Monday, April 27, 2009

What Caused The Economic Crisis Of 2008?

I think we can sum up the cause of our current economic crisis in one word — GREED. Over the years, mortgage lenders were happy to lend money to people who couldn’t afford their mortgages. But they did it anyway because there was nothing to lose. These lenders were able to charge higher interest rates and make more money on sub-prime loans. If the borrowers default, they simply seized the house and put it back on the market. On top of that, they were able to pass the risk off to mortgage insurer or package these mortgages as mortgage-backed securities. Easy money!

What Went Wrong With Our Financial System?

The whole thing was one big scheme. Everything was great when houses were selling like hot cakes and their values go up every month. Lenders made it easier to borrow money, and the higher demand drove up house values. Higher house values means that lenders could lend out even bigger mortgages, and it also gave lenders some protection against foreclosures. All of this translates into more money for the lenders, insurers, and investors.

Click Here To Read More....

Posted By Lee Ruth

US to take majority GM stake

By Angelo Orlando Jr.

The US government is to take majority control of General Motors in a sweeping restructuring plan that involves more plant closures and job losses and an aggressive debt-for-equity swap.
Under the accelerated restructuring, GM will shut 13 of 47 plants by the end of next year, involving 7,000 job losses. The carmaker is also to close its 83-year-old Pontiac brand and cut its dealership network from 6,200 to 3,600 by the end of 2010.

Fritz Henderson, chief executive, said: “The objective here is not to survive. The objective is to develop an operating plan that allows us to win.”

The balance-sheet restructuring would lower GM’s debt by $44bn to an estimated $23bn, leaving the government and a healthcare trust managed by the United Auto Workers union with 89 per cent of the equity.

The balance-sheet restructuring would lower GM’s debt by $44bn to an estimated $23bn, leaving the government and a healthcare trust managed by the United Auto Workers union with 89 per cent of the equity.

Financial Crisis; Job Market

As the current school year is winding down, I'm going to take this opportunity to speak of the current job market, and my current search for jobs. I am a senior with a dual major of Marketing and Finance. It has always been my dream to grow up and become a large player in the stock market. As graduation approaches, I have been interviewing with several financial and sales companies. By utilizing the Syracuse University Orangelink website, I was able to land two job offers. One was budgeting and financial planning for a group of 15 hospitals on Long Island, and the other job offer was with a stock broker. In today's market, you can't be picky about jobs. I am extremely fortunate to have different options to choose from, and I blieve that I am picking the stock broker job. The current job market is horrible, and I am so thankful to be in the position I am. My advice to young students is to take advantage of the Orange Link website. The link below leads to a youtube video of a financial analyst speaking on unemployment due to the economic crisis. If you would like to follow up on this issue, click on the link below.

Posted by: Joseph Owen

Sunday, April 26, 2009

Senate wants $5M to study financial crisis


Posted by: Stephanie King

Written by: Anne Flaherty

WASHINGTON (AP) — The Senate has agreed to spend $5 million to investigate the cause of the economic crisis as it moves toward passing a $245 million bill that would substantially increase the number of FBI agents and prosecutors working mortgage fraud.

The legislation is aimed at showing voters that lawmakers are serious about getting to the bottom of the nation's financial woes, even as they struggle to agree on how to improve the economy and prevent it from getting worse.

"We must hold those responsible for this calamity to account," said Sen. Kent Conrad, D-N.D.

President Barack Obama and congressional Democrats have vowed to complete by the end of the year an overhaul of the federal regulatory system governing the nation's financial institutions. Democrats say that had regulations been tighter, banks would not have taken many of the risky bets that ultimately put them in danger of collapsing and required a $700 billion government bailout.

But as Republicans and Democrats debate the finer points of that longer-term effort, lawmakers are pitching ways to provide immediate relief to cash-strapped voters.

The $245 million fraud bill is "our chance to authorize the necessary additional resources to detect, fight and deter fraud that robs the American people and American taxpayers of their funds," said Sen. Patrick Leahy, D-Vt., who co-sponsored the bill with Sen. Chuck Grassley, R-Iowa.

The Senate agreed 92-4 on Wednesday to designate $5 million for a congressionally appointed, independent "Financial Markets Commission." The panel, which would be modeled after the 9-11 Commission that investigated the 2001 terrorist attacks, would be given 18 months to issue its recommendations.

Lawmakers also agreed to create a separate Senate committee focused on the financial meltdown.

For Full article: click here

How to survive a financial crisis??

