Friday, December 11, 2009

Recession Hits Innovation

Posted by Kenny Hernandez

NEW YORK ( -- U.S. innovation slowed this year for the first time in 13 years as the recession cut into budgets, and costs to protect inventions rose.

The number of patent filings in the United States fell 2.3% in 2009 to 485,500 from 496,886 last year, according to a preliminary estimate by the U.S. Patent and Trademark Office. That makes 2009 the first year since 1996 in which businesses and inventors filed fewer patents year over year.

Recovery May Be Nearing

Posted by Kenny Hernandez

WASHINGTON (AP) -- Just in time for Christmas, the fragile economic recovery is showing signs of strengthening: Consumers are spending, companies are rebuilding stockpiles and Chinese exports are mounting a comeback.

Data released Friday eased some worries about Americans' willingness to spend this holiday season. But stores remain worried that they may have to offer deeper discounts than planned, perhaps as early as this weekend, because of mediocre sales so far.

Motives behind Mergers

By Ka Lee Angel Lee

The Bing and Yahoo search engines merger has just completed. Both of them are popular and leading search engines, however, businesses today still believe the bigger the better concept and here is why.

Yahoo and Bing are horizontal integration. Bing can provide yahoo real time searching and thus provide the missing ingredients necessary for further success. Merging for the two can save resources that are complementary and thus save a lot of time in engineering or develop new search engineers by yahoo itself. Also there are economies of scale. Bing and Yahoo can spread fixed costs across a larger volume of output and thus achieve higher efficiency.

Though Google still owns 71.6% of the overall search market updated last month, the merging of Bing and Yahoo search engines will leave Microsoft far behind. This means mergers can help companies gain market shares.

Nevertheless, merging can help diverse risks as the two companies now shares resources and provide what each other needs, they may as well help each other’s financial needs like providing funds and paying back liabilities.

Though merger sounds beneficial, companies always think deep before taking action because if they do not choose the right partner, the benefits mentioned above cannot be achieve and costs will then go up for training and management.

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No one goes to the temple for nothing.

by Ka Lee Angel Lee

There is a saying that “No one goes to the temple for nothing.” All the efforts of both countries to cooperate are motivated by many reasons. The United States has been the leader of every aspect which includes global economy, education, science, technology as well as social development. China, the developing country, needs this giant, the United States, to give it a boost in its progress. A close relationship with the United States is indisputably China’s recipe for success. The United States, in return, needs China to accelerate its recovery economically especially after the 911 tragedy 2001 by collaborations to combat terrorism and maintain social stability. Therefore a forward-looking policy adoption by both countries towards each other is essential to allow opportunities for job, trade, investments, developments and innovations.

China is a big pool of treasures. According to the most recent record in 2009, it is “the largest holder of foreign exchange reserves, with a total sum of $2.27 trillion.” It is also “the US’s largest creditor nation, with a total U.S. debt of more than $800 billion” Since American President Obama’s national scheme summary, “including his $787 billion bailout plan, New Energy Plan and healthcare reform plan,” requires substantial financial support, China is the U.S. first choice to seek for help. Under the forecast of a $1.4 billion budget deficit of the US, China’s hold of foreign currency and growth rate of foreign trade can assist in stimulating the U.S. economy. Furthermore, the United States is the largest creditor nation in the world; therefore each changes of global economic policy of other nations can influence the global stock market thus the U.S. economy. With China being the most aggressive developing country among all, each step China takes counts a great deal to the United States.

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Sino-US Cooperations

By Ka Lee Angel Lee

The most significant newsworthy contract of Sino-U.S. economic cooperation happened recently is the 4th round of China-U.S. Strategic Economic Dialogue held in Annapolis, the United States 2008. China and the U.S. exchanged their trade interests and concerns globally and domestically. The meeting “focused on five specific areas: financial and macroeconomic management, developing and protecting human capital, the benefits of trade and open markets, enhancing investment, and advancing joint opportunities for cooperation in energy and environment. After an in-depth discussion of the current world economy view and possibilities of bilateral economic teamwork, diplomats of both countries agreed on continuous economic cooperation in the next decade.

