After MUCH drama, the fall of the auto industry in the US has finally been avoided- at least temporarily anyway. In the end, Bush signed over $17.4 to Chrysler and GM on Friday in return for non voting warrants and more oversight on executive pay etc. In the end, they made a full circle and the money will be coming from the TARP fund, which brings up the really intriguing question of whether the government has opened the pandora box and now other industries will be lining up to get a share of the rest of the TARP fund. Paulson has already asked Congress to release the rest of the $350 billion TARP fund early, when just a few days ago he said that it will not be necessary. Just when we thought we figured out how the TARP is going to work, they change their minds. This does not bode well for the government, because it makes them look like they have no idea what they're doing. Maybe they don't! On the other hand, the wider purpose of TARP is to support the financial market stability, and I daresay, it will probably not be very stable if the auto industry went bankrupt!
On the sidelines, the Madoff scandal continues to unfold, revealing many influential individuals exposed to this fraud. The S&P cut the rating of 11 US and EU banks, including Bank of America, Barclays Bank, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase Bank, Morgan Stanley, Royal Bank of Scotland, UBS and Wells Fargo Bank. I guess if ratings must be cut, at least there is safety in numbers. What are you going to do when everyone goes down?
Outside of the States, it looks like the land of chocolate and waffles is not doing very well. Belgium's attempt to bailout Fortis got frozen as Prime Minister Yves Leterme tendered his resignation after having reportedly politically meddling to sway a court ruling. Apparently this is the third time their government collapsed. I had no idea.