Monday’s retreat has spelled the end of the rally for now.  The FTSE finished lower than the finish on Friday the 20th so the big rally on Monday the 23rd has vaporised.  The S&P500 has almost cancelled out the rally also.  It has only 20 points of the rally left while the DJIA still has some 265 points of its rally left.

The cause of this change of direction was President Obama’s decree that GM and Chrysler are not viable in their present form or even their proposed restructuring.  From an outsiders point of view most of the problem seems to be with the Automotive Workers Union and the benefits they built up in the good times that have turned out to be a mill stone around the neck of the car makers.

The Unions downright refusal to relinquish some of these benefits now means that it is likely that GM will go into bankruptcy, many more of their members will loose their jobs and the possibility of many of the cherrished benefits stripped away also.  It goes to show that you need to pick your fights.  Its no use winning the battle if you lose the war.