Written by: Stephanie King

While the economy continues to look like it’s harder and harder to recover from it shambles, looking for ways to save money is the only way to turn. As commercial products and services increase in price, the income levels seem to stay the same. Companies are cutting jobs and giving salary cuts.
Here are some tips on saving money in these tough times:

· Create your own personal cash flow statement
As for most people, the paycheck amount stays the same regardless of hours worked based on salary workers. For this reason, we know how much money we have and keeping a list of expenses and purchases made will help determine if there have been any unnecessary purchases made.

· Keep debt as low as possible
Using your cash flow statement to determine which expenses can be used using a credit card and limit the uses. Use your income to make big purchases and use the credit card for minor purchases which will reduce your monthly payments.

· Always try to do your best work at your job

As more and more companies are cutting jobs and giving salary cuts, it is extr4emely important now more than ever to insure that the company knows how good of an asset you are to the company. If the company knows you are doing the best job and are indispensible to the company, it will be much harder for them to want to get rid of you.


Financial Crisis to threathen attempt to cut poverty

Posted by Stephanie King

Written by : IMF survey Online

Global financial crisis setting back progress on poverty reduction
Growth in developing countries hit by global recession
Strong policy actions needed to respond to development emergency

The global financial crisis has hit poor countries especially hard, posing serious threats to their hard-won gains in boosting economic growth and achieving progress toward the UN Millennium Development Goals (MDGs), a joint IMF-World Bank report warns.
The overall outlook for the MDGs (a set of eight globally agreed development targets that the international community is aiming to achieve by 2015), already a cause for serious concern, has become still more worrisome, says this year’s Global Monitoring Report 2009: A Development Emergency (GMR). Strong economic growth in developing countries in the past decade had put the MDG for poverty reduction within reach at the global level, but the triple punch of the food, fuel, and financial crises creates new risks.
According to the report, the goals of gender equality in primary and secondary education and access to clean water have seen relatively good progress and are expected to be achieved at the global level. However, most human development goals—especially for child and maternal mortality, but also for primary school completion, nutrition, and sanitation—are unlikely to be met at the global level.
“With simultaneous recessions striking all major regions, the likelihood of painfully slow recoveries in many countries is very real, making the fight against poverty more challenging and more urgent,” said John Lipsky, IMF First Deputy Managing Director, in a statement.
Impact on developing countries
The GMR says that the global financial crisis will affect developing countries through reductions in export volumes, commodity prices, remittances, tourism, foreign direct investment, and possibly even foreign aid. The IMF said April 22 that growth in developing countries is projected to fall to 1.6 percent in 2009, from an average of 8.1 percent in 2006–07. The global economy is projected to shrink by 1.3 percent in 2009, with a slow recovery expected to take hold next year.
At their summit in London on April 2, the G-20 leaders, which represent both advanced and developing economies, decided to dramatically beef up the IMF’s lending capacity to support its ability to combat financial contagion, providing significant new financing and a broad mandate for action.
The huge increase in IMF resources would bolster the IMF’s firepower to help economies around the world respond to the crisis, which has plunged economies into recession and sent world trade plummeting. Low-income countries would also get help, with leaders proposing more than a doubling of concessional lending resources.

For Full Article, click here .

Wednesday, April 22, 2009

Bailout current situation

By Xavier Guerrero (Copied from CNN)

The government continues to attempt to increase the range of their economic stimulus plan.

Still more bailouts are in the air, and Treasury Secretary Henry Paulson said Wednesday the government would broaden the reach of the $700 billion bailout plan to support non-bank financial institutions.

So far, the government has pledged about $172 billion of that $250 billion to a total of 52 banks, according to Keefe, Bruyette & Woods. That total may actually be higher, since the Treasury is relying on the banks to announce their participation in the program.

Click here for more information


Banks Sway Bills to Aid Consumers

By Lindsay Chin

WASHINGTON — They may be held in low esteem around the nation, but the country’s largest banks still wield considerable influence in Washington.
The banks have made it difficult for Congressional Democrats and the White House to give stretched homeowners a stronger hand in negotiating lower monthly payments on mortgages and to prevent credit card companies from imposing higher fees and interest rates.
Having won some early skirmishes by teaming with Republican allies, the banks now appear to have the upper hand and may wind up killing — or at least substantially diluting — both pro-consumer measures.
To turn the tide, Democrats are calling in their big gun — President Obama — to pressure the executives at the largest credit card lenders. In coming weeks, officials say, the administration intends to make a major push on consumer finance issues, possibly including tough new lending standards for homeowners seeking mortgages.
Mr. Obama is set to meet at the White House on Thursday with executives from American Express, Bank of America, Capital One Financial, Citigroup, Discover Financial Services, JPMorgan Chase and others to discuss what officials say are abusive credit card fees and practices.
During the presidential campaign, Mr. Obama made an issue of what he considered excessive credit card fees, but he has been largely silent on the matter since his arrival in Washington. As a candidate, he also favored legislation to make it easier for troubled homeowners to use bankruptcy court to ease the terms of their mortgages, a proposal he again endorsed last month.

