For the second time in just over a week, the U.S. Central Bank has cut interest rates to try to spur a slowing economy. From Washington, VOA's Michael Bowman reports.
Last week, the Federal Reserve aggressively cut a key short-term interest rate by 0.75 percent in what was seen as an emergency move to reassure global financial markets that plunged amid worries of a possible U.S. recession. Now, the Fed has acted again, slashing the so-called "federal funds rate" - which banks charge each other on overnight loans - by another half percent to three percent.
In a statement, the central bank said, given current economic conditions - including a depressed U.S. housing market, a credit crunch, and market volatility - further rate cuts could be forthcoming.
The Fed actions are good news, according to economist Mark Zandi of the credit rating agency Moody's Economy.com:
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Thursday, January 31, 2008
Jobless claims surge in latest week
First-time claims jump back to 375,000, the loftiest level since October
First-time jobless claims rocketed higher last week, adding to concern that the economy may be stalled.
Claims had been one of the few lonely bright spot in a sea of gloomy indicators and the sharp rise dents the belief that the labor market might remain strong.
Initial claims for state unemployment benefits rose 69,000 in the week ended Jan. 26, reaching 375,000, the Labor Department reported Thursday. It marked the highest level since early October -- and the biggest weekly jump since September 2005 in the wake of Hurricane Katrina. Read government release.
Before this sharp rise, jobless claims had fallen by a net of 51,000 since late December, confounding economists who had expected claims to gradually rise as the nation's economy slowed.
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First-time jobless claims rocketed higher last week, adding to concern that the economy may be stalled.
Claims had been one of the few lonely bright spot in a sea of gloomy indicators and the sharp rise dents the belief that the labor market might remain strong.
Initial claims for state unemployment benefits rose 69,000 in the week ended Jan. 26, reaching 375,000, the Labor Department reported Thursday. It marked the highest level since early October -- and the biggest weekly jump since September 2005 in the wake of Hurricane Katrina. Read government release.
Before this sharp rise, jobless claims had fallen by a net of 51,000 since late December, confounding economists who had expected claims to gradually rise as the nation's economy slowed.
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US economy at a glance
The US economy, a $15 trillion giant which makes up 25% of the world economy, is in trouble, and could drag down world growth. The US central bank has cut interest rates aggressively and the US Congress is planning an economic stimulus package to prevent a recession.
In the past few years the US economy has been growing strongly. But recent troubles in the housing and credit markets have hit the economy hard, with growth slowing sharply at the end of 2007. Economic forecasts suggest that the US growth in 2008 could be cut by half to about 1.5%.
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In the past few years the US economy has been growing strongly. But recent troubles in the housing and credit markets have hit the economy hard, with growth slowing sharply at the end of 2007. Economic forecasts suggest that the US growth in 2008 could be cut by half to about 1.5%.
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Bankers' and brokers' greed has undermined our economy
Call this the perfect financial storm or what you will; Wall Street has made fools of financial institutions around the world with their CMOs, CDOs, and greedy boo-boos.
At least they didn't lose as much as their customers. The stock market is in distress, bond insurers are looking for a $200 billion bailout, junk-bond markets are at risk of further losses and life-, home- and auto insurers' risk has not yet been fully assessed.
We need real ready-to-go financial leadership and we need it now. Tell the presidential candidates, Congress and economists to stay home. We need regulators with clear priorities.
Former Federal Reserve Chairman Paul Volcker, former FDIC Chairman Bill Isaacs and anyone they trust would be good choices. They beat inflation and presided over the savings and loan cleanup. Tell Ben Bernanke to go home.
As for you personally, it's every person for themselves and their family. Study the charts: This is a bear market.
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At least they didn't lose as much as their customers. The stock market is in distress, bond insurers are looking for a $200 billion bailout, junk-bond markets are at risk of further losses and life-, home- and auto insurers' risk has not yet been fully assessed.
We need real ready-to-go financial leadership and we need it now. Tell the presidential candidates, Congress and economists to stay home. We need regulators with clear priorities.
Former Federal Reserve Chairman Paul Volcker, former FDIC Chairman Bill Isaacs and anyone they trust would be good choices. They beat inflation and presided over the savings and loan cleanup. Tell Ben Bernanke to go home.
As for you personally, it's every person for themselves and their family. Study the charts: This is a bear market.
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Why the US rate cut may kill the dollar
The recent cut in the benchmark interest rates by the US Federal Reserve by 75 basis points from 4.25 per cent to 3.50 per cent on January 22 and a further 50 basis points to 3 per cent on January 30 as a response to a possible recession in the United States has completely surprised analysts across the world.
Unprecedented as it is, this steep cut in the interest rates effected by the Fed has the potential to dynamite the US dollar, the US economy and, by extension, the global economy.
What could surprise many is the fact that the US Fed's prescription to reduce interest rates, ostensibly to tackle the prospect of a recession might well turn out to be its Waterloo. Put bluntly, the US faces as much of a risk of a recession after this rate cut as it did before.
Two economists end up usually giving rise to three opinions. Nevertheless, most of them are near unanimous in their view that the situation in the US economy is quite serious. In fact, many experts are veering to the view that the US economy -- the engine of the world economic growth -- is well and truly into recession.
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Unprecedented as it is, this steep cut in the interest rates effected by the Fed has the potential to dynamite the US dollar, the US economy and, by extension, the global economy.
What could surprise many is the fact that the US Fed's prescription to reduce interest rates, ostensibly to tackle the prospect of a recession might well turn out to be its Waterloo. Put bluntly, the US faces as much of a risk of a recession after this rate cut as it did before.
Two economists end up usually giving rise to three opinions. Nevertheless, most of them are near unanimous in their view that the situation in the US economy is quite serious. In fact, many experts are veering to the view that the US economy -- the engine of the world economic growth -- is well and truly into recession.
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'It's going to be much worse'
Famed investor Jim Rogers sees hard times ahead for the United States - and a big opportunity looming in China.
You might expect Jim Rogers to be gloating a little bit. After all, the famed investor has been predicting a recession in the U.S. economy for months and shorting the shares of now-tanking Wall Street investment banks for even longer. And with fears of a recession sparking both a worldwide market sell-off and emergency action from Federal Reserve chairman Ben Bernanke, Rogers again looks prescient - just as he has over the past few years as the China-driven commodities boom he predicted almost a decade ago began kicked into high gear. But when I reached him by phone in Singapore the other day there was little hint of celebration in his voice. Instead, he took a serious tone.
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You might expect Jim Rogers to be gloating a little bit. After all, the famed investor has been predicting a recession in the U.S. economy for months and shorting the shares of now-tanking Wall Street investment banks for even longer. And with fears of a recession sparking both a worldwide market sell-off and emergency action from Federal Reserve chairman Ben Bernanke, Rogers again looks prescient - just as he has over the past few years as the China-driven commodities boom he predicted almost a decade ago began kicked into high gear. But when I reached him by phone in Singapore the other day there was little hint of celebration in his voice. Instead, he took a serious tone.
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Wednesday, January 30, 2008
Primary states lost 1.5 million manufacturing jobs
The 24 states holding primaries in next week's Super Tuesday have lost 1,568,600 manufacturing jobs in the seven years since President Bush took office, according to statistics provided WND by the Alliance for American Manufacturing, or AAM.
"In the Super Tuesday states, "It's the economy, stupid,' is what voting is going to be all about," Kerri Houston, senior analyst at AAM, told WND.
"It's also about 'It's the defense, stupid," Houston said, "given how many U.S. defense suppliers have now been outsourced overseas."
"The Department of Defense now has graveyards full of broken-down equipment, including tanks, airplanes and missile launchers that are out of action for lack of a part," she continued.
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"In the Super Tuesday states, "It's the economy, stupid,' is what voting is going to be all about," Kerri Houston, senior analyst at AAM, told WND.
"It's also about 'It's the defense, stupid," Houston said, "given how many U.S. defense suppliers have now been outsourced overseas."
"The Department of Defense now has graveyards full of broken-down equipment, including tanks, airplanes and missile launchers that are out of action for lack of a part," she continued.
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Stimulus Package Will Boost Deficit
A proposed economic stimulus plan could boost this year's deficit by $100 billion, but political leaders believe the flood of red ink is worth the cost if it keeps the country from falling into a prolonged recession.
Worries that any recession could be a severe one, far surpassing the last two mild, brief downturns in 1990-91 and 2001, have captured the attention of President Bush and other politicians, especially in an election year with the White House up for grabs.
Bush and House leaders reached a deal in record time last week that would provide $150 billion in economic stimulus through tax rebates that will go to 117 million families, and temporary tax breaks for businesses.
The House is rushing the proposal to a vote this week and Senate Majority Leader Harry Reid, D-Nev., said he hopes to have the package approved by the Senate and on the president's desk by Feb. 15.
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Worries that any recession could be a severe one, far surpassing the last two mild, brief downturns in 1990-91 and 2001, have captured the attention of President Bush and other politicians, especially in an election year with the White House up for grabs.
Bush and House leaders reached a deal in record time last week that would provide $150 billion in economic stimulus through tax rebates that will go to 117 million families, and temporary tax breaks for businesses.
The House is rushing the proposal to a vote this week and Senate Majority Leader Harry Reid, D-Nev., said he hopes to have the package approved by the Senate and on the president's desk by Feb. 15.
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IMF Cuts Global Forecast On Soft U.S. Economy
The International Monetary Fund is projecting a deceleration in world economic growth for 2008, as turmoil in the financial markets hurt consumer confidence in key regions.
The International Monetary Fund is projecting a deceleration in world economic growth for 2008 on a slowdown in the United States and as turmoil in the financial markets hurt consumer confidence in key regions.
The IMF said today in its World Economic Outlook report that it expects the U.S. economy will grow a modest 1.5 percent this year, compared with an estimated 2.2 percent in 2007 and 2.9 percent in 2006.
The U.S. slowdown is seen dragging global economic growth down to 4.1 percent in 2008 compared with an estimated 4.9 percent for 2007.
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The International Monetary Fund is projecting a deceleration in world economic growth for 2008 on a slowdown in the United States and as turmoil in the financial markets hurt consumer confidence in key regions.
The IMF said today in its World Economic Outlook report that it expects the U.S. economy will grow a modest 1.5 percent this year, compared with an estimated 2.2 percent in 2007 and 2.9 percent in 2006.
The U.S. slowdown is seen dragging global economic growth down to 4.1 percent in 2008 compared with an estimated 4.9 percent for 2007.
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US economy plan passes first test
The US House of Representatives has approved a $146bn (£73bn) economic stimulus package proposed by President George W Bush to fend off a recession.
The measures include rebates for people with lower incomes as well as tax incentives for businesses.
Correspondents say while the package passed the House vote easily, its fate in the Senate will be less clear-cut.
There, both parties are backing a slightly more expensive package that favours the elderly and unemployed.
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The measures include rebates for people with lower incomes as well as tax incentives for businesses.
Correspondents say while the package passed the House vote easily, its fate in the Senate will be less clear-cut.
There, both parties are backing a slightly more expensive package that favours the elderly and unemployed.
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Stimulus Gone Bad
House Democrats and the White House have reached an agreement on an economic stimulus plan. Unfortunately, the plan — which essentially consists of nothing but tax cuts and gives most of those tax cuts to people in fairly good financial shape — looks like a lemon.
Specifically, the Democrats appear to have buckled in the face of the Bush administration’s ideological rigidity, dropping demands for provisions that would have helped those most in need. And those happen to be the same provisions that might actually have made the stimulus plan effective.
Those are harsh words, so let me explain what’s going on.
Aside from business tax breaks — which are an unhappy story for another column — the plan gives each worker making less than $75,000 a $300 check, plus additional amounts to people who make enough to pay substantial sums in income tax. This ensures that the bulk of the money would go to people who are doing O.K. financially — which misses the whole point.
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Specifically, the Democrats appear to have buckled in the face of the Bush administration’s ideological rigidity, dropping demands for provisions that would have helped those most in need. And those happen to be the same provisions that might actually have made the stimulus plan effective.
Those are harsh words, so let me explain what’s going on.
Aside from business tax breaks — which are an unhappy story for another column — the plan gives each worker making less than $75,000 a $300 check, plus additional amounts to people who make enough to pay substantial sums in income tax. This ensures that the bulk of the money would go to people who are doing O.K. financially — which misses the whole point.
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US economy comes to virtual standstill
The US economy came to a virtual standstill in the final three months of 2007 as the deepest slump in the real estate market for a quarter of a century acted as a brake on expansion, according to data released in Washington today.
Official figures showed that gross domestic product increased at an annualised rate of 0.6% between October and December, only half as fast as Wall Street had been expecting.
Today's news meant that the US economy grew by 2.2% in 2007 as a whole - the weakest expansion seen since the 1.6% growth recorded in 2002, when the economy was affected by the dotcom collapse and the aftermath of the September 2001 terrorist attacks.
The weakness of the data was seen by Wall Street as clinching evidence that the Federal Reserve, America's central bank, will cut interest rates by 0.5 percentage points to 3% tonight in a bid to boost flagging growth.
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Official figures showed that gross domestic product increased at an annualised rate of 0.6% between October and December, only half as fast as Wall Street had been expecting.
Today's news meant that the US economy grew by 2.2% in 2007 as a whole - the weakest expansion seen since the 1.6% growth recorded in 2002, when the economy was affected by the dotcom collapse and the aftermath of the September 2001 terrorist attacks.
The weakness of the data was seen by Wall Street as clinching evidence that the Federal Reserve, America's central bank, will cut interest rates by 0.5 percentage points to 3% tonight in a bid to boost flagging growth.
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Tuesday, January 29, 2008
Home Prices Decline at Record Rates
A closely watched gauge of U.S. home prices shows they are falling sharply at record rates as a deepening slump in the housing market threatens to damp consumer spending.
Home prices in 10 major metropolitan areas in November were down 8.4% from a year earlier, according to the S&P/Case-Shiller home-price indexes, released Tuesday by credit-rating firm Standard & Poor's.
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Home prices in 10 major metropolitan areas in November were down 8.4% from a year earlier, according to the S&P/Case-Shiller home-price indexes, released Tuesday by credit-rating firm Standard & Poor's.
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Bush Urges Quick Action on Economy
President Bush sought to reassure Americans about the economy on Monday night, declaring in his last State of the Union address that the United States would banish the specter of an imminent recession, provided that Congress acts quickly on the economic stimulus package laid out last week.
“To build a prosperous future, we must trust people with their own money and empower them to grow our economy,” Mr. Bush said before an audience of hundreds of officials and guests at the Capitol and a television audience of millions.
“In the long run, Americans can be confident about our economic growth,” Mr. Bush said. “But in the short run, we can all see that growth is slowing.”
