CHICAGO (Reuters) –
AutoNation Inc, the largest U.S. chain of auto dealers, decided to end its "cash for clunkers" rebates as of Friday night, three days ahead of the government's Monday deadline, The Wall Street Journal reported.
The program, aimed at boosting vehicle sales while helping the environment, offers rebates of up to $4,500 to car buyers trading in older, fuel-thirsty vehicles.
AutoNation, which has sold more than 10,500 cars and trucks with clunker rebates, wanted to make sure it could process all of its sales by the time the program officially ends at 8 p.m. EDT on Monday, according to the report, which cited an AutoNation spokesman.
AutoNation spokesman could not immediately be reached for comment on Saturday.
Lawmakers and the Obama administration had to scramble earlier this month to add $2 billion in funding after the program's initial $1 billion was quickly exhausted.
The program has faced some complaints from dealers who have reported delays in government reimbursements and problems finalizing paperwork.
Fort Lauderdale, Florida-based AutoNation operates 220 dealerships in 15 states across the South and West.
(Reporting by Matthew Lewis; Editing by Toni Reinhold)
BERLIN (Reuters) –
German politicians reacted angrily on Saturday to the failure of carmaker General Motors to choose a buyer for its German unit Opel, prompting an appeal to the United States government to help broker a solution.
Despite German pressure to back a bid by Magna International (
German Economy Minister Karl-Theodor zu Guttenberg said he believed a deal was still possible and that talks would continue, but there were angry words from around the country where the carmaker has plants employing some 25,000.
Juergen Ruettgers, premier of North Rhine-Westphalia, Germany's most populous state and home to the Bochum works, issued a statement saying the delay was "intolerable."
"The United States government now shares responsibility for finding a way past GM's leadership weakness and helping us finally to reach a sustainable decision," he said.
The German government, which is barely a month away from a federal election, has offered financial backing for Magna's bid because it believes it would be the best option to save jobs.
Two sources familiar with the talks said GM directors wanted Berlin to say what financing would be available to back a rival Opel bid by Brussels-based financial investor RHJ International.
Economy Minister Guttenberg told the Hamburger Abendblatt Germany had provided GM with all the necessary information.
"There is still room for an agreement," he said.
Berlin and the German states that host Opel plants have made clear they want Magna to get the carmaker and are set to provide 4.5 billion euros ($6.4 billion) in state aid to make it happen.
Dismay about the lack of clarity over Opel's fate extended from conservatives such as Ruettgers to the center-left Social Democrats (SPD), who rule together nationally in coalition.
MAGNA STILL FAVOURED
One source close to the talks said the next GM board meeting would be at the start of September and that two bones of contention were likely to be discussed over the next week.
One was that Berlin was insisting GM should step in if the German aid proved insufficient. The other was that GM wants to receive royalties from Opel for the use of its technology even if the German carmaker files for insolvency.
Magna remained the favored candidate, the source added.
German holds a federal election on September 27, and finding a buyer for Opel has become a focal point of the campaign.
Foreign Minister Frank-Walter Steinmeier, who is leading the SPD's bid to unseat incumbent Chancellor Angela Merkel, said he would continue to canvass for a deal with Magna.
"There can only be state aid for a proposal that we in Germany find convincing," he said.
Kurt Beck, SPD premier of Rhineland-Palatinate, another Opel state, said the failure to pick a buyer was "completely unacceptable" and urged Merkel to intervene directly.
Roland Koch, conservative state premier of Hesse, where Opel is based, said he was "extremely annoyed," by Friday's outcome.
"All the relevant questions have been resolved between GM and Magna," he said. "There's absolutely no justification for this postponement."
(Additional reporting by Philipp Halstrick; Editing by Keiron Henderson)
JACKSON HOLE, Wyoming (Reuters) –
The U.S. Federal Reserve's stated intention to keep interest rates exceptionally low for "an extended period" may conflict with its desire to avoid inflation, an academic economist told central bankers on Saturday.
"The point of keeping interest rates low in the future is to promote economic activity today, but the price is a future rise in inflation," Carl Walsh of the University of California, Santa Cruz, wrote in a paper presented at the Kansas City Federal Reserve's annual Jackson Hole conference.
"It is not clear how one has one without the other."
Walsh's audience includes Fed Chairman Ben Bernanke, European Central Bank President Jean-Claude Trichet and other central bankers from around the world gathered here in the shadow of the towering Grand Teton mountain range.
The U.S. central bank chopped its benchmark interbank lending rate target to near zero at the end of last year and has pledged to keep it low for a long time to revive the economy. It restated that expectation as recently as August 12, when it wrapped up its last policy meeting.
Near-zero interest rates and the Fed's aggressive efforts to pump of money into financial markets have raised concerns about sparking inflation.
The Fed has steadily sought to calm those fears by arguing it can keep inflation at bay by paying interest on the reserves banks hold at the Fed. By making it attractive for banks to keep their reserves out of play, the Fed would prevent that money from circulating and causing the economy to overheat.
The strategy of raising the interest rate the Fed pays to banks to pull money back from the system as the economy picks up may have pitfalls, Walsh wrote.
"The perception that borrowing costs for households and firms are going up while the Federal Reserve is rewarding banks with higher interest on reserves may be less politically supportable," he said.
Central banks may need to keep their massive infusions of cash in place just beyond the point when economic activity begins to take off, but once they decide it is time to hike benchmark rates, they must act quickly and aggressively, Walsh said.
Following the crisis, central bankers may need to revisit some widely held beliefs, Walsh wrote.
One is the belief that a central should not "lean against" a growing asset bubble by raising borrowing costs out of concern interest rate hikes are too blunt an instrument that could damage the entire economy, he said.
"There seems little doubt that the consequences of allowing the bubble in housing prices to continue was a serious policy mistake in the U.S. and many countries," Walsh wrote.
(Reporting by Mark Felsenthal; Editing by Neil Stempleman)