There are many other signs of willingness of both countries to work together to strive for prosperity and harmony in the global economic context. The Sino-U.S. recognition of a share responsibility of global economy in the meeting of the Chinese President, Hu Jintao and the U.S. Treasury Secretary Henry H. Paulson in Beijing has great impact on both countries’ future collaboration. President Hu noted that “China will join hands with the United States to boost exchanges and communication, expand strategic mutual trust and appropriately handle sensitive issues in an effort to step up bilateral constructive and cooperative relations.”

Other signs of mutual trusts are engraved in mutual national aids to each other by China and the United States. The U.S.’ s encouragement of China’s entry of the World Trade Organization showed America’s optimistic and confident view of China’s opening of its trade market. The building of Microsoft’s research and development center in Beijing as well as the signing of a total of $13.6-billion contracts between companies of both countries indicate mutual trust and faith.

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by Ka Lee Angel Lee

For centuries, nations have been working hard on maintaining the status quo. However, due to the strengths and weaknesses of countries as well as the inevitable outside forces of opportunities and threats, some countries rise while others fall. In the recent decades, the emergence of China has been a controversial topic for leaders in the world. The United States, the strongest nation in the world who has long realized China’s remarkable development, regarded China as a “Frienemy”.

The most boiling debate is on China’s evolvement from an agricultural country to one of the world’s most prosperous trade centers. The expansion of power of China is inevitable and irreversible. It is no denial that China’s ambition has threatened many countries especially the United States. Many American politicians have been warning the world to exercise more protective policies against China and some even think that China’s rise will endanger the U.S. economy. However, in the past decade, there has been a growth of interdependence of China and the United States. The United States, being the richest country in the world, is definitely China’s prime trade partner. China, the fastest-growing country, can also provide the U.S. financial assistance it needs. Both countries hold interests of each other so tightly that cooperation is the only way to benefit themselves.

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Ponzi Scheme No-No’s

By: Kelsey Hoffman

About a year ago in a town 20 minutes from my home, a man named Madoff was being busted for one of the largest financial scandals of the decade, the epic ponzi scheme. For those of you who don’t know how a ponzi scheme works, Madoff pulled it off in the following fashion. A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by new investors, rather than from any actual profit earned. The Ponzi scheme usually entices new investors by offering returns other investments cannot guarantee. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going. These investors were investing not only their money but also their trust in Madoff and instead he was taking their money for his own.

Clearly this is not something that we want to aspire to do in our lifetime, but in all honesty we have to give Madoff credit for his skills and mastermind. He must be smart if he was able to pull this off and have it work for about 20 years. I think he always knew it would never last as he was definitely not ignorant on the fact that investments would have to drop at sometime. In the end though, Madoff lost about $50 billion in his scheme and obviously has been put away for life.

Thursday, December 10, 2009

Nations Seek Financing to Aid Global Warming in Poor Countries

Posted by Chris O'Sullivan

European nations are pressing allies to assist in establishing a multi-billion dollar fund to assist countries suffering the most from global warming. At the European Union summit Thursday, European governments committed a total of $2.6 billion (euro1.8 billion) a year for 2010-2012 for the short-term climate fund, or a three-year total of $7.9 billion (euro5.4 billion). President Obama has also insisted that the US will pledge dollars to assist in this matter, but some US officials are cautious about the amount that can be spent at this point in time.

The financing is intended to help poorer nations to build coastal protection, modify or shift crops threatened by drought, build water supplies and irrigation systems, preserve forests, improve health care to deal with diseases spread by warming, and move from fossil fuel to low-carbon energy systems, such as solar and wind power.

Both rich and poor nations are talking behind closed doors and in open forums at the conference to mitigate wide differences and reach agreements on how to combat global warming. They have only one week to deliver something for Obama and 100 other national leaders to sign on Dec. 18, the final day of the summit.


