Hero Honda, Ford cut India vehicle prices
Wed, Dec 10 09:39 AM
Hero Honda Motors Ltd, India's leading motorcycle maker, has reduced the prices of its products after the government cut a tax as part of a stimulus package.
The reduction ranges between 1000 rupees ($20) to 2000 rupees across its product portfolio, it said in a statement issued late on Tuesday.
Ford Motor's Indian unit has also cut prices of its cars by 17,500 to 54,000 rupees.
The government on Sunday announced a 4 percent cut in central value-added tax on all products other than petroleum, as part of a stimulus package to boost the slowing economy.
No. 2 bike maker Bajaj Auto and car makers Maruti Suzuki India, Hyundai Motor India and Honda Siel Cars India announced price cuts earlier in the week.
Hero Honda, in which Japan's Honda Motor Co holds 26 percent, saw its sales rise 0.5 percent in November from a year earlier.
Bush, Democrats seek to finalize auto bailout
WASHINGTON (Reuters) – White House and congressional negotiators sought on Sunday to resolve remaining differences over an emergency rescue for the struggling auto industry, a stark symbol of the deepening U.S. economic crisis.
Prodded by shock unemployment figures that showed the country shed more than half a million jobs last month alone, negotiators tried to turn into legislation an agreement in principle to provide "The Big Three" U.S. automakers with at least $15 billion in short-term loans.
"The expectation is that White House will see our draft (bill) tonight," a Democratic aide said, adding several unspecified modifications were being incorporated into it.
In addition to reorganizing automakers and protecting taxpayer investment, possible conditions include creating a government "car czar" to oversee the bailout and additional concessions by the United Auto Workers (UAW) union as well as the corporate leadership.
The Senate is due back in session on Monday and negotiators hope to have a package ready that can be quickly approved and sent to President George W. Bush as one of the last measures he signs into law before Democrat Barack Obama succeeds him as president on January 20.
The amounts under discussion are less than half the $34 billion that the automakers asked Congress for last week. Some economists believe they may need $75 billion to $125 billion to survive in the longer term.
Nevertheless, lawmakers fear a recession will deepen if any of the three giants -- GM, Ford and Chrysler -- collapses soon. But some from Bush's Republican party don't want another rescue plan after a $700 billion Wall Street rescue package that triggered voter backlash in the November 4 congressional elections.
Critics also say market forces, not state intervention, ought to determine the fate of the auto industry.
Bailout backers say that since the government helped Wall Street, it must also help hundreds of thousands of blue-collar auto workers who have the support of Democrats.
Obama added his weight to the drive, saying while the car companies had made mistakes, letting them collapse was not an option -- although they must be forced to radically revamp their operations.
"I think that Congress is doing the exact right thing by asking for a conditions-based assistance package that holds the auto industry's feet to the fire," he said in Chicago, adding that new management could also be an option.
CONDITIONS AND CONCESSIONS
A UAW official, speaking after a Detroit church service dedicated to prayers for the auto industry, said on Sunday the union was open to moves by Chrysler to seek an alliance with a rival automaker as long as it saves as many jobs as possible.
Senate Banking Committee Chairman Christopher Dodd said on Sunday that GM chairman Rick Wagoner should resign to allow new leadership to restructure the faltering company.
"He has to move on," Dodd, a Connecticut Democrat who is leading efforts to craft bailout legislation, told CBS.
Faced with plummeting sales they blame largely on the credit crunch and recession, GM, Chrysler and Ford sought $34 billion from Congress last week to avoid possible collapse. A deal negotiated by the White House and Congress would provide no more than $17 billion to last into March.
Critics have said any loans would be a waste of money unless U.S. automakers were able to cut costs and better compete with more fuel-efficient, foreign-made cars.
Democratic Sen. Carl Levin of Michigan, home to the major automakers, said he was confident there would be a deal in the next 24 hours. But he was less certain if backers would garner the 60 votes needed in the 100-seat Senate to avoid a Republican procedural hurdle known as a filibuster.
"That's a much more complicated question," Levin said on "Fox News Sunday."
Senate Republican Leader Mitch McConnell earlier indicated he might support a bailout if it had adequate safeguards. But Sen. Richard Shelby, an Alabama Republican who has spoken out against the proposed "bridge loan" emergency package, indicated he was ready for battle.
"This is a bridge loan to nowhere," said Shelby, appearing with Levin on "Fox News Sunday."
UNKNOWN FUTURE
Despite the progress in Washington, America's auto industry is headed into an unknown future.
GM and Chrysler, along with Ford once bywords for U.S. industrial power, are both headed for wrenching restructuring under federal oversight that will hit their investors, creditors, dealers and workers almost as hard as if they had filed for bankruptcy protection.
Ford is in slightly better financial shape, but all three are expected to continue to mothball plants and dismiss tens of thousands of employees.