Countrywide: 1 in 3 subprime mortgages delinquent
Countrywide Financial Corp (CFC.N: Quote, Profile, Research), the largest U.S. mortgage lender, on Tuesday said more than one in three subprime mortgages were delinquent at year-end in the $1.48 billion portfolio of home loans it services.
Countrywide said borrowers were delinquent on 33.64 percent of subprime loans it serviced as of December 31, up from 29.08 percent in September. It also said borrowers were at least 90 days late on payments on 17.25 percent of subprime mortgages.
The rate of late payments rose to 7.32 percent at year end from 5.76 percent on prime home equity loans, and to 5.76 percent from 4.41 percent on conventional first mortgages, Countrywide said. For all loans, the delinquency rate rose to 8.64 percent from 7.12 percent, it said.
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Countrywide said borrowers were delinquent on 33.64 percent of subprime loans it serviced as of December 31, up from 29.08 percent in September. It also said borrowers were at least 90 days late on payments on 17.25 percent of subprime mortgages.
The rate of late payments rose to 7.32 percent at year end from 5.76 percent on prime home equity loans, and to 5.76 percent from 4.41 percent on conventional first mortgages, Countrywide said. For all loans, the delinquency rate rose to 8.64 percent from 7.12 percent, it said.
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Citigroup chief says Chinese, Russian sovereign funds are top worry
State investment funds from China and Russia are the main concern in the growing debate over whether to regulate so-called sovereign wealth funds, the chairman of Citigroup Inc.
Win Bischoff, said Tuesday.
"It is the China and Russia syndrome of sovereign wealth funds that is most concerning," Bischoff told a finance conference in Brussels.
Citigroup and Merrill Lynch were among the financial institutions that raised funds from Middle Eastern sovereign wealth funds following recent write-downs related to bad subprime mortgages.
Bischoff noted that when Citigroup raised this money, it was seen as a strengthening of the financial system. He said, however, that since then the U.S. has become more wary of state-controlled investments.
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Win Bischoff, said Tuesday.
"It is the China and Russia syndrome of sovereign wealth funds that is most concerning," Bischoff told a finance conference in Brussels.
Citigroup and Merrill Lynch were among the financial institutions that raised funds from Middle Eastern sovereign wealth funds following recent write-downs related to bad subprime mortgages.
Bischoff noted that when Citigroup raised this money, it was seen as a strengthening of the financial system. He said, however, that since then the U.S. has become more wary of state-controlled investments.
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American Economy: Strolling over the troubled waters
Against a backdrop of growing concern about the recession, the central bank of the United States, the Federal Reserve unexpectedly, out of the blue, slashed a key interest rate by three – quarters of a percentage point, from 4.25 percent down to 3.5 percent on Tuesday January 22nd after Federal Reserve Chairman Ben Bernanke and his team approved the huge rate cut after an emergency video conference on Monday night.
The action was approved on an 8-1 vote and this dramatic rate cut has raised concerns about the weakness in the world’s largest economy and has stirred panic all over the world as many analysts had predicted that the US economy could fall into a recession and drag down the rest of the world with it. And their panics and predictions are justifiable because the Fed has honestly stated some harsh economic realities hitting the world’s number one economy in its statement.
For instance, the fed in its statement has candidly stated that an appreciable downside risks to growth remain, and considering so it pledged to act in timely manner to curd the risk facing the economy.
The Fed signaled that further rate cuts were likely, possibly as soon as their next meeting on Jan. 29-30, if the American economic picture looks murky. And the situation is likely to be murkier because a macroeconomic policy takes time to jump from paper policies and act in the real world.
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The action was approved on an 8-1 vote and this dramatic rate cut has raised concerns about the weakness in the world’s largest economy and has stirred panic all over the world as many analysts had predicted that the US economy could fall into a recession and drag down the rest of the world with it. And their panics and predictions are justifiable because the Fed has honestly stated some harsh economic realities hitting the world’s number one economy in its statement.
For instance, the fed in its statement has candidly stated that an appreciable downside risks to growth remain, and considering so it pledged to act in timely manner to curd the risk facing the economy.
The Fed signaled that further rate cuts were likely, possibly as soon as their next meeting on Jan. 29-30, if the American economic picture looks murky. And the situation is likely to be murkier because a macroeconomic policy takes time to jump from paper policies and act in the real world.
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The Economic State of the Union, 2008
Unprecedented debt and soaring numbers of unsold homes are driving down inflated prices for all kinds of assets.
In just the past seven years, U.S. household debt almost doubled and federal debt soared by near two-thirds, rocketing by a combined $10.5 trillion. The total combined debt of households ($14.4 trillion) and the federal government ($9.2 trillion) is now 168 percent of GDP, far higher even than in the brief spike during World War II. All other levels and ratios of debt also have soared far beyond any past precedent.
Yet, this record-shattering explosion of debt stimulus created the weakest seven-year job growth (4.4 percent) and one of the weakest periods of real GDP growth (18.1 percent) since the Depression: less than 6 million new jobs ($1.8 million of debt per job) and a mere $4 trillion increase in GDP.
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In just the past seven years, U.S. household debt almost doubled and federal debt soared by near two-thirds, rocketing by a combined $10.5 trillion. The total combined debt of households ($14.4 trillion) and the federal government ($9.2 trillion) is now 168 percent of GDP, far higher even than in the brief spike during World War II. All other levels and ratios of debt also have soared far beyond any past precedent.
Yet, this record-shattering explosion of debt stimulus created the weakest seven-year job growth (4.4 percent) and one of the weakest periods of real GDP growth (18.1 percent) since the Depression: less than 6 million new jobs ($1.8 million of debt per job) and a mere $4 trillion increase in GDP.
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A mind-blowing machine
In America, land of the bubbles, the next pop will be the biggest
Three cheers! Wall Street's got a new rally song: "I'm dreaming dreams, I'm scheming schemes, I'm building castles high."
Actually it's the 1919 tune that launched the roaring run-up to the '29 crash and the Great Depression. Remember the lyrics: "I'm forever blowing bubbles. Pretty bubbles in the air. They fly so high, nearly reach the sky. Then like my dreams they fade and die."
And it still fits today! Listen to venture capitalist Eric Janszen's scary new paradigm in "The Next Bubble," a Harper's Magazine report: "That the Internet and the housing hyperinflations transpired within a period of 10 years, each creating trillions of fake wealth, is, I believe, only the beginning."
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Three cheers! Wall Street's got a new rally song: "I'm dreaming dreams, I'm scheming schemes, I'm building castles high."
Actually it's the 1919 tune that launched the roaring run-up to the '29 crash and the Great Depression. Remember the lyrics: "I'm forever blowing bubbles. Pretty bubbles in the air. They fly so high, nearly reach the sky. Then like my dreams they fade and die."
And it still fits today! Listen to venture capitalist Eric Janszen's scary new paradigm in "The Next Bubble," a Harper's Magazine report: "That the Internet and the housing hyperinflations transpired within a period of 10 years, each creating trillions of fake wealth, is, I believe, only the beginning."
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Monday, January 28, 2008
Bush to focus on economy and Iraq
The US economy and Iraq are expected to dominate President George W Bush's final State of the Union address.
Recent economic rescue efforts will be emphasised as Mr Bush seeks to maintain his public profile amid the race to replace him, correspondents say.
Few new big ideas are expected, but the speech is also likely to touch on tax cuts, Aids and security laws.
Democratic candidate hopefuls Hillary Clinton and Barack Obama will be in Congress watching the speech on Monday.
At least one Republican candidate, John McCain, is staying in Florida ahead of his party's primary on Monday.
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Recent economic rescue efforts will be emphasised as Mr Bush seeks to maintain his public profile amid the race to replace him, correspondents say.
Few new big ideas are expected, but the speech is also likely to touch on tax cuts, Aids and security laws.
Democratic candidate hopefuls Hillary Clinton and Barack Obama will be in Congress watching the speech on Monday.
At least one Republican candidate, John McCain, is staying in Florida ahead of his party's primary on Monday.
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US Dec New Home Sales Hit Lowest In 12 Yrs
New-home sales tumbled to the lowest mark in 12 years during December and prices also fell sharply.
Sales of single-family homes decreased by 4.7% last month to a seasonally adjusted annual rate of 604,000, the Commerce Department said Monday. November new-home sales fell 12.6% to an annual rate to 634,000; originally, the government said November sales fell by 9.0% to 647,000.
Economists forecast December sales at an annual rate of 650,000. The pace of 604,000 was the worst since 559,000 in February 1995.
Year over year, new-home sales were 40.7% lower than the level in December 2006.
The median price of a new home decreased by 10.4% to $219,200 in December from $244,700 in December 2006. The average price dropped by 11.5% to $267,300 from $301,900 a year earlier. In November this year, the median price was $245,900 and the average was $311,200.
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Sales of single-family homes decreased by 4.7% last month to a seasonally adjusted annual rate of 604,000, the Commerce Department said Monday. November new-home sales fell 12.6% to an annual rate to 634,000; originally, the government said November sales fell by 9.0% to 647,000.
Economists forecast December sales at an annual rate of 650,000. The pace of 604,000 was the worst since 559,000 in February 1995.
Year over year, new-home sales were 40.7% lower than the level in December 2006.
The median price of a new home decreased by 10.4% to $219,200 in December from $244,700 in December 2006. The average price dropped by 11.5% to $267,300 from $301,900 a year earlier. In November this year, the median price was $245,900 and the average was $311,200.
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Asian markets tumble ahead of Fed; Shanghai slumps more than 7 percent
Stock markets across Asia accelerated their losses late Monday, with the Shanghai Composite leading the selloff with a more than 7 percent decline, as investors tracked Wall Street's lackluster performance Friday and awaited some key events in the US this week.
President Bush is scheduled to deliver his State of the Union address later today and investors are expecting an update on the government's proposed 145 billion-dollar stimulus plan.
On Tuesday, the Federal Reserve kicks off its first meeting of the year. Fed fund futures traded on the Chicago Mercantile Exchange show markets pricing in another 25 basis-point move at its conclusion Wednesday, scaling back expectations for a bigger move following last week's surprising 75 basis-point intrameeting cut.
On Friday, the US Labor Department will release the January jobs report.'Many investors are taking a wait-and-see attitude ahead of a series of events this week,' said Won Jong-Hyuck, an analyst at SK Securities in Seoul.
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President Bush is scheduled to deliver his State of the Union address later today and investors are expecting an update on the government's proposed 145 billion-dollar stimulus plan.
On Tuesday, the Federal Reserve kicks off its first meeting of the year. Fed fund futures traded on the Chicago Mercantile Exchange show markets pricing in another 25 basis-point move at its conclusion Wednesday, scaling back expectations for a bigger move following last week's surprising 75 basis-point intrameeting cut.
On Friday, the US Labor Department will release the January jobs report.'Many investors are taking a wait-and-see attitude ahead of a series of events this week,' said Won Jong-Hyuck, an analyst at SK Securities in Seoul.
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US blacks see 'financial apartheid' in subprime crisis
They had small means and big hopes of owning a house. But African-Americans snared in the US mortgage crisis have seen the American dream turn into a nightmare many call "financial apartheid."
The storm triggered by risky "subprime" loans has left many in ruins, forced out of their modest homes and furious at falling victim to financial dealings that have taken a particular toll on minority families.
"People of color are more than three times more likely to have subprime loans," concluded the organization United for a Fair Economy in a recent report which estimated that minorities have seen between 163 billion and 278 billion dollars of their equity go up in smoke since 2000.
With its weakened economy and a large black population more used to renting, Cleveland has become a poster child of the subprime crisis in a country where some 2.1 million borrowers are behind on their mortgage payments.
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The storm triggered by risky "subprime" loans has left many in ruins, forced out of their modest homes and furious at falling victim to financial dealings that have taken a particular toll on minority families.
"People of color are more than three times more likely to have subprime loans," concluded the organization United for a Fair Economy in a recent report which estimated that minorities have seen between 163 billion and 278 billion dollars of their equity go up in smoke since 2000.
With its weakened economy and a large black population more used to renting, Cleveland has become a poster child of the subprime crisis in a country where some 2.1 million borrowers are behind on their mortgage payments.
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The darker side of interest rate cuts
Markets like the Fed cuts and expect more. But lower interest rates could keep the dollar weak and ultimately threaten economic growth.
Interest rates are headed lower. But how low can they go?
The Federal Reserve surprised Wall Street earlier this week by cutting its fed funds short-term interest rate target by three-quarters of a percentage point, to 3.5 percent. The move had the effect of reducing rates on mortgages and home equity loans, and reassured investors that the Fed will do what it can to spur economic activity as long as the threat of recession looms.
But as much as Fed Chairman Ben Bernanke might like to keep the economy rolling by slashing interest rates, it's not clear how much room he'll have to do so. Two factors complicate the outlook for further interest-rate cuts: the hefty losses in the financial sector that are making banks less eager to lend money, and the prospect that lower rates will chase overseas investors away from the dollar, lowering the value of the greenback and boosting inflation. Adding to the case against deep rate cuts is the widespread perception that it was the Fed's rate-cutting zealousness after the last recession that led to the housing bubble that now threatens to derail the economy.
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Interest rates are headed lower. But how low can they go?
The Federal Reserve surprised Wall Street earlier this week by cutting its fed funds short-term interest rate target by three-quarters of a percentage point, to 3.5 percent. The move had the effect of reducing rates on mortgages and home equity loans, and reassured investors that the Fed will do what it can to spur economic activity as long as the threat of recession looms.
But as much as Fed Chairman Ben Bernanke might like to keep the economy rolling by slashing interest rates, it's not clear how much room he'll have to do so. Two factors complicate the outlook for further interest-rate cuts: the hefty losses in the financial sector that are making banks less eager to lend money, and the prospect that lower rates will chase overseas investors away from the dollar, lowering the value of the greenback and boosting inflation. Adding to the case against deep rate cuts is the widespread perception that it was the Fed's rate-cutting zealousness after the last recession that led to the housing bubble that now threatens to derail the economy.
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U.S. debt in 'severe' distress
The volume of U.S. corporate debt issued by companies in severe financial distress rose in January to the highest level in more than four years, suggesting corporate defaults are likely to surge in coming months, Standard & Poor's said Thursday.
The credit-rating agency said the ratio of "distressed" corporate debt to all speculative-grade debt jumped to 11.1 percent in January from 6.1 percent in December. The percentage this month is the highest since September 2003.
The surge occurred despite aggressive moves by the Federal Reserve to ease the credit crunch, which former Federal Reserve Chairman Alan Greenspan has described as the worst in a decade.
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The credit-rating agency said the ratio of "distressed" corporate debt to all speculative-grade debt jumped to 11.1 percent in January from 6.1 percent in December. The percentage this month is the highest since September 2003.
The surge occurred despite aggressive moves by the Federal Reserve to ease the credit crunch, which former Federal Reserve Chairman Alan Greenspan has described as the worst in a decade.