News From Detroit

The latest repercussion of the financial crisis has been the auto industry. Here's an article from Reuter's regarding the possible break up of the American auto industry. Specifically, the article looks at what would happen to the profitable brands owned by each of the three major manufacturers.

If any of the big three U.S. automakers is forced to sell assets in a liquidation, their brands and patents may attract the most interest, while the manufacturing assets could be a tough sell.

Both General Motors Corp (GM.N) and Chrysler LLC -- currently being kept afloat by billions in taxpayer dollars -- have warned they could file for bankruptcy if they are unable to reach deals with key stakeholders. A bankruptcy for either company is expected to save the stronger and more profitable parts of the companies, such as GM's Chevrolet and Cadillac divisions and Chrysler's Jeep unit, but some parts could be destined for fire-sales or liquidation as the U.S. auto industry grapples with sharply reduced consumer demand.

click here for full article

by Rob Wildhack

Financial Crisis A Global Problem

Like the demonstrators who will greet them in London Thursday, G20 leaders will be marching to the beat of different drummers.

British Prime Minister Gordon Brown, who has already begun to welcome the leaders, is stressing the positive, reports CBS News correspondent Mark Phillips.

“We are taking the necessary decisions to safeguard the future of the world economy,” Brown said.

And the leaders, who are from countries which generate 80 percent of the world's wealth, are all suffering from the same problems: falling production, rising unemployment. The G20 group of governments and central bankers, which was formed 10 years ago to foster global financial stability, has never been needed more.

Click Here To

Posted By Lee Ruth

Monday, April 20, 2009

The Curse of Politics

by Lionel Creech

Financial crises can drag on because efficient remedies are politically unpalatable.

As their banking crisis approaches Japanese proportions, Americans can take comfort from the fact that their political culture is more capable of finding a solution. Or can they? Today’s anti-banker backlash bears a striking resemblance to the voter outrage that stymied efforts to fix Japan’s banking system in the 1990s. Indeed, an enduring lesson of financial crises is how political constraints interfere with economically efficient solutions.

Click here to read full article...

Big Banks Have a Big Credit Problem

Posted by Andrew Moran

NEW YORK (Fortune) -- Banks are socking away funds for future loan losses at a record clip. But at the sickliest institutions, problem loans are rising even faster.

On Monday, Bank of America (BAC, Fortune 500) became the latest big bank to report a stronger-than-expected quarterly profit, posting net income of $4.2 billion, or 44 cents a share. Analysts had expected a profit of just 4 cents a share.

Like its rivals Citigroup (C, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Wells Fargo (WFC, Fortune 500), Charlotte-based BofA pointed to strong fixed-income trading results and a big rise in earnings from its mortgage business.

BofA managed to post the big profit even as it set aside more than $6 billion to cover future loan losses. The bank's loan loss reserve now stands at $30 billion -- double its year-ago level.

BofA expects more borrowers will fall behind on payments or default on their loans as job losses deepen and the economy struggles through its worst recession in decades.

"We understand that we continue to face extremely difficult challenges primarily from deteriorating credit quality driven by weakness in the economy and growing unemployment," CEO Ken Lewis said in a statement Monday morning. Click here to continue reading...

Small Business Stimulus Worries

Here's an article from CNN Money about concerns small business owners have regarding the economic stimulus plan.

Geoff Chapin, CEO of green remodeling company Next Step Living, is ready to do his part for our flailing economy. He believes that federal stimulus funds, which include $5 billion for weatherization projects, will trickle down to his Boston-based startup.

"We plan to hire up to 120 people in the next 18 months," he told Fortune Small Business.
But small business advocates worry: Will entrepreneurs like Chapin really nab their share of lucrative government contracts?

The White House estimates that nearly 75% of the funds will be committed by August 2010. To meet that tight deadline, agencies may hire bigger companies with a greater capacity to handle several different types of projects.

click here for full article

G-20 Pumps Money into Global Recession

Posted by: Joseph Owen

As I have been analyzing the current financial crisis, I found a great article on the G-20 summit that took place on April 2nd, 2009.  The G-20 is a group of the largest economies in the world.  These countries leader met together to discuss the global recession and what could be done.  They agreed to put together a stimulus package worth up to $1 trillion.  With this investment pumped into the global economy, G-20 wishes to stimulate the international banking system.  The majority of the stimulus package will be put toward correcting the world financial system.  The goals of the package are listed as the following;

The six-point consensus consisted of measures to:

  • Restore confidence, growth, and jobs;
  • Repair the financial system to restore lending;
  • Strengthen financial regulation to rebuild trust;
  • Fund and reform our international financial institutions to overcome this crisis and prevent future ones
  • Promote global trade and investment and reject protectionism, to underpin prosperity;
  • Build an inclusive, green, and sustainable recovery.

