BUSINESS BRIEFS
Government will borrow record $550B for bailout
Associated Press
WASHINGTON — One day after Barack Obama was elected the next U.S. president, the outgoing Bush administration detailed its plans to borrow a record $550 billion through the end of the year to back the financial bailout.
The Federal Reserve, meanwhile, said it will boost interest payments to banks as authorities battle the worst financial crisis in decades. The Treasury Department will sell $55 billion in bonds next week, part of a massive borrowing effort to cover the $700 billion bailout and a budget gap that's expected to hit a record of nearly $1 trillion next year.
SERVICE SECTOR STARTS TO CONTRACT
NEW YORK — Hotels, construction firms and retailers saw business shrink in October as slower spending and declining employment sent the service sector into contraction, another gloomy sign for the economy.
The Institute for Supply Management, a trade group of purchasing executives, said yesterday its service sector index suffered a sharper-than-expected drop to 44.4 in October from 50.2 in September. Wall Street economists surveyed by Thomson Reuters expected a reading of 47.5. A reading below 50 signals contraction.
GMAC ANNOUNCES $2.52B IN LOSSES
NEW YORK — GMAC Financial Services said yesterday its third-quarter losses widened to $2.52 billion, as the ongoing woes of the global credit industry resulted in steep losses at its mortgage division.
For the year-earlier period, GMAC had a loss of $1.6 billion. Revenue tumbled 24 percent in the latest quarter to $1.72 billion from $2.25 billion.
The New York-based firm said economic and market conditions made things tough for the lending industry overall during the quarter.
GMAC is 51 percent owned by private equity firm Cerberus Capital Management LP, while Detroit-based General Motors Corp. holds the rest.
NO. 2 DRUGMAKER LAYING OFF 1,000
RENTON, N.J. — British drugmaker GlaxoSmithKline PLC is restructuring its U.S. operations, starting with reducing its U.S. sales force by 1,000, following many of its top competitors in eliminating sales jobs.
The world's No. 2 drugmaker by revenue also will switch from having dual U.S. headquarters, in Philadelphia and in Research Triangle Park, N.C., to operating just the North Carolina headquarters.
SLOWING ECONOMY PUSHES DOWN OIL
HOUSTON — Oil prices dipped yesterday as investor sentiment once again shifted to the growing global economic malaise and its potential impact on energy demand. Light, sweet crude for December delivery fell $5.23 to settle at $65.30 a barrel on the New York Mercantile Exchange.
A day after oil staged an Election Day rally, even indications that OPEC was acting on an earlier pledge to pull 1.5 million barrels of crude a day from the market failed to support prices.
