Andrew Torgan
CNN Financial News Producer

Gold continues to push higher into record territory amid concerns about a weak U.S. dollar, inflation and technical-based buying by large investment funds.

The December contract for gold rose $4.70 to settle at a fresh all-time high of $1,044.40 an ounce today. Earlier in the session, it traded as high as $1,048.20, topping Tuesday's intraday mark by $3 an ounce.

Gold, which is up 17% so far this year, has been supported recently by concerns about the dollar and bets that inflation will rise over the long term as the economy recovers and stimulus measures will have to be reversed.

Analysts expect the rally to continue and say gold could push past $1,050 this week and top $1,100 in the near future.

Sources: Administration considering safety net measures

Amid nervousness about states' economies and a growing unemployment rate, the Obama Administration is considering a series of measures aimed at putting many Americans back to work before the 2010 midterm elections, sources close to the process told CNN.

The effort is largely being directed by the Treasury Dept, and Lawrence Summers, director of the National Economic Council, one source said.

Ideas include enhancing tax credit flexibility for small businesses, extending unemployment and health benefits and offering states temporary "loan packages" to help governors get through the worst of the recession.

Unlike the stimulus package, the loans to states would be voluntary: "We would like to avoid the stimulus problem," the source said.

GM hits a big speed bump

For General Motors, the road out of bankruptcy isn't proving to be as smooth as its quick trip through it.

In the past week, the company's plans to sell its Saturn brand to auto retailer Penske Auto Group fell through, forcing GM to start winding down a network of about 350 dealerships.

But that's not the only post-bankruptcy problem for GM. Its plans to sell Hummer to a Chinese industrial company missed a target date of closing by Sept. 30.

GM is also trying to close a deal to sell two-thirds of GM's European Opel brand to a joint venture between a Canadian auto parts maker and a Russian automaker. Despite ongoing losses at Opel, the decision to sell that stake was a difficult one for GM. Many experts are concerned that the Opel sale will weaken GM by limiting its global reach.

The great tax drought of 2009

You don't need a Ph.D in economics to know that the government fiscal year that ended last week was ugly for the budget.

Much attention has been paid this year to the record-high spending and deficit accrued because of the financial and economic crisis.

But one of the driving factors that has gotten less notice: plummeting tax revenue. The crisis, after all, walloped company profits and savaged Americans' income stream.

Through the end of August, Uncle Sam collected 25% less in tax revenue for the year than he did during the same period a year earlier. The two biggest culprits - a 56% drop in corporate income tax revenue and a 20% drop in individual income tax revenue.

On balance, the Congressional Budget Office expects that tax receipts will be 14.9% of gross domestic product this year, well below the historical 18.3% average.

Amazon lowers ‘Kindle’ prices

Anyone who has visited Amazon.com recently knows the company has been relentlessly promoting its “Kindle” e-book reader.

Now, with Christmas less than 80 days away and amid predictions for a dismal holiday shopping season, Amazon is cutting the price of the Kindle in the U.S. and launching a version that can be used worldwide.

The company lowered the U.S. price of the Kindle by $40 to $259. It also launched a new Kindle that can be used globally. That device, which has wireless capabilities in more than 100 countries, sells for $279 and will begin shipping Oct. 19.

Target slashes toy prices 50% for the holidays

Discount retailer Target is offering up to half off of popular toys like Barbie and Fisher Price to lure bargain hunters this holiday season, the company said today.

Target says the price cuts went into effect Oct. 1 and will remain in place throughout the holiday season.

A selection of toys are discounted by as much as 50%, including the Barbie Fashion Doll, on sale for $5, and the GI Joe Tough Troopers Figure, marked down to $14.99. Most are available both online and in stores.

Whether these efforts will pay off in the form of stronger sales remains to be seen. Retailers are bracing for another potentially weak holiday shopping season amid an uncertain economic recovery.

Tiger says he’s no billionaire

Forbes magazine reported last week that golfer Tiger Woods was the first athlete to earn $1 billion.

One problem, though: Woods says he doesn't have that much money. At a news conference yesterday ahead of the start of The Presidents Cup, a reporter asked Woods directly about the Forbes report.

Reporter: "This last week, it was announced you hit the billionaire status. What's that like to learn?"

Tiger Woods: [Laughs] "Well, one, I haven't, so I don't know where that number came from."

Forbes cited estimates of Woods's earnings from endorsements, tournament winnings, appearance fees and his nascent golf-course design business. Other than tournament winnings, Forbes could only guess at the other income of the famously circumspect Woods, and the magazine admitted its figures could not be exact.

Follow the money… on Twitter: @AndrewTorganCNN

Gene Bloch
Managing Editor
CNN New York

We kick off this morning with one of those “green shoots” in the economy: better than expected retail sales; they surged 2.7 percent in August, as the Cash for Clunkers program provided a lift to auto sales. But even without auto sales and auto parts in the mix, retail sales rose a respectable 1.1 percent.

On the less positive side, wholesale inflation as measured by the Producer Price Index surged 1.7 percent last month. Most of that increase however was due to a surge in energy prices. If you strip out food & energy costs, the PPI’s “core rate” edged up just 0.2 percent.

President Obama is talking about the economy today as he addresses GM workers at a GM plant in Ohio; he then travels to Pittsburgh to address an AFL-CIO convention, before making his way to a fundraiser for Sen. Arlen Specter in Philly. Fed Chief Ben Bernanke today is out talking economy as well, going farther than before in saying the recession is “very likely over.” Of course, we know that only the National Bureau of Economic Research can conclude when recessions begin and end. And it doesn’t happen until after the fact.

How effective have the federal government’s efforts been to help consumers? In June, the President called for the creation of a new consumer protection agency to regulate mortgages, credit cards, and other financial products. But not much has happened since then— why not?

And what about the Administration’s efforts to help troubled borrowers stay in their homes? The Treasury Department says only 12 percent of eligible borrowers have had their loans modified under the President’s foreclosure prevention plan, which began in April. Why aren’t loan servicers moving faster? Alison Kosik takes a look in today’s Breakdown.

