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With the auto industry in crisis leaders of General Motors [GM
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], Chrysler and Ford [F
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] implored the government for help on Thursday.
All three CEO’s flew to Washington DC and met with House Speaker Nancy Pelosi on Thursday to underscore just how serious their situation is.
According to CNBC’s Phil Lebeau they asked for billions in aid to help the industry get through the worst downturn, ever.
“They asked for Congress to appropriate another $25 billion that would allow the Big 3 to cover health care fund obligations. That money would go to the UAW which is taking over retiree healthcare obligations,” LeBeau says.
No Time To Waste
U.S. auto sales declined to their lowest level in more than 17 years last month, prompting some auto executives to predict dire consequences if the economy doesn't improve.
Unfortunately, the industry's health is so bad some believe they made the trip Thursday because they can't wait for Barack Obama to take office.
"He's not here until January (20th) and that's a long time in the life of these companies at the moment," John Engler, a former Michigan governor and president and chief executive of the National Association of Manufacturers.
Engler expects fundamental changes in industry before Obama's inauguration although he hasn’t been specific. General Motors Corp said on Wednesday it plans to reveal new cost cuts when it reports quarterly earnings on Friday. Results at GM and Ford Motor Co are expected to be dismal.
Is Bankruptcy Even An Option?
"Also, expect there to be a fight in Washington to prevent the industry from going under," adds LeBeau. "A massive amount of the labor market either works for or in jobs supported by the auto industry."
“If GM files for bankruptcy it would force Ford and Chrysler into bankruptcy and an enormous supply base into bankruptcy. It would create an industrial crisis that our nation has never seen,” adds Kimberly Rodriguez, principal at Grant Thornton Global Automotive Services.
But what happens to the industry if the sales don’t rebound halfway through 2009, adds LeBeau. The bigger issue is, how much money do we give them?
What do you think? Tell us now!
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Trader disclosure: On Nov. 6, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (DIS), (BNI), (MSFT), (SDS), (UUP), (WMT); Finerman's Firm Owns (MSFT); Finerman's Firm Owns (OIH) Puts; Finerman's Firm Is Short (IYR), (IJR), (MDY), (IWM), (SPY), (USO), (USO); Najarian Owns (MBI) Put Spread; Najarian Owns (MSFT) And Is Short (MSFT) Calls; Najarian Owns (YHOO) And Is Short (YHOO) Calls; Seymour Owns (AAPL), (BAC), (EEM), (F), (MER); Seygem Asset Management Owns (EEV)
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