A breakthrough in the auto crisis emerged on Friday after government statistics showed that employers slashed more than 533,000 jobs in November, the highest monthly decline in 34 years. This underscored lawmakers' feared that hundreds of thousands more would be thrown out of work if any of the major automakers went down.
Oil plummets below $44 per barrel on economic news
SINGAPORE – Oil prices were steady near four-year lows below $44 a barrel Friday in Asia as more bad U.S. economic news soured the outlook for global growth and demand for crude.
Light, sweet crude for January delivery was down 3 cents at $43.64 a barrel in electronic trading on the New York Mercantile Exchange by midmorning in Singapore. The contract fell overnight $3.12 to settle at $43.67, the lowest since January 2005.
"The damage to the economy by the financial turmoil is much bigger than the market initially thought," said Tetsu Emori, commodity markets fund manager at ASTMAZ Futures Co. in Tokyo. "The economic data now is much worse than what we expected a few months ago."
Oil prices have fallen about 70 percent since peaking at $147.27 in July.
Dismal economic data continued Thursday in the U.S., pointing toward a sharp contraction of gross domestic product in the fourth quarter and weakening demand for crude products, such as gasoline.
The government said the number of people continuing to claim unemployment benefits last week reached 4.09 million, the highest level since December 1982, while the proportion of workers receiving benefits matched a level reached 16 years ago, in September 1992.
Factory orders plunged a bigger-than-expected 5.1 percent in October caused by big cutbacks in demand for steel, autos, computers and heavy machinery. It was the largest decrease since an 8.5 percent fall in July 2000.
On Thursday, AT&T said it was slashing 12,000 jobs, or about 4 percent of its work force. Chemicals company DuPont said it will cut 2,500 jobs and media conglomerate Viacom Inc. said it will eliminate about 850 jobs.
Investors will be eyeing the Labor Department's November unemployment report on Friday, which economists expect will show that the jobless rate rose to 6.8 percent and that companies cut another 320,000 jobs.
"It could take a while before the economy and oil prices really hit bottom," Emori said. "Oil seems headed below $40."
In other Nymex trading, gasoline futures rose 0.44 cent to 97 cents. Heating oil fell 0.67 cent to $1.50 a gallon while natural gas for January delivery slid 7.9 cents to 5.94 per 1,000 cubic feet.
Dow plunges on news recession began in Dec. 2007
WASHINGTON – Most Americans sorely knew it already, but now it's official: The country is in a recession, and it's getting worse. Wall Street convulsed at the news — and a fresh batch of bad economic reports — tanking nearly 680 points. With the economic pain likely to stretch well into 2009, Federal Reserve Chairman Ben Bernanke said Monday he stands ready to lower interest rates yet again and to explore other rescue or revival measures.
Rushing in reinforcements, Treasury Secretary Henry Paulson, who along with Bernanke has been leading the government's efforts to stem the worst financial crisis since the 1930s, pledged to take all the steps he can in the waning days of the Bush administration to provide relief. Specifically, Paulson is eyeing more ways to tap into a $700 billion financial bailout pool.
On Capitol Hill, House Speaker Nancy Pelosi, D-Calif., vowed to have a massive economic stimulus package ready on Inauguration Day for President-elect Barack Obama's signature.
That measure — which could total a whopping $500 billion — would bankroll big public works projects to generate jobs, provide aid to states to help with Medicaid costs and provide money toward renewable energy development. Crafting such a colossal recovery package would mark a Herculean feat: Congress convenes Jan. 6, giving lawmakers just two weeks to complete their work if it is to be signed on Jan. 20.
President George W. Bush, in an interview with ABC's "World News," expressed remorse about lost jobs, cracked nest eggs and other damage wrought by the financial crisis. "I'm sorry it's happening, of course," said Bush. The president said he'd back more government intervention.
None of the pledges for more action could comfort Wall Street investors. The Dow Jones industrials plunged 679.95 points, or 7.70 percent, to close at 8,149.09.
It was another white-knuckle day, punctuated by grim economic reports. An index of manufacturing activity sank to a reading of 36.2 in November, a 26-year low, the Institute for Supply Management reported. Construction spending fell by a larger than expected 1.2 percent in October, the Commerce Department said.
Adding to the gloom, the National Bureau of Economic Research, a group of academic economists, concluded Monday that the country has been suffering through a recession since December 2007.
With NBER's decision, the United States has fallen into two recessions during Bush's eight years in office. The first one started in March 2001 and ended in November of that year.
The economy jolted into reverse in the final three months of last year. After a short spring rebound, it contracted again in the summer. Economists say it is still shrinking and will continue to do so through at least the first quarter of next year.