Is there a trade war shaping up with China? The Obama Administration is increasing tariffs on Chinese-made tires, which could put pressure on U.S. manufacturers overseas and cash-strapped consumers at home. China is calling for talks with the World Trade Organisation over the issue.

We continue our coverage marking the one-year anniversary of the financial crisis (note: Lehman filed for bankruptcy protection one year ago TODAY), and American Morning’s Carol Costello has a terrific interview with a former Lehman VP, Lawrence McDonald. He recently wrote a book about his experience titled "A Colossal Failure of Common Sense, The Inside Story of the Collapse of Lehman Brothers". McDonald sums it up in one phrase: "24,992 people striving hard, making money, and about eight guys losing it." McDonald talks about the corporate culture, how the firm's leaders ignored all the warnings and why he believes Lehman Brothers could have avoided bankruptcy.

And CNNMoney’s Poppy Harlow will interview Warren Buffett today on the recovery, what could go wrong, and what steps need to be taken to prevent a repeat of the calamity. The interview will take place this afternoon at the Fortune’s Most Powerful Women Summit in Aviara, CA. Poppy is there covering it. She’s available live after 230p.

And gas prices are down for a fourth straight day. AAA reports the average price of a gallon of regular unleaded is at $2.563 ($2.56 for grfx), down nine-tenths of a cent from the previous price.

On CNNMoney Today:

THE CRISIS: 1 YEAR AFTER LEHMAN

Ranking the rescues: Banks, autos, jobs. The collapse of Lehman led to a deeper recession and a litany of government programs to try and end the pain. We rate just how bold and effective the plans have been so far.

Judge rejects Merrill bonus settlement. Bank of America and the SEC are told that a proposed $33 million penalty over Merrill Lynch bonuses is 'neither fair, nor reasonable, nor adequate.'

Ex-Bear Stearns chief sees silver lining in Lehman collapse. Alan Schwartz said the firm's failure spurred policymakers around the world to finally cooperate.

HEALTH CARE

Rx for money woes: Doctors quit medicine. Some physicians, fed up with the costs of their practice, are ready to hang up their stethoscopes and shift careers.

HSAs remain rare, but small businesses have been among their biggest adopters. Advocates are waiting to see if they'll survive the health care reform battle.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

I've been thinking a lot about Chrysler and GM lately. This isn't quite as ripped-from-the-headlines as it might sound, because I often think of cars. I'm what you might call a "car guy".

Car guys fall into all sorts of sub-categories, but mine is the one where the middle-aged guy who really couldn't fix a car to save his life finds himself dreaming of building a hotrod. Yes, I'm over 40 and I like things that loudly go vroooooom.

One thing us car guys like to do is plan the future for all of our favorite car companies. It's kind of like we used to do when we were little boys in school, drawing pictures of cars with crayons, adding an air scoop in the front, and maybe some flames coming out of the exhaust.

Except, most of us mid-life car guys have given up the crayons and either taken up the online forum or hold court around a Weber grill - and the closest we ever really get to flame jobs is cooking the oh-so-well-done burger that Dad always likes.

Good old American iron

But now we really do have something to talk about, because the good old American iron is showing more than a few signs of rust. Chrysler, for example, just had a shotgun marriage with Fiat Fiat of all companies - you go to their Web site and they don't even list the United States on their list of countries!

Regardless of how most of us Americans think of Fiat, they've been around longer than any of the big three. Formed in 1899, Fiat is the world's sixth largest car maker.

But when most American car guys my age think of Chrysler, we think of that special brand of muscle car known as Mopar. Yes, Mopar is a contraction of Motor Parts and I agree it's an altogether uninspired moniker, but true Mopar cars can take your breath away.

The 1969 Dodge Charger and the 1970 Hemi Cuda convertable were cars that were all go and all show. Heck, the General Lee was a 1969 Dodge Charger and Bo and Luke could make that baby jump rivers!

Of course, Ford and GM also had their classic muscle cars. Who doesn't salivate just thinking about a classic Shelby or a 1970 Boss 302 Mustang? On the GM side, of course, there's the Goat, the Pontiac GTO (Gran Turismo Omologato) and the Trans Am. When you have a long way to go and a short time to get there, there's just nothing like a 1977 Trans Am to keep Smokey at bay.

And today, where are these heroic brands? GM has declared bankruptcy and the Pontiac brand will cease to exist after 2010. Of course, there's been precious little life in the brand for years. Chrysler's also been dead for years, but no one's really known it. Bought by Germany's Daimler almost a decade ago and dumped in 2007, the company has long been a brand without a mission - and hasn't really been an American car company for years.

What if you ran the car companies?

So, what if we got rid of all the suits and let some car guys run Chrysler and GM? Would it herald a return to the heyday of the Bandit and the General?

Sadly, the answer is no. It's no coincidence that all the classic muscle cars are 30 years-old or older. Back when they were at the top of their game, gas was incredibly cheap and the world's oil reserves were presumed by most to be infinite. Global warming was an unknown term, and, often, so were the concepts of reliability and safety.

The thing about the muscle cars, back in the day, was they were generally affordable by the regular Joe. Sure, some of the biggest engines were a stretch on the finances, but if you wanted a Hemi badly enough, you could get one.

Chrysler still makes hot cars. One of its hottest is the failure known as the Dodge Viper. So far this year, Chrysler's sold a little under 300 of them. Total. This 600-horsepower, V10-powered bad boy gets barely 16 miles to the gallon with a tailwind and costs more than $90,000 - and this is the first car that the management at the new Fiat/Chrysler have decided to put back on the road.

Talk about missing the point! Sigh.

Grabbing a slice of Kielbasa off the grill before it had completely turned to charcoal, I asked some of my buddies what they'd do if they were faced with revitalizing Chrysler and GM. Together, we came up with a plan that even Joe the Plumber could love.