  • To read up further on the G-20 conference, click on the link below...


    Hope for Recovery

    By Lindsay Chin

    In fall of 2008, the financial crisis emerged as the biggest crisis since the Great Depression. Hundreds of billions in mortgage-related investments went bad. After a year of heavy losses and three bailouts from Washington, Citigroup said Friday that it had made money. It had made a net profit of $1.6 billion for the first quarter. Small wisps of recovery are appearing in the nation’s banking industry. Banks are doing all they can to make themselves look good. The industry’s goal is to create the impression that banks are stabilizing so private investors will invest in them, minimizing the need for additional taxpayer money. Citigroup had its first profitable quarter in eighteen months dur to its unusually strong trading results. It also made progress in reducing expenses and improving its capital position. However, it has used several common accounting tactics to increase its reported earnings. One of the tactics is a move known as credit value adjustments. The strategy added $2.7 billion to the company’s bottom line. Also, the industrial conglomerate General Electric held up reasonably well in a difficult first quarter. The Business showed slight gains in profit. As in the capital markets, they say they are improving; industrial orders are down but are not collapsing. There is hope that the United States will recover from this recession soon.

    Bank fears sink stocks

    Angelo Orlando Jr.

    Stocks suffered an across-the-board decline on Monday as investors remained jittery about the financial sector despite big profits at Bank of America.
    The Dow Jones Industrial Average was off 250 points, or 3.1%, hurt by a 22% slide in Bank of America. The bank said that its first-quarter net income more than tripled, with the company's recent Merrill Lynch acquisition contributing more than $3 billion to its bottom line, but net charge-offs rose and losses in its credit-card business ballooned.

    Major bank stocks had rallied over the last month but fundamental questions linger for the sector. The industry's ability to extend credit is still constrained, according to a Wall Street Journal analysis of Treasury Department data.

    Wednesday, April 15, 2009

    Financial Crisis: What you should know

    The financial crisis gripping the country had already created widespread confusion about what these problems might mean for ordinary Americans, and that was before a week of political bickering over a massive financial rescue package for Wall Street.

    Hoping to calm a jittery public and win over some skeptics, a new version of the rescue package includes a provision that would increase the amount of money the Federal Deposit Insurance Corp. would insure in the event of a bank failure. That version passed the Senate Wednesday and was approved by the House of Representatives on Friday.

    Click Here To

    Posted By Lee Ruth

    Stress this: Some Banks are Weak

    by Lionel Creech

    The fact that the government will release results of the bank stress tests is good news. It's about time regulators abandoned the notion that all banks are equal.

    The Obama administration confirmed Wednesday that the government will release some of the results of the stress tests currently being conducted on 19 big banks. The results of those tests will determine how much, if any, new funding banks will need in order to survive a longer recession.

    It is widely expected that none of the banks will actually fail the test. But that doesn't mean everyone is going to pass with flying colors, either.

    Click here to read the full article...

    Banks await stress test

    By Angelo Orlando Jr.

    The Obama administration is considering making public some results of the stress tests being conducted on the country's 19 largest banks, said people familiar with the matter, a move that could help more clearly separate healthy banks from the weaklings.
    Until now, the government has tried to treat all banks equally, pouring cash into both strong and struggling institutions to prop up the financial sector. The strategy has provided cover for beleaguered banks, which received funds along with their stronger brethren.
    This possible move, combined with first-quarter bank earnings and the push by some financial institutions to raise new capital and repay their bailout funds, could lay the groundwork for a new phase in the financial crisis. Within weeks, the stronger banks could emerge free of government shackles and flush with new funds, with weaker ones still reliant on federal largesse. That would transform how investors and the government view the financial sector.

    U.S. Program Lends a Hand to Banks, Quietly

    By Lindsay Chin

    Eager to escape the long arm of government, Goldman Sachs is preparing to return $10 billion in taxpayer funds as fast as the ink can dry on the check. But the bank, and a number of others, is quietly holding on to other forms of public support that come with virtually no strings attached.

    Banks have been benefiting from an indirect subsidy adopted by the federal government at the height of the financial crisis last fall that allows them to issue their debt cheaply with the backing of the Federal Deposit Insurance Corporation.
    That debt — more than $300 billion for the banking industry so far — helped otherwise cash-strained banks to keep their businesses running even when it was virtually impossible for other companies to raise funds. The program will continue to bolster scores of banks through at least the middle of 2012.
    The value of the assistance, economists say, is incalculable, because it helped keep participating banks alive despite the panic sown in financial markets after Lehman Brothers collapsed.
    “I don’t know how you measure that subsidy,” said Mark Zandi, the chief economist at Moody’s “That’s why they say it’s invaluable. It’s an infinite subsidy. It’s their franchise value.”

