US House Passes Auto Bailout

The US House of Representatives easily passed the $14 billion dollar automaker bailout. Prospects in the senate look grim with Republican lawmakers expected to block passage despite urging from the White House to pass the bailout measure. One senior Republican aide when so far as to say that “no one cares what the White House thinks.” Many economists say that a collapse of the ‘big 3’

automakers would have a disastrous effect on the already troubled US economy. Forex traders are watching these developments closely.

GOP Stalls Bailout

Unfortunately Republicans appear to have more than enough votes to stop the auto bailout with a procedural roadblock that would require 60 votes to clear in the Democratic-led Senate. Market reaction to the house vote was positive but this new development could send markets downward again. Forex markets will be quick to react and Forex traders will be following global markets closely.

Republicans Set Conditions

Freshman Sen. Bob Corker, a Tennessee Republican, has proposed a measure that would give loans to automakers with a provision that General Motors and Chrysler debt must be cut by two-thirds by March 15 or they must file for bankruptcy. The measure contains a provision unpopular with union members that would cut wages for union workers to levels of those paid by nonunion foreign competitors in the United States.

Obama Supports Auto Bailout

President Elect Barack Obama remained hopeful that the bailout would pass the Senate. Bailouts remain unpopular with the American public making many in congress reluctant to write another massive check to bailout private industry. Backers of the bill say a bailout is needed to rescue a century-old centerpiece of the U.S. economy and prevent a deepening of the U.S. recession. A deepening recession would be sure to have an effect on currency markets and send Forex traders scurrying to any safe haven that can be found.

Automakers Under Scrutiny

The loans are intended to carry the car companies through March 31st after which more help would be dependent upon the quality of restructuring plans demonstrating their viability. General Motors and Chrysler are seeking billions before the end of December just to survive. Ford is asking for a line of credit to be used if its finances worsen more than expected in 2009.

Over 2 Million Jobs at Stake

Hopefully ideological hard liners will not prevail in preventing some sort of aid for the auto industry. It has been said that over 2 million jobs would be lost if the auto industry is allowed to fail and the economic fallout would be catastrophic. The effect on the dollar would be devastating and Forex traders and investors no longer could take advantage of the safe haven the dollar is presently offering.

These are volatile times with volatile markets. Let us hope that the automaker bailout can be resolved quickly. Millions of people are depending on it.