First, we agreed that fuel economy is important. This is where good ol' American engine-uity can shine. There are now amazingly long-lasting and high-performing batteries and the technology for fuel cells and hybrids is well understood. Get the best technology for environmentally sound get-up-and-go, scale it up to keep the cost down, and don't look back.

Yes, we agreed, there are issues of charging, infrastructure, new fuel distribution, and all that. Ignore it. Make a hot, fast, affordable car and the rest of the infrastructure will take care of itself. Apple made the iPhone. Do you have any idea how many other companies jumped on the bandwagon behind that blazingly hot product to fill out the offerings? The same will happen with a hot car - just as long as it sells. So make something that will sell.

Next, make the car look cool. Most family cars look the same, but you can tell a Mopar from a mile away (and not just because some dude pulled off the muffler). Make it look really, freakin' cool. Don't hold back, don't try to meet everyone's needs, don't try to be middle of the road. You want a car that looks so darned good that your toes curl just staring at it.

And don't make it so small that only a 13-year-old boy can fit inside. American adults are "big boned" and that's why we fit better in muscle cars than sports cars. Leave those tiny, little eggs to the Italians. We want manly-man cars.

Make it reliable and rock-solid safe. Most Americans don't buy foreign cars because they prefer foreign cars. Those Americans who buy foreign cars do so because the foreign cars seem better. And yet, we Americans pioneered the concept of quality in manufacturing. There's no reason, if we really, really care, that we can't make a car that's built to last.

Yes, last. The more cars that are out there, the stronger the aftermarket will be. And the stronger your aftermarket, the stronger the overall market for your car. Don't worry, you Detroit pencil-pushers. Those people who always turn in their car every three years will continue to do so. Your cars don't have to break down so you can make money selling more. If your car is solid, you'll make it up on volume.

Good mileage, environmentally friendly, and high-performance. Check.

So cool looking, it's guaranteed to get you laid - and roomy enough to make it possible. Check.

Reliable and rock-solid safe. Check.

What's left? Oh, yeah. Cost. The car has to be affordable. And we're not talking affordable to lease. We're talking affordable to purchase. If Apple can sell a $700 phone for $199 and still make a mint, American car companies can figure out a business model that can get these babies in the hands of any American who wants one. Be creative. It's doable.

I can see the suits shaking their heads. How can we put an environmentally friendly high-performance engine in it, make it sexy, make it reliable, and make it cheap? It's just not possible, they'd say.

And that's why the MBAs in Detroit are now bowing and scraping to an Italian company that can't even be bothered to put the United States on their Web site.

The thing is, American industry has proven it's capable of anything. After all, America - not Japan, not South Korea, and certainly not Italy - America created the Mustang, America created the Hemi, and America created the Goat.

America can do this. America must do this.

Oh, and if you're wondering, and I know you are: if I were Barack Obama and I owned 60% of a car company like GM, even for a week, I'd require all cars to have flame jobs and hood scoops. Just sayin'...

Question for readers: If you ran a car company, what would you do? Comment below.

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.

Jack Gray
AC360° Producer/Writer

There’s nothing like a hot ride. And my first car was nothing like a hot ride. A 1987 Chevrolet Celebrity station wagon. Baby blue with a generous array of leathery rust spots, it was the vehicular love child of an obese Smurf and Dog the Bounty Hunter.

The car was a gift from my grandfather, for whom it had served the dual purpose of smoking lounge and elderly chick magnet. As with most things – especially his changeover from a black toupee to a white one – my grandfather had impeccable timing, giving me the car at the height of my high school insecurity. Because nothing makes a 16-year-old more self-confident than a battered station wagon manufactured in the previous decade.

That said, I’ve never been one to look a gift horse in the mouth, or toupee. So I accepted the car just as I had accepted puberty, with profuse gratitude and quiet shame. And to my surprise, even though I would have preferred something red and Italian, The Celeb – as my friends and I called it – would come to serve me well. It was clean, the engine started on cold mornings and the brakes – unless I needed to stop – worked great.

Like many high school vehicles, The Celeb saw its share of youthful indiscretions. Cigarettes were smoked, beer was transported, and virginities were lost. At the time they all seemed like perfectly constructive activities. Though I suppose, in retrospect, I was just trying to keep up with President Clinton.

Fast forward a dozen years and I’m now car-less…memories of my baby blue Chevy brought back today by news that the House of Representatives has passed so-called “Cash for Clunkers” legislation. The idea, as I understand it, is to give Americans who turn in their gas-guzzlers vouchers for up to $4,500 toward the purchase of a new fuel efficient car. I’m out of luck on this one, since The Celeb is long gone. Which is just as well since Anderson has a policy about staffers displaying bumper stickers that read, “Come and Get It, Tiffani-Amber Thiessen.”

So, with my gas-guzzling days behind me, I travel mainly on the New York City subway, a form of transportation for which there is little difference between overcrowding and an unsolicited lap dance. But, the price is right and I find comfort in the knowledge that by taking mass transit I’m doing my part to help the environment, even if on most days the experience ranks right below having my hair set on fire.

Still, I miss The Celeb and what it represented: Pride of ownership and the freedom to go where I wanted when I wanted.

And, of course, sexiness.

Follow Jack Gray on Twitter @jackgraycnn.

Justine Redman and Joe Johns
AC360º Producer and Correspondent

Grilled at a Senate hearing Wednesday, the President of Chrysler couldn't answer a question about whether 15 Chrysler employees stand to get $20 million in bonuses.  Keeping them honest, we want to know the answer too. Please send us your confidential tips to AC360KTH@CNN.com

Here is an excerpt from a Senate committee hearing yesterday on GM and Chrysler plans to close dealerships, and how to protect dealers and consumers:

SENATOR MCCASKILL: This is a difficult question, Mr. Press, but I looked and I have - we've gotten some information that came to us back channel about the DIP budget, and this is the debtor in possession budget in the bankruptcy. And it talks about the budget for the old company. And what troubles me in there, there's an acknowledgement that there may be up to 15 employees of old Chrysler working on this bankruptcy and there is a pool in this budget of up to $20 million for bonuses.