Industries that our Hiring

Article by Matthew Maillet

While many economic indicators suggest that job openings in ALL industries are declining, the truth is that several US sectors are hiring qualified candidates. There’s no need to let the 10% unemployment rate deter you from being successful—instead, focus on growing industries such as health care and some professional service sectors. The Bureau of Labor Statistics reports that health care will see 4 million new employees by 2018, while business services will also see an impressive 4.2 million added employees.

It’s important however to focus on the specific areas within these industries that demand new workers. For example, qualified home health care aids are in high demand. Home health care is a rapidly growing trend in the United States, so as a result, thousands of jobs are for the taking. Another health care sector that needs new hires is social assistance—especially for the baby boomers.

It is important to look at future trends before choosing a career path. Even though students may feel restricted to their academic major, this does not mean that you are out of luck It will just take more planning and wise decision-making if you wish to find a secure job.

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Tuesday, December 8, 2009

Debt Raters are Escaping Reforms from Congress

By Leah Gorham

In 2008, the big three credit rating agencies, Standard & Poor's, Moody's Investors Service and Fitch, agreed to reform their practices relating to complex mortgage-backed securities in the wake of the housing marker collapse. The agreement came after an investigation by New York State attorney general Andrew Cuomo's office into how the firms rated large mortgage security portfolios held and traded by major Wall Street banks.

However, since 2008, there has been little reform and now as Congress makes reforms on Wall Street, it seems that the Big Three are escaping the overhaul. Why isn't Congress making sweeping changes that change the flawed rating model that contributed to the housing collapse? Because lawmakers are afraid that bold measures may backfire because the Big Three are such an integral part of the country's debt issuance and larger economy. Also, Congress is not sure what an overhaul of the Big Three would look like.

There are some changes proposed in new legislation that will establish an office within the SEC to oversee the credit rating industry, and require all Nationally Recognized Statistical Rating Organizations (NRSROs) to establish governance procedures to manage conflicts of interest. There are also provisions that address concerns that the agencies’ fail to perform due diligence, especially with regard to structured finance offerings. Specifically, any third-party due diligence report in connection with an asset-backed security would have to be made publicly available by the issuer or underwriter. Another area impacting the operations of securities firms are provisions requiring rating agencies to publicly disclose information on initial ratings published for each type of security. By making these ratings public, the agencies would more carefully scrutinize preliminary ratings, and discourage informal “ratings shopping." While these changes may not add up to an overhaul by Congress, they wll impact the way the Big Three and other rating organizations operate.

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Monday, December 7, 2009

Dubai Stock Keep Tumbling

By Eric Gursky

TEL AVIV (MarketWatch) -- Shares traded in Dubai fell sharply on Monday, led by a 10% drop in shares of Emaar, the property developer behind Burj Dubai, the world's tallest tower, which is scheduled to open next month.

The DFM index, the benchmark for the Dubai Financial Market, closed 5.84% lower at 1,744.83.

Markets in the Arab states have been roiled in the past two weeks since Dubai World, the emirate-controlled conglomerate, said it was seeking a six-month standstill on payments under $60 billion of debt. The company is currently trying to restructure $26 billion of debt.

On Monday, Reuters reported that Dubai's finance chief told Al Jazeera television that Dubai World might sell some of its foreign assets to meet its obligations, but that the Dubai government won't sell any assets for that purpose.

Abdulrahman al-Saleh told the station that Dubai World has investments and real estate abroad as well as local assets available for sale to raise funds to cover its debt, Reuters reported. But he reiterated that the government does not guarantee Dubai World's debt, the news service reported.

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Sunday, December 6, 2009

Time to get a job

By Quang Nguyen

With the recession on hand, people stop looking for jobs. Many claim that companies are laying off their employees, so why would they waste their time to look for a job now. Expert are saying that now is actually a good time for you all to get back in the game. With nearly 16 million Americans out of work now, it is a sign that most companies need more employees to carry on their normal productivity.

Experts pointed out that each industry has its own hiring season within their business cycle, so certain times within a year is better for a job hunt, and right now this is it. You need to get out there as soon as possible.