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Friday, January 25, 2008
Bernanke Earns Feldstein Cheers, Roach Jeers for Emergency Cut
Federal Reserve Chairman Ben S. Bernanke's emergency interest-rate cut this week is either just what the doctor ordered or grounds for malpractice, depending on which prominent economists and investors you consult.
Stanford University Professor John Taylor says the move ``made sense'' and Harvard University's Martin Feldstein calls it a ``very good thing.'' Morgan Stanley's Stephen Roach counters that the decision was ``dangerous, reckless and irresponsible,'' and Nobel Prize winner Joseph Stiglitz says it resulted from ``bad economic management.''
The divergence of views stems from the timing of the reduction, less than a day after stocks tumbled from Hong Kong to London, raising prospects of a slide in U.S. markets. While Bernanke has warned of the danger that ``fragile'' markets pose to the slowing economy, some analysts say he risks rewarding investors who simply made bad decisions.
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Stanford University Professor John Taylor says the move ``made sense'' and Harvard University's Martin Feldstein calls it a ``very good thing.'' Morgan Stanley's Stephen Roach counters that the decision was ``dangerous, reckless and irresponsible,'' and Nobel Prize winner Joseph Stiglitz says it resulted from ``bad economic management.''
The divergence of views stems from the timing of the reduction, less than a day after stocks tumbled from Hong Kong to London, raising prospects of a slide in U.S. markets. While Bernanke has warned of the danger that ``fragile'' markets pose to the slowing economy, some analysts say he risks rewarding investors who simply made bad decisions.
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China's ICBC eyes more foreign banks, including troubled US lenders
The Industrial and Commercial Bank of China, which has made headlines with a series of overseas acquisitions, is eyeing more foreign targets, including troubled US banks, state media said Friday.
China's largest lender, cashed up after a 21.9-billion-dollar dual listing in Shanghai and Hong Kong in 2006, could make the acquisition some time this year, the China Daily reported.
"It's possible that ICBC will complete another acquisition deal in 2008," Pan Gongsheng, a ranking ICBC executive in charge of the bank's merger and acquisition business, told the paper.
US financial institutions, battered by the subprime mortgage crisis, may also be on the ICBC's shopping list "if such a deal facilitates our strategic development", Pan said.
"ICBC's major strategy will be expanding in Asia, consolidating in Europe and making a breakthrough in America," Pan said.
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China's largest lender, cashed up after a 21.9-billion-dollar dual listing in Shanghai and Hong Kong in 2006, could make the acquisition some time this year, the China Daily reported.
"It's possible that ICBC will complete another acquisition deal in 2008," Pan Gongsheng, a ranking ICBC executive in charge of the bank's merger and acquisition business, told the paper.
US financial institutions, battered by the subprime mortgage crisis, may also be on the ICBC's shopping list "if such a deal facilitates our strategic development", Pan said.
"ICBC's major strategy will be expanding in Asia, consolidating in Europe and making a breakthrough in America," Pan said.
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Methode Electronics to eliminate 700 Illinois jobs
Methode Electronics Inc., citing continuing cost pressures, said Thursday that it plans to eliminate 700 jobs at its Illinois production facilities as the Chicago-based company continues to shift production offshore.
The jobs being cut by the maker of electronic components are at Methode's automotive operations in Carthage and Golden, Ill., as well as its electronic-connector operation in suburban Rolling Meadows.
Shares of Methode added 84 cents, to close at $12.24, on the New York Stock Exchange.
Because of the financial impact the job cuts will have on terminated workers, the decision to initiate the domestic restructuring was "made with great difficulty," said President and Chief Executive Donald Duda.
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The jobs being cut by the maker of electronic components are at Methode's automotive operations in Carthage and Golden, Ill., as well as its electronic-connector operation in suburban Rolling Meadows.
Shares of Methode added 84 cents, to close at $12.24, on the New York Stock Exchange.
Because of the financial impact the job cuts will have on terminated workers, the decision to initiate the domestic restructuring was "made with great difficulty," said President and Chief Executive Donald Duda.
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U.S. Decline Makes History
Boosters in the U.S. may decry the media’s characterization of the housing industry’s woes, but there’s no mistaking the terrible numbers released yesterday by the National Association of Realtors.
Sales of single family homes were down 13 percent for 2007, the worst decline since 1982. The median price for a single family home fell 1.8 percent, the first annual decline on record, going back to 1968, the NAR reports. It may have been the first annual drop since the Great Depression in the 1930s, NAR economist Lawrence Yun told the Associated Press.
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Sales of single family homes were down 13 percent for 2007, the worst decline since 1982. The median price for a single family home fell 1.8 percent, the first annual decline on record, going back to 1968, the NAR reports. It may have been the first annual drop since the Great Depression in the 1930s, NAR economist Lawrence Yun told the Associated Press.
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Thursday, January 24, 2008
Ford trims loss, says new job cuts ahead
Ford's quarterly loss much narrower than a year earlier; announces new round of hourly worker buyouts.
Embattled Ford Motor capped a difficult year by trimming its quarterly loss and announcing a new round of companywide buyouts for its remaining 54,000 hourly U.S. workers.
The buyouts are part of the company's continued effort to end three years of losses on its core automotive operations. Despite the latest improvements and plans for further cost cuts, the automaker warned it expected losses to continue this year.
Ford (F, Fortune 500) shares fell nearly 1 percent in premarket trading.
Ford, which lost its long-held position as the nation's No. 2 automaker to Japanese rival Toyota Motor (TM) last year, lost $429 million, or 20 cents a share, in the fourth quarter, excluding special items.
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Embattled Ford Motor capped a difficult year by trimming its quarterly loss and announcing a new round of companywide buyouts for its remaining 54,000 hourly U.S. workers.
The buyouts are part of the company's continued effort to end three years of losses on its core automotive operations. Despite the latest improvements and plans for further cost cuts, the automaker warned it expected losses to continue this year.
Ford (F, Fortune 500) shares fell nearly 1 percent in premarket trading.
Ford, which lost its long-held position as the nation's No. 2 automaker to Japanese rival Toyota Motor (TM) last year, lost $429 million, or 20 cents a share, in the fourth quarter, excluding special items.
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Nethaway: No waiting for waiters
The United States blossomed into an international economic leader during the First and Second Industrial Revolutions.
Now many Americans worry that the bloom is off the rose.
As a young nation, Americans were quick to adopt technological innovations that transformed the labor-based economy into a manufacturing powerhouse.
Good old American ingenuity turned the steam engine, cotton gin, steel mill, telephone, internal combustion engine and other inventions into industrial giants that employed millions of workers
and expanded U.S. trade worldwide.
In recent years, however, manufacturing jobs dried up as companies moved their operations to foreign countries with lower labor costs, fewer employee benefits, lax environmental laws and less government interference.
There's nothing to worry about, Americans were told.
The outsourcing of manufacturing jobs is natural in the new global economy.
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Now many Americans worry that the bloom is off the rose.
As a young nation, Americans were quick to adopt technological innovations that transformed the labor-based economy into a manufacturing powerhouse.
Good old American ingenuity turned the steam engine, cotton gin, steel mill, telephone, internal combustion engine and other inventions into industrial giants that employed millions of workers
and expanded U.S. trade worldwide.
In recent years, however, manufacturing jobs dried up as companies moved their operations to foreign countries with lower labor costs, fewer employee benefits, lax environmental laws and less government interference.
There's nothing to worry about, Americans were told.
The outsourcing of manufacturing jobs is natural in the new global economy.
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Juicing the economy will come at a cost
Boosting economic growth is great, but it's not free and it's not guaranteed. Lawmakers need to weigh the cost of any stimulus package with its benefits.
Even as Washington nears agreement on measures to minimize the effects of a recession, there is little agreement on how much such moves would boost the economy.
But one thing is certain: They will come at a cost.
Initially, President Bush and leading Democrats have indicated they envisioned stimulus
measures - cash rebates, business breaks and other proposals - worth roughly $150 billion. Some experts think the final number could be closer to $200 billion.
Even if the stimulus package proves wildly successful, however, it won't pay for itself in full, at least not in the near term.
The Congressional Budget Office estimated Wednesday that the federal budget deficit this year will increase to $219 billion or 1.5 percent of gross domestic product - and even more if increased military funding is approved. And that doesn't count the cost of a stimulus plan.
Stimulus will bump that deficit up, but not necessarily dollar for dollar. Here's why: If the stimulus effort works, the increased economic activity will generate federal tax revenue.
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Even as Washington nears agreement on measures to minimize the effects of a recession, there is little agreement on how much such moves would boost the economy.
But one thing is certain: They will come at a cost.
Initially, President Bush and leading Democrats have indicated they envisioned stimulus
measures - cash rebates, business breaks and other proposals - worth roughly $150 billion. Some experts think the final number could be closer to $200 billion.
Even if the stimulus package proves wildly successful, however, it won't pay for itself in full, at least not in the near term.
The Congressional Budget Office estimated Wednesday that the federal budget deficit this year will increase to $219 billion or 1.5 percent of gross domestic product - and even more if increased military funding is approved. And that doesn't count the cost of a stimulus plan.
Stimulus will bump that deficit up, but not necessarily dollar for dollar. Here's why: If the stimulus effort works, the increased economic activity will generate federal tax revenue.
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Stimulus deal struck
Compromise could send $600 rebates to most taxpayers in effort to spur spending and head off recession. Those earning more than $75,000 reportedly could be left out.
Congressional leaders and Bush administration officials have reached a deal on an economic stimulus package that would send $600 to more than $1,200 to most taxpayers in an effort to keep the economy from falling into recession.
Sources told CNN that the deal would pay most taxpayers $600 and two-wage-earner households as much as $1,200. A Democratic aide and a Republican aide said the deal will include an additional amount per child amounting to about $300.
The main exception will be higher income taxpayers - individuals earning $75,000 or more or couples earning $150,000 or more, would not get the rebate checks, sources told CNN.
Earlier proposals to increase food stamps and extend unemployment benefits are not part of the agreement. But some low-income taxpayers who owe no income tax will get rebates, although they could be for less than $600.
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Congressional leaders and Bush administration officials have reached a deal on an economic stimulus package that would send $600 to more than $1,200 to most taxpayers in an effort to keep the economy from falling into recession.
Sources told CNN that the deal would pay most taxpayers $600 and two-wage-earner households as much as $1,200. A Democratic aide and a Republican aide said the deal will include an additional amount per child amounting to about $300.
The main exception will be higher income taxpayers - individuals earning $75,000 or more or couples earning $150,000 or more, would not get the rebate checks, sources told CNN.
Earlier proposals to increase food stamps and extend unemployment benefits are not part of the agreement. But some low-income taxpayers who owe no income tax will get rebates, although they could be for less than $600.
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Dollar's golden era is ending, warns Soros
The billionaire investor famous for "breaking" the Bank of England in the 1990s has warned that Britain is heading for a recession.
George Soros said that a recession in both the United States and Britain "will be very difficult to avoid". He was speaking on the fringes of the World Economic Forum summit in Davos, Switzerland, where many of the world's top politicians and businessmen are meeting.
The warning is significant, since although many of the major investment banks now agree that the US is set to suffer a recession, most economists have predicted that Britain's fortunes will be far better.
His warning came less than 24 hours after the US Federal Reserve used an emergency three-quarter percentage point cut in interest rates to try to prevent the world's biggest economy slumping dramatically.
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George Soros said that a recession in both the United States and Britain "will be very difficult to avoid". He was speaking on the fringes of the World Economic Forum summit in Davos, Switzerland, where many of the world's top politicians and businessmen are meeting.
The warning is significant, since although many of the major investment banks now agree that the US is set to suffer a recession, most economists have predicted that Britain's fortunes will be far better.
His warning came less than 24 hours after the US Federal Reserve used an emergency three-quarter percentage point cut in interest rates to try to prevent the world's biggest economy slumping dramatically.
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Recession 2008: How bad it can get
Many economists are predicting a short, shallow recession. But there's also a significant risk of a more serious economic decline.
The sputtering U.S. economy has gotten everyone from the financial markets to the Federal Reserve to Congress in a panic.
But here's a disheartening message for those already worried about economic growth -- it could get much worse.
Most economists who believe a recession is already here or at least near are looking for a relatively short and mild downturn, perhaps lasting only two or three quarters.
But many of those same economists say they also can envision a worst-case scenario where spending by consumers and businesses falls off sharply, unemployment heads higher than normal during a typical recession and housing and credit market problems worsen.
"I can easily imagine [the economy] going into a free fall," said Dean Baker, the chief economist for the Center for Economic and Policy Research. "The danger is that housing prices continue to tumble and accelerate, people's ability to pull out equity will evaporate, and you'll see a serious downturn in consumption."
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The sputtering U.S. economy has gotten everyone from the financial markets to the Federal Reserve to Congress in a panic.
But here's a disheartening message for those already worried about economic growth -- it could get much worse.
Most economists who believe a recession is already here or at least near are looking for a relatively short and mild downturn, perhaps lasting only two or three quarters.
But many of those same economists say they also can envision a worst-case scenario where spending by consumers and businesses falls off sharply, unemployment heads higher than normal during a typical recession and housing and credit market problems worsen.
"I can easily imagine [the economy] going into a free fall," said Dean Baker, the chief economist for the Center for Economic and Policy Research. "The danger is that housing prices continue to tumble and accelerate, people's ability to pull out equity will evaporate, and you'll see a serious downturn in consumption."
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Wednesday, January 23, 2008
Political talk won't bring back textile jobs
Candidates can debate restoring jobs, but textile numbers are reason for pessimism
Now that the economy has become such an issue in the presidential campaign, candidates are rushing to stake out positions on what they would and would not do to give things a boost.
A notable debate came in Michigan when former Massachusetts Gov. Mitt Romney and Arizona Sen. John McCain took opposing positions on the future of the auto industry. Romney insisted jobs lost in Detroit can be restored. McCain countered that the jobs are gone for good and there must be retraining of workers for other jobs.
Romney is a wealthy businessman whose father was a force in the auto industry but it is doubtful that he as president could deliver on returning the auto industry in the United States to its golden age in terms of providing jobs. Automation alone has taken many, but it is the nature of corporate America now to do away with every job possible.
McCain may be on target about retraining, but the money needed to accomplish a major mission just isn't available from Washington.
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Now that the economy has become such an issue in the presidential campaign, candidates are rushing to stake out positions on what they would and would not do to give things a boost.
A notable debate came in Michigan when former Massachusetts Gov. Mitt Romney and Arizona Sen. John McCain took opposing positions on the future of the auto industry. Romney insisted jobs lost in Detroit can be restored. McCain countered that the jobs are gone for good and there must be retraining of workers for other jobs.
Romney is a wealthy businessman whose father was a force in the auto industry but it is doubtful that he as president could deliver on returning the auto industry in the United States to its golden age in terms of providing jobs. Automation alone has taken many, but it is the nature of corporate America now to do away with every job possible.
