Mixed feelings
Market analysts say that the fluctuating indexes have faithfully reflected the investors' mentality -- cheered up by the rescue plan but still worried about the industry's future.
On the one hand, Wall Street found it simply couldn't refuse the aid for the industry. "You favor it, because if one fails, that's two million jobs. You don't want to see that. It will have ripple effect right across the economy. You have them too big," said Alan Valdes, a trader of Hilliard Lyons.
On the other hand, the market doubted the auto companies' capability to become viable again, and worried that no matter if the government endows them with the money, they have lost value for common shareholders.
"They may come back in several months and ask another 25 billion dollars. The market worried that the government threw money on these corporations and still failed to settle the problem. They don't know where it gonna stop," Valdes elaborated.
According to Teddy Weisberg, the market sentiments toward the auto rescue plan were really mixed. "Many people feel that bankruptcy is a viable solution, because it allows a company to start over. But there are clearly more people feel that it is not," said Weisberg.
Uncertain prospects
Some investors say that even though the rescue plan is there and cash is being handed out to those in desperate need of it, the situation remains almost the same as before Dec. 19 because the market still faces too many uncertainties.
Under the conditions of the emergency loan, the auto companies will have to conclude new agreements with groups including unions, dealers, creditors and suppliers, by March 31, or the loans will be recalled.
However, Ron Gettelfinger, president of the United Auto Workers, already gave a sign of the challenges this may encounter, saying the plan has "added unfair conditions singling out workers."
It was reported that the earlier Congressional rescue package had failed to pass Senate because the powerful union refused to make any further concessions on workers' wage cuts.
Some analysts also pointed out that the emergency rescue plan had just pushed the problem down the road by a couple more months. It seems that the current administration basically is passing the problem to the new administration, as the government transition is taking place shortly after the holiday season.
"The loan was just a bridge loan, and almost more political than financial," said Weisberg.
For the investors, the good news is that President-elect Barack Obama, who will be sworn into office on Jan. 20, has repeatedly said that he supports the rescue efforts for the auto industry.
The bad news may be that with the U.S. and world economy apparently in recession, auto sales are set to continue to slump, making it almost impossible for the American automakers to turn viable and profitable in the short run, even if they can smoothly complete their restructuring and catch up with their Japanese and European rivals.
But there is at least one thing for certain: the auto factor will linger on the market for a period to come, during which investors could hardly do anything other than "hope for the best and prepare for the worst."
(Xinhua News Agency December 24, 2008)