It is true that there are more hiring in January than December historically. However, December is the time for you to get your resume and interviews. This is the time for you and your employer to get to know each other, so that when January comes, you will hear the good news. Since the Holiday of Xmas and New Year are coming up, employers will not give up their time to read your resume and interview you by then. Therefore this is the best time for you to put yourself out there.


Wal-Mart on the thrive despite the recession

By Quang Nguyen

During this current economic downturn, many companies go under. Even companies with strong brands are struggling to survive. However, there is one company that is taking good advantage of the recession. It is Wal-Mart.

With a strategy known as "Always low prices", Wal-Mart offer customers options during this hard time. People used to go to higher end stores for their needs, now turn to Wal-Mart since it is the only place they can afford. Wal-Mart has kept lots of families in the US from starving to death. A lot of people have criticized Wal-Mart for destroying America, but without Wal-Mart, people would have to pay much higher prices for everything.

According to official financial report, Wal-Mart has a lot of cash on its balance sheet and very little debts. Despite the recession, Wal-Mart has been making profit consistently. Since March 9th, 2009, its shares has increased as much as 14%. Despite popular belief that Wal-Mart is destroying the local economy of small towns, researchs have shown that it actually permanently raises local employment.


UBS Scandal

By Laura Reginelli

Switzerland is renowned for the interesting, to say the least, banking principals. For years people have been placing money in Swiss accounts and failing to report their generated income from them due to the Swiss’s strict secrecy agreements. Recently however, the United States has been cracking down on these occurrences and they are beginning to demand the name of individuals using these accounts as a form of tax evasion.

In February of this year, UBS was ordered to pay $780 million due to tax evasion. For years wealthy Americans have been stashing their money in UBS accounts in order to avoid paying taxes because Switzerland has unusually secret laws when it comes to bank accounts. On top of the huge fine that UBS incurred, they also have to start turning in the names of individuals who were participating in these sorts of accounts.

According to “American nationals are allowed to open offshore accounts, provided they reveal them and pay taxes on their assets. UBS announced in July 2008 that it would stop offering to American clients offshore private banking services that are not declared to the I.R.S. a program known also as Qualified Intermediary.” The United States suspects that over 30,000 people have used these accounts to avoid paying their fair share of taxes.

Recently in October, the government ordered the first individual involved in this scandal to pay his back taxes that he avoided. Steven Michael Rubinstein was fined $40,000.


Friday, December 4, 2009

Unemployment Rates Looking Up

By: Sara Sindelar

The numbers are in for November and unemployment rate is at 10% which is slightly up from the previous 10.2%. This makes for the smallest drop since the beginning of the recession with only 11,000 jobs. Economist had expected the complete opposite for the month of November for payrolls. Payrolls were up 120,000 against the anticipated decrease of 125,000. “Employment fell in construction, manufacturing, and information, while temporary help services and health care added jobs.” (WSJ). Health care is one of the highest hiring industries during this recession adding up to 613,000 jobs since the beginning of the recession. Though, the manufacturing industry is taking quit the hit from the recession with factory orders declining and jobs decreasing.

Even though Obama is still worried about this high unemployment rate it still leaves us with hope that the number is going in the right direction for now. Though, there are still 15.4 million people looking for jobs that are unemployed with an additional 6 million who want jobs but are not counted as part of the labor force. On top of that 21.4 million there are 9.2 million who can only find part time work that are looking for full time positions. This holiday season is a great time to look for a job according to studies. This is a bug hiring time for employers which will hopefully make for a greater decrease in unemployment rate. This November recorded number may be a light to the end of the tunnel but there are still a lot of problem in the job market and the economy.

Why Wells Fargo hasn't paid back the US Government

Posted by: Christina Dove

Being one of the first US banks to fail a little over a year ago when the financial crisis hit, Wells Fargo has yet to pay back any of the TARP funds that it has received from the government. Many other banks such as the Bank of America have also received funds and have been paying monthly installments back the government for the large loan that the government lended them.