McCain may be on target about retraining, but the money needed to accomplish a major mission just isn't available from Washington.
Read Complete Story
Budget deficit expected to reach $250B
Slowing economy and cost of wars are expected to send the 2008 budget deficit to $250 billion, compared with $163 billion last year.
The deficit for the current budget year will jump to about $250 billion, the Congressional Budget Office estimated Wednesday, citing the weakening economy. And that figure does not reflect at least $100 billion in red ink from an economic stimulus measure in the works.
"After three years of declining budget deficits, a slowing economy this year will contribute to an increase in the deficit," the CBO report said.
The figure greatly exceeds the $163 billion in red ink registered last year. Adding likely but still unapproved outlays for the wars in Iraq and Afghanistan brings its "baseline" deficit estimate of $219 billion to about $250 billion, the nonpartisan CBO said.
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The deficit for the current budget year will jump to about $250 billion, the Congressional Budget Office estimated Wednesday, citing the weakening economy. And that figure does not reflect at least $100 billion in red ink from an economic stimulus measure in the works.
"After three years of declining budget deficits, a slowing economy this year will contribute to an increase in the deficit," the CBO report said.
The figure greatly exceeds the $163 billion in red ink registered last year. Adding likely but still unapproved outlays for the wars in Iraq and Afghanistan brings its "baseline" deficit estimate of $219 billion to about $250 billion, the nonpartisan CBO said.
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Current market crisis is 'worst in 60 years': Soros
The current crisis in the world financial markets is the worst "in 60 years", billionaire investor George Soros wrote in the Financial Times today.
In his comment piece, Soros warned that while a global recession could be held off by strong growth rates in the developing world, the danger was that the resulting political tension from a rebalancing of international economic power could "plunge the world into recession or worse".
His remarks come after the US Federal Reserve surprised observers by cutting interest rates by 75 basis points to 3.50 per cent, providing some much-needed relief to battered financial markets that had suffered heavy losses in recent days.
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In his comment piece, Soros warned that while a global recession could be held off by strong growth rates in the developing world, the danger was that the resulting political tension from a rebalancing of international economic power could "plunge the world into recession or worse".
His remarks come after the US Federal Reserve surprised observers by cutting interest rates by 75 basis points to 3.50 per cent, providing some much-needed relief to battered financial markets that had suffered heavy losses in recent days.
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California loan defaults hit 15-year high
Default notices were up 114 percent in the fourth quarter - compared to 2006 - the highest level since 1992, says report.
The number of California homeowners who fell behind on their mortgage payments surged in the fourth quarter of 2007 to a 15-year high, heightening the possibility of a jump in foreclosures, a real estate research firm said Tuesday.
A total of 81,550 default notices were sent to homeowners statewide between October and December, up 12.4 percent from the previous quarter and an increase of more than 114 percent versus the same quarter in 2006, according to DataQuick Information Systems.
Last quarter's tally of default notices is the highest recorded by DataQuick, whose records go back to 1992.
The notices serve as an early indicator of possible foreclosures.
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The number of California homeowners who fell behind on their mortgage payments surged in the fourth quarter of 2007 to a 15-year high, heightening the possibility of a jump in foreclosures, a real estate research firm said Tuesday.
A total of 81,550 default notices were sent to homeowners statewide between October and December, up 12.4 percent from the previous quarter and an increase of more than 114 percent versus the same quarter in 2006, according to DataQuick Information Systems.
Last quarter's tally of default notices is the highest recorded by DataQuick, whose records go back to 1992.
The notices serve as an early indicator of possible foreclosures.
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The Financial Tsunami and the Evolving Economic Crisis: Greenspan’s Grand Design
Seven years of Volcker monetary “shock therapy” had ignited a payments crisis across the Third World. Billions of dollars in recycled petrodollar debts loaned by major New York and London banks to finance oil imports after the oil price rises of the 1970’s, suddenly became non-payable.
The stage was now set for the next phase in the Rockefeller financial deregulation agenda. It was to come in the form of a revolution in the very nature of what would be considered money—the Greenspan “New Finance” Revolution.
Many analysts of the Greenspan era focus on the wrong facet of his role, and assume he was primarily a public servant who made mistakes, but in the end always saved the day and the nation’s economy and banks, through extraordinary feats of financial crisis management, winning the appellation, Maestro.1
Maestro serves the Money Trust
Alan Greenspan, as every Chairman of the Board of Governors of the Federal Reserve System was a carefully-picked institutionally loyal servant of the actual owners of the Federal Reserve: the network of private banks, insurance companies, investment banks which created the Fed and rushed in through an almost empty Congress the day before Christmas recess in December 1913. In Lewis v. United States, the United States Court of Appeals for the Ninth Circuit stated that "the Reserve Banks are not federal instrumentalities…but are independent, privately owned and locally controlled corporations." 2
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The stage was now set for the next phase in the Rockefeller financial deregulation agenda. It was to come in the form of a revolution in the very nature of what would be considered money—the Greenspan “New Finance” Revolution.
Many analysts of the Greenspan era focus on the wrong facet of his role, and assume he was primarily a public servant who made mistakes, but in the end always saved the day and the nation’s economy and banks, through extraordinary feats of financial crisis management, winning the appellation, Maestro.1
Maestro serves the Money Trust
Alan Greenspan, as every Chairman of the Board of Governors of the Federal Reserve System was a carefully-picked institutionally loyal servant of the actual owners of the Federal Reserve: the network of private banks, insurance companies, investment banks which created the Fed and rushed in through an almost empty Congress the day before Christmas recess in December 1913. In Lewis v. United States, the United States Court of Appeals for the Ninth Circuit stated that "the Reserve Banks are not federal instrumentalities…but are independent, privately owned and locally controlled corporations." 2
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For Millions Of Americans, Economic Crisis Is Old News
Things are looking grim for the U.S. economy these days, the politicians and the MSM pundits tell us.
I'm glad they finally noticed. The fact is, tens of millions of Americans have already been living through increasingly lean times over the past decade.
It took a stock market crisis for the Wall Street crowd to finally notice that the nation's economy is going down the tubes.
But that's hardly news for millions of average American workers, who've seen their incomes stagnate since 1980.
For years, the pundits and the politicians celebrated "strong" economic growth when the rest of us were wondering what they were talking about. The pundits also cheered America's low jobless rate. But the rest of us knew it was all a sham, in an era when millions of jobs pay such low wages that nobody could possibly live on them.
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I'm glad they finally noticed. The fact is, tens of millions of Americans have already been living through increasingly lean times over the past decade.
It took a stock market crisis for the Wall Street crowd to finally notice that the nation's economy is going down the tubes.
But that's hardly news for millions of average American workers, who've seen their incomes stagnate since 1980.
For years, the pundits and the politicians celebrated "strong" economic growth when the rest of us were wondering what they were talking about. The pundits also cheered America's low jobless rate. But the rest of us knew it was all a sham, in an era when millions of jobs pay such low wages that nobody could possibly live on them.
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This is Recession 2008 Rearing its ugly head
Stock Markets around the world tumbled Monday on fears of a U.S. recession, as Wall Street was off for Martin Luther King Jr. day.
In response to the shocking fall in world markets, the Fed held an emergency telephone conference Monday night, deciding to cut two key interest rates - the fed funds and the discount rate- to quell the brewing panic.
But the band-aid could not cover the bullet wound.
Early this morning the Dow Jones Industrial plummeted 500 points - as investors scrambled to join the world-wide sell-off. Now the Dow has rebounded from its morning lows but still is suffering triple digit losses.
This is recession 2008, the result of subprime, housing bubble and outsourcing rearing its ugly head. This is the mess we created through financial schemes that threaten to foreclose millions and possibly drag the entire world into a recession.
We have become a nation in debt- from personal savings rates that hit a post Great Depression low of negative .5% in 2005 to a growing national deficit propped up by foreign nations. At the same time, our manufacturing base has been decimated and rendered unable to compete in the world, closing down factories and putting American’s into lower paying service jobs with poorer benefits. Still more, Americans were lured by teaser mortgage rates to buy the unaffordable, and deceived by skyrocketing housing values to believe they were worth more than they actually were.
Read Complete Story
In response to the shocking fall in world markets, the Fed held an emergency telephone conference Monday night, deciding to cut two key interest rates - the fed funds and the discount rate- to quell the brewing panic.
But the band-aid could not cover the bullet wound.
Early this morning the Dow Jones Industrial plummeted 500 points - as investors scrambled to join the world-wide sell-off. Now the Dow has rebounded from its morning lows but still is suffering triple digit losses.
This is recession 2008, the result of subprime, housing bubble and outsourcing rearing its ugly head. This is the mess we created through financial schemes that threaten to foreclose millions and possibly drag the entire world into a recession.
We have become a nation in debt- from personal savings rates that hit a post Great Depression low of negative .5% in 2005 to a growing national deficit propped up by foreign nations. At the same time, our manufacturing base has been decimated and rendered unable to compete in the world, closing down factories and putting American’s into lower paying service jobs with poorer benefits. Still more, Americans were lured by teaser mortgage rates to buy the unaffordable, and deceived by skyrocketing housing values to believe they were worth more than they actually were.
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Tuesday, January 22, 2008
Investors Spooked worldwide on fears of US recession (video)
Around the world markets are dropping and fear is gripping investors from Wall Street to Hong Kong- what the heck is going on?!
Video
Video
Soros: world faces worst finance crisis since WW2
Billionaire investor George Soros said the world was facing the worst financial crisis since World War Two and the United States was threatened with recession, according to an interview with the Austrian daily Standard.
"The situation is much more serious than any other financial crisis since the end of World War Two," Soros was quoted as saying.
He said over the past few years politics had been guided by some basic misunderstandings stemming from something which he called "market fundamentalism" -- the belief financial markets tended to act as a balance.
"This is the wrong idea," he said. "We really do have a serious financial crisis now."
Asked whether he thought the United States was headed for a recession, he said: "Yes, this is a threat in the United States".
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"The situation is much more serious than any other financial crisis since the end of World War Two," Soros was quoted as saying.
He said over the past few years politics had been guided by some basic misunderstandings stemming from something which he called "market fundamentalism" -- the belief financial markets tended to act as a balance.
"This is the wrong idea," he said. "We really do have a serious financial crisis now."
Asked whether he thought the United States was headed for a recession, he said: "Yes, this is a threat in the United States".
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Jobs are Sparse in the Wal-Mart Economy
Economists worry over the decline of the American consumer, but what about the decline of the American worker?
It's a story told in towns across America: middle-class jobs are vanishing. Where once there were steel mills and auto plants, abandoned factories and Wal-Mart stores now stand. Companies that once employed hundreds of thousands of U.S. workers are now manufacturing overseas, abandoning not just individual workers, but entire communities.
Wal-Mart, and the companies that copy its business model, are largely responsible for the loss of these jobs. Wal-Mart's demands for ever-lower costs have forced dozens of American companies to stop producing in the U.S. and move operations overseas, where labor is cheaper and safety regulations are lax. The company often justifies these business practices as a necessary evil, claiming to save consumers money on the other end. On the heels of one of the worst retail holiday seasons in recent memory because Americans are losing their jobs, losing their homes, trying to pay for health care and worrying about a recession, it is evident that Wal-Mart's logic is deeply flawed. At some point we have to face facts: more and more Americans are skimming the edge of poverty.
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It's a story told in towns across America: middle-class jobs are vanishing. Where once there were steel mills and auto plants, abandoned factories and Wal-Mart stores now stand. Companies that once employed hundreds of thousands of U.S. workers are now manufacturing overseas, abandoning not just individual workers, but entire communities.
Wal-Mart, and the companies that copy its business model, are largely responsible for the loss of these jobs. Wal-Mart's demands for ever-lower costs have forced dozens of American companies to stop producing in the U.S. and move operations overseas, where labor is cheaper and safety regulations are lax. The company often justifies these business practices as a necessary evil, claiming to save consumers money on the other end. On the heels of one of the worst retail holiday seasons in recent memory because Americans are losing their jobs, losing their homes, trying to pay for health care and worrying about a recession, it is evident that Wal-Mart's logic is deeply flawed. At some point we have to face facts: more and more Americans are skimming the edge of poverty.
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Global economic crisis 'serious': IMF Chief
Investors skeptical of U.S. stimulus package, says IMF's Strauss-Kahn; an American recession would spread globally, he warns.
The head of the International Monetary Fund called the global economic situation "serious" and said markets worldwide had responded skeptically to a U.S. stimulus plan.
Dominique Strauss-Kahn stressed that a U.S. recession would affect economies across the globe.
"The situation is ... serious," said Strauss-Kahn following a meeting in Paris with French President Nicolas Sarkozy. "All the countries in the world are suffering from a slowdown in growth in the United States."
He said investors were skeptical that an economic stimulus plan presented last Friday by U.S. President George W. Bush would shore up the economy, which has been battered by problems in its housing and credit markets. The plan, which requires approval by Congress, calls for about $145 billion worth of tax relief to encourage consumer spending.
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The head of the International Monetary Fund called the global economic situation "serious" and said markets worldwide had responded skeptically to a U.S. stimulus plan.
Dominique Strauss-Kahn stressed that a U.S. recession would affect economies across the globe.
"The situation is ... serious," said Strauss-Kahn following a meeting in Paris with French President Nicolas Sarkozy. "All the countries in the world are suffering from a slowdown in growth in the United States."
He said investors were skeptical that an economic stimulus plan presented last Friday by U.S. President George W. Bush would shore up the economy, which has been battered by problems in its housing and credit markets. The plan, which requires approval by Congress, calls for about $145 billion worth of tax relief to encourage consumer spending.
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Manufacturing Jobs Can Heal The Economy
There is more to the current recession than subprime and tightening credit markets. A major contributor to our current debt ridden, import dependent way of life is America’s abandonment of manufacturing….
From the Detroit Free Press
“As the U.S. economy slides inexorably toward recession, China continues to boom. A major reason for this stunning divergence in fortunes is the ongoing transfer of millions of American manufacturing jobs to China. To restore the health of the American economy, it follows that we must resuscitate our once dominant manufacturing sector and reclaim those jobs.
Unfortunately, the importance of U.S. manufacturing as an anti-recessionary tool has been totally lost on both Washington policymakers and our bumper crop of presidential candidates. This is true even as the Midwest and many other heavy manufacturing pockets of the country continue to endure some of the hardest times in 50 years.
…
The most productive, literally, anti-recession tool would be to restore America's competitive manufacturing edge. For those who have little faith in American industry's ability to compete, consider the remarkable technological makeover of the Rust Belt steel industry, which has been one of the hottest plays on Wall Street for the past five years. This industry has added $350 billion and 1.2 million direct and indirect jobs to the economy.