Unlike past recessions, consumers are bearing the brunt of this one. Clobbered by job losses, hard-to-get credit and hits to their wealth from sinking home values and plunging portfolio investments, consumers have cut back sharply on their spending, throwing the economy into chaos.
Watching customers' appetites wane, employers have throttled back on hiring. The unemployment rate in October zoomed to 6.5 percent, a 14-year high. So far this year, 1.2 million positions have disappeared. The jobless rate is likely to climb to 8 percent or higher next year.
Against that backdrop, many economists believe the current recession will be the worst since the 1981-82 downturn.
To help ease the pain, Bernanke said additional interest-rate cuts are "certainly feasible," but he warned there are limits to how much such action would revive the economy, which is likely to stay mired in weakness well into next year.
The Fed's key interest rate now stands at 1 percent, a level seen only once before in the past half-century, and many economists predict Bernanke and his colleagues will drop the rate again at their next meeting on Dec. 15-16.
The Fed can lower its key rate only so far — to zero — and it's getting ever closer. Given that constraint, Bernanke said there are other ways to bolster economic activity.
The Fed, for instance, could buy longer-term Treasury or agency securities on the open market in substantial quantities, he said. This might lower rates on these securities, "thus helping to spur aggregate demand," Bernanke said.
Because the Fed can go only so low in reducing interest rates, the central bank over the past year has resorted to a flurry of other radical and often unprecedented actions with the hope of busting through credit jams and getting financial markets operating more normally.
The bracing impact of the Fed's aggressive rate reductions, however, has been somewhat stymied by the credit and financial crises, Bernanke said. Despite lower borrowing costs, skittish banks have been reluctant to lend money to people and businesses, a vicious cycle that has seriously hobbled the U.S. economy.
"Even if the functioning of financial markets continues to improve, economic conditions will probably remain weak for a time," Bernanke warned.
Paulson, meanwhile, has been working closely with the incoming administration, including New York Fed President Timothy Geithner, Obama's pick to be the next treasury secretary, to pave the way for a smooth transition.
"We are actively engaged in developing additional programs to strengthen our financial system so that lending flows into our economy," Paulson said, referring to tapping the $700 billion bailout fund. "When these programs are ready for implementation, we will discuss them with the Congress and the next administration," he added.
Paulson did not provide specifics on what type of programs the administration was weighing other than to say that it was looking at ways to boost capital injections into financial institutions.
Shoppers snap up Black Friday deals as stores hope
NEW YORK – Shoppers, who had snapped their wallets shut since September, flocked to stores and malls before dawn Friday to grab deals on everything from TVs to toys for the traditional start of the holiday shopping season, feared to be the weakest in decades. 
Retailers extended their hours — some opening at midnight — and offered deals that promised to be even deeper and wider than even the deep discounts that shoppers found throughout November. Best Buy, which threw its doors open at 5 a.m. offered such early morning specials as a 49-inch Panasonic plasma HDTV for $899.99 and a $189.99 GPS device by Garmin, while Toys "R" Us, was offering up to 60 percent discounts from 5 a.m. to 10 a.m.
But the question remains whether many people will be spending much money on holiday gifts as a recession nears, credit markets remain frozen, layoffs loom and consumer spending shrinks.
At the Best Buy store in Syracuse, N.Y., a line snaked past stores and around walkways on the second floor of Carousel Center a few moments before the store's 5 a.m. opening — about eight hours after some people near the front of the line had arrived.
Rob Schoeneck, the mall's manager, estimated about 1,000 people were waiting for the electronics store to open and said the crowd was about the same size as a year ago. Usually the mall gets the biggest Black Friday lines for electronics, he said.
"I don't understand this, whether the economy is good or bad," he said, referring to the line.
Inside, Kira Carinci, 33, searched for the $80 "Guitar Hero III: Legends of Rock" video game and guitar controller bundle for her son.
Carinci, a teacher who lives in Cicero, N.Y., said that this year she is more concerned about money than she was last holiday season, and she set aside a certain amount for Christmas spending this year.
"I don't usually save, so this year is a little different," she said.
Meanwhile, Michaela Kipp, 42, a single mom who works as a dental assistant, arrived at the Best Buy store in Syracuse, N.Y., with her boss' husband because both of them wanted to pick up a new HP desktop computer packages, selling for $600. Kipp also wanted to get a $380 Toshiba laptop for her 17-year-old son. The two got in line at 9 p.m. to ensure they'd get the computers.
Kipp said she'd applied online to get 18 months of interest-free financing for the purchase, and that she hoped to use her income tax return to pay off a good chunk of it.
She estimated that she's spending less than she usually does on holiday gifts.
Still, "the fact that the gas prices have gone down, I feel confident that I can pay off this without any problems," she said.
Meanwhile, Katie Lecompte of Elton, La., drove to the Lake Charles, La., Toys R Us early Friday for half-price deals for seven children below the age of 5.
