May 27th, 2009
01:33 PM ET

Financial Dispatch: GM one step closer to bankruptcy

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Andrew Torgan
CNN Financial News Producer

Big developments today for two of Detroit’s Big Three.

General Motors says it’s 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.

And in a sign that a bankruptcy filing could come as early as Friday, GM moved up the pay date for its employees this week.

Hourly employees represented by the UAW were paid today and salaried employees will be paid on Thursday. Both normally would have been paid on Friday.

Chrysler in court

It’s is judgment day for Chrysler and hundreds of auto dealers. A federal judge in Chrysler’s Chapter 11 case could decide today whether to give the automaker permission to sell the bulk of its assets to a group headed by Italy's Fiat in the hope of saving itself from liquidation.

Lawyers for Chrysler say the Fiat deal is the company's only hope to avoid being sold off in pieces, but more than 300 objections to the sale have been filed by the carmaker's dealers, bondholders and former employees.

But if the deal doesn't close by June 15, Fiat could back out.

Economists see recession ending this year

A group of leading economists say the end of the recession is in sight.

But while the economy is showing signs of stabilizing, the recovery will be more moderate than is typical following a severe downturn, the National Association for Business Economics said in a report released this morning.

The panel of 45 economists said it expects economic growth will rebound in the second half of 2009. However, the group still expects to see a decline in second-quarter economic activity.

Home sales inch up

The residential real estate market picked up slightly in April, as increasingly affordable home prices attracted wary buyers.

The National Association of Realtors reported that sales of previously-owned homes ticked up nearly 3% last month to a seasonally adjusted annual rate of 4.68 million units, compared to the revised rate of 4.55 million in March.

Sales came in slightly ahead of expert forecasts of 4.66 million annual units but are still off 3.5% from the 4.85 sold 12 months ago.

First-time homebuyers continued to drive sales but there was also a seasonal rise of repeat buyers. Additionally, the median price of homes sold in April was just $170,200, a more than15% year-over-year drop.

Crude tops $63 per barrel

Crude oil prices climbed above $63 per barrel today after a Saudi oil minister said the global economy has strengthened enough to cope with oil at $75-$80 a barrel and that level will be hit soon as fuel demand picks up.

Oil has already climbed from a low of $32.40 last December to six-month highs well above $60 a barrel this week.

Still, crude remains well below the all-time high of $147 per barrel that it hit last July.

Gas approaching $2.50 per gallon

Gas prices rose 9-tenths of a cent to $2.434 overnight, the 29th straight increase.

In the last 29 days, the average price of gas has increased 38.6 cents, or 18.8 percent. But gas is still well below the record high price of $4.114 that AAA reported on July 17, 2008.

The highest gas prices are in Alaska ($2.727). The cheapest gas prices are in Missouri ($2.274).

Filed under: Andrew Torgan • Economy • Finance • Gas Prices • Housing Market • Oil
soundoff (4 Responses)
  1. Larry,Ohio

    The bond holders at GM have adopted the same Gordon Gekko mantra as have the CEOs' of our banking institutions, "Greed Is Good". Banks have folded, millions have lost their jobs, their homes, their savings, there retirement, yet the CEOs' of huge banking interests keep raking in the cash, touting their entitlements.
    Now the auto industry has seen major concessions from common share holders, the government, UAW and other labor unions, management, dealerships, and the communities where these manufacturers are their life blood. But of course the bond holders, the wealthiest members of the industry, aren't having a bit of it. They want the cash their entitled to and they want it all now. Greed is not good, greed causes pain, suffering, and hardship across the board. Unless of course you're on the board, the board of directors.
    Don't pee down my back and tell me it's raining.

    May 28, 2009 at 8:49 am |
  2. Rodrigo Villanueva

    GM isn't going to stay under bankruptcy law protections. It all indicates that it's a matter of negotiations tactics with the bond holders and other creditors, and a way to reestructure in a more competitive way.

    May 27, 2009 at 5:31 pm |
  3. SLM

    Recession still seems pretty strong here in California. Our Liberal spending politicians refuse to deal with our budget crisis seriously. Time for them to cut the real $$ wasters, Illegal immigration and free school lunch programs only to mention a few. Instead they threaten to cut teachers, fire, police, wages to health care workers. Their solution of higher taxes failed at the polls.

    May 27, 2009 at 1:44 pm |
  4. Michael C. McHugh

    Nothing can be done now except pay off these private owners completely, and then let these companies continue under some form of government and UAW ownership. Then they might finally be able to make greener, more modern vehicles, but their has to be a clean sweep of the old owners and the old thinking.

    May 27, 2009 at 1:36 pm |

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