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From the Detroit Free Press
“As the U.S. economy slides inexorably toward recession, China continues to boom. A major reason for this stunning divergence in fortunes is the ongoing transfer of millions of American manufacturing jobs to China. To restore the health of the American economy, it follows that we must resuscitate our once dominant manufacturing sector and reclaim those jobs.
Unfortunately, the importance of U.S. manufacturing as an anti-recessionary tool has been totally lost on both Washington policymakers and our bumper crop of presidential candidates. This is true even as the Midwest and many other heavy manufacturing pockets of the country continue to endure some of the hardest times in 50 years.
…
The most productive, literally, anti-recession tool would be to restore America's competitive manufacturing edge. For those who have little faith in American industry's ability to compete, consider the remarkable technological makeover of the Rust Belt steel industry, which has been one of the hottest plays on Wall Street for the past five years. This industry has added $350 billion and 1.2 million direct and indirect jobs to the economy.
Read Complete Story
Monday, January 21, 2008
London shares in biggest fall since 9/11
Shares in London plunged today following heavy losses in Asia overnight, as intensifying fears over the state of the US economy triggered a wave of selling and talk of market meltdown.
The FTSE 100 index of leading shares was a sea of red, opening nearly 3% lower this morning and steadily ploughing new depths.
It closed at 5578.2 points, down 323.5 points or 5.48% on the day. That is the biggest percentage fall since September 11 2001, and the largest fall in points terms ever, wiping tens of billions of pounds off the value of Britain's biggest companies.
Miners and financial institutions were among the biggest fallers, as investors were unimpressed by a stimulus package for the ailing US economy announced by George Bush on Friday.
Only four FTSE 100 companies ended up higher than they started the day, led by insurer Friends Provident. It finished 3.6% higher at 158p after US private equity firm JC Flowers confirmed it was considering a takeover bid.
Northern Rock was a rare riser on the FTSE 250, gaining 46% to 90.8p on the back of the government's plan to turn its loans into bonds.
Tim Hughes, head of sales trading at IG Index, said it had been an "incredible day of trading".
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The FTSE 100 index of leading shares was a sea of red, opening nearly 3% lower this morning and steadily ploughing new depths.
It closed at 5578.2 points, down 323.5 points or 5.48% on the day. That is the biggest percentage fall since September 11 2001, and the largest fall in points terms ever, wiping tens of billions of pounds off the value of Britain's biggest companies.
Miners and financial institutions were among the biggest fallers, as investors were unimpressed by a stimulus package for the ailing US economy announced by George Bush on Friday.
Only four FTSE 100 companies ended up higher than they started the day, led by insurer Friends Provident. It finished 3.6% higher at 158p after US private equity firm JC Flowers confirmed it was considering a takeover bid.
Northern Rock was a rare riser on the FTSE 250, gaining 46% to 90.8p on the back of the government's plan to turn its loans into bonds.
Tim Hughes, head of sales trading at IG Index, said it had been an "incredible day of trading".
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U.S. Recession Spurs Slip In Global Stock Markets
News of a possible recession in the United States led to lower major global stock markets. From London to Tokyo, drops in indices were reported.
In Europe, London's FTSE slid by 3.6 percent to 5685.2, while Paris' Cac-40 suffered a 6.7 percent decline and Frankfurt's Dax fell 5.4 percent.
Asian markets also reflected a downturn. Tokyo's Nikkei 225 index dipped by 3.9 percent, its lowest decline since October 2005, while India's Sensex tumbled by 7.4 percent. Hong Kong's Hang Seng index showed a 5.5 percent slip to 23,818.86. This is the Special Administrative Region's second largest percentage decline since Sept. 11, 2001.
Similar downtrends were reported in South Korea, Australia, Singapore, Taiwan and the Philippines.
"People are certainly nervous about a potential recession in the U.S. spilling over to the rest of the world," David Cohen, director of the Asian Economic Forecasting at Action Economics in Singapore, told the BBC.
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In Europe, London's FTSE slid by 3.6 percent to 5685.2, while Paris' Cac-40 suffered a 6.7 percent decline and Frankfurt's Dax fell 5.4 percent.
Asian markets also reflected a downturn. Tokyo's Nikkei 225 index dipped by 3.9 percent, its lowest decline since October 2005, while India's Sensex tumbled by 7.4 percent. Hong Kong's Hang Seng index showed a 5.5 percent slip to 23,818.86. This is the Special Administrative Region's second largest percentage decline since Sept. 11, 2001.
Similar downtrends were reported in South Korea, Australia, Singapore, Taiwan and the Philippines.
"People are certainly nervous about a potential recession in the U.S. spilling over to the rest of the world," David Cohen, director of the Asian Economic Forecasting at Action Economics in Singapore, told the BBC.
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Americans: Recession near - or already here
More than three out of four Americans believe that a recession has already started or will hit in '08. Half have cut their spending, which could make a slowdown worse.
More than three in four Americans believe the U.S. economy is already in a recession, or will be sometime in 2008. That's according to a comprehensive poll commissioned this week by Fortune Magazine.
Only 19 percent of 1,000 Americans surveyed believe the nation will avoid a recession, while 57 percent believe that there will be a downturn this year. Another 19 percent believe the nation is already in a recession.
What's worse for the economic outlook, just about half of those surveyed say that they've cut back their spending compared to last year.
These results indicate a far gloomier outlook than economists anticipated.
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More than three in four Americans believe the U.S. economy is already in a recession, or will be sometime in 2008. That's according to a comprehensive poll commissioned this week by Fortune Magazine.
Only 19 percent of 1,000 Americans surveyed believe the nation will avoid a recession, while 57 percent believe that there will be a downturn this year. Another 19 percent believe the nation is already in a recession.
What's worse for the economic outlook, just about half of those surveyed say that they've cut back their spending compared to last year.
These results indicate a far gloomier outlook than economists anticipated.
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"Help Wanted" highlights skills drain in U.S
TRAFFORD, Pennsylvania (Reuters) - Only half the machines are running at precision parts maker Hamill Manufacturing, nestled in the Allegheny Mountains just east of Pittsburgh, once the booming center of the U.S. steel industry.
But the factory's overcapacity is the result not of a shortage of business -- it has more orders than it can fill, despite a slowing U.S. economy -- but because of a shortage of skilled workers.
"I'd hire 10 machinists right now if I could," said John Dalrymple, president of the company, which makes high-end parts for military helicopters and nuclear submarines. "That's eight to 10 percent of our workforce."
While millions of jobs making everything from textiles to steel have moved to new powerhouses like China in recent years, precision manufacturing remains a crucial niche in the United States, one that is overworked and chronically understaffed.
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But the factory's overcapacity is the result not of a shortage of business -- it has more orders than it can fill, despite a slowing U.S. economy -- but because of a shortage of skilled workers.
"I'd hire 10 machinists right now if I could," said John Dalrymple, president of the company, which makes high-end parts for military helicopters and nuclear submarines. "That's eight to 10 percent of our workforce."
While millions of jobs making everything from textiles to steel have moved to new powerhouses like China in recent years, precision manufacturing remains a crucial niche in the United States, one that is overworked and chronically understaffed.
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Friday, January 18, 2008
Homebuilding: Sharpest drop in 27 years
Steeper than expected plunge in December ends year that saw homebuilding, permits post declines not seen since past recessions.
Housing starts and building permits plunged in December much more than expected, resulting in a full-year decline in new home construction that was the sharpest drop in 27 years.
And there is little sign things will get better soon. According to government data released Thursday, the full-year total for building permits posted the biggest drop in 33 years. The sharp dropoff in building is one of the reasons that many leading economists are growing increasingly fearful that an economic recession is near, if it hasn't already struck.
The pace of housing starts in December dropped 14 percent to a seasonally-adjusted annual rate of 1.01 million in December, according to the Census Bureau report.
That figure is down from the 1.17 million November reading, which was also revised lower. Economists surveyed by Briefing.com had forecast the annual pace of starts would fall to 1.15 million in the latest reading.
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Housing starts and building permits plunged in December much more than expected, resulting in a full-year decline in new home construction that was the sharpest drop in 27 years.
And there is little sign things will get better soon. According to government data released Thursday, the full-year total for building permits posted the biggest drop in 33 years. The sharp dropoff in building is one of the reasons that many leading economists are growing increasingly fearful that an economic recession is near, if it hasn't already struck.
The pace of housing starts in December dropped 14 percent to a seasonally-adjusted annual rate of 1.01 million in December, according to the Census Bureau report.
That figure is down from the 1.17 million November reading, which was also revised lower. Economists surveyed by Briefing.com had forecast the annual pace of starts would fall to 1.15 million in the latest reading.
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US Fed Chief Endorses Swift Stimulus Package
The head of the U.S. central bank says America's economy is slowing and that a short-term economic stimulus package would be beneficial to spur growth and help avoid the risk of a recession. VOA's Michael Bowman reports from Washington, where Federal Reserve Chairman Ben Bernanke testified on Capitol Hill.
A recent string of sobering economic news - including lower growth rates, higher unemployment and runaway energy costs - has made economic stimulus a hot topic in Washington and beyond. Leaders of both political parties, as well as most presidential candidates and even the White House, are now on record urging action to spur the economy and aid those who are suffering in the current economic environment.
Addressing the House Budget Committee, Fed Chairman Bernanke cautiously added his voice to the growing chorus.
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A recent string of sobering economic news - including lower growth rates, higher unemployment and runaway energy costs - has made economic stimulus a hot topic in Washington and beyond. Leaders of both political parties, as well as most presidential candidates and even the White House, are now on record urging action to spur the economy and aid those who are suffering in the current economic environment.
Addressing the House Budget Committee, Fed Chairman Bernanke cautiously added his voice to the growing chorus.
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Manufacturing report at 6-year low
Survey from the Federal Reserve Bank of Philadelphia is weakest since just after the 9/11 attacks.
Manufacturing activity in the Philadelphia area this month reached its lowest level since October 2001, a month after the 9/11 terrorist attacks, according to a report issued Thursday.
The Federal Reserve Bank of Philadelphia's Business Outlook Survey index weakened to -20.9 in January from -1.6 last month, the bank said.
Demand for manufactured goods, indicated by the number of new orders, reached its first negative level in 15 months, the bank said. The number of shipments also declined in the report.
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Manufacturing activity in the Philadelphia area this month reached its lowest level since October 2001, a month after the 9/11 terrorist attacks, according to a report issued Thursday.
The Federal Reserve Bank of Philadelphia's Business Outlook Survey index weakened to -20.9 in January from -1.6 last month, the bank said.
Demand for manufactured goods, indicated by the number of new orders, reached its first negative level in 15 months, the bank said. The number of shipments also declined in the report.
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US economy has lost momentum; recession fears persist: Somber Fed
Retailers, home builders and many manufacturers should brace for even more rough times ahead, a somber Federal Reserve suggests amid growing fears that the US might be sliding into recession.
The Fed's snapshot of business conditions showed a national economy losing momentum heading into the new year and a future riddled with uncertainty. The persistent housing slump and harder-to-get credit are making people and businesses ever more cautious, it said.
Separately on Wednesday, the Labor Department reported that US consumer prices rose in 2007 at the fastest pace in 17 years in 2007, by 4.1 percent, as motorists paid a lot more for gasoline and grocery shoppers paid higher food bills.
Also, more big banks reported losses and said people were having trouble making payments for everything from credit cards to cars. Stocks were mostly down Wednesday, the Dow Jones industrial average declining 34.95 points, or 0.28 percent.
The Fed report was the unwelcome icing on a recent batch of economic indicators _ ranging from a plunge in retail sales to a big jump in unemployment _ raising concern that the country is heading for its first recession since 2001.
At the beginning of last year, many economists put the chance of a recession at less than 1-in-3; now an increasing number say 50-50 or even worse. Goldman Sachs, the biggest investment bank on Wall Street, thinks a recession is inevitable this year.
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The Fed's snapshot of business conditions showed a national economy losing momentum heading into the new year and a future riddled with uncertainty. The persistent housing slump and harder-to-get credit are making people and businesses ever more cautious, it said.
Separately on Wednesday, the Labor Department reported that US consumer prices rose in 2007 at the fastest pace in 17 years in 2007, by 4.1 percent, as motorists paid a lot more for gasoline and grocery shoppers paid higher food bills.
Also, more big banks reported losses and said people were having trouble making payments for everything from credit cards to cars. Stocks were mostly down Wednesday, the Dow Jones industrial average declining 34.95 points, or 0.28 percent.
The Fed report was the unwelcome icing on a recent batch of economic indicators _ ranging from a plunge in retail sales to a big jump in unemployment _ raising concern that the country is heading for its first recession since 2001.
At the beginning of last year, many economists put the chance of a recession at less than 1-in-3; now an increasing number say 50-50 or even worse. Goldman Sachs, the biggest investment bank on Wall Street, thinks a recession is inevitable this year.
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Scramble for cash
Devastated by tightening credit markets and the mortgage mess, Wall Street firms have sent out an S.O.S.
Their cries have been answered in large part by overseas investors, which have agreed to inject billions of dollars into America's biggest banks.
The rescue effort has been led by investment funds run by foreign governments, also known as sovereign wealth funds, which have forged a string of deals in recent months.
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Their cries have been answered in large part by overseas investors, which have agreed to inject billions of dollars into America's biggest banks.
The rescue effort has been led by investment funds run by foreign governments, also known as sovereign wealth funds, which have forged a string of deals in recent months.
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U.S. economy teeters on the brink
Bush and Federal Reserve chairman endorse $100-billion package in effort to prevent recession as housing mess hammers banks, consumers and investors
In a bid to save the world's largest economy from recession, U.S. President George W. Bush and central bank chief Ben Bernanke yesterday endorsed a $100-billion stimulus package as the spreading housing mess continued to hammer banks, consumers and investors.
The rare plug for fiscal action comes as a growing number of economists say the United States is either in recession or perilously close to it. “The United States has now effectively entered into a serious and painful recession,” said economist Nouriel Roubini of New York University.
Prof. Roubini said all of the keys to economic health are headed in the wrong direction, including the housing market, credit availability, the job market and business spending. Add to that a run-up in oil and gas prices, and the consumer is likely to take it on the chin in 2008, he said.
Another major Wall Street investment bank acknowledged yesterday that it vastly underestimated the cost of its misadventures in the subprime mortgage market. Merrill Lynch & Co. – the world's largest stockbroker and one of the major backers of mortgage bonds – reported the worst quarter in its history, losing $9.8-billion (U.S.) in the final three months of last year and wiping more than $16-billion worth of bad loans off its books. That raises Merrill's housing-related losses to nearly $24-billion in 2007.
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In a bid to save the world's largest economy from recession, U.S. President George W. Bush and central bank chief Ben Bernanke yesterday endorsed a $100-billion stimulus package as the spreading housing mess continued to hammer banks, consumers and investors.
