From Wall Street To Main Street

Proton Next?

If you think the financial tsunami is tailing off, then you are grossly underestimating the stupendous damages the tsunami is going to wreak.
Over the past one month, the US government has been going all out to salvage banks and financial institutions, including the injection of large sums of money and the acquisition of bad assets in a bid to stabilise Wall Street.
Wall Street represents the US financial system. With the collapse of companies like Lehman Brothers and Bear Stearns, AIG on the brink of bankruptcy and hundreds of other banks lining up for government bailouts, Wall Street has never been in worse shape.
The most worrisome thing is whether the storm will eventually spread from Wall Street to Main Street.
Main Street denotes the overall economy and is constituted of millions of large and small corporations, and hundreds of millions of employed workers.
Wall Street is the blood stream while Main Street the body. If the blood vessels are blocked, the body will be corrupted.
The big guys in Wall Street are the automakers. Some say the US will not be what it is today without the automobile industry. Over a century of automobile industry development makes up half of the US economic development history.
General Motors, Ford and Chrysler, the so-called "Big Three," churn out over ten million vehicles each year.
But now, the Big Three are on the verge of liquidation.
Prior to 2007, General Motors was still the bellwether of global auto industry, and once the world's biggest company.
But in the financial report released last week, the automaker registered US$4.2 billion loss for the third quarter this year, and the cash it had in hand might not see it through beyond next year.
GM's share price plummeted to US$2.13, a level last seen in 1946!
Deutsche Bank has predicted unreservedly that the automaker's target share price would be naught.
Ford and Chrysler are not any better.
The automobile industry involves not only the manufacture of motor vehicles, but also sales, services, accessories... And this whole string of value chain has three million jobs and livelihoods of tens of millions of people hooked onto it, as well as the lifeline for a score of industrial towns.
If the auto industry disintegrates, the US economy is headed for a doomsday.
While Washington is excessively anxious over this, it is simply impossible for it to plug the bottomless hole.
The Bush administration is prepared to set aside US$25 billion to resuscitate the auto industry, but prospects remain clouded as the amount is hardly sufficient to turn things around.

(By TAY TIAN YAN/Translated by DOMINIC LOH/Sin Chew Daily)

MySinchew 2008.11.16