From General Motor’s press release…

Improving its liquidity position remains a top priority for the company. In response to deteriorating market conditions, GM announced today that in addition to the $15 billion in liquidity initiatives it outlined in July 2008, it has identified $5 billion of incremental liquidity actions. Cumulatively, GM has announced actions aimed at improving liquidity by $20 billion through 2009. To date, $10 billion in internal operating actions have either already been completed or are on track for full execution by the end of 2009.

Even if GM implements the planned operating actions that are substantially within its control, GM’s estimated liquidity during the remainder of 2008 will approach the minimum amount necessary to operate its business. Looking into the first two quarters of 2009, even with its planned actions, the company’s estimated liquidity will fall significantly short of that amount unless economic and automotive industry conditions significantly improve, it receives substantial proceeds from asset sales, takes more aggressive working capital initiatives, gains access to capital markets and other private sources of funding, receives government funding under one or more current or future programs, or some combination of the foregoing. The success of GM’s plans necessarily depends on other factors, including global economic conditions and the level of automotive sales, particularly in the United States and Western Europe.

Translation: General Motors is about to become bankrupt, government bail out needed soon.

From Bloomberg….

China’s Finance Minister Xie Xuren was called back from an international economic conference in Peru before the meeting began, following orders from Beijing to help resolve problems at home, an organizer of the event said.

Xie left Trujillo, Peru, where Asia-Pacific Economic Cooperation finance officials are meeting this week, shortly after arriving at 11:00 a.m. on Nov. 5, Gladys Otero de Swinnen, protocol director for the conference, said in an interview.

“They told him he has to resolve an economic problem and that he’s the only one who could do so,” de Swinnen said. “He was complaining because he had to fly 32 hours to get here and then he had to fly another 32 hours to get back.”

I don’t know what was so critical that he had to fly back just as he got there. But a lot of China’s problems stem from this….

Sales at the nation’s largest retailers fell off a cliff in October, casting fresh doubt on the survival of some chains and signaling that this will probably be the weakest Christmas shopping season in decades.

The remarkable slowdown hit luxury chains that sell $5,000 designer dresses as badly as stores that offer $18 packs of underwear, suggesting that consumers at all income levels are snapping their wallets shut.

A lot of the stuff that is not selling was made in China.

I just checked to see what I had last written and found I have been even more delinquent than I had imagined. I did not tell you anything about my multi-state tour to set up my little invention that so pleased my boss: the On Time Delivery Bridge. It keeps track of lines that we Click Here to continue reading.

From the Dallas Fed…

You can see the size and breadth of the Fed’s efforts to counter the collapse of the credit mechanism in our balance sheet. At the beginning of this year, the assets on the books of the Fed totaled $960 billion. Today, our assets exceed $1.9 trillion. I would not be surprised to see them aggregate to $3 trillion—roughly 20 percent of GDP—by the time we ring in the New Year. The composition of our holdings has shifted considerably. Previously, almost 100 percent of our holdings were in the form of core holdings of U.S. Treasuries; today, less than a third are. The remainder consists of claims deriving from our new facilities.

(h/t Calculated Risk)

From Naked Capitalism…

Notice how Keynes expected employment to fall in capital goods industries. We have no version 2.0 for an economy so heavily dependent on financial services. I also wonder, even though the US badly needs infrastructure, if any of these newfangled theories allow for how specialized labor has become. One of the reasons that employment didn’t fall sooner is that even seemingly mundane jobs now require employer specific knowledge (computer systems, internal procedures) that make it more costly to bring a new person on board and deters firing.

Put more simply, how is creating jobs in repairing infrastructure going to help unemployed bank workers? Even if they were willing, many will prove not to be able, and will also be living at a remove from where the jobs would be. In an advanced economy, labor is not terribly fungible.

I have never been a fan of Keynes for reasons that are similar to this. Only my objections have always been based around the fact that real capital is not terribly fungible. I feel that the primary cause of recessions and depression is a misalignment of the capital structure and I don’t think those types of problems can be cured by creating more “demand”.

Yves Smith is simply pointing out the human capital has similar problems. If you train too many people to be lawyers and bankers and not enough to be construction workers, you can’t fix that problem by stimulating the economy.

From the Washington Post…

In the initial weeks of the global financial crisis, Chinese officials resolutely declared that they were not significantly affected. But now, as factory closings, dire corporate earnings reports and stock market losses continue to mount, the Communist Party’s confidence has changed to another feeling entirely: fear.

For the first time in the 30 years since China began its capitalist transformation, there is a perception that the economy is in real trouble. And for the Communist Party, the crisis is not just an economic one, but a political one. The government’s response offers a glimpse into its still ambiguous relationship with capitalism — relatively hands-off in good times, but quick to intervene directly at the first signs of a downturn in order to prevent popular unrest.

Read the whole article.

From Bloomberg….

Borrowing needs are expected to rise to $550 billion in the three months to Dec. 31, compared with the $142 billion predicted in July, the Treasury said in a statement in Washington. That follows a $530 billion record in the July-September quarter.

As Calculated Risk says…

As I noted over the weekend, these huge financing needs combined with foreign governments need to stimulate their domestic economies (and maybe even selling foreign reserves) could lead to higher intermediate to long term rates in the U.S. next year – right in the middle of a recession.

We have been preaching that for a while. People should not be fooled by the current low rates interest rates on the Federal Debt. They will not last.

From Market Watch….

General Motors Corp said Monday that October U.S. light vehicle sales fell 45.1% to 168,719 units from 307,408 a year ago.

From Bloomberg….

Ford reported a 30 percent decline and Toyota posted a 23 percent drop. Honda Motor Co.’s were down 25 percent and Nissan Motor Co.’s slid 33 percent.

From the New York Times…

The Treasury Department has turned down a request by General Motors for up to $10 billion to help finance the automaker’s possible merger with Chrysler, according to people close to the discussions.

As Calculated Risk Says…

A possible GM-Chrysler merger probably only makes sense to GM with government help – and with tens of thousands of projected layoffs (some estimates are 200 thousand job losses including suppliers and other service providers), this deal probably isn’t very appealing to lawmakers.

Without this deal, Chrysler will probably go bankrupt – and the jobs will be lost anyway – and some lenders will be stuck with Chrysler pier loans (more write downs for some banks).