The Big Three Plea

They came by hybrid carrying pledges to work for just a $1 a year, and still the Big Three bosses might leave Capitol Hill empty-handed. Even as the heads of Ford, GM, and Chrysler made their best case for a $34 billion auto bailout, they "found themselves confronting years of pent-up anger, the harsh politics of a recession and the realization that even their strongest supporters might not be able to muster the votes to save them," writes the New York Times. The automakers face a "wall of skepticism from lawmakers ... despite a general consensus among leaders in Congress and the Bush White House that a helping hand of some sort should be offered," writes the Wall Street Journal. The implications of any of the Big Three going bankrupt (both GM and Chrysler say they've just got one month's gas in the tank) is enormous. Business Week estimates letting the companies go under could cost the "U.S. government hundreds of billions of dollars and cost the country up to 3 million jobs." Yet neither the White House nor President-elect Obama appear willing to manhandle lawmakers into approving a bailout. And with a recent CNN poll showing that six in 10 Americans are against helping Detroit, lawmakers remained adamant that "they were not convinced that the automakers could return to profitability even with a massive infusion of government cash," writes the Washington Post.

Central banks in Europe seem to be engaged in a game of rate-cut limbo. Yesterday, the European Central Bank cut its main policy rate by three-quarters of a percentage point to "2.5 per cent—its largest reduction ever—just hours after Sweden’s central bank cut the country’s official borrowing costs by a record 175 basis points," writes the Financial Times. Not to be outdone, the Bank of England reduced its main rate to just 2 percent (a 1 percent cut), reducing borrowing costs to the lowest level since 1951, writes the British Guardian. Having already reduced the U.S. base rate to just 1 percent, the Federal Reserve has limited cutting power at its disposal ahead of an important mid-December meeting, says the WSJ. While some further rate-trimming is likely, the Fed is also "mulling unconventional steps [to jump start the economy, including] new efforts to bring down rates the Fed doesn't usually target, such as those on mortgages, other consumer borrowing or Treasury bonds."

Another day, another series of layoffs. On Thursday, AT&T announced it will be slashing 12,000 jobs and reducing operating costs, blaming the cuts on steadily increasing defections from its core land-line business, the NYT reports. The former telecom monopoly is not the only blue-chip suffering from the downturn. According to the WSJ, U.S. companies have shed 1.2 million jobs this year; 33,000 just this week. The market is bracing for still further bad news today, when the government releases the jobs report for November. It's expected to show a loss of 350,000 jobs last month. It all adds up to some dismal numbers: "The unemployment rate is expected to tick up to 6.8% for November and top 8% by the end of next year. That would make this recession the worst for the job market since the contraction of 1981-82, when unemployment hit 10.8%," the newspaper reports.

With so many Americans out of work, it's no surprise that retail sales figures are going from bad to worse. Sales at stores open at least a year fell 2.7 percent in November year-on-year, according to the Los Angeles Times, citing statistics from the International Council of Shopping Centers. "Only a handful of retailers, including discount giant Wal-Mart Stores Inc., showed gains while most apparel and luxury stores tanked." The NYT puts it in different terms: Despite a strong Thanksgiving weekend, retail sales have hit their weakest level in 35 years. "Declines were recorded in every retail segment the group tracks, with the biggest coming from department stores, with sales down 13.3 percent compared with November a year ago, and specialty apparel retailers, down 10.4 percent," the newspaper writes. To be sure, Black Friday sales have saved the sector from complete collapse. A better-than-expected turnout last weekend means "the November results were terrible instead of being completely horrific," Ken Perkins, president of research company Retail Metrics Inc., told the LAT.

Finally, it's not all bad news in the job market—not if you're Qi Lu, that is. The former executive vice president of engineering for Yahoo's search and advertising technology group has been hired by Microsoft to run the company's Internet operations—an area where the software giant has struggled. Could his appointment be the bridge needed to bring a Microsoft and Yahoo search deal together?