Oil prices in the $40 a barrel range are “not going to be around much longer,” Pickens told a gathering at the James A. Baker III Institute for Public Policy at Rice University in Houston.

Oil prices have tumbled from over $147 a barrel in July to about $48 a barrel Tuesday as demand in the United States and other developed countries slows due to the global economic crisis.

By late 2010, Pickens sees a rebound in oil demand sparked by a global recovery, pushing prices higher.

If the U.S. continues to rely on imported oil for 70 percent or more of its supply, prices could reach $200-$300 per barrel in another decade, Pickens said.

As an investor, Pickens said he remains “on the sidelines,” with just 10 percent of his BP Capital hedge fund invested in energy. The fund lost $2 billion last year before shifting to cash as energy prices and stocks declined.

The recent drop in oil and natural gas prices has not derailed Pickens’ effort to push the next administration to implement an energy plan to reduce U.S. dependence on foreign oil.

Pickens said he hopes President-elect Barack Obama will announce details of his energy plan within the first 100 days of the new administration.

To replace one-third of the country’s imported supply, Pickens has outlined a plan to use domestic natural gas as a transportation fuel and to invest in power generation from renewable resources such as wind and solar power.

While the cost to transform the nation’s transportation and electric infrastructure is enormous, Pickens said reducing the annual tab for imported oil “can pay for anything you are doing.”

Government leadership is imperative, Pickens said. “Waiting for the free market can be disastrous,” Pickens told reporters.

Lack of financing has slowed Pickens’ ambitious plan to build the world’s largest wind farm of 4,000 megawatts in the Texas Panhandle.

Instead of building his own high-voltage transmission line to move electricity from the first 1,000 MW of wind turbines to supply more populated areas of north Texas, Pickens said he will wait for a power line to be built by other investors through the state’s Competitive Renewable Electric Zone process, expected to take three to four years.

Pickens said his first order of wind turbines is expected in 2011.

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The Detroit-based Big Three automakers – a foundation of American industrial might for a century – are going to be altered under any US government bailout. The question now may be only how profound those changes will be.

It’s possible that the Bush administration still may offer a simple bridge loan to the desperate industry, postponing tough decisions until President-elect Obama takes office. But Bush officials ultimately could also decide on a rescue plan that puts the most troubled firms, General Motors and Chrysler, through something resembling a managed bankruptcy, according to administration officials.

“There’s an orderly way to do bankruptcies that provides for more of a soft landing. I think that’s what we would be talking about,” said White House press secretary Dana Perino on Thursday.

Any federal offer of aid would come attached to more Washington oversight, via an “auto czar” or some other mechanism. That means Woodward Avenue, metro Detroit’s main drag, in essence would then run through D.C.

Under the more involved plans under discussion, unions would have to make concessions, as would other stakeholders in the industry, such as bondholders. Plans would call for the number of dealerships to be trimmed.

Some suppliers are likely to go bankrupt, whether or not the United States provides the industry with aid.

As recent announcements of lengthy holiday plant shutdowns demonstrate, the industry has reached a turning point in its history. Ford has said it can shoulder along without US help. But GM and Chrysler can see a river from where they’re standing, metaphorically speaking – the Rubicon.

“The auto industry is on very delicate financial footing. The situation is quite dire,” says Dennis Virag, president of the Automotive Consulting Group, based in Ann Arbor, Mich.

The Big Three have long closed their US factories around the holidays. Typically, the seasonal shutdown lasts about two weeks.

But on Wednesday, Chrysler announced it was closing all its North American manufacturing plants for at least a month. The plants employ some 46,000 union workers. Ford announced that it would extend the holiday shutdown at 10 of its plants to three weeks, instead of the previously planned two.

The closures come at a time when sales of vehicles in the US are as low as at any time in the past quarter-century. Over the past three months, car and truck sales have declined at a “stunning” 43.7 annual rate, according to a Wachovia Economics Group analysis.

“The one bit of good news in these data is that the rate of decline in motor vehicle sales has clearly slowed, with the sales for motor vehicles now coming below replacement demand,” concluded the Dec. 15 analysis.

Meanwhile, in Washington, an aid plan for the industry has been longer in coming than many expected. After the Senate voted down a rescue plan last week, the White House announced that it would offer some kind of aid on its own authority.

At press time, the administration had yet to release a detailed bailout strategy.

President Bush said at an appearance Thursday at the American Enterprise Institute that he had not yet decided what to do. Under normal circumstances, bankruptcy court would be the best way for auto firms to work through credit and debt restructuring. “These aren’t normal circumstances. That’s the problem,” he said.

Mr. Bush said he was worried about the effect of an auto-industry collapse on financial markets. At the same time, he said, he was worried about throwing good government money into a bad situation.

On one matter, Bush was definite: He did not want to punt the problem to Mr. Obama. “I believe that good policy is not to dump him a major catastrophe on his first day in office,” Bush said.

The policy of not wanting to use taxpayer dollars to prop up enterprises that are going to collapse anyway is a good one, according to one economic expert. And that’s a likely reason that an aid decision has been delayed. Government officials are poring over GM and Chrysler financial records and talking to firm stakeholders in an attempt to understand the firms’ way forward.

“There is no reason to give credit if the firms have business plans you think are likely to fail. It’s better to say ‘no’ at the outset,” says Gary Burtless, a senior fellow in economic studies at the Brookings Institution.

But simply allowing GM and Chrysler to go bankrupt on their own risks their liquidation, according to Mr. Burtless. Foreign auto firms might buy some of GM and Chrysler’s assets, but not all.

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The borrower initially does receive an amount of money from the lender, which they pay back, usually but not always in regular installments, to the lender. This service is generally provided at a cost, referred to as interest on the debt. A loan is of the annuity type if the amount paid periodically (for paying off and interest together) is fixed.

A borrower may be subject to certain restrictions known as loan covenants under the terms of the loan.

A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan.

A mortgage loan is a very common type of debt instrument, used by many individuals to purchase housing. In this arrangement, the money is used to purchase the property. The financial institution, however, is given security — a lien on the title to the house — until the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it.

In some instances, a loan taken out to purchase a new or used car may be secured by the car, in much the same way as a mortgage is secured by housing. The duration of the loan period is considerably shorter — often corresponding to the useful life of the car. There are two types of auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a consumer. An indirect auto loan is where a car dealership acts as an intermediary between the bank or financial institution and the consumer.

A type of loan especially used in limited partnership agreements is the recourse note.

A stock hedge loan is a special type of securities lending whereby the stock of a borrower is hedged by the lender against loss, using options or other hedging strategies to reduce lender risk.
Unsecured

Unsecured loans are monetary loans that are not secured against the borrowers assets. These may be available from financial institutions under many different guises or marketing packages:

• credit card debt
• personal loans
• bank overdrafts
• credit facilities or lines of credit
• corporate bonds

The interest rates applicable to these different forms may vary depending on the lender and the borrower. These may or may not be regulated by law. In the United Kingdom, when applied to individuals, these may come under the Consumer Credit Act 1974.

Acting as a provider of loans is one of the principal tasks for financial institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of funding.

Legally, a Bad Credit Auto Loan is a contractual promise between two parties where one party, the creditor, agrees to provide a sum of money to a debtor, who promises to return the money to the creditor either in one lump sum or in parts over a fixed period in time. This agreement may include providing additional payments of rental charges on the funds advanced to the debtor for the time the funds are in the hands of the debtor (interest).

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