NEW YORK – General Motors Co. said Friday it will shut down Saab after talks to sell the brand to a Dutch carmaker collapsed, marking the third time this year that a deal by GM to sell an unwanted brand has fallen through.

GM said it had a small window of time to complete the deal and issues arose during the sale talks with Spyker Cars that could not be resolved. GM Vice President John Smith said representatives from GM, Spyker and the Swedish government were still in discussions Friday morning when talks fell apart. Smith declined to elaborate on the reasons.   MORE>>>

Sept. 10 (Bloomberg) — Foreclosure filings in the U.S. exceeded 300,000 for the sixth straight month as job losses that boosted the unemployment rate to a 26-year high left many homeowners unable to keep up with their mortgage payments.

A total of 358,471 properties received a default or auction notice or were seized last month, according to data provider RealtyTrac Inc. That’s up 18 percent from a year earlier, and down 0.5 percent from July, the Irvine, California-based company said in a statement. One in 357 households received a filing.

Foreclosures rose from a year earlier as companies cut payrolls by 216,000 workers last month, boosting the U.S. jobless rate to 9.7 percent, according to Labor Department data released last week. The rise in unemployment is having a bigger impact than an effort by the U.S. government and banks to modify mortgages and prevent foreclosures, said Morris A. Davis, an assistant real-estate professor at the Wisconsin School of Business. (more…)

Taxpayers face losses on a significant portion of the $81 billion in government aid provided to the auto industry, an oversight panel said in a report to be released Wednesday.

The Congressional Oversight Panel did not provide an estimate of the projected loss in its latest monthly report on the $700 billion Troubled Asset Relief Program. But it said most of the $23 billion initially provided to General Motors Corp. and Chrysler LLC late last year is unlikely to be repaid.

“I think they drove a very hard bargain,” said Elizabeth Warren, the panel’s chairwoman and a law professor at Harvard University, referring to the Obama administration’s Treasury Department. “But it may not be enough.”

The prospect of recovering the government’s assistance to GM and Chrysler is heavily dependent on shares of the two companies rising to unprecedented levels, the report said. The government owns 10 percent of Chrysler and 61 percent of GM. The two companies are currently private but are expected to issue stock, in GM’s case by next year. (more…)

Switzerland knocked the United States off the position as the world’s most competitive economy as the crash of the U.S. banking system left it more exposed to some long-standing weaknesses, a report said on Tuesday.

The World Economic Forum’s global competitiveness report 2009/2010 showed economies with a large focus on financial services such as the U.S., Britain or Iceland were the losers of the crisis.

The U.S. as the world’s largest economy lost last year’s strong lead, slipping to number two for the first time since the introduction of the index in its current form in 2004.

“We have been expecting for some time that it may lose its top-position. There are a number of imbalances that have been building up,” said Jennifer Blanke, Head of the WEF’s Global Competitiveness Network. (more…)

Anyone put off by the poster that paints President Obama as a “socialist joker” might take a look at the typical American in the mirror. We already combine the worst features of both socialism and market forces in healthcare, because we can’t seem to learn from the best examples in other countries.

It’s time we did – because that’s where the real choices are. And eventually, we’ll have to choose.

On the (fully) socialized side, US Medicare and Medicaid consume 8 percent of our national income – about the same share as socialist European systems. Except that theirs cover everyone, not just the elderly. And we’ve only just begun to pay for our own collectivism, since the bulk of our boomers haven’t retired yet. When that gray wave crashes on our status quo shores, it’ll wipe away trillions in national wealth. (more…)

The “Great Recession” is the name that has stuck for the economic decline that began in late 2007. But there’s some reason to think that using the word recession is being kind.

