., many plants will close for about a month in one of the broadest shutdowns in the automaker’s history. The closures will occur at various times during the quarter, though some will extend the annual Christmas holiday through January.

G.M. now expects to build about 60 percent fewer vehicles in the first quarter, compared with the 885,000 it made in the same period of 2008.

“Every plant in North America has some type of action related to it,” a G.M. spokesman, Tony Sapienza, said. “This is an utter collapse of the market, and it’s not specific to G.M. or to U.S. automakers. People just aren’t buying cars right now.”

But G.M., which has warned that it may run out of money unless it can borrow about $10 billion from the federal government this month, has suffered more than most of its rivals. G.M.’s sales were down 43 percent in October and November, compared with a 34 percent decline for the industry over all.

Hyperinflation and then The Second Great Depression

December 12, 2008 by Infinite

A future out of control, bankrupt financial institutions trying to hold on, limitation on credit severely limits ability of the economy to start up again, debt totally embraces our lives, handouts a state secret, soon cash infusions wont work for banks anymore, banks hold too much toxic garbage to even know if they are solvent. We are now 17 months into a credit crisis that continues to expose the corruption and incompetence of government, banking, Wall Street and transnational corporations. The situation has not stabilized and it won’t anytime soon. All we see are sweetheart deals for elitist corporations for which American taxpayers will pay for years to come. The future of our nation is totally out of control. For the last eight years our economy has been running on something for nothing, lies and deceit. The result will be hyperinflation and then the Second Great Depression.

GM says it “disappointed” and “betrayed” consumers

December 8, 2008 by Infinite

U.S. flags flutter in the wind in front of the General Motors Corp headquarters in Detroit, Michigan November 7, 2008.
REUTERS/Rebecca Cook (UNITED STATES)

DETROIT (Reuters) – General Motors Corp on Monday unveiled an unusually frank advertisement acknowledging it had “disappointed” and sometimes even “betrayed” American consumers as it lobbies to clinch the federal aid it needs to stay afloat into next month.

The print advertisement marked a sharp break from GM’s public stance of just several weeks ago when it sought to justify its bid for a U.S. government on the grounds that the credit crisis had undermined its business in ways executives could never have foreseen.

It also came as Chief Executive Rick Wagoner, who has led the automaker since 2000, faces new pressure to step aside as GM seeks up to $18 billion in federal funding.

“While we’re still the U.S. sales leader, we acknowledge we have disappointed you,” the ad said. “At times we violated your trust by letting our quality fall below industry standards and our designs became lackluster.”

The unsigned open letter, entitled “GM’s Commitment to the American People” ran in the trade journal Automotive News, which is widely read by industry executives, lobbyists and other insiders.

In the ad, GM admits to other strategic missteps analysts and critics have said hastened its recent decline.

“We have proliferated our brands and dealer network to the point where we lost adequate focus on the core U.S. market,” the ad said. “We also biased our product mix toward pick-up trucks and SUVs.”

Interview: Peter Schiff still grim on future

December 7, 2008 by Infinite

“Tens of millions of people unemployed, inflation spiraling out of control, the government instituting price controls that result in shortages and blackouts and long lines for things. I think things are going to get very bad.”

“From an investment point of view, investors need to stay clear, because they need to realize that it’s not just U.S. stocks and real estate that are going to lose value, but U.S. bonds. This is the last bubble yet to burst. I think we’re going to see a collapse of the bond market sometime during Obama’s first term, and interest rates are going to spiral out of control, and the dollar is going to just be destroyed.”
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People aren’t laughing any more at the way-out-there predictions of Peter Schiff, whose long-standing pessimism about the economy and stock market has been largely borne out.

Schiff heads Euro Pacific Capital, a brokerage in Darien, Conn. with more than $1 billion in assets under management. He has silenced critics because he predicted the collapse of the housing market, the subprime crisis and the soaring of oil prices in his market commentaries before they came to pass.

A YouTube video called “Peter Schiff Was Right” shows him being repeatedly mocked when he went on TV stock shows to make those ultimately correct calls in 2006 and 2007, including forecasting a recession 2 1/2 years ago.

Now, in the midst of what’s already the biggest financial crisis in decades, the prominent purveyor of gloom and doom still sees far tougher times ahead – including a depression and a bear market he thinks will last another five years or more.

