Detroit's Business Plan—for a BailoutThe way bailouts go these days—remember AIG (AIG)?—hiking a request from $25 billion to $34 billion should barely register on Washington's meter. On Dec. 2, Detroit's Big Three submitted revised pleas to Congress ahead of hearings, and this time they actually included business plans. General Motors (GM) wants $18 billion in loans, Chrysler $7 billion—and right away, please. Ford (F), in better financial shape, is asking for a $9 billion line of credit. To appease reluctant lawmakers, GM will try to sell Saab (GM) and Hummer (GM) and make other cutbacks. Ford is putting Volvo (F) on the block and will speed hybrid and plug-in vehicles to showrooms. The carmakers will unload their corporate jets, and CEOs will work for $1 a year. The auto workers are kicking in big concessions, too. Congress is scheduled to vote on the loans on Dec. 8.
See "Detroit's New Bill: $34 Billion"Ugly Economic NumbersIt's official: The U.S. is mired in what will turn out to be the longest downturn since the Great Depression. By reaching back to December 2007 to peg the recession's start, the National Bureau of Economic Research on Dec. 1 virtually guaranteed that this one will wind up surpassing the previous record duration of 16 months. It's intensifying, too. The Institute for Supply Management said manufacturing shrank in November at the fastest pace since 1982. Investors have been fleeing to ultra-safe Treasuries, driving the yield on 10-year notes on Dec. 2 below 2.7%, the lowest since the mid-1950s. To continue his efforts to liquefy the economy, Federal Reserve Chairman Ben Bernanke said on Dec. 1 that the Fed was ready to buy Treasuries and agency securities in "substantial quantities." Wall Street showed its gratitude by driving the Dow down 680 points, or 7.7%—and while it recovered a third of those losses the next day, it has still given up all its gains since 1997.Black Friday BluesRetailers trumpeted some of the biggest sales in their histories this Black Friday, and crowds started lining up on Thanksgiving Day. But few stores are celebrating. ShopperTrak, a firm that follows mall traffic, reported that sales for the Black Friday weekend totaled $20.1 billion, up just 0.9% from a year earlier, compared with 6.5% growth for the same period in 2007. That won't do much to undo a sad November, according to data from MasterCard (MA) SpendingPulse. For the month, revenues fell 20% in the apparel and department-store category compared with last year, 24% in luxury retail, and 25% for electronics and appliances. Online sales were better but still could not undo a so-far-crummy holiday season. ComScore (SCOR) found that while online spending jumped 13% for the four days from Black Friday through Cyber Monday, overall spending for Nov. 1 to Dec. 1 was down 2% from the corresponding days last year.
See "Black Friday Sales Rose, But More Discounts Loom"Horror in MumbaiIn just a few months, India has gone from a land of economic miracle, charging ahead at 9% annual growth, to a nation in apparent disarray. First the global crisis dealt a blow. Then the Nov. 26 terror attacks in Mumbai, which left nearly 200 dead and hundreds injured, highlighted India's political, security, and intelligence failures. Foreign investors may steer clear for a time, and business in general may slow as Indians lose confidence in their government.A Cartel SquabblesInstead of stopping oil's vertiginous slide, OPEC's Nov. 29 confab in Cairo had the opposite effect. The meeting produced reports of dissension between Iran and Venezuela, which want more production cuts, and Saudi Arabia, which wants members to stick to limits already agreed upon. With OPEC's credibility shaken, prices fell on Dec. 2 to the $47-a-barrel range. The cartel's next chance: Dec. 17 in Oran, Algeria.Lower Rates in EuropeEuropean Central Bank President Jean-Claude Trichet can't be happy about the global downturn, but at least slumping inflation is making it easier for him to respond. The ECB has already lopped 100 basis points off its key interest rate since October and was expected to cut at least 50 points on Dec. 4, bringing the rate to 2.75%. The bank earlier took fire for obsessing about price stability, but with the euro zone in recession and inflation falling to 2.1% in November from 3.2% in October, even ECB hawks are in favor of making money cheaper.Goldman Hits the WallUp until now, Goldman Sachs (GS) has been the only big investment bank to make money in every quarter of the credit bust. That's about to change. Lloyd Blankfein's firm probably lost $1 billion, maybe $2 billion, in the three months through November, according to analysts' estimates. The likely cause: stakes in bonds and corporate loans that have gone from bad to worse. The darkest estimates peg the loss at $6 a share, which would amount to $2.7 billion. Stockholders have been scampering for safety. Goldman closed on Dec. 3 near 69, down 58% since August.Marriage in the SkiesCaught in a wicked downdraft, airlines keep betting that getting bigger will keep them aloft. British Airways (BAIRY), already pursuing Spain's Iberia in a bid to create the world's third-largest airline, confirmed on Dec. 2 that it's also talking merger with Australia's Qantas. For a deal to fly, Canberra would have to relax rules that limit international carriers to a 35% stake in domestic ones.