The U.S. gross domestic product has shrunk 3.9 percent in the past year, the worst drop since the Great Depression. Plenty of observers are willing to say that this recession is much deeper than anything we’ve seen since the 1930s–including the big dip in the early 1980s, generally accepted as the other candidate for the worst recession since the Great Depression. “I think it’s way worse today,” says Ridgely Evers of Tapit Partners, a longtime entrepreneur and venture capitalist who founded the software company Netbooks (now known as WorkingPoint). In the recession of 1981 and 1982, “people recognized it as a dip. [Today,] nobody thinks we are going to come back out in relatively short order.” This recession seems to have dragged on longer. According to the National Bureau of Economic Research(NBER), the U.S. economy was in recession from July 1981 to November 1982–16 months. But the current recession started in December 2007, says the NBER, so it’s already longer than the last big one.   MORE>>>

The government agency that guarantees you won’t lose your money in a bank failure may need a lifeline of its own.

The coffers of the Federal Deposit Insurance Corp. have been so depleted by the epidemic of collapsing financial institutions that analysts warn it could sink into the red by the end of this year.

That has happened only once before — during the savings-and-loan crisis of the early 1990s, when the FDIC was forced to borrow $15 billion from the Treasury and repay it later with interest. (more…)

East Haddam, Conn. – I own two clunkers, and I’m proud of it. I drive my cars until my mechanic, fearing for his own safety, refuses to work on them. To get my wheezing metal geezers, someone is going to have to pry my cold, dead fingers from the steering wheel – or at least offer more than a few measly grand to euthanize them.

I’m all for stimulating the economy, cleaning air, and improving fuel economy, but there are better ways to achieve all that than throwing away perfectly serviceable vehicles as though they were disposable razors.

My jalopies were born in 1991 and 1992, and they each boast well over 200,000 miles on their respective odometers. My son’s first car was older than he was. The current rust buckets parked in the driveway were old when I bought them for $1,200 and $2,500 respectively, cash money. No ballooning monthly payments for me. They have taken me more than 100,000 miles combined. That’s less than 4 cents a mile. Despite their age, they get respectable gas mileage, too, with the sedan approaching 35 miles per gallon and the wagon getting 25 m.p.g. on the highway (all on regular gas, no additives). I should turn these cream puffs in? True, their great mileage means that they’re ineligible for the clunker program, but even if they did qualify I wouldn’t hand them over. (more…)

Frank-Walter Steinmeier, the Social Democratic Party’s chancellor candidate, announced last week a plan to create full employment in Germany by 2020. Rejecting criticism he’s being unrealistic, he argues his political opponents offer no alternative.

We were making progress – in September 2008, unemployment numbers were down by nearly two million when compared to the record high back in 2005. But the crisis has set us back – 3.4 million people are unemployed in Germany. They’re looking for a job. They’re looking for affirmation and recognition from their efforts. They want to be responsible for their own life with a job and an income. Work offers dignity. They don’t want to have to rely on government handouts. Unemployment takes away the qualifications workers have earned. Unemployment demoralizes. Unemployment destroys families.

But we can’t give in to unemployment. We have to fight it – using the right policies, with the right public stimulus and by using our combined strength. Smart crisis management is vital. But we also have to escape all the rhetoric. We have to take a fresh perspective and look forward. (more…)

History Channel –   America’s infrastructure is collapsing. Tens of thousands of bridges are structurally deficient or functionally obsolete. A third of the nation’s highways are in poor or mediocre shape. Massively leaking water and sewage systems are creating health hazards and contaminating rivers and streams. Weakened and under-maintained levees and dams tower over communities and schools. And the power grid is increasingly maxed out, disrupting millions of lives and putting entire cities in the dark. The Crumbling of America explores these problems using expert interviews, on location shooting and computer generated animation to illustrate the kinds of infrastructure disasters that could be just around the bend.