    Tuesday, April 14, 2009

    Family Money Talk

    Posted by: Joseph Owen

    This past weekend I went home to celebrate Easter, and my dad's birthday.  When I was around the house I overheard my mom speaking with one of her friends about her investments and my grandparents investments.  It had just hit me then that all the elder people that had lost so much money in this crisis, don't really have enough time to make money back that they lost.  My parents, at the age 0f 53 has lost a bunch of money in the stock market, but at least they still have time for the stock market to rebound and make some of their money back.  It is unfortunate for the elders who lost a lot of money due to the economic crisis.  I was looking around online for articles that discussed the perspective of families dealing with the financial crisis.  The link below will guide you to an article that gives real live discussions that parents have had with their families in regards to budgeting correctly, and taking care of the assets they own.  To follow up, click below.

    Wednesday, April 8, 2009

    The Worst Is Yet To Come

    Posted by Andrew Moran

    Amidst the current financial crisis, the United States economy is still in a downward spiral that is seemingly impossible to escape from. Kevin Warsh, the Federal Reserve Governor stated that the US economy was in a state of panic that predated the official recession. Among the other topics that he covered in his speech, he alluded to the fact that the state of the economy would most assuredly worsen throughout 2009. He stated that unemployment rates would likely rise throughout 2009, and that efforts to stabilize the financial system would be slower and harder than is typical in recessions. Hearing these comments from a Federal Reserve official makes it seem as if we have not encountered the worst of the financial storm yet. Mr. Warsh is not the only one who shares in this view however. Many analysts and experts from around the country agree that the current financial crisis has only just begun. Experts predict that the total amount of loans that banks will need to write-off will exceed the levels of the Great Depression. Moreover, the total cost of the TARP program has increased significantly since its implementation. Early estimates showed the total cost of the TARP program to taxpayers would be $189 billion. In more recent estimates, the total cost to taxpayers had risen $167 billion, to $356 billion. In this regard, if the experts are right, we have only seen the beginning of this financial disaster. Only time will tell if the experts are indeed correct, or if the US financial system can manage to dig itself out of this mess.


    Fed announces bleak economic outlook

    By Angelo Orlando Jr.

    The Federal Reserve announced that the future economic outlook of the United States will be bleak. The Fed released that the gross domestic product of the US is likely to flatten out for the rest of the year in 2009 and to start off slow at the beginning of next year. This news came to the surprise of many because of the optimism of policy makers. They believed that, “the second half of this year and that the economy would grow between 2.5% and 3.3% in 2010. The central bank had also projected in January that unemployment would peak at 8.5% to 8.8% this year and fall to a range of 8% to 8.3% in 2010.” But many policy makers believed that the economic woes will continue and that the economy will remain slow into 2010. The Federal Reserve also stated concerns for deflation and sought out ways to solve the financial problem. One solution is to buy long term treasury bills and buy mortgage backed securities. The Fed decided to buy up $300 billion in long term t-notes and to also buy up to $750 billion in mortgage backed securities. The Treasury and mortgage purchases helped bring down interest rates, including mortgage rates, and helped feed a rally in U.S. stocks.

    Steps to Save the Economy

    By Lindsay Chin

    With the dramatic economic weakening the United States and across the world have push the Federal Reserve to pump more than $1 trillion into the economy. Members of the central bank’s Open Market Committee worried about persistent declines in the economy. The Open Market Committee deals with monetary policies that influence the availability and cost of money and credit to help promote national economic goals. The Federal Open Market Committee consists of twelve members- the seven members of the Board of Governors of the Federal Reserve System, the president of the Federal Reserve Bank of New York; and four of the remaining eleven Reserve Bank presidents. The Open Market Committee now is taking actions that would be the best path toward loosening credit markets. From the committee’s meeting in March, which information was released now, it offered an idea of how the Fed had decided to inject $1 trillion into the economy through a decision to buy $750 billion in mortgage-back securities and $300 billion of longer-term Treasuries. This more have caused stocks to soar and government bond prices to spike. Also the price of gold rose and the value of the dollar dropped against other currencies, which reflected the worries that the Fed’s actions could set the stage for a weaker dollar and sharp inflation once the economy begins to recover. With that the Securities and Exchange Commission, S.E.C, has announced five new proposals to curb the practice of so-called short-selling, which includes a modified version of a Depression-era rule that prevents investors from shorting a stock when its price is already declining. All theses new steps are to help the United States pull out of this recession.