I can't imagine what kind of kick in the gut that would be if we were to learn in the next two weeks that some of the old Chrysler folks - which are getting paid their salaries, which they should, you guys are doing hard work.

But if there's $20 million in bonuses for as few as three to five people that are associated with old Chrysler, I think that would be a huge - I mean, I think the pitchforks would come out and I think there would be a real problem.

And I want - I know I asked you about this yesterday. Have you learned anything more about that and can you shed any light on that?

JAMES PRESS, CHRYSLER PRESIDENT: No, Senator. I did make an inquiry. We were not able to find testimony. I can only speculate and I think that would be inappropriate at this time. And I will do my best to see if we can find out concretely what that information is relating to.

SENATOR MCCASKILL: Well, I misspoke yesterday. It wasn't in testimony, but it is in a preliminary DIP budget, debtor in possession budget, that has been circulated and has been talked about and I believe your CFO has referred to it in various meetings. So I think we need to get to the bottom of that and sooner rather than later. I know everything is on a fast track here, but that needs to be, also.

Phaedra Ellis-Lamkins
CEO, Green For All

Yesterday morning, an icon of American industry announced its failure – and 21,000 American workers woke up without jobs.

General Motors filed for bankruptcy and will shut down nine U.S. plants.

At a time when the United States economy is already hemorrhaging jobs, the failure of an established industry giant leaves us to confront hard questions – What went wrong? And what is the future of American industry?

What went wrong?

GM doubly undermined the U.S. economy – killing jobs for American workers by taking manufacturing overseas and running the company into the ground by failing to remain competitive with foreign auto companies.

The company repeatedly rejected improving the environmental and safety standards of its vehicles and shipped thousands of American jobs overseas. Meanwhile, Japanese and German cars improved their gas mileage and safety – and foreign auto industries took off.

GM also callously misjudged the American people believing that the size and speed of our gas guzzlers was what mattered most.

The truth is, the most significant contribution of the auto industry is not the cars it produces, but the way of life it once produced for the American worker.

At its best, before shipping jobs overseas in the 1980’s, GM and the auto industry provided jobs for American workers – good, union jobs that supported the growth of a strong middle class.

This legacy of the auto industry ─ and the United Auto Workers ─ is one we cannot let die with GM.

What is the future of American industry?

The promise of American economic growth and jobs still remains in manufacturing, though the products we make must change.

Our industrial manufacturing economy has relied on unregulated consumption of fossil fuel for too long – consumption which steadily destroys our air, our communities, and our planet.

We should not salvage the gas-guzzling U.S. auto industry. But that does not mean the factories in Flint, Michigan, should stay shuttered. Instead, the manufacturing industry in the United States must be revitalized to build the infrastructure for a clean energy economy.

Imagine America’s ‘Rust Belt’ transformed into a green belt of clean energy manufacturing. Imagine the factories of Detroit making wind turbines and solar panels to power America.

The rest of the world is already racing to implement clean energy solutions. The U.S. must catch up and blaze a new trail.

China spends $12 million per hour to develop its own energy sources. Germany has already created 250,000 jobs in the clean energy sector through government investment and incentives.

As a nation, it is time to make a choice.

Are we a country whose economy runs on batteries from China and oil from the Middle East? Or will we manufacture our own clean energy in the United States, creating green-collar jobs for American workers?

The Governor of Michigan, Jennifer Granholm, has already made her choice: “despite today’s devastating news, Michigan is ready to lead,” she wrote yesterday.

“Today, the advanced batteries used in electric and hybrid vehicles are made in Asia. Tomorrow, they will be made in Michigan. Today, the wind turbines used in much of America's wind farms are made in Europe. Tomorrow, they will be made in Michigan and in states across America.”

Congress also has the opportunity to lead this transition of American industry. The U.S. House of Representatives is crafting a comprehensive energy and climate bill – The American Clean Energy and Security Act of 2009 (ACESA),

ACESA could be our chance to revitalize American manufacturing through jobs in the clean energy economy. But the bill must be strengthened to create more investments in America’s workforce and communities. A stronger ACESA must invest in job training through the Green Jobs Act and include targeted hiring provisions to ensure that clean energy jobs go to local workers and workers from low-income communities.

It’s time to invest in America’s workers and build an economy based on clean energy and green manufacturing. We can revitalize the best of America’s manufacturing legacy – and leave the rest behind.

Michigan is ready to lead again. What about the rest of the country?

Editor’s Note: Green For All is a national organization dedicated to improving the lives of all Americans through a clean energy economy. The organization works in collaboration with the business, government, labor, and grassroots communities to create and implement programs that increase quality jobs and opportunities in green industry – all while holding the most vulnerable people at the center of its agenda.

Andrew Torgan
CNN Financial News Producer

Financial giant’s American Express, J.P. Morgan Chase and Morgan Stanley have all announced plans to issue common stock in the hopes of quickly paying back taxpayer bailout money.

J.P. Morgan and American Express disclosed plans late Monday to sell $5 billion and $500 million worth of stock respectively. Morgan Stanley followed that up this morning with its own plans for a $2.2 billion offering.

J.P. Morgan was one of the first major banks to get government money when it accepted $25 billion from the Treasury Department's $700 billion Troubled Asset Relief Program back in October.

Later that year, American Express morphed itself into a bank holding company in order to gain access to $3.4 billion from the TARP. And Morgan Stanley received $10 billion as part of the program.

Banks must receive formal approval to repay bailout funds after they have satisfied government requirements. The Fed is expected to announce next week which of the 19 major banks that it ran its so-called stress tests will be allowed to pay back their loans.

In a related development, Bank of America says it’s nearly finished raising the $33.9 billion in capital that regulators said it needed to shield itself from future losses.

The nation's biggest lender by assets says it’s raised almost $33 billion since the government announced the results the stress tests nearly a month ago.

GM unloads Hummer

General Motors says it’s signed a deal to sell its Hummer unit, just one day after filing for bankruptcy.