Poll: 61% oppose auto bailout; 70% say bailout is unfair to taxpayers

December 3, 2008 by Infinite

If you oppose those disastrous bailouts people then you should have better voted for Ron Paul and not for Mr. ‘Change is Protectionism’ or Mr. ‘Bomb Them All’. Ron Paul would have listened to the people. He always did. Those elite puppets won’t.
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Survey shows that Americans think federal aid for the Big Three is unfair and won’t help the economy.

NEW YORK (CNNMoney.com) — A majority of Americans oppose a bailout of the troubled U.S. auto industry, according to a poll released Wednesday.

The CNN/Opinion Research Corp. poll, conducted by telephone on Dec. 1-2 with nearly 1,100 people, showed that 61% of those surveyed oppose government assistance for the major U.S. automakers.

The poll comes at a critical time for the American auto industry. Ford Motor, General Motors and Chrysler LLC are requesting up to $34 billion dollars in emergency loans from the government to amid the weakest auto sales in 25 years and persistently tight credit.

General Motors and Chrysler, burning through billions of dollars in cash, are the most imperiled. All three companies submitted plans to Congress on Tuesday making their case for funding, and industry executives are set to testify on Capitol Hill as lawmakers debate whether to take emergency action.

But Wednesday’s poll suggests that Americans believe bailing out the Big Three is a bad idea.

A full 70% of respondents indicated that a bailout is unfair to taxpayers.

GM, Chrysler Seek $11 Billion Just to Avert 2008 Collapse

December 3, 2008 by Infinite

The ‘USSA’ will bailout almost everything until the USS Titanic sinks.
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A U.S. flag flies outside the headquarters of General Motors Corp. in Detroit, Michigan, Oct. 17, 2008. Photographer: Gary Malerba/Bloomberg News

Dec. 3 (Bloomberg) — General Motors Corp. and Chrysler LLC told Congress they need $11 billion in government loans just to survive the year. Democrats pledged to keep them out of bankruptcy without saying how.

The aid requests delivered yesterday to U.S. lawmakers total $34 billion, more than a third larger than the plans they set aside last month, and heighten the pressure for action as a deepening auto slump quickens GM’s rush toward a default.

While President-elect Barack Obama has said he favors an industry rescue, GM and Chrysler said yesterday they won’t be operating through his January inauguration without the money stalled by a deadlock in Congress. Democrats want to use the $700 billion bank-bailout fund, and Republicans favor tapping an Energy Department loan program.

Volvo and Saab ask Sweden for aid

December 1, 2008 by Infinite

The Volvo V70

General Motors and Ford Motor have approached Sweden’s government about financial aid for their lossmaking Saab and Volvo brands.

GM and Ford want to bolster the two marques’ finances in anticipation of selling them as the Detroit carmakers grapple with a cash crunch that threatens their survival.

Stephen Odell, Volvo’s chief executive, and Saab’s managing director Jan-Ake Jonsson have separately spoken to Maud Olofsson, Sweden’s industry minister, and other officials about securing funds, according to several people familiar with the discussions.

Ford and GM will both tell the US Congress they have long-term plans to dispose of the brands this week when they present detailed business and financial plans to support their request for $25bn of emergency funding.

GM Said to Study Shedding Saturn, Saab, Pontiac to Win U.S. Aid

November 27, 2008 by Infinite

Nov. 27 (Bloomberg) — General Motors Corp., working to cut costs to win $12 billion in government loans, is studying whether to shed its Saturn, Saab and Pontiac brands in addition to Hummer, people familiar with the matter said.

Selling or dropping brands would save money and reduce overlap as the biggest U.S. automaker struggles to avoid running out of operating cash by year’s end, said the people, who didn’t want to be identified because no decision has been made. GM’s other U.S. brands are Chevrolet, GMC, Buick and Cadillac.

The review of the 82-year-old Pontiac division, one of GM’s earliest, shows the scope of the survival plan being given to Congress on Dec. 2 to show GM can repay federal aid. GM also seeks to cut debt levels and reduce costs for active and retired union workers, people have said.

Colossal Financial Collapse: The Truth behind the Citigroup Bank “Nationalization”

November 25, 2008 by Infinite

On Friday November 21, the world came within a hair’s breadth of the most colossal financial collapse in history according to bankers on the inside of events with whom we have contact. The trigger was the bank which only two years ago was America’s largest, Citigroup. The size of the US Government de facto nationalization of the $2 trillion banking institution is an indication of shocks yet to come in other major US and perhaps European banks thought to be ‘too big to fail.’

