White House promotes auto bailouts, cites paybacks

By JIM KUHNHENN
Associated Press

(AP:WASHINGTON) Taxpayers will lose about $14 billion in the government's $80 billion bailout of Chrysler and GM, the White House said Wednesday, portraying the outcome as good news since the losses are far lower than originally anticipated.

Seizing on the figures, the Obama administration took credit for the resurgence of the U.S. auto industry, assuring taxpayers that the government's bailout of Chrysler and GM was an investment worth making.

A report by the president's National Economic Council noted that as Detroit automakers rebound, the taxpayers' loss from the bailout will be about $14 billion, or less than 20 percent of the $80 billion that the Bush and Obama administration used to prop up the companies in 2008. The Treasury Department had expected losses closer to 60 percent.

The report was part of a carefully devised strategy by the White House to draw attention to an industry that's on the mend and whose footprint is most noticeable in key presidential battleground states. In recent days, Vice President Joe Biden and Treasury Secretary Timothy Geithner have both promoted the government's GM and Chrysler interventions as risky moves by President Barack Obama that paid off.

Obama is making the most out of Chrysler's announcement last week that it is repaying $5.9 billion in U.S. loans and a $1.7 billion loan from the Canadian government ahead of schedule. Those payments cover most of the federal bailout money that saved the company after it nearly ran out of cash and went through a government-led bankruptcy.

General Motors Co., which also went through bankruptcy, received $49.5 billion in the U.S. bailout. The federal government has lowered its equity stake in the company from 61 percent to 26.5 percent of GM after selling part of the stake in November. Ford did not seek federal government assistance.

The National Economic Council report said that since GM and Chrysler emerged from bankruptcy last year, the industry as a whole has created 115,000 jobs.

The White House is reveling in an " I-told-you-so" moment and Obama himself will take that message Friday to a Chrysler plant in Toledo, Ohio.

Ron Bloom, the president's top manufacturing adviser, summed up the White House point of view Wednesday: " At the time the president chose to help Chrysler, at the time he chose to help General Motors, a lot of people said you're throwing good money after bad, you'll never get out, these companies are not savable."

The auto industry success is a potentially powerful political story for the president. With Washington focused now on budget cutting, the administration does not have the political leverage to spend money on jobs initiatives, let alone a new economic stimulus.

Still, any claim that the administration can make that it saved or restored jobs is a plus in an environment where unemployment hovers around 9 percent.

What's more, the auto industry is prominent in states like Michigan, Ohio, Indiana and Missouri, all of them important for Obama's re-election prospects.

" We believe the steps we took and the steps they took in partnership with us have positioned these companies to where they have a real chance of success," Bloom said.

Republicans had proposed an alternative that relied on private sector investment. It included government-provided insurance to cover half of investor losses.

" The administration's auto bailout is nothing to celebrate there were better options that could have saved jobs for these workers," Brendan Buck, a spokesman for House Speaker John Boehner, said

Bloom declined to say when the government would sell its remaining stake in GM. The company's stock price fluctuated between $29 and $39 over the last two months. It was selling at just over $30 per share on Wednesday. " We're not going sell at a fire sale the first day we can, on the other hand we're not holding, waiting for a target price," Bloom said.

The administration's decision to promote the industry and the role of the bailouts came on the same day the industry reported a falloff in May sales after their aggressive performance earlier this year. General Motors' sales fell 1.2 percent as it offered fewer deals to customers and cut sales to rental car companies. Ford sales fell 2.4 percent as strong sales of small cars were weighed down by lower sales of pickup trucks.

The White House economic report sounded one word of warning for Chrysler, saying it continues to face challenges. It cited a product line that still relies heavily on large vehicles and light trucks. The report added: " It must prove its ability to overcome past skepticism about its brand and attract and retain customers over the long term."

Still, in an opinion piece in Wednesday's edition of The Washington Post, Geithner said U.S. auto companies are now at the forefront of a comeback in American manufacturing.

" We cannot guarantee their success, and at some point they may stumble. But we've given them a better shot," Geithner wrote. " While we will not get back all of our investments in the industry, we will recover much more than most predicted, and far sooner."

GM and Chrysler were on the verge of collapse in the final days of the Bush administration after Congress failed to approve an emergency loan package. The Bush administration gave the companies $17.4 billion in loans and required them to develop a restructuring plan by mid-February 2009.

Obama's administration pumped billions more into the carmakers later that spring but won concessions from industry stakeholders, allowing it to push GM and Chrysler through bankruptcy court in the summer of 2009.

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Associated Press writer Julie Pace contributed to this report.

Singapore Stocks May Add To Winning Streak

(RTTNews) - The Singapore stock market has finished higher now in four consecutive trading days, gathering nearly 25 points or 0.8 percent along the way. The Straits Times Index finished just above the 3,135-point plateau, and now traders are looking another firm opening when the market kicks off trade on Monday.

The global forecast for the Asian markets is positive thanks to a rebound in the price of commodity stocks and generally good economic data out of the United States. Gold and oil stocks are expected to lead the way, while financials and steel companies also could provide support. The European and U.S. bourses finished firmly higher on Friday, and the Asian markets also are expected to track to the upside.

The STI finished modestly higher on Friday following gains from the commodity stocks and industrials.

For the day, the index rose 11.82 points or 0.38 percent to finish at 3,135.52 after trading between 3,125.49 and 3,154.52. Volume was 1.32 billion shares worth 1.37 billion Singapore dollars. There were 269 gainers and 166 decliners.

Among the actives, SembCorp Marine added 1.5 percent, while Keppel Corp collected 0.4 percent, Cosco Corp shed 3.0 percent, Noble Group climbed 1.5 percent, Golden Agri-Resources jumped 1.4 percent, Olam International gathered 0.7 percent and Wilmar International rose 0.4 percent.