But GM would not identify the buyer nor name a price, saying only that the deal would close by the end of September. GM revealed in April that it was courting three serious offers for the Hummer brand.

Separately, GM will have access to $15 billion dollars in government funds immediately - and up to 33-billion as needed - pending a final court hearing later this month.

And later today we’ll see just how much damage GM’s impending bankruptcy did to its sales last month. We’ll be getting U.S. car and truck sales figures for May from the major automakers throughout the day - and they’re not expected to be pretty.

Pending home sales rebound

The number of home sales contracts signed in April continued to bounce back from record lows hit last winter, posting the third consecutive month of gains.

The National Association of Realtors says its Pending Home Sales Index rose 6.7% in April after jumping 3.2% in March. That was well above the forecasts of a 0.5% increase.

Pending home sales are a forward-looking indicator since many of the contracts don't result in completed deals for many weeks or months.

Gas prices keep climbing

Gasoline prices rose 1.3-cent to $2.525 overnight, the 35th straight increase.

In the last 35 days, the average price of gas has increased 47.7 cents. But gas is still below the all-time high of $4.114 that AAA reported on July 17, 2008.

The highest gas prices are in Alaska ($2.768). The cheapest gas prices are in South Carolina ($2.333).

States feel auto pain

Finally, the downfall of the American auto industry is wreaking havoc on state and local budgets from coast to coast.

The decline in auto dealerships, coupled with the drop in car sales, is costing states and municipalities millions of dollars in lost sales taxes, not to mention lost income and property taxes and other fees.

Although exact numbers aren't available, car purchases account for about 12% to 15% of sales tax revenues in many states, according to estimates from the Center on Budget and Policy Priorities. And sales taxes usually account for about one-third of a state's revenue.

As the recession deepens, state tax revenues have fallen off a cliff. This has opened up yawning gaps, forcing officials to scramble to balance their budgets.

A look at GM's plants and manufacturing employees, as well as suppliers and retirees, in the United States and around the world.

Chris Isidore
CNNMoney.com senior writer

General Motors filed for bankruptcy protection early Monday, a move once viewed as unthinkable that became inevitable after years of losses and market share declines capped by a dramatic plunge in sales in recent months.

The bankruptcy is likely to lead to major changes and job cuts at the battered automaker. But President Obama and GM CEO Fritz Henderson both promised that a more viable GM will emerge from bankruptcy.

In the end, even $19.4 billion in federal help wasn't enough to keep the nation's largest automaker out of bankruptcy. The government will pour another $30 billion into GM to fund operations during its reorganization.

Taxpayers will end up with a 60% stake in GM, with the union, its creditors and federal and provincial governments in Canada owning the remainder of the company.

Keep Reading...

David E. Sanger
The New York Times

It is not every 31-year-old who, in a first government job, finds himself dismantling General Motors and rewriting the rules of American capitalism.

But that, in short, is the job description for Brian Deese, a not-quite graduate of Yale Law School who had never set foot in an automotive assembly plant until he took on his nearly unseen role in remaking the American automotive industry.

Nor, for that matter, had he given much thought to what ailed an industry that had been in decline ever since he was born. A bit laconic and looking every bit the just-out-of-graduate-school student adjusting to life in the West Wing — “he’s got this beard that appears and disappears,” says Steven Rattner, one of the leaders of President Obama’s automotive task force — Mr. Deese was thrown into the auto industry’s maelstrom as soon the election-night parties ended.

Read More...

Jay Westbrook
Special to CNN

The screams produced by the Chrysler bankruptcy are nothing compared with the howling that will accompany General Motors' bankruptcy filing as various creditors claim that the case is going too fast and their rights are being trampled.

But rough justice in the interest of speed is a common trade-off in the world of bankruptcy. The real question is whether even Chapter 11 of the bankruptcy law can quickly process a company the size of GM.

Bankruptcy has two central purposes: maximization of value (including community values) and fairness of distribution of that value. The number one job is to preserve the largest possible pie, then to figure out who gets what slice.

Keep Reading...

CNNMoney.com

General Motors, the nation's largest automaker and for decades an icon of American manufacturing, stood on the brink of a bankruptcy filing and a de facto government takeover today.

A bankruptcy petition will be filed at 8 a.m., according to a source with direct knowledge of the bankruptcy proceedings.

President Obama will address the nation shortly before noon on Monday to explain the rationale for the filing and his hopes that this is the best route for a turnaround, two officials close to the situation told CNN.

"Today will rank as another historic day for the company - the end of an old General Motors and the beginning of a new one," the administration stated in documents released Sunday.

Keep Reading

Andrew Torgan
CNN Financial News Producer

The Treasury Department and a committee of major bondholders at General Motors have reached a deal that could give creditors a larger stake in GM than previously offered - as long as they agree not to fight the government's plans for a quick bankruptcy at GM.

The agreement, revealed in a SEC filing by GM early today, would essentially give the bondholders 10% of the company but also give them the rights to buy an additional 15% of the company's stock at a low price.

The deal is unlikely to allow GM to avoid bankruptcy, however.

In fact, the new offer is structured so that the assets of GM that would remain in bankruptcy would receive a 10% stake in a "new GM" that would be used to pay bondholders. The “old GM” would also technically receive the right to buy the 15% stake in the new company that emerges from bankruptcy.

Auto-parts maker files for bankruptcy

With Chrysler already in bankruptcy and General Motors still teetering on the brink, we’re seeing the ripple effect in the auto-parts industry. Visteon filed for bankruptcy protection yesterday after revenue fell amid a global slump in vehicle sales.

The former unit of Ford said U.S. parts sales plunged 37% through April, with sales at Ford - Visteon’s largest customer - dropping 40%.

The auto-parts industry employs more workers in the United States than the automakers - about 500,000 of them. In addition, most of the big suppliers have contracts with multiple automakers. And since most make unique parts for the automakers, a closing can rapidly halt operations at auto plants.