    Bernie Madoff; The Devil

    Posted by: Joseph Owen

    I do not even know where to begin about Bernie Madoff.  I personally feel as if he should suffer worse than the thousands of people he screwed over with his ponzi scheme.  Stealing money from thousands of clients, some in which had billions of dollars invested with Bernie Madoff is only setting our economic crisis back.  How can one person effect the economy in such a poor manner.  The answer is, Bernie Madoff.  What a jerk.  I don't understand how he was not put directly in jail, and is still allowed to walk the streets.  Madoff, even after being caught, preformed illegal operations; including sending money and assets to family and friends before he would be put in jail.  Bernie Madoff shows the evil in people, which is so sad to see due to the harsh economic times of today.  People can be that selfish to screw thousands of people just for personal wealth.  I was reading up on the clients of Madoff, and it states that one customer had over $7.5 billion.  What Bernie Madoff did is unthinkable, and he should be put in jail and suffer for the rest of his life.  People went from being extremely wealthy one day, to dead broke the next.  In my eyes, Bernie Madoff should suffer for the remainder of his life.  If you would like to see a few articles concerning the ponzi scheme and Bernie Madoff, click on the following links below.

    Monday, April 6, 2009

    George Soros on Credit Crisis

    By Xavier Guerrero

    They didn't have a way to emdeb the video, but it is a really good video. So, please click the link, and watch the video. It is very good and interesting.

    Click here to watch it!

    Credit Crisis — The Essentials

    Xavier Guerrero

    In the fall of 2008, the credit crunch, which had emerged a little more than a year before, ballooned into Wall Street’s biggest crisis since the Great Depression. As hundreds of billions in mortgage-related investments went bad, mighty investment banks that once ruled high finance have crumbled or reinvented themselves as humdrum commercial banks. The nation’s largest insurance company and largest savings and loan both were seized by the government. The channels of credit, the arteries of the global financial system, have been constricted, cutting off crucial funds to consumers and businesses small and large.

    In response, the federal government adopted a $700 billion bailout plan meant to reassure the markets and get credit flowing again. But the crisis began to spread to Europe and to emerging markets, with governments scrambling to prop up banks, broaden guarantees for deposits and agree on a coordinated response.

    Click here for more

    U.S. Lays Down Terms for Auto Bailout

    Xavier Guerrero

    The White House on Sunday pushed out the chairman of General Motors and instructed Chrysler to form a partnership with the Italian automaker Fiat within 30 days as conditions for receiving another much-needed round of government aid.

    The decision to ask G.M.’s chairman and chief executive, Rick Wagoner, to resign caught Detroit and Washington by surprise, and it underscored the Obama administration’s determination to keep a tight rein on the companies it is bailing out — a level of government involvement in business perhaps not seen since the Great Depression.

    President Obama is scheduled to announce details of the auto package at the White House on Monday, but two senior officials, offering a preview on condition of anonymity, made clear that some form of bankruptcy — a quick, court-supervised restructuring, as they described it — could still be an option for one or both companies.

    Mr. Obama’s auto industry task force, in a report released Sunday night assessing the viability of both companies and detailing the administration’s new plans for them, concluded that Chrysler could not survive as a stand-alone company.

    Click here for more


    New York Times
    General Motors

    World Leaders Pledge $1.1 Trillion for Crisis

    It has come to the point where President Obama has travelled to the G-20 summit in order to stress the importance of a struggling economy in the United States. However, it is important to understand that the United States in not the only country that is struggling and that helping out other countries is an important problem that must be faced in order to keep strong ties with countries all over the world.

    LONDON — Struggling to bridge deep divides over how to revive a paralyzed global economy, the leaders of the world’s largest economies agreed Thursday to bail out developing countries, stimulate world trade and regulate financial firms more stringently. But President Obama conceded that there were “no guarantees” that those measures would reverse the biggest global downturn in six decades.

    Prime Minister Gordon Brown of Britain, host of the Group of 20 summit meeting called to fight the crisis, announced at its conclusion that the leaders had committed to $1.1 trillion in new funds that would greatly increase the capital available to the International Monetary Fund. The goal would be a revival in trade, which is expected to contract this year for the first time in 30 years.

    Click here to

    Posted By Lee Ruth

    Crisis Not Quite Over

    Here's an article from Bloomberg outlining a recent drop in U.S. jobs. This is important because employment is one of the key measures in economic health and when employment is hurting, it is indicative of a struggling economy. 

    A measure of U.S. job prospects fell in March for a 14th straight month, indicating the labor market will deteriorate further, a private report showed.

