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Detroit reeling as $14bn auto rescue fails

The high profile effort to agree legislation to lend $14bn to the US auto industry collapsed on Thursday night, leading the Bush administration to hold open the possibility that it would seek funds from its financial rescue plan instead.

Efforts to agree a deal in the US Senate ended in failure when Harry Reid, the leader of the Democratic majority, said negotiations with Senate Republicans were at an end and warned that millions of jobs were at stake as a result.

"It's over with," Mr Reid said. "I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight. Millions of Americans, not only the auto workers, but people who sell cars, car dealerships [and] people who work on cars are going to be directly impacted and affected."

Both Democrats and Republicans said the sticking point was a demand to push Detroit to bring down labour costs to a par with foreign manufacturers in the US. Democrats said the move made unrealistic demands on the United Auto Workers union, while Republicans argued that no effort to restructure the industry would work without such a step.



In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Dec 12th, 2008 at 04:28:53 AM EST
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