Mixed news on the jobs front

New applications for jobless benefits dropped last week, a sign that companies are cutting fewer workers, but the number of unemployed workers continuing to get benefits climbed to a new record high.

First-time claims for unemployment insurance fell by 13,000 to 623,000 from the previous week’s revised figure of 636,000.

But the number of people receiving benefits for one week or more rose by 110,000 to just under 6.8 million. That’s the highest number on records dating back to 1967.

Durable Goods orders jump

Also on the economic front, demand for big-ticket manufactured items like cars and refrigerators soared by the largest amount in 16 months in April, the second increase in the past three months.

Orders for durable goods increased by 1.9 percent in April, more than four times the 0.4 percent increase that had been expected.

But the government also revised its estimate for new orders in March to show a drop of 2.1 percent, a much bigger fall than the 0.8 percent decline previously reported.

New home sales edge up

Sales of newly constructed homes edged up slightly in April from a downwardly revised reading the prior month.

The Commerce Department says new home sales ticked up 0.3% last month to a seasonally adjusted annual rate of 352,000. But that’s still 34% below the same month a year ago.

One bright spot: The median sales price of new homes rose to $209,700 in April, up nearly 4%.

Gas prices up again

Gas prices rose 1.5-cents to $2.449 overnight, the 30th straight increase

In the last 30 days, the average price of gas has increased 40.1 cents, or 19.5 percent.

But gas is still well below where it was one year ago today ($3.944) as well as the all-time high of $4.114 that AAA reported on July 17, 2008.

The highest gas prices are in Alaska ($2.739). The cheapest gas prices are in South Carolina ($2.271).

Program Note: Tune in tonight to hear more from Ali Velshi on AC360° at 10 p.m. ET.

Ali Velshi | Bio
CNN Chief Business Correspondent

It's down to the wire for GM.

The nation's biggest auto maker has until Monday to come up with a viable plan to save itself, or the government will force it into bankruptcy like it did Chrysler.

But the time probably doesn't matter.

GM's bond holders (the people who lent the company money) refused a deal to swap their debt for part ownership in the ailing company.

GM paid its hourly staff today, instead of Friday, and word is many suppliers have also been paid, paving the way for the company to file for Chapter 11 bankruptcy protection before this week is out.

I'm on my way to a bar, ironically called "bamboozled" across from a GM plant in the Detroit suburb on Warren, to talk to workers about the fact that the end of their careers may be near.

Sadly, I have made this trip to Michigan too many times. I'm rarely here for good news.

The irony is that this trip WASN'T for the GM story; it was to go for a ride around the test track with Ford CEO Alan Mulally about his (somewhat successful) efforts to turn that company around. Right now, he's a bit of a shining light in Detroit.

We'll bring you parts of that discussion later this week.

Chris Isidore
CNNMoney.com senior writer

General Motors said Wednesday that it has fallen far short of the bondholder support it needed for its proposed debt-for-stock offer, virtually guaranteeing that the nation's largest automaker will be forced to file for bankruptcy court protection within the next five days.

The bondholders were not satisfied with the prospect of owning only 10% of the company when the U.S. government would own nearly 70% and a union-controlled trust fund up to 20%.

The bondholders own $27 billion in corporate notes. GM (GM, Fortune 500) needed owners of 90% of those bonds to accept stock in return for the debt in order to reduce its interest expenses to a more manageable level.

Keep Reading...

Andrew Torgan
CNN Financial News Producer

It’s coming down to the wire for General Motors.

With GM rapidly burning through its cash reserves due to hefty losses amid an historic slump in auto sales, President Obama said the Treasury Department would give the automaker the cash it needs to continue operations on the condition that GM restructure its debt or file for bankruptcy by June 1.

And the automaker a midnight deadline for its bondholders to reach a restructuring agreement.

GM’s chief executive officer Fritz Henderson has repeatedly said that the difficulty in inking a deal makes a bankruptcy filing for the automaker "probable."

A spokeswoman for GM last week said the company continues to plan for a bankruptcy, which is the likely next step if no agreement is reached.

Chrysler, dealers on edge

And Wednesday is judgment day for Chrysler and hundreds of auto dealers, when their fate could be decided in bankruptcy court. But some experts think it's already a done deal.

The federal judge in Chrysler Chapter 11 case could decide on May 27 whether the automaker can pull its choice assets - its best-performing factories and dealerships - out of bankruptcy and sell them to a newly-formed incarnation of itself, called Chrysler Group.

The new Chrysler Group would be controlled primarily by a trust fund used to pay future health care expenses for the UAW, which will own the majority share of 55%. Italian automaker Fiat will own 20%, at least initially, though it could eventually increase its share to 35%. Minority stakes would go to governments: 8% for the U.S. and 2% for Canada.

Home prices keep getting clobbered.

More troubling news on the housing front today. The S&P/Case-Shiller National Home Price Index shows a more than 19% decline in prices in the first quarter of 2009 compared with the first quarter of 2008. That’s the largest decline in the measure’s 21-year history.

Home prices have fallen more than 32% since peaking in the second quarter of 2006 and are at levels not seen since the end of 2002.

Sun-Belt cities still had the largest year-over-year declines in March, with Phoenix prices down 36%, Las Vegas off 31.2% and San Francisco dropping 30.1%.

Two cities have now have fallen more than 50% from their peak prices: Phoenix is down 53% since June 2006 and Las Vegas is off 50.4% from its August 2006 high. Dallas prices suffered the smallest loss from peak, just 11.1% since June 2007.

Gas prices keep climbing

The end of the long holiday weekend brings gasoline prices ever closer to $2.50 per gallon.

Gas rose 1-tenth of a cent to $2.425 overnight, the 28th straight increase. In the last 28 days, the average price of gas has increased 37.7 cents, or 18.4 percent.

But gas is still down $1.68, or 41.0%, from the record high price of $4.114 that AAA reported on July 17, 2008.

The highest gas prices are in Alaska ($2.737). The cheapest gas prices are in Missouri ($2.270).

