Chrysler has filed for Chapter 11 bankruptcy protection this afternoon. The negotiations between the stakeholders broke down yesterday, due to the small group of hedge funds blocking the deal that the U.S. government offered: $2.25 billion in cash to the secured holders if they agree to write down the $6.9 billion in secured debt that Chrysler owed. Chrysler chief executive Robert Nardelli announced that he will return to Cerberus Capital Management as an adviser. Cerberus Capital Management is Chrysler’s current majority owner and it would have its holdings wiped out, as a result of the company’s bankruptcy. On the heels of this news, the New York Times held a “Does the U.S. Need an Auto Industry” forum of four academics, three economists and Robert Reich. So much for the diversity of opinion. If you want that, you’ll have to read the comments made by the NYT readers. The Commerce Department reported today that consumer spending decreased further in March—no surprise there, as the unemployment continues to grow around the country and the credit has tightened. But a simultaneously released report from the Institute for Supply Management--Chicago showed that March business activity contracted less than had been forecast, reaching a 40.1 point level for the first time since the U.S. business activity started to contract sharply in September. Anything below 50-point level still signals at overall contraction. Chinese stimulus funds are apparently being doled out quickly, and businesses around the world (including the U.S.) are hoping to get a piece of the action. Even if not being involved directly, some hope that at least China will be employing its excess capacity in such industrial sectors as steel, and stop depressing the prices for U.S. and other companies, by dumping its steel on the world market.