Wednesday, November 19, 2008

Dow falls as car bosses ask for bail out

The Dow has closed on a five year low. The index lost nearly 8000 points on Wednesday adding to the woes already felt on world financial markets [CNN / BBC]. Europe also saw losses with the FTSE, CAC and Dax all dropping more than four percent. The FTSE closed 4.82% down while the CAC and Dax closed at 4.03% and 4.92% respectively. The worsening situation on the main indices came as motor manufacturing bosses flew into Washington on private jets to ask for government handouts. But their choice of transport was not welcomed by some lawmakers who criticised their extravagance. US democrat Gary Ackerman described their arrival on private jets as “delicious irony” and added that it was “almost like a man turning up at a soup kitchen with top hat and tuxedo” [CNN]. The executives of General Motors, Ford and Chrysler had appeared before congress to ask for loans for their ailing companies and had warned that the failure of the industry would have dire consequences for the U.S. Economy [CNN / BBC].

The US car makers aren’t the only ones asking for money. In China auto manufacturers were also appealing for financial assistance. One reason behind the request was because of increased competition and an inability to compete effectively. "China is the last booming market nowadays, and foreign automakers are investing more money and building more factories here, threatening our own businesses," Xu Heyi, chairman of Beijing Automobile Industries Holding Co., a partner with Hyundai Motor Co. and Daimler AG, said [AP].

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