The rare plug for fiscal action comes as a growing number of economists say the United States is either in recession or perilously close to it. “The United States has now effectively entered into a serious and painful recession,” said economist Nouriel Roubini of New York University.
Prof. Roubini said all of the keys to economic health are headed in the wrong direction, including the housing market, credit availability, the job market and business spending. Add to that a run-up in oil and gas prices, and the consumer is likely to take it on the chin in 2008, he said.
Another major Wall Street investment bank acknowledged yesterday that it vastly underestimated the cost of its misadventures in the subprime mortgage market. Merrill Lynch & Co. – the world's largest stockbroker and one of the major backers of mortgage bonds – reported the worst quarter in its history, losing $9.8-billion (U.S.) in the final three months of last year and wiping more than $16-billion worth of bad loans off its books. That raises Merrill's housing-related losses to nearly $24-billion in 2007.
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Thursday, January 17, 2008
CAFTA: The Jobs Killer Canard
It’s official. With the trade data just released today by the U.S. Department of Commerce, the U.S. trade balance in manufactured goods with CAFTA (Central American and Dominican Republic Free Trade Agreement), has registered a $2 billion trade surplus. This is a sharp reversal from the pre-CAFTA situation, where in the years before the passage of the CAFTA agreement we averaged an annual manufactured goods trade deficit of about -$1.5 billion.
This agreement is the one that isolationist organizations have called “the job killer.” Just before the Congressional vote on CAFTA, one of these groups pronounced, “Like NAFTA, CAFTA is just another outsourcing agreement that will devastate U.S. manufacturing…CAFTA is a continuation of the failed NAFTA policy that drives our rising trade deficit and mounting job losses.”
This was always a silly statement, because the CAFTA countries already had one-way free trade into the U.S. market. The big deal in CAFTA was that in exchange for making their access to the U.S. market permanent, they would eliminate their trade barriers to Made-in-the-USA products. How we could lose in such a deal is beyond me.
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This agreement is the one that isolationist organizations have called “the job killer.” Just before the Congressional vote on CAFTA, one of these groups pronounced, “Like NAFTA, CAFTA is just another outsourcing agreement that will devastate U.S. manufacturing…CAFTA is a continuation of the failed NAFTA policy that drives our rising trade deficit and mounting job losses.”
This was always a silly statement, because the CAFTA countries already had one-way free trade into the U.S. market. The big deal in CAFTA was that in exchange for making their access to the U.S. market permanent, they would eliminate their trade barriers to Made-in-the-USA products. How we could lose in such a deal is beyond me.
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US Lawmakers Pledge Bipartisan Steps to Bolster US Economy
Amid concerns about the U.S. economy and a potential recession, U.S. lawmakers are discussing a possible economic stimulus package aimed at easing burdens on Americans. Majority Democrats in the House of Representatives say they intend to work with Republicans and the Bush administration, and will meet with President Bush next week. VOA's Dan Robinson reports from Capitol Hill.
Democratic House speaker Nancy Pelosi says it's clear the U.S. economy is in a serious downturn. Appearing with other key Democrats, she said congressional leaders have made a decision to move ahead with a stimulus package:
"To put forth a stimulus package that will be timely, that will be temporary, and will be targeted to middle and low income families so that they can spend the money to inject demand into the economy, create jobs, ease the pain in their lives," said Pelosi.
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Democratic House speaker Nancy Pelosi says it's clear the U.S. economy is in a serious downturn. Appearing with other key Democrats, she said congressional leaders have made a decision to move ahead with a stimulus package:
"To put forth a stimulus package that will be timely, that will be temporary, and will be targeted to middle and low income families so that they can spend the money to inject demand into the economy, create jobs, ease the pain in their lives," said Pelosi.
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Fix economy with manufacturing jobs
As the U.S. economy slides inexorably toward recession, China continues to boom. A major reason for this stunning divergence in fortunes is the ongoing transfer of millions of American manufacturing jobs to China. To restore the health of the American economy, it follows that we must resuscitate our once dominant manufacturing sector and reclaim those jobs.
Unfortunately, the importance of U.S. manufacturing as an anti-recessionary tool has been totally lost on both Washington policymakers and our bumper crop of presidential candidates. This is true even as the Midwest and many other heavy manufacturing pockets of the country continue to endure some of the hardest times in 50 years.
Consider the Federal Reserve. Its recession "solution" is to feverishly cut interest rates and throw open wide the credit spigot. With the dollar hitting fresh lows, this easy money policy has merely debased our currency.
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Unfortunately, the importance of U.S. manufacturing as an anti-recessionary tool has been totally lost on both Washington policymakers and our bumper crop of presidential candidates. This is true even as the Midwest and many other heavy manufacturing pockets of the country continue to endure some of the hardest times in 50 years.
Consider the Federal Reserve. Its recession "solution" is to feverishly cut interest rates and throw open wide the credit spigot. With the dollar hitting fresh lows, this easy money policy has merely debased our currency.
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Net foreign capital inflows to U.S. jump
Net foreign capital inflows into the United States jumped 62 percent in November to $149.9 billion, reaching their highest level since January 2006.
The boost, reported by the U.S. Treasury Department Wednesday, signals a revival in foreign demand for U.S. securities and is a stark turnaround from August and September, when outside interest was dismal. Responding to the credit market crisis in August, foreigners were selling off their interest in U.S. long-term securities, leading to an outflow of $150.5 billion that month.
The strong data for November represent "a full 180-degree swing" from the peak of the credit market crisis in August, Global Insight U.S. Economist Brian Bethune said in commentary.
"Overall, this is a positive report, notwithstanding all of the negative news in the financial markets that seems to be grabbing the headlines in recent days."
Financial market analysts consider the Treasury's monthly Treasury International Capital report data to be a significant but imprecise gauge of how easily the United States can finance its trade deficit.
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The boost, reported by the U.S. Treasury Department Wednesday, signals a revival in foreign demand for U.S. securities and is a stark turnaround from August and September, when outside interest was dismal. Responding to the credit market crisis in August, foreigners were selling off their interest in U.S. long-term securities, leading to an outflow of $150.5 billion that month.
The strong data for November represent "a full 180-degree swing" from the peak of the credit market crisis in August, Global Insight U.S. Economist Brian Bethune said in commentary.
"Overall, this is a positive report, notwithstanding all of the negative news in the financial markets that seems to be grabbing the headlines in recent days."
Financial market analysts consider the Treasury's monthly Treasury International Capital report data to be a significant but imprecise gauge of how easily the United States can finance its trade deficit.
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US banks announce job losses
Citigroup and Bank of America have announced job cuts following losses coming from exposure to the US subprime market.
Citigroup, which announced on Tuesday it will raise $14.4bn from private investors and sovereign wealth funds, will cut its staff by 4,200. This follows massive job cuts in April (17,000 jobs).
The US bank has revealed a 40 per cent dividend cut, a $9.83bn fourth-quarter loss and $18bn in subprime-related credit writedowns. The government of Singapore Investment Corporation, the Kuwait Investment Authority, Prince Alwaleed bin Talal (already one of the bank's biggest shareholder), Sandy Weill (former CEO), and the New Jersey investment division will invest in Citigroup.
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Citigroup, which announced on Tuesday it will raise $14.4bn from private investors and sovereign wealth funds, will cut its staff by 4,200. This follows massive job cuts in April (17,000 jobs).
The US bank has revealed a 40 per cent dividend cut, a $9.83bn fourth-quarter loss and $18bn in subprime-related credit writedowns. The government of Singapore Investment Corporation, the Kuwait Investment Authority, Prince Alwaleed bin Talal (already one of the bank's biggest shareholder), Sandy Weill (former CEO), and the New Jersey investment division will invest in Citigroup.
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Mortgage meltdown: Now the rents
More fallout from the current housing slump - the cost of renting a home stagnated in 2007, according to an exclusive report for CNNMoney.
Home prices dropped last year in most cities around the nation, and now rents are flattening out in many of the markets worst hit by the housing downturn.
According to data from Investment Instruments Corp. generated by their Rentometer.com site and supplied the data exclusively to CNNMoney, the median monthly rental bill for a sampling of 10 metro areas all around the United States rose just 0.5 percent in 2007 from $1,457 to $1,465.
Rentometer, which publishes rent-comparison statistics online, does not have historical rent data prior to 2007, but according to real estate consultant M/PF YieldStar, national rent increases had averaged between 2 and 3 percent annually the previous several years.
Home prices post record decline
"The major factors having an impact on housing prices are foreclosures, which make more rental property available," said Owen Johnson, president of Investment Instruments, "and also foreclosures that are not happening."
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Home prices dropped last year in most cities around the nation, and now rents are flattening out in many of the markets worst hit by the housing downturn.
According to data from Investment Instruments Corp. generated by their Rentometer.com site and supplied the data exclusively to CNNMoney, the median monthly rental bill for a sampling of 10 metro areas all around the United States rose just 0.5 percent in 2007 from $1,457 to $1,465.
Rentometer, which publishes rent-comparison statistics online, does not have historical rent data prior to 2007, but according to real estate consultant M/PF YieldStar, national rent increases had averaged between 2 and 3 percent annually the previous several years.
Home prices post record decline
"The major factors having an impact on housing prices are foreclosures, which make more rental property available," said Owen Johnson, president of Investment Instruments, "and also foreclosures that are not happening."
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Wednesday, January 16, 2008
Washington's hard case: How to juice economy
Congress on Wednesday kicks off a series of hearings to weigh stimulus options. The right answer isn't so clear.
Washington lawmakers are about to begin playing a notoriously tricky game: pinpointing just how to steer the economy away from recession.
On Wednesday, the Joint Economic Committee of Congress is holding the first of several hearings to assess options for easing the financial strain many leading economists forecast is ahead.
Successfully predicting the chances of a recession, let alone staving one off, has left plenty of economists with egg on their face. But momentum has been building in Washington to do something to address a cascade of discouraging economic indicators - continued declines in housing, a rise in energy prices, slower-than-expected job growth and weaker-than- expected retail sales.
But there's no consensus on what's needed, what's politically feasible or whether any of it will be enough to nip a recession in the bud.
Rebate checks - a lump-sum payment to millions of consumers - is one idea reportedly being considered by both Democrats and Republicans. But the similarities in expected approaches by the two parties end there.
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Washington lawmakers are about to begin playing a notoriously tricky game: pinpointing just how to steer the economy away from recession.
On Wednesday, the Joint Economic Committee of Congress is holding the first of several hearings to assess options for easing the financial strain many leading economists forecast is ahead.
Successfully predicting the chances of a recession, let alone staving one off, has left plenty of economists with egg on their face. But momentum has been building in Washington to do something to address a cascade of discouraging economic indicators - continued declines in housing, a rise in energy prices, slower-than-expected job growth and weaker-than- expected retail sales.
But there's no consensus on what's needed, what's politically feasible or whether any of it will be enough to nip a recession in the bud.
Rebate checks - a lump-sum payment to millions of consumers - is one idea reportedly being considered by both Democrats and Republicans. But the similarities in expected approaches by the two parties end there.
Read Complete Story
ABC/Wash Post Consumer Comfort Index dives to -24
American consumers' confidence fell to match its 2007 low in the latest week and expectations for an improved economy plunged to a 16-year low as market turmoil, higher energy prices and slow retail spending rattled views on the economy, separate polls showed on Tuesday.
The ABC News/Washington Post Consumer Comfort Index fell to -24 in the week ended Jan. 13, marking a 23-week run in negative double digits. This matches a reading from six-weeks ago, the 2007 low and down from -20 a week earlier.
The index ranges from -100 to +100 and its 2007 average was -11.
The news outlets said in a statement the low index reading was concurrent with slow retail spending in December, continued turmoil in stock, credit and housing markets and steadily high energy prices.
In a separate monthly gauge of expectations, only 5 percent of Americans say the economy is getting better, the fewest since December 1991, during the recession. Sixty-five percent say the economy is getting worse.
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The ABC News/Washington Post Consumer Comfort Index fell to -24 in the week ended Jan. 13, marking a 23-week run in negative double digits. This matches a reading from six-weeks ago, the 2007 low and down from -20 a week earlier.
The index ranges from -100 to +100 and its 2007 average was -11.
The news outlets said in a statement the low index reading was concurrent with slow retail spending in December, continued turmoil in stock, credit and housing markets and steadily high energy prices.
In a separate monthly gauge of expectations, only 5 percent of Americans say the economy is getting better, the fewest since December 1991, during the recession. Sixty-five percent say the economy is getting worse.
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CEO confidence in economy falls to seven-year low
The confidence of chief executive officers at companies around the country has fallen to a seven-year low, according to a nonprofit research firm that measures executive attitudes about the economy.
The Conference Board's Measure of CEO Confidence, which had declined to 44 in the third quarter of 2007, fell to 39 in the final quarter of 2007. A reading of more than 50 points reflects more positive than negative responses, according to the group. The last time the measure fell below 40 was in the final quarter of 2000 when it fell to 31.
"CEOs confidence in the state of the U.S. economy continues to wither and is now at a seven-year low," said Lynn Franco, director of The Conference Board Consumer Research Center.
"Given continued trouble in the housing and credit markets, persistent volatility in financial markets and increases in energy prices, it's not surprising that confidence has eroded."
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The Conference Board's Measure of CEO Confidence, which had declined to 44 in the third quarter of 2007, fell to 39 in the final quarter of 2007. A reading of more than 50 points reflects more positive than negative responses, according to the group. The last time the measure fell below 40 was in the final quarter of 2000 when it fell to 31.
"CEOs confidence in the state of the U.S. economy continues to wither and is now at a seven-year low," said Lynn Franco, director of The Conference Board Consumer Research Center.
"Given continued trouble in the housing and credit markets, persistent volatility in financial markets and increases in energy prices, it's not surprising that confidence has eroded."
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Can government turn the economy around?
In an election year, 'stimulus' proposals are popular — but will they work?
With economic forecasts calling for bad weather ahead, Congress and the White House have turned attention to proposals to offer Americans some shelter from the storm.
There’s no shortage of ideas in an election year. But it remains to be seen just how much the government can do to halt the continued slide in an economy battered by falling housing prices, rising energy costs and a lending slowdown caused by worries about how many more loans will go bad.
There’s little doubt the U.S. economy is slowing sharply. Economists are divided on whether the U.S. is headed for recession or already in one. But in just the past few weeks, the latest economic data have gotten worse.
The debate over a potential stiumuls package centers on what measures — if any — will have an impact.
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With economic forecasts calling for bad weather ahead, Congress and the White House have turned attention to proposals to offer Americans some shelter from the storm.
There’s no shortage of ideas in an election year. But it remains to be seen just how much the government can do to halt the continued slide in an economy battered by falling housing prices, rising energy costs and a lending slowdown caused by worries about how many more loans will go bad.
There’s little doubt the U.S. economy is slowing sharply. Economists are divided on whether the U.S. is headed for recession or already in one. But in just the past few weeks, the latest economic data have gotten worse.
