"We cannot, we must not, and we will not let our auto industry simply vanish," President Obama said at the White House.

"What we are asking is difficult," he said. "It will require hard choices by companies. It will require unions and workers who have already made painful concessions to make even more. It will require creditors to recognize that they cannot hold out for the prospect of endless government bailouts."

The remarks come a day after the administration ousted GM Chief Executive Rick Wagoner and rejected the restructuring plans that GM and Chrysler had hoped would lead to another infusion of government cash. Instead, the White House is giving GM 60 days to come up with a strategy for viability. Chrysler has a month to wrap up a partnership with Italy's Fiat SpA.

GM is expected to hold a news conference Tuesday morning to respond to the White House's rejection of its restructuring plan, a person familiar with the plans said Monday.


The administration says a "surgical" structured bankruptcy may be the only way forward for GM and Chrysler, and President Obama held out that prospect Monday.

[David Dietze, chief investment strategist at Point View Financial Services,] said that investors were also concerned about the message that they were hearing from governments. In Europe, over the week, stronger countries refused to come to the aid of smaller, struggling governments. And out of Washington, he said, the message continues to be inconsistent. The Senate has delayed confirmation of some members of the administration’s economic team, and the government has yet to value the toxic mortgage assets it has accepted from financial institutions.

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HSBC Holdings, the global British bank, fell 20 percent after saying it would seek to raise nearly $18 billion in new capital from shareholders and shut down its American consumer lending business.

“It’s pretty despondent everywhere,” said Dwyfor Evans, a strategist at State Street Global Markets in Hong Kong. “O.K., there are signs that some of the leading indicators have stabilized to some extent, but it’s at a very, very low level, and we’re not seeing corporate investment picking up, or consumers starting to spend again — in other words, the traditional mechanisms by which economies come out of a recession are absent at this time.”

Economic data and company earnings in recent weeks have eroded hopes that a gradual recovery would start to materialize during the second half of the year. If, as seems increasingly likely, a tangible recovery will not come until 2010 at the earliest, Mr. Evans said, “that means corporate earnings will remain extremely soft for quite some time.”

Let me be very clear on the economics of President Obama’s State of the Union speech and his budget.

He is declaring war on investors, entrepreneurs, small businesses, large corporations, and private-equity and venture-capital funds.

That is the meaning of his anti-growth tax-hike proposals, which make absolutely no sense at all — either for this recession or from the standpoint of expanding our economy’s long-run potential to grow.

Raising the marginal tax rate on successful earners, capital, dividends, and all the private funds is a function of Obama’s left-wing social vision, and a repudiation of his economic-recovery statements. Ditto for his sweeping government-planning-and-spend ing program, which will wind up raising federal outlays as a share of GDP to at least 30 percent, if not more, over the next 10 years.

American International Group (AIG: 0.4299, -0.0721, -14.36%) and the federal government will announce a major restructuring of the insurance giant’s government bailout Monday morning that will commit the Treasury Department to invest up to $30 billion in new equity in the company if it needs it, a person familiar with the negotiations told FOX Business.

GM factory workers who get laid off typically get "sub pay," in which they receive unemployment benefits, and GM pays the difference, up to most of their salary, for 48 weeks.

"We expect that discussion around entitlements [Social Security and Medicare] will be a part, a central part of those plans," Obama said. "And I would expect that by February in line with the announcement of at least a rough budget outline we will have more to say about how we're going to approach entitlement spending."