Credit slows European auto production
TEXT OF INTERVIEW
Scott Jagow: Some potentially devastating news for U.S. car makers out of Europe this morning. Three big credit insurers in Europe have revoked coverage from auto parts suppliers. In this past, this move has hastened the demise of several European companies.
We’re joined now by Marketplace’s Alisa Roth in New York. What exactly does this mean?
Alisa Roth: Well, credit insurance basically protects the suppliers if the company they’re suppliers goes bankrupt. SO in practical terms, this mostly effects European operation to the car makers, because U.S. suppliers mostly work without insurance. It will make things more difficult for the car makers in Europe, because it’s just going to be harder to keep the supply chain open. But more importantly, this is really a vote of no confidence for the auto industry. So even if the government does come through with some money, things are never gonna be the same in Detroit.
Jagow: And on that subject: Yesterday there was a big lobbying effort from the auto industry to get some of the money from the $700 billion bailout package. What are the chances that’s gonna happen?
Roth: Uh, zero to none? Paulson has said that The Big Three are important for the U.S. economy, for the global economy, but he’s sticking to his guns that $700 billion is only for the financial institutions, and if they need help, they’re gonna have to look elsewhere.
Jagow: And elsewhere, is there anything?
Roth: Well . . . The Big Three were hoping that elsewhere would be Congress, but it’s looking more and more like that’s not gonna happen. The Democrats have been pushing really hard for some kind of help to the auto industry, but they don’t have the majority, and President Bush still have veto power over the whole thing.
Jagow: So what now?
Roth: Well, they’re supposed to hold on until January, when President-elect Obama takes office, but it’s really not clear that they can hold on that long.
Jagow: OK, Alisa Roth in New York. Thank you.
Roth: You’re welcome.
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