The clumsy way in which US Treasury Secretary Henry Paulson, himself not a banker but a Wall Street ‘investment banker’, whose experience has been in the quite different world of buying and selling stocks or bonds or underwriting and selling same, has handled the unfolding crisis has been worse than incompetent. It has made a grave situation into a globally alarming one.

‘Spitting into the wind’

A case in point is the secretive manner in which Paulson has used the $700 billion in taxpayer funds voted him by a labile Congress in September. Early on, Paulson put $125 billion in the nine largest banks, including $10 billion for his old firm, Goldman Sachs. However, if we compare the value of the equity share that $125 billion bought with the market price of those banks’ stock, US taxpayers have paid $125 billion for bank stock that a private investor could have bought for $62.5 billion, according to a detailed analysis from Ron W. Bloom, economist with the US United Steelworkers union, whose members as well as pension fund face devastating losses were GM to fail.

Peter Schiff: The Truth About Bailouts

November 25, 2008November 24, 2008 by Infinite

As the Federal bailout bonanza prepares to spread beyond the mortgage and financial sectors to fill Detroit’s depleted coffers, few economic or policy analysts have spared a thought for the destitution of the U.S. government itself.

Put simply, our government doesn’t have enough spare cash to bail out a lemonade stand let alone a bloated and failing industry that is losing tens of billions of dollars per month.

Washington can only offer funds that it has borrowed from abroad or printed. Unfortunately, the nation is in the grips of a delusion that money derived from these sources has the power to heal. But history has clearly shown that borrowed or printed money only has the power to destroy.

The argument that energizes the pro-Detroit camp is that the government should extend the same courtesy to the rank and file auto workers that it lavished upon the fat cats of Wall Street.

While two wrongs certainly do not make a right, the fact remains that the Wall Street firms are still floundering despite the bailouts. What’s worse, the money spent was either printed or borrowed from abroad. Both options are destructive to America.

When it comes to bailouts, the real discussions are not centered in Washington but rather in Beijing, Tokyo, and Riyadh. With no money of our own, our ability to bailout our own citizens is completely dependent on the world’s willingness to foot the bill.

Obama Team Said to Explore `Prepack’ Auto Bankruptcy

November 21, 2008 by Infinite

U.S. President-elect Barack Obama looks on before the start of a meeting with Senator John McCain of Arizona, former Republican presidential candidate, at Obama’s transition office in Chicago, Nov. 17, 2008. Photographer: Frank Polich/Bloomberg News

Nov. 21 (Bloomberg) — President-Elect Barack Obama‘s transition team is exploring a swift, prepackaged bankruptcy for automakers as a possible solution to the industry’s financial crisis, according to a person familiar with the matter.

A representative of Obama’s team has already contacted at least one bankruptcy-law firm to say that Daniel Tarullo, a professor at Georgetown University’s law school who heads Obama’s economic policy working group, would call to discuss the workings of a so-called prepack, according to this person.

U.S. lawmakers yesterday delayed until December a vote on whether to give General Motors Corp., Ford Motor Co. and Chrysler LLC a $25 billion bailout. GM today said it would idle production at four plants an extra week and return some corporate jets to conserve cash. Automakers could use a judge-supervised bankruptcy to reduce debt and reject expensive contracts.

“It creates the environment to deal with GM’s problems but limits government financial commitment,” said bankruptcy lawyer Mark Bane of Ropes & Gray in New York.

Bankruptcy is just one option being examined. Obama told CBS News’s “60 Minutes” on Nov. 16 that government aid to automakers might come in the form of a “bridge loan,” advanced if the industry could draw up plan to make itself “sustainable.” The president-elect earlier urged Congress to approve as much as $50 billion to save automakers, using the model of Chrysler’s bailout in 1979.

Chinese Automakers May Buy GM and Chrysler

November 20, 2008 by Infinite

Chinese carmakers SAIC and Dongfeng have plans to acquire GM and Chrysler, China’s 21st Century Business Herald reports today. [A National Enquirer the paper is not. It is one of China’s leading business newspapers, with a daily readership over three million.]

The paper cites a senior official of China’s Ministry of Industry and Information Technology- the state regulator of China’s auto industry- who dropped the hint that “the auto manufacturing giants in China, such as Shanghai Automotive Industry Corporation (SAIC) and Dongfeng Motor Corporation, have the capability and intention to buy some assets of the two crisis-plagued American automakers.”