There are two large banks that have failed and received substantial funds that they have yet to pay back. One of those debtors is Citi, the troubled New York lender with $45 billion in borrowings and billions more in federal asset guarantees. It is widely viewed as dysfunctional and overextended, and isn't expected to repay its TARP borrowings any time soon. The other faulty borrower is Wells Fargo. Like Bank of America, Wells would likely need to negotiate the terms of any TARP repayment with Treasury. The government naturally wants its money back -- but it also wants to make sure banks have enough capital to avoid another meltdown should the recovery take a detour.

In a more recent article, Wells Fargo Bank reports it will pay back the federal government $371.5 million in its first quarterly bailout installment. The government will be happy that Wells Fargo has taken the initiative to start paying back some of the borrowed funds.


Job Market Shows Big Improvement

Posted by: Christina Dove

Throughout the entire economic crisis, we have seen a steady decline in the job market. Many people have been laid off, many college graduates are finding it hard to get hired, and many employers are trying to cut labor costs. Since the recession has hit almost every American has had their job/salary impacted in one way or another.

However, despite this gloomy economy, there has been a slight improvement in the job market. For the past month of November, the economy only lost 11,000 jobs which is a minor improvement from the number of jobs that have been lost in the past few years. Although many economists are excited about this promising statistic, it is too early to tell if the improvement is permanent for months to come. "I think it's a little bit premature for champagne, but after enduring two years of really bad news, let's enjoy this one," said Jay Bryson, economist with Wells Fargo Securities. "You've got to walk before you start running. I don't think we're walking yet, but we're starting to get back up on our feet."

It will still take time for the people who have already lost their jobs to get their feet back on the ground and get a new job. But the progress we have seen this past month may make it that much easier for some people to start making money again in this down economy.


Thursday, December 3, 2009

Dubai Needs Money

Posted By Ahmed Al-Salem
Dubai's debt crisis is hurting world financial markets, raising concerns that some banks could decrease their lending and stall the global economic recovery. The possible effects centered on fears that international banks could suffer big losses if Dubai's investment firm defaulted on its $60 billion debt. Stock and commodity markets tumbled in New York, London and Asia as investors flocked to the U.S. dollar for safety. Although the size of Dubai’s debts is comparatively modest at $80 billion, the uncertainty spooked the markets, with no one sure who its creditors are. Several banks rushed out statements to reassure investors that their exposure was small. Pressure mounted Friday on the federal government of the United Arab Emirates to step in with financial support, after this city-state's decision to request debt-payment delays spurred an initial rise in global markets.

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Tuesday, December 1, 2009

Money Problems in Dubai

Posted By: Sara Sindelar

Black Friday was not what investors and retailers expected. With the number of customers in stores did not meet expectations the traffic was high due to the marketing of blowout deals. On top of black Friday sales not meeting expectation, Dubai World released information that they were in major debt.

Dubai World has debt that they are unable to pay back. This has caused the DOW to fall 155 points on Friday. After reaching 13 month highs Wednesday this Dubai news has caused the DOW to fall 155 two days later. Dubai World’s debts are up to around $60 billion.

With more bad news affecting the markets and to add to the list of bad news we need to focus on hope. Unemployment may be at a 26 year high but the markets are increasing over the past year. The news of what seemed to be a flourishing economy of Dubai hopefully will not have a long lasting affect on the United States economy.

Saturday, November 28, 2009

Food Stamps

By Quang Nguyen

People used to have negative feeling when talking about food stamps. Well, during this current economy, more and more people have to take advantage of food stamps to survive. Not just inner cities, but everywhere, the range of food stamp users is getting wider and more more diverse. It is estimated that the food stamp program reaches record high with 36 million users for milk, bread, and cheese. The majority is in the cities, but there are signs of users in suburbs with foreclosures. Within the 239 counties in the US, a quarter is now under the food stamp program. Some counties like Appalachian, as much as half of its 4,600 residents have to live by with food stamps.

Things get worse. It is estimated that almost half of all American kids will experience food stamps at some time during their childhood. Even though most people who use food stamps are not starving, we need to see the big picture here. The fact is that many people who need to use food stamp often do not get them. According to the US Department of Agriculture, dozens of states failed to reach their most needed citizens. The USDA stated that one in seven American households does not have food security in 2008. In addition, about 15 percent of American households are struggling to get enough food on a daily basis.

