Although General Motors (NYSE: GM) and Ford (NYSE: F) don't want to hear about it, a story on CNN.com gives us a glimpse of how the panic over subprime mortgages may spread to the larger economy. Next up: car buyers. It seems that American consumers are starting to feel the pinch from declining housing values as the real estate bubble continues to implode. Less wealth (at least on paper) means less willingness to buy shiny expensive objects with wheels. And the tighter credit generated by the subprime mess means higher costs for car lovers who need cheap loans to put them behind the wheel of their new Escacheros.

CNW Research, which surveys new and potential car buyers, found a 30% increase in the number of people who are canceling plans to buy a new car or truck "any time soon," according the the CNN piece. Among those who are abandoning the market for new vehicles, the number one reason for doing so is housing -- 11% say that a decline in the value of their housing is to blame, while 6% cite higher mortgage payments. Another common complaint is trouble getting loans, since the mortgage crisis is tightening credit for all kinds of borrowing. Interestingly, high gas prices were cited by less than 5% of potential buyers.

John McDonald, a GM spokesman, claimed that the company isn't seeing any significant slow down due to the housing situation. But the numbers don't lie. In July, car sales were 19% below the levels from a year ago, and August is expected to be weak too. But an auto exec who refused to be named but was quoted in the article disagreed: "It's silliness to say the credit crunch doesn't matter." Art Spinella, president of CNW, echoed that sentiment. "To put it simply, housing is now the major hurdle to new car purchases. The next three to four months are not going to be much better if it's better at all. People are not interested in buying a new vehicle." That sounds like the hard truth -- and it sounds like bad news for an industry that could use some good news right about now.

MAJOR PAPERS:

• Kohlberg Kravis Roberts & Co. is planning an initial public offering, following in the footsteps of arch rival Blackstone Group (NYSE: BX), reported the Wall Street Journal (subscription required).
  
• Archer-Daniel-Midland Company (NYSE: ADM) is expected to enter the sugar cane ethanol business in Brazil, including the possible purchase of Cosan, Brazil's largest ethanol producer, reported the Wall Street Journal.

OTHER PAPERS:

• British energy company BP plc (NYSE: BP) will agree to the demands of the Russian government to give up its stake in the $20B Kovykta gas project, reported the U.K. Times.
• From BusinessWeek's "Inside Wall Street" column:
• Bulls and bears argue over where it is time to own Deere and Company (NYSE: DE) stock, some see the stock hitting $150, some believe the party is over.
• Document Security Systems Inc (NYSE: DMC) has nine patented technologies to help protect documents and printed products from brand and security fakers, leading Brookhaven Capital Management to believe it will reach $50-a-share over the next two years.
• WBB Securities believes Cleveland BioLabs Inc (NASDAQ: CBLI) is likely by summer's end to get a U.S. Department of Defense contract for its radiation protection compound called Protectan or CBLB502.

WEBSITES:

• CNN.com reported that a 16-year-old girl had both of her feet severed in an accident on the free-fall ride "Superman Tower of Power" at Six Flags Inc's (NYSE: SIX) Kentucky Kingdom amusement park yesterday.