These hints are very often followed with quick action in the Middle Kingdom. The hints were dropped just a few days after the same Chinese government gave its auto makers the go-ahead to invest abroad. And why would they do that?

GM, Ford, Chrysler Depart From Congress Empty-Handed

November 20, 2008 by Infinite

Nov. 20 (Bloomberg) — U.S. lawmakers deadlocked on a plan to bail out the Big Three automakers, leaving General Motors Corp. facing the prospect it could run out of cash before a new Congress can come to the rescue next year.

Democratic congressional leaders disagreed with Republicans and President George W. Bush‘s administration over how to provide $25 billion in aid to GM, Ford Motor Co. and Chrysler LLC. Only two days remain in a lame-duck session for lawmakers to resurrect a compromise.

Senate Majority Leader Harry Reid, a Nevada Democrat, suggested yesterday the situation was dire and refused to set aside time today to debate a compromise proposed by Senator Kit Bond, a Missouri Republican. Reid said Bond’s plan hasn’t been put in writing and the House of Representatives is about to adjourn.

“We have to face reality,” he said. “The reality is that we tried a number of different approaches.”

Paulson, Democrats Clash on Bailout for Homeowners

November 18, 2008 by Infinite

‘But, but, but … that money was only for my friends on Wall Street and not for the people.’
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Henry Paulson, U.S. treasury secretary, left, and Ben S. Bernanke, chairman of the U.S. Federal Reserve, right, listen during a hearing of the House Financial Services Committee in Washington, on Nov. 18, 2008. Photographer: Jim Lo Scalzo/Bloomberg News

Nov. 18 (Bloomberg) — Treasury Secretary Henry Paulson rejected using the government’s financial-rescue program as a “panacea” for economic difficulties, clashing with lawmakers who want the funds to help beleaguered homeowners.

“The rescue package was not intended to be an economic stimulus or an economic recovery package,” Paulson said in testimony to the House Financial Services Committee in Washington. The Troubled Asset Relief Program was designed to stabilize financial markets and the flow of credit and “is not a panacea for all our economic difficulties.”

Representative Barney Frank, who heads the House panel, cut off Paulson during the question-and-answer session, saying “the bill couldn’t have been clearer” in also being aimed at reducing foreclosures. Paulson told lawmakers he has no plans to use the second half of the $700 billion program, indicating it will be up to the incoming Obama administration to resolve the matter.

“We don’t have a lot of time and I don’t usually do this,” Frank said in interrupting Paulson during an exchange on how to deploy TARP cash. “I read sections of the bill that says — write it down — give them assistance,” Frank, a Massachusetts Democrat, told the Treasury chief.

Auto bailout: Showdown

November 17, 2008 by Infinite

Should Congress bail out the Big Three? Here’s what lawmakers are considering and what’s at stake.

NEW YORK (CNNMoney.com) — For more than a century, the U.S. auto industry has been at the center of the American industrial economy. Events over the next month could determine if that remains the case.

This week, Congress will consider whether to cough up billions of dollars to bail out the troubled companies.

There are loud advocates with strong arguments on both sides.

German government says ready to help Opel

November 17, 2008 by Infinite

BERLIN (Reuters) – Germany said on Monday it was ready to help General Motors’ struggling German unit Opel, though it would make sure any aid did not seep over to the U.S. parent or trigger a flood of demands for support.

Chancellor Angela Merkel is due to meet Opel representatives at 1530 GMT on Monday. Opel has asked the federal government and German states to help it through a financial rough patch that has been aggravated by troubles at its parent GM.

“I think the government will do everything that is necessary to help the company but on the other hand, it will of course respect the consequences with regard to dealing with other companies,” government spokesman Ulrich Wilhelm said.

“This cannot be about taking action that we would then not be able to maintain with regard to similar cases,” he added at a regular government news conference.

Senator Shelby Opposes $25 Billion to Aid Automakers

November 16, 2008 by Infinite

Nov. 16 (Bloomberg) — U.S. automakers should not get $25 billion in proposed federal loans to save them from possible bankruptcy, Senator Richard Shelby, the top Republican on the Banking Committee, said.

“Companies fail every day and others take their place,” Shelby said on CBS’s “Face the Nation” today. “There’s not a bank in this country that would loan a dollar to these companies.”