The average American like Ms. Luna said that without the food stamp program, she would not know what to do since she lost her job. Americans are facing two issues coming at once: jobs declining and prices for basic goods rising. You really know it is bad when you know that one in every eight residents in Michigan receives food stamps, and it's one in seven in Kentucky. The poverty live is less than $28,000 for a family of four and if this is your situation you would receive $100 per person per month.


Friday, November 27, 2009

Strategy During the Current Economy

By Quang Nguyen

Companies are struggling with the economy. It is difficult to keep their employee payrolls. Many companies are now trying new tricks to cut costs. One of which is getting low paid interns. With a tag line like "giving unexperienced worker a chance to gain knowledge", employers are increasing their internship programs. Many managers see it as the cheaper way to double the workforce and make a higher profit. Many people who were fired from the recession, now finding themselves in the position of these low paid interns just to live by.

Another trick to to increase overtime. Since many companies already laid off their employees, the rest need to work much harder to compensate for the loss. The employees are paid more for their overtime, but they must work much harder since the schedule is mostly on everyday of the week. They stated that overtime helps them to take care of their family and maintain a higher lifestyle with more money coming in. It seems to be a win-win for both employers and employees.

Companies also take advantage on the foreign workers. Most of foreign workers have a much higher skills and degrees than the average American since not everyone could come here. For example, Indians who finished their college back home and came to America for grad schools. These people are offered jobs with a much lower paid. Things get much worse for illegal immigrants who works at basic jobs. These people do not have their rights protected and many companies are taking advantage on it.


Investing in the next big thing: China

By Quang Nguyen

With the struggling US economy, it is difficult to estimate when this crisis is really over. The smart move is to invest in China, the new world class economy that is growing strong. With an annual growth of 5% to 8%, China is a great portfolio for your investment. The government of China is supporting individual investors, so you can purchase any share that is listed on the Hong Kong or US exchanges. Moreover, there are mutual funds that will help you to invest in companies within the mainland China. However, expert in the field strongly recommended you not to invest directly in China. Instead, you can invest through the Hong Kong exchanges. Chinese companies are listed as "H" shares, and "Red chips" are Hong Kong based companies that get their profits from China.

Recently, three investment firms, representing many individual investors, joined Sina Corp.'s management team after investing $180 million in the company. Sina is China's largest internet portal company. Sina could be compared as Google or Yahoo in China. Imagine spending just $180 million to control the most popular company in China, that $180 million could not even get you Facebook in the US. Since the average earning per person is much lower in China, the price to invest in good companies there is fairly cheap.

Investors also need to avoid risks. Many Chinese companies do not have good accounting transparency and corporate governance standards that you are used to see in US companies. Therefore it is much riskier to invest in China. However, high risk is compensated with high return. A country with more business traveling, more tourists, and more international brands is in high demand. The price of staying in cities such as Shanghai is getting close to New York. You need to hurry up to invest in this new market before it is too late.


Financial Crisis Affects Black Friday Shopping

By Quang Nguyen

As most people have predicted, big sales off and promotions could not get Americans in their black friday spirit. Since there was a death in Valley Stream, NY as a result of the craziness in black friday shopping, national stores like Wal-mart have tighten their security to control the crowds. However, it was not as chaotic as it has always been in black friday. Although many sale items were gone early, it is reported that sales were slow this year.

Not every store was full, for example, Sam's Club in Fullerton, CA was mostly empty. For Home Depot in CA, it seems like people enjoy the beach more than early Christmas shopping. At the Target store in Irvine, CA, customers said the shopping was ok since there were lots of parking spaces. Some customers even stated the fact that many shops did not given out as much incentives as previous years has contributed to the low turnover this black friday.

