GM: Better Bust Than a Bailout?

Would Bush prefer to see GM go bust than be bailed out? Even as House Democrats mobilize a rescue package for the Big Three, the Bush administration and Republicans in Congress are both reluctant to "pour taxpayer money into auto companies that face the prospect of long-term insolvency" and also skittish about involving the government further in the national economy, the Wall Street Journal reports. Politics aside, Republicans may have a sound economic point, says the New York Times. It writes that "experts note that while bankruptcy would be painful, it may be preferable to a government bailout that may only delay, at considerable cost, the wrenching but necessary steps G.M. needs to take to become a stronger, leaner company."

GM isn't the only company in need of a refresh. The WSJ suggests that Citigroup directors are growing "increasingly dissatisfied with the financial giant's performance" and "considering replacing Sir Win Bischoff as chairman." One name being floated to replace him is Richard Parsons, Time Warner Inc.'s chairman and a member of Citigroup's board, the paper writes, while taking care to stress Citi's official denial of any brewing boardroom coup. There's likely to be plenty of rumbling in the boardrooms of major life insurers this quarter. The NYT reports that many life-insurance companies face further "cuts in their credit ratings before the year is up and have little choice but to seek capital in unforgiving market." Worse still, many of the hardest hit won't be available to tap the Treasury Department's Troubled Asset Relief Program. The program insists that life insurers must be affiliated with banks or thrifts that are regulated at the federal level to qualify, and that could leave heavyweights like Hartford Financial Group out in the cold. This week a Goldman Sachs report suggested investors sell their stakes in all life insurers apart from Met Life. Even with a rescue plan, many banks remain unwilling to lend to one another or the public. This late-dawning realization caused Treasury Secretary Hank Paulson to conduct a swift volte-face yesterday and distribute bailout bucks "specifically to help consumers instead of banks, savings and loans and Wall Street firms."

Across the Atlantic, the troubles deepen in Europe's biggest economies. First to Germany, the engine of the Eurozone. According to the BBC, Germany is officially in recession now, a blow that can be felt most acutely in heavy manufacturing and telecoms. German engineering giant Siemens announced on Thursday a $3 billion fourth-quarter loss as demand for big projects slackens from the economic downturn and as costs from an expensive restructuring of its struggling telecommunications unit mount, TheStreet.com reports. It doesn't help, either, that the company had to pay $1 billion to settle a bribery scandal. Meanwhile, its sister company, telecom equipment maker Nokia Siemens Networks, announced 1,250 job cuts in Germany and Finland as part of a $2.55 billion restructuring plan, the WSJ writes. The total number of scalps to go from the retooling will be a high as 9,000, MarketWatch adds. Britain's former telecom monopoly, BT, is going one step higher. According to the BBC, the troubled telecom giant will shed 10,000 jobs by March.

U.S. tech bellwethers aren't faring much better. Chips giant Intel on Wednesday slashed its fourth-quarter sales forecast, citing "significantly weaker than expected demand in all geographies and market segments," Business Week reports. What does this mean for the wider tech sector? "For all intents and purposes, the PC market is just dead," Edwin Mok, an analyst at Needham & Co. told the magazine. "We expected something like this already, but we didn't expect it to be so bad." It's particularly grim news for already hobbled consumer electronics retailers. Just days after Circuit City filed for bankruptcy protection, its chief rival, Best Buy, on Wednesday issued a profits warning saying it expects this to be one of the worst Christmases ever, the Associated Press reports.

No wonder American retail is tanking when so many consumers are returning the goods they bought (call it the Palin effect). Shoppers throughout the land are calling an end to the retail splurge, "driven by anxiety over jobs and savings, or an immediate need for cash," writes the NYT.