Throughout world history, great civilizations have survived and extended their rule through dependence on great infrastructures. Rome had its roads and aqueducts. The Mayans had their pyramids and palaces. But what happens when society neglects its infrastructure? Right now, the U.S. infrastructure is collapsing and it impacts every single person in this country. In the first half of the 20th century, our bridges, highways, tunnels, dams, levees, ports, water and gas pipelines were built during the greatest age of construction the world had ever seen. But now these steel and concrete achievements are deteriorating. More than 70,000 of our nation’s bridges are rated structurally deficient. Massive grid failures have left millions in the dark.25,000 miles of commercial navigable waterways and locks have exceeded their 50-year design life. Everything from dilapidated levees to pipelines to railroads is past their expiration date.

History Channel Air Dates:

Tuesday, July 07 08:00 AM

Tuesday, July 07 02:00 PM

By Patrick Buchanan

In just a few weeks time, California hits the wall.

And Americans should take a good, long look at the fiscal and social wreck of the Golden Land, because California is at a place to which all of America is heading.

In May, when five fund-raising proposals were put on the ballot, Gov. Schwarzenegger pleaded with the overtaxed Californians not to make their state “the poster child for dysfunction.”

As The Economist writes, “On May 18th, they did exactly that.”

Arnold went to the White House for U.S. loan guarantees for new state bonds. But with the president’s approval rating wilting because of a belief he is spending too much, the Obama-ites slammed the door. (more…)

WASHINGTON — The Obama administration is proposing the broadest changes in financial regulation since the Great Depression, calling for the elimination of some bank regulators and giving theTreasury Department and Federal Reserve vast new authority.

“We are going to put forward a very strong set of regulatory measures we think can prevent this kind of crisis from happening again,”President Barack Obama said Tuesday from the Rose Garden.

Senior administration officials late Tuesday confirmed that on Wednesday Obama would propose the elimination of the much-maligned Office of Thrift Supervision , which regulates savings and loan institutions, and had oversight of the financial products division of failed insurer American International Group . The company’s collapse has cost taxpayers more than $180 billion , and AIG is now almost 80 percent owned by the Federal Reserve.

Under Obama’s much-anticipated regulatory proposal, the OTS would be merged with the Office of the Comptroller of the Currency , which regulates a large number of big banks, and a new entity will be created. The revamping would eliminate separate federal charters for banks and thrifts and treat financial institutions alike from a regulatory standpoint. (more…)

SACRAMENTO, California (Reuters) – California lawmakers were poised to miss their constitutional deadline on Monday for a state budget, bringing the state’s government closer to running out of cash.

Democrats and Republicans in the legislature’s budget conference committee worked through Monday afternoon on a variety of proposals addressing Gov. Arnold Schwarzenegger’s plan to close a $24.3 billionbudget shortfall, but they failed to find common ground on its most dramatic proposal: eliminating the state’s welfare system.

“This meeting is not headed in that direction,” Republican Assemblyman Roger Niello said.

California’s revenues are plunging amid recession, rising unemployment and the prolonged housing crisis, and the state is unable to borrow its way out of its immediate financial trouble by issuing debt at low cost because of its budget gap.

It will run out of cash within weeks if it does not balance its books, leaving it little option but to postpone a variety of payments, according to State Controller John Chiang, who estimated last week that California was “less than 50 days away from a meltdown of state government.”   MORE>>>

In a two-page order, the court said the group of Indiana pension funds opposed to the deal had failed to show “that the circumstances justify” delaying proceedings to accommodate their challenge.

The funds had argued that the White House-backed sale of Chrysler to Fiat is unconstitutional because it puts the rights of junior creditors ahead of the rights of senior lenders.

They also said the US Treasury had overstepped its legal authority by using some $12 billion in financial bailout funds to reorganize Chrysler when Congress had intended the money for banks.

Chrysler’s sale to Fiat, a union-aligned trust and the US and Canadian governments is aimed at pulling the company out of bankruptcy and reorganizing it to cope with changing economic conditions and consumer tastes. (more…)

KaDeWe, Berlin’s premier department store, appears in every travel guide to the German capital. Some 40,000 visitors turn up there every day and in the pre-Christmas season, up to 180,000 people go there to shop.