Optimistic stores however reported that black friday this marked as a sign of recovery. They said that customers were mostly using cash and debit cards instead of credit cards. Shoppers spent their money on practical things like pillows and pajamas since they were trying to cutback. Store owners expect a higher shopping turnover for Christmas as the economy is slowly stabilize.


Dubai Debt Affects Stocks in US and Asia

By Quang Nguyen

The financial crisis has affected everyone in the world, and now it's coming to the Middle East. Dubai World, representing the Emirate's investment industry, is seeking for another 6 months in order to pay its debt of $59 billion. As a result, the stock markets in the US as well as Asia have reported low on Friday, November 27th. Dow Jones was down 1.48%, S&P fell 1.72%, Nasdaq slipped 1.7%, Hang Seng in Hong Kong declined 4.8%, Kospi in South Korea dropped 4.7%, Nikkei in Japan and Taiex in Taiwan both sagged 3.2%.

Things might be worse than it seems. The total amount of Dubai's debts could be as high as $80 billion. It is not reported who are the creditors of these debts. As a result, many banks have given their official statement that their investors are not at risk.

Some incidents also taking part in this Dubai crisis. For example, the closure of the financial markets in the US for Thanksgiving increases the uncertainty of the global market. In addition, the Eid al-Adha, a religious holiday in Dubai, makes the financial market unpredictable. Moreover, a computer crash at the London Stock Exchange causes dealers in Dubai unable to trade for many hours.

People are afraid of a domino effect since Dubai is one of the biggest economical market. The crisis in the US has already weaken the world's economy. Could Dubai, known for its lavish hotels, palm-shaped islands, and indoor skiing, really be the next on the bankruptcy list?


Thursday, October 22, 2009

Is Economy really Imporving ???

By Anshu Dixit

The United States ranks first in the world in the total value of its economic production. According to the most of the sources, our economy is improving, but with a steady pace. Most of the recent recourses have shown that our economy has not improved that much as people were expecting. Research have shown that, The economy has shown signs of stabilizing or modestly improving in recent weeks, according to the latest Federal Reserve snapshot of regional economic conditions.” Some areas like housing market, manufacturing activities have been improving, whereas commercial real estate market is still a matter of concern. The most concerning matter is labor market. Many of the firms are saying that they are hiring more employees, but the unemployment rate has gone so high that new hiring is not making a big difference. According to the resources, the number of new claims for jobless benefits jumped more than expected last week. Claims had fallen in five out of the previous six weeks, and most economists expect that trend to continue but at a slow pace, with employers still reluctant to hire. There were 531,000 initial jobless claims filed in the week ended Oct. 17, up 11,000 from an upwardly revised 520,000 the previous week, the Labor Department said in a weekly report. The week included the Columbus Day holiday. Are these the sign of improving economy? So, we all know that the economy will be better, but exactly when no one knows. It shows that, there is a long way to go, to get over from these financial crisis.

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Home Buyer Credit Fraud

By: Zachary Pienkowski

Everyone knows that over the last year and a half the United States has gone through one of its most trying economic downturns in its history. One of the worst areas of commerce, and culprits of the problem, was the residential housing market. In an attempt to jump-start the residential housing market and encourage people to purchase homes, the government established a first time home buyers tax credit program. A program that has been seen as a success has hit its first snag. Congress is concerned that more than 19,000 people filed for the tax credit on their 2008 returns for homes that they had not yet purchased. This resulted in a potential loss of nearly $130 million in fraudulent tax credits. In addition to this the IRS has discovered claims of $500 million from 74,000 tax payers that had indications of prior home ownership. Due to the inability to electronically check the validity of any documentation, the IRS did not require tax payers to provide any documentation at all to verify the purchase of a home. Since the IRS has found out of the fraudulent claims they have tightened oversight of this process and will hopefully alleviate the problem of any unwarranted claims. Its of concern to Congress that this issue be resolved as quickly as possible because the program is scheduled to end within the next month and the housing market remains shaky. In an effort to continue to rebuild the economy there is talk to expand and extend the program, but concerns of cost remain the hurdle and it will be difficult enough to finance, let alone have to worry about fraudulent claims.