The debate over a potential stiumuls package centers on what measures — if any — will have an impact.
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No end in sight to debt upheaval
Foreign agencies among investors providing $24B in capital infusion
Bert Hill, The Ottawa Citizen; with files from Citizen News ServicesPublished: Wednesday, January 16, 2008
The bill for the global credit crunch rose by almost $24 billion yesterday as the largest U.S. bank, a major Canadian bank and a big U.S. investment house announced new charges or cash infusions.
The financial upheaval, which started with U.S. homebuyers getting bigger mortgages than they could afford and investment bankers getting rich after they sliced-and-diced the mortgage securities into ultimately worthless investments, shows no signs of an easy resolution.
The mess likely won't plunge the world into recession because central banks are chopping interest rates.
The parade of senior bank executives getting fired, the decline of the U.S. dollar and the surge in gold will continue, but won't stop the huge growth of developing economies in China and India.
However, the consequences for average people in terms of slower economic growth, higher loan costs and weaker job creation could be significant, compared to the strong growth of recent years.
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Bert Hill, The Ottawa Citizen; with files from Citizen News ServicesPublished: Wednesday, January 16, 2008
The bill for the global credit crunch rose by almost $24 billion yesterday as the largest U.S. bank, a major Canadian bank and a big U.S. investment house announced new charges or cash infusions.
The financial upheaval, which started with U.S. homebuyers getting bigger mortgages than they could afford and investment bankers getting rich after they sliced-and-diced the mortgage securities into ultimately worthless investments, shows no signs of an easy resolution.
The mess likely won't plunge the world into recession because central banks are chopping interest rates.
The parade of senior bank executives getting fired, the decline of the U.S. dollar and the surge in gold will continue, but won't stop the huge growth of developing economies in China and India.
However, the consequences for average people in terms of slower economic growth, higher loan costs and weaker job creation could be significant, compared to the strong growth of recent years.
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Fixing Our Economy and Country
America’s economic system is no longer functioning. The continued loss of our industrial base coupled with the subprime crisis, decline in the housing market, tightening credit and rising deficits have all devastated the economy.
Just how do we get out of this mess? Copying Japan, one of the world’s most successful economies, may be the answer.
Decades ago, U.S. industrial supremacy seemed unstoppable due to the fact that competitor nation’s economies were still reeling from the bombs dropped during World War II.
From the charred ruins of factories and cities, nations rebuilt and the global economy changed. In turn, America with high quality control standards, good worker benefits and strict adherence to free trade doctrines, was left seeing its debts skyrocket and good paying jobs outsourced to third world slave-wage countries.
But there is an answer to revitalizing manufacturing, correcting our gluttonous balance of trade deficit and reducing our dependence on imports- copy Japan’s economic model.
Japan rebuilt after WWII and focused on industrial and technological development. With a clear vision, and a proactive government supporting capital and knowledge intensive industries, Japan has risen to the point where they have become an economic super power. Economist Eamonn Fingleton elaborates…..
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Just how do we get out of this mess? Copying Japan, one of the world’s most successful economies, may be the answer.
Decades ago, U.S. industrial supremacy seemed unstoppable due to the fact that competitor nation’s economies were still reeling from the bombs dropped during World War II.
From the charred ruins of factories and cities, nations rebuilt and the global economy changed. In turn, America with high quality control standards, good worker benefits and strict adherence to free trade doctrines, was left seeing its debts skyrocket and good paying jobs outsourced to third world slave-wage countries.
But there is an answer to revitalizing manufacturing, correcting our gluttonous balance of trade deficit and reducing our dependence on imports- copy Japan’s economic model.
Japan rebuilt after WWII and focused on industrial and technological development. With a clear vision, and a proactive government supporting capital and knowledge intensive industries, Japan has risen to the point where they have become an economic super power. Economist Eamonn Fingleton elaborates…..
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Tuesday, January 15, 2008
Detroit's bumpy road to better times
U.S. automakers struggle with weak sales, ongoing losses as Detroit auto show kicks off, but lower labor costs, overseas growth could help in future.
The Detroit News welcomed Detroit auto show attendees to town over the weekend with the headline "Carmakers try to overcome gloom."
Oil at $100. The worst sales since 1998. Billions in continuing losses. New fuel economy regulations on the horizon.
There's plenty weighing on the industry, especially the U.S. automakers, as they gather for what is officially called the North American International Auto Show. Forecasts are that U.S. sales are going to be down again this year from last year's weak level, as both high gas prices and a weak housing market weigh on car buyers.
But while there's plenty of trouble facing the industry, there are also signs of hope for U.S. automakers, in the form of new labor deals, new management and new opportunities overseas.
Malibu is car of the year
"As bad as it is, it could be worse," said Tom Libby, senior director of industry analysis for J.D. Power and Associates. "If you think about it, all three have taken big steps. None of them will have the strength they used to have in the near term. But they have some good new product in the pipeline and the drop in costs is going quicker than they anticipated."
Still, Libby and other experts agree it's going to be another tough year ahead for the industry in general but for the Detroit based automakers, in particular, as Ford Motor (F, Fortune 500), General Motors (GM, Fortune 500) and Chrysler LLC try to stem ongoing losses from their auto operations.
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The Detroit News welcomed Detroit auto show attendees to town over the weekend with the headline "Carmakers try to overcome gloom."
Oil at $100. The worst sales since 1998. Billions in continuing losses. New fuel economy regulations on the horizon.
There's plenty weighing on the industry, especially the U.S. automakers, as they gather for what is officially called the North American International Auto Show. Forecasts are that U.S. sales are going to be down again this year from last year's weak level, as both high gas prices and a weak housing market weigh on car buyers.
But while there's plenty of trouble facing the industry, there are also signs of hope for U.S. automakers, in the form of new labor deals, new management and new opportunities overseas.
Malibu is car of the year
"As bad as it is, it could be worse," said Tom Libby, senior director of industry analysis for J.D. Power and Associates. "If you think about it, all three have taken big steps. None of them will have the strength they used to have in the near term. But they have some good new product in the pipeline and the drop in costs is going quicker than they anticipated."
Still, Libby and other experts agree it's going to be another tough year ahead for the industry in general but for the Detroit based automakers, in particular, as Ford Motor (F, Fortune 500), General Motors (GM, Fortune 500) and Chrysler LLC try to stem ongoing losses from their auto operations.
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US retail sales fell in December
US retail sales fell in December as shops endured weak Christmas trading, the latest indication that the US economy is under pressure.
Sales declined 0.4% last month compared with December 2006, the US Commerce Department said, which also downgraded November's sales figures.
It now says sales in November rose 1% instead of the initial 1.2% figure.
The weak festive retail sales figures come as a growing number analysts warn the US is now heading for a recession.
Pressure on the Fed
December's figure was worse than market expectations, which had predicted flat sales.
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Sales declined 0.4% last month compared with December 2006, the US Commerce Department said, which also downgraded November's sales figures.
It now says sales in November rose 1% instead of the initial 1.2% figure.
The weak festive retail sales figures come as a growing number analysts warn the US is now heading for a recession.
Pressure on the Fed
December's figure was worse than market expectations, which had predicted flat sales.
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US retail sales fell in December
US retail sales fell in December as shops endured weak Christmas trading, the latest indication that the US economy is under pressure.
Sales declined 0.4% last month compared with December 2006, the US Commerce Department said, which also downgraded November's sales figures.
It now says sales in November rose 1% instead of the initial 1.2% figure.
The weak festive retail sales figures come as a growing number analysts warn the US is now heading for a recession.
Pressure on the Fed
December's figure was worse than market expectations, which had predicted flat sales.
Read Complete Story
Sales declined 0.4% last month compared with December 2006, the US Commerce Department said, which also downgraded November's sales figures.
It now says sales in November rose 1% instead of the initial 1.2% figure.
The weak festive retail sales figures come as a growing number analysts warn the US is now heading for a recession.
Pressure on the Fed
December's figure was worse than market expectations, which had predicted flat sales.
Read Complete Story
Citigroup suffers $9.8 billion loss
Financial giant takes $18.1 billion writedown and slashes dividend, while getting a $12.5 billion capital infusion.
Citigroup Inc. delivered some of the worst quarterly results in its history Tuesday, reporting a nearly $10 billion loss that was much worse than Wall Street had anticipated.
The financial giant also announced a writedown of $18.1 billion related to soured mortgage investments and a 41 percent cut to its dividend. At the same time, it said it was receiving a $12.5 billion infusion from investors in Kuwait, Singapore and the state of New Jersey.
Citigroup (C, Fortune 500) shares gained 1.5 percent in pre-market trading on the news.
The company recorded a net loss of $9.83 billion, or $1.99 a share, in the fourth quarter. In the same period last year, the company reported a profit of $5.13 billion, or $1.03 per share.
Tuesday's results mark Citigroup's first quarterly loss since the merger of Citicorp and Travelers Group in 1998.
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Citigroup Inc. delivered some of the worst quarterly results in its history Tuesday, reporting a nearly $10 billion loss that was much worse than Wall Street had anticipated.
The financial giant also announced a writedown of $18.1 billion related to soured mortgage investments and a 41 percent cut to its dividend. At the same time, it said it was receiving a $12.5 billion infusion from investors in Kuwait, Singapore and the state of New Jersey.
Citigroup (C, Fortune 500) shares gained 1.5 percent in pre-market trading on the news.
The company recorded a net loss of $9.83 billion, or $1.99 a share, in the fourth quarter. In the same period last year, the company reported a profit of $5.13 billion, or $1.03 per share.
Tuesday's results mark Citigroup's first quarterly loss since the merger of Citicorp and Travelers Group in 1998.
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Wholesale inflation hike largest in 26 years
Labor Department says soaring energy costs, from gasoline to home heating oil, responsible for 6.3% increase last year.
Wholesale inflation shot up in 2007 by the largest amount in 26 years even though falling gasoline costs allowed price pressures to moderate in December.
The Labor Department reported that wholesale inflation was up 6.3 percent for all of 2007, reflecting a huge increase for the year in various types of energy costs ranging from gasoline to home heating oil.
The year ended on a more positive note, with wholesale prices falling by 0.1 percent in December. That reflected decreasing costs at the time for gasoline and other energy products. It was a significant slowdown after prices had soared by 3.2 percent in November, which had been the biggest one-month increase in 34 years.
Meanwhile, the Commerce Department reported that retail sales fell by 0.4 percent in December. It was a worse-than-expected decline and increased worries that the country could topple into a recession.
The combination of rising inflation pressures and a weak economy represent a dilemma for the Federal Reserve over whether to cut rates to boost economic growth even at the risk of making inflation worse.
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Wholesale inflation shot up in 2007 by the largest amount in 26 years even though falling gasoline costs allowed price pressures to moderate in December.
The Labor Department reported that wholesale inflation was up 6.3 percent for all of 2007, reflecting a huge increase for the year in various types of energy costs ranging from gasoline to home heating oil.
The year ended on a more positive note, with wholesale prices falling by 0.1 percent in December. That reflected decreasing costs at the time for gasoline and other energy products. It was a significant slowdown after prices had soared by 3.2 percent in November, which had been the biggest one-month increase in 34 years.
Meanwhile, the Commerce Department reported that retail sales fell by 0.4 percent in December. It was a worse-than-expected decline and increased worries that the country could topple into a recession.
The combination of rising inflation pressures and a weak economy represent a dilemma for the Federal Reserve over whether to cut rates to boost economic growth even at the risk of making inflation worse.
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Recession monster stalks US economy
IS THE United States on the brink of a collective funk as it prepares to vote on candidates to run for the presidency?
In the space of just a few weeks, the mood of the nation has turned decidedly sour as the Christmas credit card bills roll in and the talk of recession escalates.
The New York Times carried a story on Monday saying that consumer spending, which accounts for 70 per cent of the US economy, has slowed dramatically.
The newspaper's evidence was anecdotal, but alarming. Calls to department stores revealed rapidly slowing sales as the wealthy and the less-so braced for a slowdown.
American Express said that growth in spending by its 52 million cardholders had slowed from 13 per cent to 10 per cent, the first slowdown since the 2001 recession.
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In the space of just a few weeks, the mood of the nation has turned decidedly sour as the Christmas credit card bills roll in and the talk of recession escalates.
The New York Times carried a story on Monday saying that consumer spending, which accounts for 70 per cent of the US economy, has slowed dramatically.
The newspaper's evidence was anecdotal, but alarming. Calls to department stores revealed rapidly slowing sales as the wealthy and the less-so braced for a slowdown.
American Express said that growth in spending by its 52 million cardholders had slowed from 13 per cent to 10 per cent, the first slowdown since the 2001 recession.
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Monday, January 14, 2008
Toyota U.S production reaches record level
Toyota Motor Engineering & Manufacturing North America, Inc. (TEMA) boosted vehicle and engine production to record levels at its North American plants in 2007. Toyota built 1,671,009 vehicles, an 8% increase, and 1,571,872 engines, a 10% increase. Gains are largely attributed to a Tundra pickup production ramp-up in Texas and to Camry saloon production in Indiana.
North American Toyota production began in 1984 and has increased by 39% over the last five years. This year Toyota will build its 20 millionth vehicle in North America, including the 5 millionth Corolla. Toyota produces 11 models in North America, and is preparing to increase capacity to approximately 2.2 million units by 2010.
The 2007 total assembly figure does not include 49,371 Pontiac Vibe cars built at NUMMI, a joint venture between Toyota and GM in Fremont, Calif.
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North American Toyota production began in 1984 and has increased by 39% over the last five years. This year Toyota will build its 20 millionth vehicle in North America, including the 5 millionth Corolla. Toyota produces 11 models in North America, and is preparing to increase capacity to approximately 2.2 million units by 2010.
The 2007 total assembly figure does not include 49,371 Pontiac Vibe cars built at NUMMI, a joint venture between Toyota and GM in Fremont, Calif.
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US's triple-A credit rating 'under threat'
The US is at risk of losing its top-notch triple-A credit rating within a decade unless it takes radical action to curb soaring healthcare and social security spending, Moody's, the credit rating agency, said yesterday.
The warning over the future of the triple-A rating - granted to US government debt since it was first assessed in 1917 - reflects growing concerns over the country's ability to retain its financial and economic supremacy.
It could also put further pressure on candidates from both the Republican and Democratic parties to sharpen their focus on healthcare and pensions in the run-up to November's presidential election.
Most analysts expect future administrations to deal with the costs of healthcare and social security and there is no reflection of any long-term concern about the US's financial health in the value of its debt.
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The warning over the future of the triple-A rating - granted to US government debt since it was first assessed in 1917 - reflects growing concerns over the country's ability to retain its financial and economic supremacy.
It could also put further pressure on candidates from both the Republican and Democratic parties to sharpen their focus on healthcare and pensions in the run-up to November's presidential election.
