US NOT OUT OF WOODS YET –warns Fed Reserve boss Bernanke


America’s central banker, Federal Reserve chairman Ben Bernanke, has warned that the US economy is ‘not out of the woods yet’.

In a speech delivered in Dallas, Texas, Bernanke said: ‘Many Americans are still grappling with unemployment or foreclosure, or both,’ adding that bank lending remains ‘very weak’.

The Fed chairman warned: ‘We have yet to see evidence of a sustained recovery in the housing market.

‘Mortgage delinquencies for both sub-prime and prime loans continue to rise, as do foreclosures.’

He further warned that unemployment is continuing to hold back economic recovery, saying: ‘Although layoffs have eased in recent months, hiring remains very weak.’

• US car giant General Motors has reported a $4.3bn (£2.8bn) net loss for July to December of last year.

The six months cover the period after the Detroit-based carmaker’s official emergence from bankruptcy.

In return for state assistance, GM has undergone a major restructuring involving scores of plant closures and tens of thousands of job cuts.

The US government currently owns a 61 per cent stake in the company after giving $52bn in aid.

The latest GM results come on the same day that German carmaker Daimler announced it would give Renault and Nissan a 3.1 per cent stake in its business as part of a global tie-up of the three groups.

Announcing the deal on Wednesday, Daimler added that in return it will take 3.1 per cent stakes in both Renault and Nissan, who have been in an alliance since 1999.

The swap will see the companies remain separate, but allow them to share technology and development costs.

Nissan said that the carmakers will co-operate to make electric cars and light commercial vehicles.

The companies will co-operate on the development of Daimler’s Smart car brand and a new Renault Twingo, including electric versions.

Engines currently made by Renault-Nissan will also be modified to fit a new range of compact Mercedes Benz cars.

The companies said that the cars would be based on ‘jointly-developed architecture’, but would still differ from each other in terms of product design.

Renault-Nissan chairman and chief executive Carlos Ghosn said: The Renault-Nissan Alliance knows how to work successfully in collaborative partnerships.’

Speaking to reporters, Ghosn said: ‘This industry is moving more and more towards increasing scale, and sharing innovation and investment.’

The bosses of the two groups also said they expect to see savings of about 2bn euros (£1.76bn, $2.68bn) as a result of the alliance over the first five years.