The lead from Wall Street is fairly upbeat as stocks moved mostly higher on Friday, with traders reacting positively to a mixed batch of economic data. The markets continued to recover from the sell-off earlier in the week, although trading activity was relatively subdued ahead of the holiday weekend. The strength in the markets was partly due to an upward move by resource stocks, which moved higher along with commodities prices.

On the economic front, the Commerce Department released a report before the start of trading showing continued increases in personal income and spending in the month of April. Personal income rose by 0.4 percent in April, matching the increases seen in each of the two previous months. Personal spending also rose by 0.4 percent in April following a 0.5 percent increase in March. However, when factoring in the recent increases in prices, disposable income was nearly unchanged and spending showed only a modest increase.

A separate report from Reuters and the University of Michigan showed a notable upward revision to their consumer sentiment index for May. The index was upwardly revised to a reading of 74.3 from the preliminary reading of 72.4.

Meanwhile, the National Association of Realtors released a report showing a much steeper than expected drop in pending home sales in April, with unusual weather and economic softness adding to ongoing problems in the housing market. NAR said its pending home sales index plunged by 11.6 percent in April following a downwardly revised 3.5 percent increase in March. Economists had expected pending sales to edge down by 1 percent compared to the 5.1 percent increase originally reported for the previous month.

In corporate news, shares of Marvell Technology (MRVL) surged up by 11.1 percent after the chip maker reported weaker than expected first quarter earnings but provided upbeat second quarter guidance. While Marvell reported first quarter earnings of $0.29 per share, a penny below analyst estimates, it forecast second quarter earnings of $0.37 per share on revenues of $870 million to $910 million compared to analyst estimates for earnings of $0.34 per share on revenues of $875.4 million.

The major averages all ended the day in positive territory but well off their best levels of the day. The Dow rose 38.82 points or 0.3 percent to 12,441.58, the NASDAQ climbed 13.94 points or 0.5 percent to 2,796.86 and the S& P 500 advanced 5.41 points or 0.4 percent to 1,331.10. While the major averages closed higher for the third straight day, they all moved lower for the week. The Dow posted a weekly loss of 0.6 percent, while the NASDAQ and the S& P 500 both fell by 0.2 percent.

Malaysian Stocks Likely To Claim 1,550-Point Level

(RTTNews) - The Malaysian stock market has finished higher now in four straight sessions, climbing more than 20 points or 1.3 percent along the way. The Kuala Lumpur Composite Index finished just below the 1,550-point plateau, and now analysts are forecasting continued support at the opening of trade on Monday.

The global forecast for the Asian markets is positive thanks to a rebound in the price of commodity stocks and generally good economic data out of the United States. Gold and oil stocks are expected to lead the way, while financials and steel companies also could provide support. The European and U.S. bourses finished firmly higher on Friday, and the Asian markets also are expected to track to the upside.

The KLCI finished modestly higher on Friday as gains among the financial shares and plantation stocks were dented by softness from the industrial issues.

For the day, the index added 7.75 points or 0.50 percent to finish at 1,548.69 after trading between 1,543.21 and 1,549.96. Volume was 947.812 million shares worth 1.689 billion ringgit. There were 464 decliners and 314 gainers.

Among the actives, Tenaga Nasional, Genting Malaysia, Hong Leong Bank, Genting and IOI Corporation all finished higher, while GSB Group and Petronas Chemicals ended lower.

The lead from Wall Street is fairly upbeat as stocks moved mostly higher on Friday, with traders reacting positively to a mixed batch of economic data. The markets continued to recover from the sell-off earlier in the week, although trading activity was relatively subdued ahead of the holiday weekend. The strength in the markets was partly due to an upward move by resource stocks, which moved higher along with commodities prices.

On the economic front, the Commerce Department released a report before the start of trading showing continued increases in personal income and spending in the month of April. Personal income rose by 0.4 percent in April, matching the increases seen in each of the two previous months. Personal spending also rose by 0.4 percent in April following a 0.5 percent increase in March. However, when factoring in the recent increases in prices, disposable income was nearly unchanged and spending showed only a modest increase.

A separate report from Reuters and the University of Michigan showed a notable upward revision to their consumer sentiment index for May. The index was upwardly revised to a reading of 74.3 from the preliminary reading of 72.4.

Meanwhile, the National Association of Realtors released a report showing a much steeper than expected drop in pending home sales in April, with unusual weather and economic softness adding to ongoing problems in the housing market. NAR said its pending home sales index plunged by 11.6 percent in April following a downwardly revised 3.5 percent increase in March. Economists had expected pending sales to edge down by 1 percent compared to the 5.1 percent increase originally reported for the previous month.

In corporate news, shares of Marvell Technology (MRVL) surged up by 11.1 percent after the chip maker reported weaker than expected first quarter earnings but provided upbeat second quarter guidance. While Marvell reported first quarter earnings of $0.29 per share, a penny below analyst estimates, it forecast second quarter earnings of $0.37 per share on revenues of $870 million to $910 million compared to analyst estimates for earnings of $0.34 per share on revenues of $875.4 million.

The major averages all ended the day in positive territory but well off their best levels of the day. The Dow rose 38.82 points or 0.3 percent to 12,441.58, the NASDAQ climbed 13.94 points or 0.5 percent to 2,796.86 and the S& P 500 advanced 5.41 points or 0.4 percent to 1,331.10. While the major averages closed higher for the third straight day, they all moved lower for the week. The Dow posted a weekly loss of 0.6 percent, while the NASDAQ and the S& P 500 both fell by 0.2 percent.

Continued Support Eyed For South Korean Stock Market