See "British Airways in Merger Talks with Qantas"More Mortgage Help?The Treasury may be set for a more direct attack on the housing mess. The Wall Street Journal said on Dec. 3 that Treasury Secretary Henry Paulson's team is pondering a plan to buy up mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac in an effort to cut 30-year mortgage rates by a full point, to 4.5%. The idea is to pave the way for more refinancings and home purchases. Democratic lawmakers have lambasted Paulson for not using some of the $700 billion rescue fund to help homeowners facing foreclosure, and some have lauded a Federal Deposit Insurance Corp. proposal to guarantee modified loans. But the new plan still wouldn't do much for those who owe far more on loans than their homes are worth.Tarnished ChinaHas China lost its mojo as a manufacturing platform? It looks that way. In a new poll asking 130 U.S. companies to weigh their worries about different regions of the world, China ranked highest in 9 of the 15 risk factors. Intellectual-property-rights piracy and product quality were the leading concerns, with 57% and 35% of respondents, respectively, citing them. By contrast, in a similar survey from May, rising wages and transportation costs topped the list. As a result, some companies said they are scaling back plans to make more goods in China. (AMR Research)A New Commerce CzarPresident-elect Barack Obama on Dec. 3 invited into his Cabinet an ex-rival for the Presidency and longtime Friend of Bill—but this one isn't married to the former head of state. New Mexico Governor Bill Richardson got the nod for Commerce Secretary, which he says puts him at the center of coming efforts to create "millions of new jobs that can never be outsourced." The highest-profile Hispanic named by Obama, Richardson is a former congressman who served as Clinton's Energy Secretary and U.N. Ambassador, but after abandoning his quest for the nomination he supported Obama over Hillary Clinton. He fits the profile of Obama's solidly pragmatic appointments thus far. Meanwhile, news reports on Dec. 3 said that Representative Xavier Becerra (D-Calif.), a friend of labor and skeptic on free-trade agreements, has been offered the job of U.S. Trade Representative.Too Many ChickensThese pilgrims had a rotten Thanksgiving weekend. After months of flirting with insolvency, Pilgrim's Pride (PPC), the biggest U.S. chicken producer, filed for Chapter 11 bankruptcy protection on Dec. 1, blaming high debt costs from the acquisition of Gold Kist in 2006. The poultry business has been eroding: A supply glut drove prices lower even as the cost of corn- and soy-based feed have been stuck near record highs. Pilgrim's Pride will keep operating with $450 million in financing from Bank of Montreal (BMO).Redstone Logs OffAs he labors to untangle a media empire snarled by $1.6 billion in debt, Sumner Redstone, now barely a billionaire, on Dec. 1 sold his 87.2% stake in video game company Midway Games (MWY). He collected a mere $100,000—well below the $30 million current value—in an apparent effort to generate tax losses for his National Amusements theater chain. The buyer: Acquisition Holdings Subsidiary, owned by little-known investor Mark Thomas. He isn't expected to run the money-losing company, known for its Mortal Kombat franchise, or to sit on its board. Redstone, who lost an estimated $800 million on his Midway investment, is negotiating with lenders to restructure debt and may unload theaters as well as slot machine supplier WMS Industries (WMS). He says he won't sell big pieces of CBS (CBS) or Viacom (VIA).A Plague of PiratesThe world economy may be in the doldrums, but for pirates, business is as good as it has ever been (barring perhaps the 17th century). These predators of the high seas launched 199 attacks in the first nine months of this year, according to a Nov. 23 cover story in BusinessWeek Turkey. Ransom payments can run into the millions: The raiders who on Nov. 16 hijacked a Saudi tanker carrying $100 million in crude are demanding $15 million. And negotiations can last for months. Vessels have become more vulnerable as shippers have cut back crews to trim costs. Insurers, meanwhile, are poised to jack up their rates.