Economic Outlook: Monday's fender-bender

NEW YORK, March 31 (UPI) -- Global stock markets looked to recover from a tumultuous Monday, in which U.S. automobiles took center stage, derailing a recent comeback in equities.

The dust hasn't settled yet. U.S. President Barack Obama's task force for the automobile industry gave General Motors Corp. 60 days to pull a rabbit out of a hat or something equally unlikely: Find concessions from debt holders and union workers, that have been elusive. At the same time, Chrysler LLC was given 30 days to reduce debt and form a partnership with Fiat, which appeared to be a done deal, as Chrysler announced it had Fiat waiting in the wings and government support for a new deal.

The deal would give Fiat 20 percent of the company, a smaller portion than the previous 35 percent deal the companies had discussed, The Wall Street Journal reported.

Using a tactic different from nationalization, the government has held out loans as a carrot that GM and Chrysler cannot resist. In his first day at the helm, Fritz Henderson, taking over for GM's Rick Wagoner, said "the administration has made it clear that it expects GM to expand and accelerate its restructuring efforts. I want the American people to know that we understand and accept this guidance."

Behind that looms the threat of bankruptcy, which auto companies fear would drive customers even farther away.

To combat that eventuality, the government said it would act guarantor of car company warranties, essentially becoming the nation's default mechanic for GM and Chrysler.

Obama also signaled interest in a plan to offer cash vouchers to customers who turn in older cars, a plan similar to one in Germany, that can be spun as an effort to jolt consumers into buying cars with higher emissions standards.

A plan proposed by U.S. Rep. Betty Sutton, D-Ohio, would provide $4,000 for customers buying a car built in the United States if it came with a fuel efficiency rating of more than 27 miles per gallon, The New York Times reported Tuesday. For U.S. cars with a fuel efficiency rating of 30 miles per gallon, customers would receive $5,000.

March vehicle sales reports are due Wednesday. Experts predict the annual sales rate to fall to 9.1 million a year, a hard tumble from previous years.