Consumer Confidence sparks a rally on Wall Street

Stocks soared in the first hour of trading, following a choppy open, after an upbeat consumer confidence report raised hopes that the economy is stabilizing.

The gains came despite that dismal housing report, concerns about North Korea’s nuclear program and the fate of General Motors and Chrysler.

Stocks ended last week essentially flat, but economic worries continue to hang over investors, who are coming back from the long weekend.

Gene P. Bloch
Managing Editor
CNN New York

CNNMoney.com was the first to report this morning that General Motors has notified 1,100 dealerships targeted to be shut down. The company has indicated up to 2,600 of its dealerships – or 42% – will be closed over the next year. Unlike Chrysler’s announcement Thursday which detailed a list of 789 dealers as part of filing in bankruptcy court, GM says it will not put out a master list of dealers that are hearing from the company today. As CNNMoney reports, metro area and suburban dealers are expected to feel the biggest hit.

GM has a conference call to discuss its strategy on noon today – it’s headed toward a June 1 restructuring deadline, and a Chapter 11 filing is looking increasingly likely.

No relief at the gas pumps – AAA reports regular unleaded rose 9-tenths of a cent to $2.29 a gallon, the 17TH straight increase. The average price is still 44% lower than last July.

In today’s Energy Fix, gas prices should go down if electric cars hit the market in large numbers. When that times comes, car shoppers will find the new vehicles look different than what’s on the road right now. The GM and Ford designers we talked to said that taking out the internal combustion engine and the cooling system that goes with it, a whole new world of design possibility opens up. Ford is even taking it’s inspiration from nature… fish and other animals!

A trifecta of decent economic news this Friday – the Reuters/University of Michigan index of consumer sentiment rose to an eight month high, while the Consumer Price Index was unchanged in April, right in line with expectations.

And Industrial production was down 0.5% in April – but that’s the smallest drop in six months.

The latest recipients of federal assistance under the TARP – or Troubled Asset Relief Program – is life insurers, as they too have been suffering in the economic crisis.

Six of those companies – Allstate, Ameriprise Financial, Hartford Financial Services Group, Lincoln National Corp, Principal Financial, and Prudential Financial, have qualified for TARP money, according to the Treasury Department.

In California, Gov. Arnold Schwarzenegger is threatening to sell off San Quentin and other state properties if his proposed budget cuts fail. He estimates the state prisons would have to release up to 38,000 prisoners, half of them illegal immigrants.

On CNNMoney today:

ROAD TO RESCUE

• Credit cards and gun rights – Huh? A new wrinkle in the congressional effort to legislate curbs on credit card issuers: an unrelated provision to allow guns in national parks.

• Where does Obama stand with his tax reform task force? It's been 6 weeks since he formed it and still hasn't named members.

* AIG 'bonusgate': Lessons learned. As anger resurfaces about AIG's controversial bonuses, lawmakers say a perfect storm may be forming for broad action on compensation reform.

HOUSING

• Obama's mortgage rescue plan – What still stands in the way
• Treasury's anti-foreclosure incentive program – Giving $1,500 to lenders for ceding the deed.

BANKING/WALL STREET

* Bank execs feel new 'stress.' Some financial firms may have little choice but to shake up their board room - and some top officials could also be at risk.

The Postal Service said the price increases were needed because of rising production costs.

Andrew Torgan
CNN Financial News Producer

President Barack Obama says he has secured the commitment of several industry groups to do their part to rein in the growth in health care costs.

This pledge from the private sector could reduce the growth in health care spending by 1.5 percentage points a year, for a savings of $2 trillion over 10 years.

Overall, it could amount to a 20% reduction in the growth of health care spending. Six trade associations representing unions, hospitals, insurers and the drug industry have signed on to the commitment.

However, the savings depend in part on Congress passing health care reform this year.

GM may shuffle board

Another shakeup is reportedly in the works at General Motors.

The Wall Street Journal says the automaker has hired an executive search firm to help it find replacements for at least half of its 12 directors.

Since the government could end up with a controlling stake in a bankrupt or restructured GM, it’s expected to name some of the directors, as will the United Auto Workers Union. This move comes almost 2 months after the government ousted former GM CEO Rick Wagoner.

Separately, current GM CEO Fritz Henderson said today the automaker intends to keep its headquarters in Detroit, even though its U.S. operations are in far worse shape than some of its growing overseas units.

Henderson also repeated his earlier statements that he believes a bankruptcy filing is now “probable” as the company tries to reach agreements with creditors, the UAW and its dealership base to cut costs.

The company has been given until the end of the month by the Treasury Department to reach those agreements or file for bankruptcy.

Senate targets credit card rates and fees

Key negotiators in the Senate today reached a deal on legislation targeting credit card rates and fees.

The development could spur the bill to a Senate vote as early as this week, although the battle is far from over when it comes to reconciling the Senate’s bill with an earlier version that passed the House. President Obama said Saturday he'd like to have the bill on his desk by Memorial Day.

According to copies of the legislation distributed by lobbyists, the Senate's new bill is tougher than a similar bill passed in the House, and would, among other things, prevent those under 21 from getting a credit card unless they can prove they have an income stream to pay off debt or have their parent's signature. It would also ban gift card issuers from charging "dormancy fees" on cards redeemed too late.

USPS strives to survive

Finally, if the mail must go through, it's going to cost a little more. The United States Postal Service hiked the price of stamps today, as well as other delivery services.

But as the cash-strapped and debt-ridden agency fights for financial survival, it's considering much more drastic changes than adding 2-cents to the cost of a 42-cent stamp.

In testimony before the Postal Service's Board of Governors in January, Postmaster General John Potter said it "could become necessary to temporarily reduce mail delivery to only five days a week," from the current six-day service, which would effectively end Saturday delivery. The Postal Service estimates savings of $3.5 billion annually.

That’s significant, considering that in its most recent fiscal year ending Sept. 30, 2008, the Postal Service reported a loss of $2.8 billion. And in the six months since then, losses accelerated to $2.3 billion.