Most analysts expect future administrations to deal with the costs of healthcare and social security and there is no reflection of any long-term concern about the US's financial health in the value of its debt.
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Responding to Recession
Suddenly, the economic consensus seems to be that the implosion of the housing market will indeed push the U.S. economy into a recession, and that it’s quite possible that we’re already in one. As a result, over the next few weeks we’ll be hearing a lot about plans for economic stimulus.
Since this is an election year, the debate over how to stimulate the economy is inevitably tied up with politics. And here’s a modest suggestion for political reporters. Instead of trying to divine the candidates’ characters by scrutinizing their tone of voice and facial expressions, why not pay attention to what they say about economic policy?
In fact, recent statements by the candidates and their surrogates about the economy are quite revealing.
Take, for example, John McCain’s admission that economics isn’t his thing. “The issue of economics is not something I’ve understood as well as I should,” he says. “I’ve got Greenspan’s book.”
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Since this is an election year, the debate over how to stimulate the economy is inevitably tied up with politics. And here’s a modest suggestion for political reporters. Instead of trying to divine the candidates’ characters by scrutinizing their tone of voice and facial expressions, why not pay attention to what they say about economic policy?
In fact, recent statements by the candidates and their surrogates about the economy are quite revealing.
Take, for example, John McCain’s admission that economics isn’t his thing. “The issue of economics is not something I’ve understood as well as I should,” he says. “I’ve got Greenspan’s book.”
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Too late to rescue U.S. economy?
The rescue brigade has finally arrived, but does it know what to do? And isn't it already too late?
The economic rescue brigade finally arrived in something like full force last week, about a year after experts dismissed warnings of a U.S. economic downturn with global consequences, and five months after world credit markets were thrown into turmoil by the collapse of the U.S. housing boom.
It has not been an edifying sight.
Stephen Harper, the Canadian prime minister, announced a $1 billion assistance fund for one-industry towns hard hit by forestry mill closings – a trend, and a hardship, that's been evident for more than two years now. The premiers promptly responded that the sum wasn't sufficient. Ontario's all-important auto sector alone could swallow up that bailout sum. With its output largely exported to the U.S., it will be in grim shape by year's end if, as expected, tapped-out American consumers cut back sharply on vehicle purchases.
U.S. president George W. Bush was said last week to be contemplating a grandly titled economic stimulus package, probably to be unveiled at the time of his Jan. 28 state of the union address. Like most non-military challenges faced by Bush, the tonic will likely be more tax cuts, further eroding America's alarmingly weak fiscal status, and putting still more downward pressure on the greenback, already worth a humble $1.49 to the euro.
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The economic rescue brigade finally arrived in something like full force last week, about a year after experts dismissed warnings of a U.S. economic downturn with global consequences, and five months after world credit markets were thrown into turmoil by the collapse of the U.S. housing boom.
It has not been an edifying sight.
Stephen Harper, the Canadian prime minister, announced a $1 billion assistance fund for one-industry towns hard hit by forestry mill closings – a trend, and a hardship, that's been evident for more than two years now. The premiers promptly responded that the sum wasn't sufficient. Ontario's all-important auto sector alone could swallow up that bailout sum. With its output largely exported to the U.S., it will be in grim shape by year's end if, as expected, tapped-out American consumers cut back sharply on vehicle purchases.
U.S. president George W. Bush was said last week to be contemplating a grandly titled economic stimulus package, probably to be unveiled at the time of his Jan. 28 state of the union address. Like most non-military challenges faced by Bush, the tonic will likely be more tax cuts, further eroding America's alarmingly weak fiscal status, and putting still more downward pressure on the greenback, already worth a humble $1.49 to the euro.
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Economic Tsunami Is Upon Us
A simple truth, ignored for generations, is leading us to enslavement and privation. Wealth makes us free, and debt enslaves us. Debt-based currency puts you in debt without your consent and prevents your escape from the consequences. In answer to an editorial by Rob Kall.
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As long as you have the Federal Reserve System operating with a monopoly on the creation of debt-based money out of thin air, a few things are inevitable:
1. The system requires continued growth in order to remain viable, ever increasing as interest on the fake money is compounded. When the Fed says their aim is 'price stability', that means they will inflate the currency at the same rate as economic growth. This means that they rob the population of all increases in productivity, because prices should fall when productivity rises, not stay 'stable'. But stable prices are impossible when all currency is borrowed into existence because the interest to repay it must be borrowed, too, and mathematically you will reach a point where the interest and borrowing must accelerate out of control.
2. When, through socialist regulation and taxation, the producers are killed off below a certain point, that growth falls below the minimum. Price stability is a forgotten joke as inflation and taxes eat away at the capital required to fund ongoing operations, and growth becomes a thing of the past.
3. The system can continue on inertia alone, by pumping more fake money into it, until foreign creditors begin to lose faith in the dollar.
4. The system has to inflate the currency, or it collapses. The only tool the Fed has is to inflate slower or faster. When it inflates faster, economic activity increases (bubble) but prices rise as the dollar falls in value (collapse). As the debt increases, it takes exponentially larger infusions of cash to get any increase in production, leading eventually to hyperinflation. When the Fed inflates slower, economic activity slows down.
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::::::::
As long as you have the Federal Reserve System operating with a monopoly on the creation of debt-based money out of thin air, a few things are inevitable:
1. The system requires continued growth in order to remain viable, ever increasing as interest on the fake money is compounded. When the Fed says their aim is 'price stability', that means they will inflate the currency at the same rate as economic growth. This means that they rob the population of all increases in productivity, because prices should fall when productivity rises, not stay 'stable'. But stable prices are impossible when all currency is borrowed into existence because the interest to repay it must be borrowed, too, and mathematically you will reach a point where the interest and borrowing must accelerate out of control.
2. When, through socialist regulation and taxation, the producers are killed off below a certain point, that growth falls below the minimum. Price stability is a forgotten joke as inflation and taxes eat away at the capital required to fund ongoing operations, and growth becomes a thing of the past.
3. The system can continue on inertia alone, by pumping more fake money into it, until foreign creditors begin to lose faith in the dollar.
4. The system has to inflate the currency, or it collapses. The only tool the Fed has is to inflate slower or faster. When it inflates faster, economic activity increases (bubble) but prices rise as the dollar falls in value (collapse). As the debt increases, it takes exponentially larger infusions of cash to get any increase in production, leading eventually to hyperinflation. When the Fed inflates slower, economic activity slows down.
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Friday, January 11, 2008
Trade deficit widest in 14 months
Jumps 9.3% in November; Commerce Department says oil imports, weak dollar contributed to the $63.1 billion deficit.
The U.S. trade deficit in November surged to the highest level in 14 months, reflecting record imports of foreign oil. The deficit with China declined slightly while the weak dollar boosted exports to another record high.
The Commerce Department reported that the trade deficit, the gap between imports and exports, jumped by 9.3 percent, to $63.1 billion. The imbalance was much larger than the $60 billion that had been expected.
The increase was driven by a 16.3 percent surge in America's foreign oil bill, which climbed to an all-time high of $34.4 billion as the per barrel price of imported crude reached new records. With oil prices last week touching $100 per barrel, analysts are forecasting higher oil bills in future months.
The big surge in oil pushed total imports of goods and services up by 3 percent to a record $205.4 billion. Exports also set another record, rising by a smaller 0.4 percent to $142.3 billion. Export demand has been growing significantly over the past two years as U.S. manufacturers and farmers have gotten a boost from a weaker dollar against many other currencies. That makes U.S. goods cheaper on overseas markets.
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The U.S. trade deficit in November surged to the highest level in 14 months, reflecting record imports of foreign oil. The deficit with China declined slightly while the weak dollar boosted exports to another record high.
The Commerce Department reported that the trade deficit, the gap between imports and exports, jumped by 9.3 percent, to $63.1 billion. The imbalance was much larger than the $60 billion that had been expected.
The increase was driven by a 16.3 percent surge in America's foreign oil bill, which climbed to an all-time high of $34.4 billion as the per barrel price of imported crude reached new records. With oil prices last week touching $100 per barrel, analysts are forecasting higher oil bills in future months.
The big surge in oil pushed total imports of goods and services up by 3 percent to a record $205.4 billion. Exports also set another record, rising by a smaller 0.4 percent to $142.3 billion. Export demand has been growing significantly over the past two years as U.S. manufacturers and farmers have gotten a boost from a weaker dollar against many other currencies. That makes U.S. goods cheaper on overseas markets.
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Merrill may write down $15 billion
Broker expected to take staggering loss on bad mortgage bets when it posts results next week, paper reports.
Merrill Lynch is expected to report a bigger-than-expected $15 billion writedown when it reports quarterly results next week, according to a report in The New York Times.
The hit is bigger than the $12 billion writedown many Wall Street analysts are expecting, the report said.
Merrill is expected to post a steep fourth-quarter loss when it posts results next Thursday, due largely to bad bets made on mortgage investments.
As a result of the deep loss, the nation's largest broker is looking to raise additional capital from an outside investor, the newspaper said, citing people who had been briefed on the matter.
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Merrill Lynch is expected to report a bigger-than-expected $15 billion writedown when it reports quarterly results next week, according to a report in The New York Times.
The hit is bigger than the $12 billion writedown many Wall Street analysts are expecting, the report said.
Merrill is expected to post a steep fourth-quarter loss when it posts results next Thursday, due largely to bad bets made on mortgage investments.
As a result of the deep loss, the nation's largest broker is looking to raise additional capital from an outside investor, the newspaper said, citing people who had been briefed on the matter.
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China's reserves hit $1.53 trillion
Country's central bank says foreign exchange reserves added $461.9 billion last year.
China's foreign exchange reserves hit $1.53 trillion at the end of 2007, up 43 percent from the end of the previous year, the central bank said Friday.
The bank said in a statement on its Web site that $461.9 billion was added to the country's foreign exchange reserves in 2007.
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China's foreign exchange reserves hit $1.53 trillion at the end of 2007, up 43 percent from the end of the previous year, the central bank said Friday.
The bank said in a statement on its Web site that $461.9 billion was added to the country's foreign exchange reserves in 2007.
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U.S. Consumer Debt Rose $15.4 Billion in November
U.S. consumer borrowing rose more than forecast in November as Americans used credit cards and auto loans to add to a record amount of debt, Federal Reserve statistics showed.
Consumer credit increased $15.4 billion for the month to $2.51 trillion, the Fed said today in Washington. In October, credit rose $2 billion, less than the previously reported gain of $4.7 billion. The Fed's report doesn't cover borrowing secured by real estate, such as home-equity loans.
The figures suggest Americans are relying more on credit cards and other short-term borrowing to maintain spending after the collapse in subprime lending made bank loans harder to get. An increase of 133,000 U.S. jobs in November and December was the lowest for those two months since 2002 and disposable incomes aren't keeping pace with inflation.
``With job losses mounting, this could be the tip of the iceberg with consumers needing to rely more on credit cards now that personal income is lagging,'' said Chris Rupkey, an economist at Bank of Tokyo-Mitsubishi, in New York.
The report explains how consumer spending, which accounts for two-thirds of the economy, strengthened at the start of the holiday shopping season. Commerce Department figures released Dec. 21 showed U.S. personal spending rose 1.1 percent in November after a 0.4 percent increase in October.
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Consumer credit increased $15.4 billion for the month to $2.51 trillion, the Fed said today in Washington. In October, credit rose $2 billion, less than the previously reported gain of $4.7 billion. The Fed's report doesn't cover borrowing secured by real estate, such as home-equity loans.
The figures suggest Americans are relying more on credit cards and other short-term borrowing to maintain spending after the collapse in subprime lending made bank loans harder to get. An increase of 133,000 U.S. jobs in November and December was the lowest for those two months since 2002 and disposable incomes aren't keeping pace with inflation.
``With job losses mounting, this could be the tip of the iceberg with consumers needing to rely more on credit cards now that personal income is lagging,'' said Chris Rupkey, an economist at Bank of Tokyo-Mitsubishi, in New York.
The report explains how consumer spending, which accounts for two-thirds of the economy, strengthened at the start of the holiday shopping season. Commerce Department figures released Dec. 21 showed U.S. personal spending rose 1.1 percent in November after a 0.4 percent increase in October.
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What American Workers Deserve is Fair Trade, not Free Trade
"Fair Trade" must be adopted as the trade policy of the U.S. for the sake of the survival of the U.S. working classes. If implemented correctly, it will result as well in an improvement of the living standard of workers throughout the world. This article will describe the deceptive and false premises used as an explanation of the need and justification for Globalization.The real motivation is an even more intensive exploitation of workers and resources worldwide. "Fair Trade" needs to be accepted worldwide as the only suitable and equitable means of sustaining a high standard of living in the U.S., as well as an improvement in living standards worldwide. I will end the article with some of the changes in trade policy necessary to implement "Fair Trade".
The theory of `Globalization` is based upon the premise that there are three practices which are necessary to ensure optimal worldwide trade. They consist of `free trade(the trading of goods and services with no duties, quotas, or other hindrances), free flow of capital, and the free flow of labor. The following paragraphs consists of a history of the evolution of "Globalization" and a description of the consequences to the working classes in the U.S. and overseas as these practices are implemented. Our "new"system of world trade, called "Globalization" is nothing more than "old wine in new bottles". The world has practiced "free trade" on and off for over 200 years starting with Great Britain`s industrialization and the desire for uninhibited trade during this period. The British were at least astute enough to pursue it only at the times when they were the world`s premiere trading nation. The U.S. started promoting it in 1944 under GATT, when the U.S. itself had become the worlds premier trading nation. But now, when it has become the worlds least competitive trading nation, it still persists in pursuing this practice. The continuation by the U.S. of "free trade"will eventually result in the drain of all major assets from U.S.(including ultimately the money supply), and the pauperization of its working classes.
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The theory of `Globalization` is based upon the premise that there are three practices which are necessary to ensure optimal worldwide trade. They consist of `free trade(the trading of goods and services with no duties, quotas, or other hindrances), free flow of capital, and the free flow of labor. The following paragraphs consists of a history of the evolution of "Globalization" and a description of the consequences to the working classes in the U.S. and overseas as these practices are implemented. Our "new"system of world trade, called "Globalization" is nothing more than "old wine in new bottles". The world has practiced "free trade" on and off for over 200 years starting with Great Britain`s industrialization and the desire for uninhibited trade during this period. The British were at least astute enough to pursue it only at the times when they were the world`s premiere trading nation. The U.S. started promoting it in 1944 under GATT, when the U.S. itself had become the worlds premier trading nation. But now, when it has become the worlds least competitive trading nation, it still persists in pursuing this practice. The continuation by the U.S. of "free trade"will eventually result in the drain of all major assets from U.S.(including ultimately the money supply), and the pauperization of its working classes.
Read Complete Story
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