    The Conference Board's Employment Trends Index last month decreased 2.3 percent to 90.1, the lowest since February 1994, from a revised 92.2 in February, the New York based research group said today. The index declined 22 percent from a year earlier.

    Click here for full article

    Japan Stimulus Plan

    Posted by: Joseph Owen

    Not only is our economy failing.  Economies around the world are feeling the economic pain that we have been feeling for the past several months.  The largest economy in Asia, Japan, is currently in their worst economic slump since WWII.  Due to the poor economic state of the country, Japan is eyeing out a $100 billion stimulus package.  Of all of the advance countries throughout the world, Japan is forecasted to grow the least, which does not suit well for the future.  To article is found on google news, and if you would like to follow up on this issue, click on the link below.  

    Click here for link to article...

    U.S. Lays Down Terms for Auto Bailout

    By Lindsay Chin

    WASHINGTON — The White House on Sunday pushed out the chairman of General Motors and instructed Chrysler to form a partnership with the Italian automaker Fiat within 30 days as conditions for receiving another much-needed round of government aid
    The decision to ask G.M.'s chairman and chief executive, Rick Wagoner, to resign caught Detroit and Washington by surprise, and it underscored the Obama administration’s determination to keep a tight rein on the companies it is bailing out — a level of government involvement in business perhaps not seen since the Great Depression.
    President Obama is scheduled to announce details of the auto package at the White House on Monday, but two senior officials, offering a preview on condition of anonymity, made clear that some form of bankruptcy — a quick, court-supervised restructuring, as they described it — could still be an option for one or both companies.
    Mr. Obama’s auto industry task force, in a report released Sunday night assessing the viability of both companies and detailing the administration’s new plans for them, concluded that Chrysler could not survive as a stand-alone company.
    The report said the company would get no more help from the government unless it can finalize a proposed alliance with the Italian automaker Fiat by April 30. It must also reduce its debt and health-care obligations.
    If a deal is reached between Chrysler and Fiat, the administration says it would consider another loan of $6 billion to Chrysler.

    Unemployment During the Financial Crisis.

    by Lionel Creech

    Unemployment still continues to haunt the American workforce with over 5.1 million jobs lost since the beginning of 2008, 3.3 million of which have been lost in the past 5 months. The numbers are tough to look at and they are unfortunately close to what was projected. Part-time employees who wish to work full-time rose from 423,000 to 9 million. American workers also face trouble in mobilizing themselves. Typically Americans used to move to where the jobs were, yet the housing market and financial crisis has forced Americans to stay put. Now the market value of many citizen's homes is less than the mortgage on their house which has made it increasingly frustrating. For those 5.1 million citizens who are unemployed, there is aid being granted in certain areas. Recently, companies like Walgreens, Target, Wal-mart, and other retailers are offering free health care services for non-emergency cases such as colds, strep throat, allergies, and skin conditions. For those who have no college degree, Goodwill offers free training in IT, health care, banking, and landscaping. Although unemployment rate is expected to continue rising, taking advantage of these services can help alleviate America's unemployed until the recession flattens out and begins to recover.


    Bank Woes Nowhere Near Over

    By Angelo Orlando Jr.

    The amount in loans that banks will need to write off will exceed levels seen during the Great Depression, according to a bank analyst's report Monday.
    The report helped send bank stocks and the overall market lower in early trading.
    Mike Mayo of Calyon Securities gave the banking industry an "underweight" rating, citing "the ongoing consequences" of banks' increased risk-taking.
    "The seven deadly sins of banking include greedy loan growth, gluttony of real estate, lust for high yields, sloth-like risk management, pride of low capital, envy of exotic fees, and anger of regulators," Mayo said in the report.
    These "sins" created front-load earnings and pushed costs further down the line, Mayo said. Now those costs are appearing and many of the current problems being experienced are only midstream, he added.

    Loan losses to exceed Great Depression levels

    Posted by Andrew Moran

    NEW YORK ( -- The amount in loans that banks will need to write off will exceed levels seen during the Great Depression, according to a bank analyst's report Monday.

    The report helped send bank stocks and the overall market lower in early trading.

    Mike Mayo of Calyon Securities gave the banking industry an "underweight" rating, citing "the ongoing consequences" of banks' increased risk-taking.

    "The seven deadly sins of banking include greedy loan growth, gluttony of real estate, lust for high yields, sloth-like risk management, pride of low capital, envy of exotic fees, and anger of regulators," Mayo said in the report.

    These "sins" created front-load earnings and pushed costs further down the line, Mayo said. Now those costs are appearing and many of the current problems being experienced are only midstream, he added. Click here to continue reading...