GM Collapse at $200 Billion Would Exceed Bailout Tab, Firm Says

November 15, 2008 by Infinite

Nov. 15 (Bloomberg) — General Motors Corp., burning through cash as sales slump, would cost the government as much as $200 billion should the biggest U.S. automaker be forced to liquidate, a forecasting firm estimated.

A GM collapse would mean “more aid to specific states like Michigan, Ohio, and Indiana, and more money into unemployment and extended benefits,” Nariman Behravesh, chief economist at IHS Global Insight Inc. in Lexington, Massachusetts, said yesterday in an interview.

Behravesh’s projection of $100 billion to $200 billion in costs dwarfs the $25 billion industry bailout plan that will be debated in Congress next week to prop up Detroit-based GM, Ford Motor Co. and Chrysler LLC. The drain on taxpayers from a rescue or a GM failure is a central issue for U.S. lawmakers.

Included in the Global Insight estimate, which Behravesh supplied to Bloomberg News, are the anticipated costs for existing programs, such as unemployment insurance, and new measures that the economist said would be needed to revive economic growth after millions of auto-related job losses.

A GM shutdown would wipe out jobs among suppliers as well as at the automaker itself, pushing the U.S. unemployment rate next year to 9.5 percent, compared with current projections of as high as 8.5 percent, Behravesh said.

GM Judged Too Big to Fail as Pelosi Embraces Rescue

November 12, 2008 by Infinite

Vehicles are parked at the Jefferson Chevrolet dealership in Detroit on Nov. 7, 2008. Photographer: Jeff Kowalsky/Bloomberg News

Nov. 12 (Bloomberg) — House Speaker Nancy Pelosi has thrown her support behind the premise that General Motors Corp., the largest U.S. automaker, is too big to be allowed to fail.

In urging Congress to enact emergency aid for the ailing auto industry, Pelosi rejected calls to let GM collapse and sided with the company and its allies in trying to prevent a “devastating” domino effect that would cost millions of jobs.

“Trying to reorganize the auto industry in bankruptcy would be as close to reorganizing the whole U.S. economy as you could get,” said Alan Gover, a bankruptcy lawyer with White & Case LLP in New York. “The vast supply chain involves thousands of businesses, millions of existing jobs and just as many retirees, as well as whole communities and states.”

Passage of an industry bailout plan may keep GM from running out of operating cash by year’s end, which it says may happen without U.S. help. GM is the second-biggest provider of private health-care benefits and was the third-biggest advertiser in this year’s first half.

“It’s truly one of those companies that’s too big to fail, and everybody understands that,” said Nariman Behravesh, chief economist at IHS Global Insight Inc. in Lexington, Massachusetts. “If it does collapse, it could make the recession deeper and longer.”

Behravesh said a GM bankruptcy could send the U.S. jobless rate as high as 9.5 percent, up from a 14-year high of 6.5 percent in October, and produce a recession comparable in length to that of 1980-82.

Revised AIG Terms Begin Treasury Transfusions to ‘Zombie’ Firms

November 11, 2008 by Infinite

A man exits the American International Building, home to the headquarters of American International Group (AIG), in New York, Nov. 10, 2008. Photographer: Daniel Acker/Bloomberg News

Nov. 11 (Bloomberg) — The revised bailout of American International Group Inc. marks a new phase in the government’s effort to shore up financial markets: It’s the first time cash from the rescue fund Congress created last month has been committed to a failing company.

The Federal Reserve, which saved the insurer from collapse two months ago with an $85 billion loan, yesterday reduced that loan and offered lower rates, while the Treasury chipped in $40 billion from its bank-rescue fund to buy preferred shares. The new terms represent a departure for Secretary Henry Paulson, who until now has said he only wants to invest Treasury funds in “healthy” firms.

Taxpayers are “keeping the zombie alive,” said Robert Eisenbeis, chief monetary economist at hedge fund Cumberland Advisors and former director of research at the Atlanta Fed. “We keep getting deeper and deeper into these holes.”

The shift is likely to vastly expand political demands for saving dying companies in the name of financial or economic stability. The administration of President-elect Barack Obama may soon have to consider credit or capital injections for other insurers, automakers, even retailers as the U.S. slides deeper into what could be the worst recession in a quarter-century.

“Are you going to do General Motors and Ford, and, if you do those, are going to go on and do retailers?” said William Isaac, former chairman of the Federal Deposit Insurance Corp. and now chairman of the Secura Group LLC. “ Where does it stop? That is a very difficult decision we are going to face as a country.”