 At the entrance, small exclusive shops – Gucci, Louis Vuitton and Cartier – vie for big-spending customers with 4,000-euro ($5,500) watches and 2,000-euro handbags. Up on the sixth floor, shoppers get together over champagne and lobster cocktails in the store’s gourmet food section.

 KaDeWe – short for “Kaufhaus des Westens,” or “department store of the West” – is a real “pearl,” said Karl-Gerhard Eick, the new head of Arcandor, the group that owns the Berlin shopping landmark.

 Although exact numbers haven’t been made public, word is that KaDeWe is still turning a profit, even as Arcandor itself faces imminent insolvency. (more…)

BERLIN (AFP) – German luxury carmaker Daimler said on Tuesday it was buying a 10 percent stake in US electric car manufacturer Tesla as it attempts to plug in to the market for electric cars.

Daimler paid “around 50 million dollars” (37 million euros) for its share in Tesla, the manufacturer of the “Model S” electric car, a much-anticipated vehicle with a range of 300 miles (480 kilometres).

The two companies will collaborate on batteries and electric motors, a joint statement said.

“Our strategic partnership is an important step towards accelerating the worldwide commercialisation of electric vehicles,” said Thomas Weber, a Daimler board member, in a statement.

Daimler recently snapped up a stake in German group Li-tec to facilitate the manufacture of the lithium-ion batteries needed for electric cars.

The German car giant intends to roll out several models of electric car by the end of the year.    MORE>>>

This is the fourth quarter in a row of falling gross domestic product (GDP), which is the basic measure of an economy’s economic performance. In the last quarter, the economy shrank by 2.1 percent after two quarters of contracting by 0.5 percent.

The Federal Statistics Office says this is the strongest contraction Germany has seen since 1970, when it began tracking quarter-to-quarter growth. It is also the first time since reunification in 1990 that the German economy has experienced so many quarters of negative growth.

“This is a dramatic plunge,” Juergen Michels, an economist at banking group Citigroup said. “And a worse start to the year than we could have imagined.”

Governments and investors hope the worst of the first global recession since World War II may soon pass. This latest news, however, has confirmed that the situation remains dire. But some economists are still hopeful.   MORE>>>

DETROIT/WASHINGTON (Reuters) – General Motors Corp and Chrysler aim to drop as many as 3,000 U.S. dealers and are expected to begin sending notifications as early as Thursday, three people briefed on the still developing plans said.
GM, facing a U.S. government-imposed deadline of June 1 to restructure or file for bankruptcy, is expected to send termination notices to up to 2,000 dealers — a third of its roughly 6,000 U.S. dealers, the sources told Reuters.

Chrysler, which filed for bankruptcy on April 30, will also tell up to 1,000 of its 3,189 U.S. dealers it is terminating their franchise agreements, according to the sources who asked not to be identified because the controversial closure plans have not been yet announced.

The moves to shut down auto dealerships underscores how the economic pain caused by the downward spiral of both automakers — now operating under U.S. government oversight — is spreading beyond their home base in Detroit.   MORE>>>

General Motors CEO Fritz Henderson said GM was urging the government to provide more funds as the struggling carmaker looks to sell off its German subsidiary Opel and other European operations as part of a massive restructuring effort.

 ”With respect to the German government, we have a need for funding actually in our European business that is important and urgent,” Henderson said in a conference call with reporters on Monday. “We’re going make sure that any partner we pick for the business would be suitable for them.”

 Henderson said GM was prepared to take a minority stake in its major European subsidiaries, which also include Britain’s Vauxhall. Italy’s Fiat Spa, which already plans to take over Chrysler, and Canadian-Austrian firm Magna are both involved in the takeover talks. (more…)

It was supposed to be the corporate takeover of the century. Porsche wanted to swallow up Volkswagen, a company 15 times its size. But the current economic crisis has forced the sportscar company to give up that dream and opt for a merger. It’s still not clear where the power in the newly merged company will lie.