    Wednesday, April 1, 2009

    G20 Summit Creates High Expectations and Demands

    by Lionel Creech

    As the world looks to our governments to help aid in the current global economic crisis, the G20 leaders will get down to business and hopefully reach some sort of agreement at the summit currently taking place. Thousands of protesters have been showing their displeasure with leaders outside London’s Central Bank showing how distressed the population is towards the current situation. Differences in certain countries have made it hard to reach an agreement. The main dispute is the amount of extra funding for the International Monetary Fund to help it rescue the countries hardest hit by the crisis and it is likely to create tensions among countries. Hedge funds, private equity firms, and derivatives trading are likely to be more regulated and there is also a call for more well to do countries to provide stimulus money for other countries. The G20 groups the world's most powerful economies, accounting for 90% of the world's economic output, 80% of world trade, and two thirds of the world's population. As global demand contracts, trade is slumping and protectionism rising. A simple promise won’t suffice so hopefully governments, beginning with G20 summit, will draw up a comprehensive plan of protectionist measures that goes beyond tariffs and export subsidies. Thursday morning the G20 summit begins and anticipation is at its highest.


    What the G-20 Hopes to Accomplish

    Posted by Andrew Moran

    In the wake of the recent financial crisis experienced in the developed world, leaders from the worlds 20 most powerful countries will come together to discuss possible resolutions to the crisis. This meeting is known as the G20 summit, and it will be held in London, England on April 2nd. The main topics that will be discussed at the summit include:

    - Reviving the world economy

    - Restoring lending

    - Tougher rules for banks

    - Bigger role for IMF

    - More help for developing countries

    Leaders of the representative countries will try and work together in order to improve the welfare of the world economy. It is always impossible to judge whether or not the G20 Summit Meeting will be a success or a miserable failure. In order to judge whether or not it was a success, there are a few questions that must be addressed. The answers to these questions will determine whether or not the G20 Summit Meeting was successful. In the eyes of experts, at least two or three of these questions will need to be resolved in order to be a success. These questions are:

    - Will the G20 truly restructure the IMF?

    - Will Germany provide additional stimulus money?

    - Will Obama and Brown get serious about financial regulation?

    - Will G20 leaders denounce protectionism

    - Will Obama make nice with the dollar?

    - Will the leaders kick the bankers?

    The answers to these questions will provide a reference point as to whether or not the G20 is a success. As the world continues to hold its breathe, hoping for a resolution to these dark economic times, all we can do is wait and see what the G20 leaders accomplish.


    Bankrupty for Automakers

    By Angelo Orlando Jr.

    Ford sales dropped 41% in March due to the weakening economy which included a 73% decrease in the sales of SUV’s. Ford also has not met its sales forecasts for the first quarter of 2009 falling short by 26,000 vehicles. Ford is also still continuing to cutback production levels at its Kansas City and Chicago plants. This decision may lead to job cuts in these locations. With the fear of bankruptcy for other automakers such as GM or Chrysler, some potential consequences due to bankruptcy will have a large effect on the financial health of our economy. These two automakers, which have already received $16.4 billion in loans, are under review by a federal task force which could force these two giant automakers into bankruptcy. Some possible consequences of a GM or Chrysler bankruptcy are that the resale values of the automakers vehicles could drop 50%. Another consequence would be that auto prices could spike as a result of a bankruptcy as well as incentives on new cars could be less appealing. For investors, a bankruptcy could also affect them in negative ways as well. A GM or Chrysler bankruptcy could wipe out the current debts of the automakers and investors would loose all their investment in the automakers.

    Bankers Pledge Cooperation with Obama

    By Lindsay Chin

    In Washington, thirteen chief executives met and pledged to cooperate with the administration’s efforts to shore up the banking industry and broader economy. Administration officials and bankers spent considerable time addressing the more charged issue of executive pay. Both sides addressed the fact that they must defuse Americans’ anger with the industry is the White House is to gain more public support for its recovery program. The concern began when millions of dollars in bonuses paid by companies such as American International Group. American International Group was the largest insurance company in the United States before it suddenly collapsed in September of 2008. The company was bailed out by the Federal Reserve and rescue packages amounted to $150 billion dollars. Many Americans were outraged by the $165 million in bonuses paid out on Marsh 15th. American International Group’s chief executive said that he had asked employees making more than $100,000 a year and who had shared in the bonus payout to give half the money back due to the public and political disgust at the whole idea. The President stated that the industry needs to show that they get it on the compensation issue. And at least two bank executives, Lloyd C. Blankfein of Goldman Sachs and Kenneth I. Chenault of American Express asked the president to provide a pathway for them to pay back the taxpayer money that their companies have received. Many companies are doing their best to help the economy. Many economists are unswayed by the crashing economy and so should Americans.

    Source 1, Source 2, Source 3