Dollar Slumps Below 90 Yen as U.S. Auto Bailout Fails in Senate

The dollar slumped below 90 yen for the first time in 13 years after the U.S. Senate rejected a $14 billion bailout for the nation

Oil settles near $48 on auto vote

Oil settles near $48 on auto vote

Passage of the $14 billion measure to aid carmakers helps boost sentiment about economy, but threatens weaker dollar.

By Kenneth Musante, CNNMoney.com staff writer

Oil prices jumped Thursday after the House passed a $14 billion stop-gap measure designed to keep the U.S. auto industry from immediate collapse.

U.S. crude for January delivery rose $4.46 to settle at $47.98 a barrel in New York. It rose to a high of $49 a barrel earlier in the session.

The House passed a bill that would provide $14 billion in loans to automakers General Motors (GM, Fortune 500) and Chrysler, and keep them out of bankruptcy until at least March. Ford Motor (F, Fortune 500), which is in better shape cash-wise than its counterparts, is not part of the $14 billion plan.

The measure, which still faces a vote in the Senate, could prevent a large blow to the economy of the world’s largest oil consumer.

An auto bailout has been largely priced in to oil, but a collapse of the U.S. auto industry “would result in a very painful [price] correction, not only in crude oil, but also in the equity markets,” said Chris Lafakis, associate economist with Moody’s Economy.com.

The U.S. auto industry employs about 2 million workers, according to the Center for Automotive Research. That total includes GM (GM, Fortune 500), Ford (F, Fortune 500) and Chrysler workers, as well as dealers and workers at parts manufacturers.

In urging Congress to pass the auto bailout, the White House cited jobless claims, which jumped to a 26-year high last week, according to the Labor Department.

Falling dollar: Oil prices also got a boost Thursday as the value of the U.S. dollar fell versus other major currencies.

The dollar slipped against the 15-nation euro, British pound and Japanese yen.

“We’re seeing concerns that all these bailouts are going to lead to more interest rate cuts and a weaker dollar,” said Phil Flynn, senior market analyst with Alaron Trading in Chicago.

A weaker dollar makes oil (which, like other commodities, is demoninated in dollars) cheaper for foreign investors, which spurs buying.

OPEC cut: Investors are also looking for a large cut in production from the Organization of Petroleum Exporting Countries, an international trade cartel whose members produce about 40% of the world’s oil, when it meets next week in Algeria.

Due to falling worldwide demand, crude prices have plummeted more than $100 a barrel since hitting a record high of $147.27 in mid-July.

The deep cut in prices has raised serious concerns for many OPEC members who rely on oil profits to fuel their domestic economies. more

Facing a Slowdown, China

<a href="http://www.financialdose.com/" title="Facing a Slowdown, China

Detroit Chiefs Plead for Aid, to Little Avail

Detroit Chiefs Plead for Aid, to Little Avail

By BILL VLASIC and DAVID M. HERSZENHORN
Published: November 18, 2008

WASHINGTON

GM, Ford Sales Slump Puts Buyers in Driver’s Seat

GM, Ford Sales Slump Puts Buyers in Driver’s Seat

By Alexis Leondis and Philipp Schlaeger

Nov. 17 (Bloomberg) — John Bruno, president of a car dealership in midtown Manhattan, said he would do anything to sell a car, including slashing prices by at least 10 percent on various models.

“If they want to buy a car, they are going to leave with a car,” said Bruno, whose Potamkin dealership sells Cadillac, Buick, Chevrolet, Pontiac, Saab, Hummer and GMC vehicles.

Automakers are offering incentives to consumers, such as lower prices and 0 percent financing to combat slumping sales. A buyer with a credit score of at least 700, or cash, will find the environment ideal for negotiating, industry analysts say.

Sales of new cars and trucks in the U.S. are projected to decrease 12 percent this year compared with a year earlier, according to the McLean, Virginia-based National Automobile Dealers Association.

“Dealers are hungry and manufacturers are hungry, so if your credit score is above 700, you can drive a pretty good deal,” said Terry Jackson, consumer auto columnist at Bankrate.com. “If you’re below 700 however, you might get a usurious loan.”

Toyota Motor Corp. is offering no-interest loans on more than half of its models, including the 2008 4Runner, 2009 Camry and 2009 Corolla. Chrysler LLC promises up to $6,000 cash back on a 2008 300C. General Motors Corp. began its annual “Red Tag” sale almost 10 days early this year. The year-end promotion will offer savings such as $4,500 for a 2009 Chevrolet TrailBlazer to as much as $10,000 for a 2008 Cadillac Escalade, among others.

December Promotion

At Lexus of Manhattan, the “December to Remember” promotion began this month and applies to four models — the ES350, IS250, GS350 and RX350 — said Michael Pecorella, a sales manager. A customer who leases an RX350 for 36 months can get 0.9 percent APR and pay $399 a month instead of $508. more

Obama sees need for auto bailout

Obama sees need for auto bailout

By Steve Holland – Analysis

CHICAGO (Reuters) – Since his election last week, Barack Obama has largely avoided getting entangled in resolving issues now that will face him later as president, except for one big item: Bailing out the U.S. auto industry.

A heated debate has broken out in Washington over whether to use $25 billion of a $700 billion financial bailout package to provide a lifeline to the Big Three automakers — GM, Ford and Chrysler — which are suffering from plummeting sales.

Professing that the United States has “only one president at a time,” Obama is avoiding Washington this week as world leaders who would love to take his measure are gathering there for a financial summit.

He is also steering clear of a lame-duck session of the U.S. Congress that will attempt to craft a new economic stimulus package, a job that will be left to him when he takes over on January 20 should an agreement fail to materialize. more