"We started planning right after we finished the turkey," she said. She added, "We do have a budget. It's basically what we spent last year. We come early because of the half-price sale. We saved $120 last year by coming out early."
Black Friday — which falls on the day after Thanksgiving and officially starts the holiday shopping period — received its name because it historically was the day when a surge of shoppers helped stores break into profitability for the full year. But this year, with rampant promotions of up to 70 percent throughout the month amid a deteriorating economy, the power of this landmark day for the retail industry could be fading.
Still, while it isn't a predictor of holiday season sales, the day after Thanksgiving is an important barometer of people's willingness to spend for the rest of the season. And particularly this year, analysts will dissect how the economy is shaping shoppers' buying habits, including whether they will spring for big-ticket items or focus on small purchases like gloves and hats.
Last year, the Thanksgiving shopping weekend of Friday through Sunday accounted for about 10 percent of overall holiday sales, according to ShopperTrak RCT Corp.
The group hasn't released estimates for Black Friday sales this year, but experts believe it will remain one of the season's biggest selling days, even as shoppers remain deliberate in their spending.
Britt Beemer, chairman of America's Research Group, expects to see the surge of shoppers dramatically taper off throughout the day and into the weekend.
"I think we are going to see the busiest Black Friday ever, but will it carry over past 10 a.m.?" he said. "The bottom line is a great Black Friday does not make a season."
China's central bank slashes interest rate
BEIJING, China (AP) -- China announced its biggest interest rate cut in 11 years on Wednesday to spur private borrowing and support a multibillion-dollar stimulus package to boost slowing economic growth.
Workers install a poster on a fashion store window in Beijing this week.
The European Union's administrative body, meanwhile, urged the bloc's 27 member countries to join together in making euro200 billion (US$256.22 billion) in spending and tax cuts to boost economic growth and bolster the confidence of consumers and businesses.
China's 1.08 percentage-point cut -- the fourth rate reduction in three months -- reflects the government's urgency about raising private consumption and investment to supplement state spending on the stimulus package.
Interest on a one-year loan will fall to 5.58 percent, effective Thursday, while interest paid on deposits will drop to 2.52 percent.
"This is the most aggressive monetary easing in recent years and should bode well for China's market performance," said Jing Ulrich, chairwoman of China equities for JP Morgan & Co., in a report to clients.
The 4 trillion yuan ($586 billion) stimulus aims to insulate China from the global slowdown by injecting money into the economy through spending on new highways and other public facilities. But its ultimate goal is to increase consumer spending, which a rate cut is meant to encourage.
Beijing is trying to shore up consumer and investor confidence and reverse a sharp downturn in growth. China's economy is expected to expand by at least 9 percent this year, down from 11.9 percent last year. But communist leaders worry about rising job losses -- especially in export industries hit by weak global demand -- and possible unrest.
Don't Miss
China has avoided a big hit so far from the global financial crisis because its banks are healthy and exports strong. But conditions are expected to worsen in coming months as export demand weakens and growth in real estate and other domestic industries slows.
Just this week, the World Bank cut its forecast for China's growth next year from 9.2 percent to 7.5 percent, the lowest level since 1990.
Beijing had been rumored to be considering a rate cut and Chinese stock markets fell Monday after one failed to materialize over the weekend. The cut Wednesday was announced after markets closed. The Shanghai Composite index, down two-thirds from its peak in October 2007, edged up 0.5 percent to 1,897.88.
Also Wednesday, the central bank cut the amount of money commercial banks must set aside as reserves, expanding the pool available for lending.
The moves are meant to "promote stable credit growth," the People's Bank of China said on its Web site.
The rate cut was China's biggest since 1997, said Standard Chartered economist Stephen Green. But he cautioned that rate cuts alone might not be enough to trigger a wave of house purchases and corporate investment.
"To be honest, rate policy in this environment is a marginal factor -- businesses think about possible returns on investments, and households will look at house price prospects," he said in a report.
A key issue will be whether banks are willing to lend more. They have tried to shield themselves from global turmoil and the slowing real estate industry by cutting back on lending to exporters, developers and small companies. 
"The degree of benefit realized from China's monetary stimulus will hinge on whether banks increase their lending to the most troubled sectors of the economy," Ulrich said.
In Brussels, Belgium, the European Commission outlined a two-year "European Economic Recovery Plan" that calls for EU members to spend 1.5 percent of the bloc's gross domestic product to halt a slowdown that has already pushed some European nations into recession.
The spending plan's euro200 billion price tag is much higher than the euro130 billion that EU officials had been discussing in recent weeks.
Some euro170 billion would come from national governments and include tax breaks, credit guarantees for ailing industries and to easy loans to encourage new green technologies. The remainder would be financed from the EU budget and the European Investment Bank.