AIG’s Losses

GM Tumbles as Deutsche Says It May Become Worthless

November 10, 2008 by Infinite

Nov. 10 (Bloomberg) — General Motors Corp. plummeted as much as 31 percent and moved toward its lowest level in 62 years after a Deutsche Bank AG analyst downgraded the shares, saying they may be worthless in a year.

“Even if GM succeeds in averting a bankruptcy, we believe that the company’s future path is likely to be bankruptcy-like,” Deutsche Bank’s Rod Lache wrote today in a note. The New York analyst recommended selling the shares and cut his 12-month price target to zero. He previously advised holding the stock.

The decline shows mounting pessimism that a turnaround will succeed at the largest U.S. automaker amid the credit crisis and the worst sales market in at least 15 years. GM is petitioning the U.S. government for aid after saying last week it may not have enough cash to operate this year. A bankruptcy typically wipes out the value of a company’s shares.

Barclays Capital and Buckingham Research Group cut their price targets for GM to $1.

GM, based in Detroit, lost 99 cents, or 23 percent, to $3.37 at 2:45 p.m. in New York Stock Exchange composite trading. It fell as low as $3.02 in intraday trading, which would be the lowest close since Nov. 22, 1946, according to Global Financial Data in Los Angeles. Ford Motor Co. dropped 9 cents to $1.93.

Tesla CEO: GM couldn’t afford us now

November 8, 2008 by Infinite

The Roadster goes 0 to 60 mph in 3.9 seconds. Image: Yi-Wyn Yen

SAN FRANCISCO – How much is Tesla Motors worth?

Tesla CEO Elon Musk won’t say, but it’s at least too expensive for General Motors to buy. “I’m not sure they can afford Tesla right now,” he said during a 30-minute talk Friday at the Web 2.0 Summit.

The South African-born entrepreneur talked candidly with host John Battelle about the failures of the auto industry and Tesla’s own troubles. Battelle had asked why GM (GM) doesn’t buy the electric car startup.

GM reported a $2.5 billion loss in the third quarter Friday and also warned that it could run out of cash soon. Said Musk, “There’s an issue with organized labor and trade and management still acts like it’s 1955. There are too many country club memberships, and [GM] management has focused on the wrong thing. ”

Tesla has been plagued with its own problems. In mid-October Musk, who has helped bankroll Tesla, became its third CEO in less than a year, announced layoffs and delayed the debut of its forthcoming electric sedan, the Model S.

Musk explained why Tesla had to let go 10% of his employees last month. “Before market Armageddon occurred, the point was to raise $100 million. And we intended to get going with that in full force before the market collapsed,” he said.

The company settled for cutting costs and raising $40 million from its existing investors. Musk says he’s backing half of the $40 million round. He has already poured $55 million of his own money into the company.

Jobless ranks hit 10 million, most in 25 years; unemployment hits 14-year high

November 8, 2008 by Infinite

Sunny Yang, left, a masters degree student from Shanghai and employed banker in New York City, speaks with World Bank representative Roberto Amorosino about opportunities for unemployed friends of his during a career fair at Columbia Univeristy Friday, Nov. 7, 2008 in New York. The U.S. unemployment rate bolted to a 14-year high of 6.5 percent in October as another 240,000 jobs were cut, far worse than economists expected and stark proof the economy is deteriorating at an alarmingly rapid pace. (AP Photo/Julie Jacobson)

WASHINGTON (AP) — The nation’s jobless ranks zoomed past 10 million last month, the most in a quarter-century, as piles of pink slips shut factory gates and office doors to 240,000 more Americans with the holidays nearing. Politicians and economists agreed on a painful bottom line: It’s only going to get worse.

The unemployment rate soared to a 14-year high of 6.5 percent, the government said Friday, up from 6.1 percent just a month earlier. And there was more grim news from U.S. automakers: Ford Motor Co. and General Motors Corp., American giants struggling to survive, each reported big losses and figured to be announcing even more job cuts before long.

Regulators, meanwhile, shut down Houston-based Franklin Bank and Security Pacific Bank in Los Angeles on Friday, bringing the number of failures of federally insured banks this year to 19.

The Federal Deposit Insurance Corp. was appointed receiver of Franklin Bank, which had $5.1 billion in assets and $3.7 billion in deposits as of Sept. 30, and of Security Pacific Bank, with $561.1 million in assets and $450.1 million in deposits as of Oct. 17.