Bloomberg reports the decision that sent global markets into a tailspin on Monday.
President Barack Obama gave General Motors Corp. and Chrysler LLC deadlines to “fundamentally restructure” or lose government aid that has kept them alive.
Obama rejected the companies’ recovery plans and forced GM Chief Executive Officer Rick Wagoner to resign. He gave GM, the biggest U.S. automaker, 60 days to develop a new strategy. Obama said No. 3 Chrysler can’t survive on its own and gave it 30 days to complete a partnership with Italy’s Fiat SpA.
Meanwhile, Europe had enough bad news of its own. From Bloomberg:
An index of executive and consumer sentiment in the euro area declined to 64.6, the lowest since the indicator began in 1985, from 65.3 in February, the European Commission in Brussels said today. Gauges for industry, services and consumer sentiment all reached record lows. A separate report showed that Spanish consumer prices fell from a year earlier for the first time ever, indicating deflationary pressure that may spread.
ECB President Jean-Claude Trichet made little attempt to hide the gloomy picture in a speech on Monday.
“We expect demand to remain very weak throughout 2009 before gradually recovering in the course of 2010,” Trichet told European lawmakers in Brussels today. “2009 is a very, very difficult year, where you have to accept negative growth all across the year,” he said, adding that “I trust we will have this recovery in the course of 2010.”
The finding from a recent retail survey did show an improvement though. Again from Bloomberg:
European retail sales dropped for a 10th month in March as job cuts and deteriorating consumer confidence hurt household spending, the Bloomberg purchasing managers index showed.
The measure of euro-region sales was at 44.1 from a revised 42.3 in February, where a reading below 50 indicates contraction. The indicator has stayed below that mark since June...
There was also positive news from the UK. From Reuters:
The number of loans approved for house purchase rose to 37,937 in February from 31,791 in January, the Bank of England said on Monday, the highest since May 2008 and above forecasts for a modest increase to 34,000.
Mortgage lending rose by 1.507 billion pounds, almost double analysts' forecasts for an 800 million pound rise, and up from just over 1 billion pounds in January.
Analysts said the figures offered a first indication that activity in the sinking housing market may have passed its low point, but that prices were likely to continue to sink for months to come.
And UK consumers became less gloomy in March. Again from Reuters:
The GfK/NOP consumer confidence barometer rose to a 10-month high of -30 in March from -35 in February, confounding expectations for an unchanged reading...
The biggest improvement related to people's expectations for the economy which rose to -31 from -40 in February.