Andrew Torgan
CNN Financial News Producer

Today we find out just how safe our banking system really is.

But the results of the so-called "stress tests," due out at 5:00 p.m. ET after the stock market closes, may not offer any stunning revelations. That’s because the results may be the worst-kept secret of all time - there have been numerous leaks in recent days regarding the results of the tests.

Reports say that Bank of America may need roughly $34 billion in capital to weather a more painful economic environment. Wells Fargo and Citigroup have also been frequently mentioned as two institutions in need of capital.

Other institutions, namely American Express, Goldman Sachs, JPMorgan Chase and MetLife, are believed to be in good shape.

As for the banks that need to raise more capital, they’ll have a month to present regulators with a fundraising plan and six months to raise the funds.

And some heads may roll.

Banks will have to review their management and board within a month, "to assure that the leadership of the firm has sufficient expertise and ability to manage the risks presented by the current economic environment," regulators said in a statement. White House spokesman Robert Gibbs indicated Wednesday that the government might lean on companies whose boards and managers aren't seen as up to snuff.

Meanwhile, Treasury Secretary Tim Geithner writes in a New York Times op-ed today that the stress tests will help bring capital into the financial system by lifting the "fog of uncertainty" over the banking sector.

Jobless claims dip

New applications for jobless benefits plunged to the lowest level in 14 weeks, a possible sign that the massive wave of layoffs has peaked, but the number of unemployed workers continuing to get benefits climbed to a new record high.

First-time claims for unemployment insurance fell by 34,000 to 601,000 from the previous week revised figure of 635,000.

But the number of people receiving benefits for one week or more rose by 56,000 to 6.35 million. That’s the highest number on records dating back to 1967.

GM post $6 billion loss

General Motors' financial woes continue as the troubled automaker reported a $6 billion loss during the first three months of the year today.

Excluding special items, GM reported a loss of $5.9 billion. The company has now lost $88 billion since 2005.

Revenue fell 47% in the quarter to $22.4 billion due to a global slump in auto sales. Global sales volume, meanwhile, fell 28% in the quarter, led by a 46% decline in sales in the company's North American market.

GM has until the end of this month to come up with an agreement with creditors, unions and dealers that would cut its costs and debt enough to be viable for the long-term. If it fails to reach those agreements, GM is expected to follow rival Chrysler into bankruptcy.

GM to hosts buyers at spa event

And just weeks before that deadline, GM is entertaining 500 of its biggest customers at a luxury spa and golf course in Arizona.

But the affair is scaled back from previous years, says a GM spokesman quoted in USA Today. Guests have to pay for their own golf outings, he says, and most of the days are packed with informational sessions on GM's 2010 product line.

The guests are GM's fleet and corporate customers, which accounted for nearly 28% of GM's business in 2008. Fleet customers can buy dozens of vehicles at a time.

Andrew Torgan
CNN Financial News Producer

Reports out today indicate the government will direct about half of the 19 banks undergoing “stress tests” to boost their capital reserves, a move that officials hope will quell fears about the solvency of the financial sector.

Regulators reportedly plan to brief the nation's largest banks today on the final results, with a public announcement scheduled for Thursday afternoon. The “stress tests” are meant to determine whether the banks in question have sufficient reserves to weather the recession.

Preliminary results are said to show that firms including Bank of America, Citigroup, Wells Fargo and several regional banks may be required to take remedial action.

Wall Street retreats

Stocks slumped today as investors slammed on the brakes after pushing the major gauges to multi-month highs in the previous session.

Stocks rallied Monday on bets that the economy is closer to stabilizing. The Nasdaq ended at a 6-month high and the Dow and S&P 500 ended at nearly 4-month highs.

Swiss bank’s outlook cloudy

Also on Wall Street’s radar today… Swiss banking giant UBS, one of the hardest-hit banks in the global financial crisis, confirmed that it posted a net loss for the first quarter, illustrating that it continues to struggle with write-downs even as rivals show signs of business picking up.

UBS said its net loss for the three months was $1.75 billion, and cautioned that it may have to raise credit provisioning in coming quarters. The bank announced last month it would cut nearly 9,000 jobs.

Bernanke says recovery will begin this year

Fed Chairman Ben Bernanke says that the economy is stabilizing and will begin to rebound later this year, but the recovery will be slow and cautious.

At a hearing of the Joint Economic Committee of Congress, Bernanke said consumer sentiment, the housing market and spending have begun to show signs of life.

But he expects the economy will continue to shed jobs and credit will remain tight for some time. He said the recent frugality trend will continue due to deflated household wealth, and business spending will be slow to bounce back as well.

Bernanke also fielded questions from lawmakers on the bank “stress tests,” Bank of America's controversial purchase of Merrill Lynch last year and whether the huge increase in the Fed's balance sheet will create an untenable situation by the end of the year.

Deal on 'cash for clunkers' bill

The Obama administration has signaled its support for a congressional effort that aims to boost the troubled car industry by subsidizing new cars sales for consumers who scrap old ones.

Congressional Democrats, emerging from a meeting at the White House today, say they’ve struck a deal on a bill to establish a one-year program to encourage the purchase of 1 million new cars and trucks that get better gas mileage.

Under the so-called “cash-for-clunkers” legislation, consumers with old, gas guzzlers could get $3,500 or $4,500 in government vouchers to use toward the purchase of new cars that get gas mileage than exceeds the old car's by four miles per gallon.

Chrysler sets new incentives

Finally, with bankruptcy threatening to further weigh down the carmaker's sales, Chrysler is expected to announce a new incentive program today.

Chrysler's "Employee Pricing Plus Plus," program ended just days after the carmaker declared Chapter 11 bankruptcy. That program combined cash rebates with price reductions and cut-rate financing for qualified customers.

The new sales program is expected to rely heavily on giving dealers cash incentives, which means that customers will see big price reductions at the dealership, said Jessica Caldwell, an industry analyst with the automotive Website Edmunds.com.