New jobless claims rise more than expected to 531K

Posted By:-Anshu Dixit
By Christopher S. Rugaber, AP Economics Writer

WASHINGTON (AP) -- The number of newly laid-off workers filing claims for jobless benefits rose more than expected last week, as employers remain reluctant to hire even with the economy showing signs of recovery.

Claims had fallen in five out of the previous six weeks and most economists expect that trend to continue, but at a slow pace, as jobs remain scarce.

The report is "slightly disappointing," Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a note to clients, "but it does not change the core story, which is that ... a clear downward trend in claims has emerged" over the past two months.

Wednesday, October 21, 2009

Changes in the Banking Industry

Posted by Scarlett Lu

During a financial crisis it is important for banks to retain capital so they do not have to depend solely on the government when a financial crisis occurs. Government and central banks have put alot of money in keeping the financial system work. Retaining capital will reduce large bank's risk of becoming illiquid during a financial crisis.This will improve banks capital levels. Regulatory reforms and re-evaluation of the monetary, regulatory, and supervisory policy is needed to prevent another financial crisis. An authority should be created to help sustain the economy and dealing with failing financial firms. Financial institutions should discover the problems earlier before they mature over time.
Global regulators state that banks have to improve their risk management and internal controls following the financial crisis. The report, called "Risk Management Lessons from the Global Banking Crisis of 2008" was created by global regulators to repost the progress of reducing financial risk.
Regulators want to phase out programs that guarantee debt issued by banks so banks will be relying less on the government. The less banks reply on the government the more careful they will be in loaning out to risky customers. Regulators want to set up a 6 month safety net facility, even though it will be more costly. Under the 6-month facility, subject to approval, a bank's senior unsecured debt issued after October 31 would be guaranteed through April 30, 2010.

Credit Rating Agencies and the Next Financial Crisis

Posted by Scarlett Lu

I recently chaired an Oversight and Government Reform Committee hearing to examine the role credit rating agencies contributed to the financial crisis. Credit rating agencies play a powerful role in our economy and they played a starring role in the collapse of the financial system last year.
The main mission of credit rating agencies is to tell investors the risk level of bonds and other debt securities. Pension plans, banks, insurance companies, and other investors depend on these ratings to help them decide where to invest their funds.
Unfortunately, for the past decade, the credit rating system has not worked well at all. Last year, my committee learned that ratings did not capture the true risk of many deals, because the rating agencies were more concerned with their own bottom lines. In turn, millions of people have had their pensions wiped out, seen their life savings evaporate or lost their homes due to foreclosure.
A year after the collapse of Lehman Brothers and the massive government bailout of AIG, Bank of America, and others, it looks like not much has changed. During the hearing we heard compelling testimony from two senior employees at Moody's who described a culture of tainted ratings and lax regulatory compliance at the agency which helped contribute to the financial collapse.
Eric Kolchinsky, a former Managing Director in charge of rating residential mortgage backed securities at Moody's, testified that conflicts of interest, inadequate methodologies and lack of independence for the Credit Policy and Compliance groups significantly contributed to the shoddy performance of Moody's ratings. According to Mr. Kolchinsky, Moody's has adopted "new" methods that actually maintain the status quo and continue to undermine the reliability of their ratings.Read more at:

Tuesday, October 20, 2009

Free Credit Report Scams Increase As Credit Crisis Gets Worse

By: Zachary Pienkowski

This is where a lot of companies who are out to take advantage of the average consumer come into play. Just because you see advertisements all over the Internet, T.V., and radio about getting free copies of your credit reports doesn’t mean that there isn’t some sort of catch to it. Over 99% of the time when searching for a company that can offer you your 3 major credit bureau credit reports for free you will be asked to purchase some other kind of product or sign up for a credit monitoring service in order to receive your free credit reports.

But if you are being asked to pay for something else before you get to see your “free” credit reports than is it really free? That is the question that many people are asking themselves after signing up for a credit monitoring

trial just to see their credit reports. Only to find themselves paying a monthly fee for a service they never really wanted just because they forgot to cancel their membership in time.

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