DrBoyceFinancialCrisis

Recession Hits Innovation

2009-12-11T20:09:00.000-08:00

Posted by Kenny Hernandez

NEW YORK (CNNMoney.com) -- 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.

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Recovery May Be Nearing

2009-12-11T19:25:00.000-08:00

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.

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Motives behind Mergers

2009-12-11T18:43:00.000-08:00

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.

Sources 1 2 3

No one goes to the temple for nothing.

2009-12-11T16:30:00.000-08:00

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.

Sources 1 2 3

Sino-US Cooperations

2009-12-11T16:17:00.000-08:00

By Ka Lee Angel Lee

The most significant newsworthy contract of Sino-U.S. economic cooperation happened recently is the 4^th 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.

Sources 1 2 3

Frienemy?

2009-12-11T16:08:00.000-08:00

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.

sources 1 2 3

Ponzi Scheme No-No’s

2009-12-11T12:37:00.001-08:00

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.

Sources:
http://www.google.com/hostednews/ap/article/ALeqM5h4b15Cn01dC2JLGS3Kryyxt7auLgD9CGOPL81
http://www.huffingtonpost.com/les-leopold/wall-streets-latest-ponzi_b_385273.html
http://www.google.com/hostednews/ap/article/ALeqM5iVRaRYcWFCQgMxBfNtbcfT98Zr4QD9CGO4IO6

Nations Seek Financing to Aid Global Warming in Poor Countries

2009-12-10T23:02:00.000-08:00

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.

Sources:
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Industries that our Hiring

2009-12-10T13:17:00.000-08:00

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.

Source 1
Source 2
Source 3

Debt Raters are Escaping Reforms from Congress

2009-12-08T05:31:00.000-08:00

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.

Source 1, Source 2, Source 3

Dubai Stock Keep Tumbling

2009-12-07T16:30:00.001-08:00

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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Time to get a job

2009-12-06T18:24:00.000-08:00

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.

Sources:
http://money.cnn.com/2009/12/04/news/economy/job_seasons/index.htm
http://www.nytimes.com/2009/12/06/jobs/06search.html?ref=business
http://360jobinterview.com/blog/2009/11/hey-turkey-time-to-get-a-job/

Wal-Mart on the thrive despite the recession

2009-12-06T17:39:00.000-08:00

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.

Sources:
http://www.ncpa.org/sub/dpd/index.php?article_id=925
http://www.nytimes.com/2009/12/06/business/06stra.html?ref=business
http://www.usatoday.com/money/economy/2008-12-03-recession-proof-companies_N.htm

UBS Scandal

2009-12-06T14:08:00.000-08:00

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 PressTV.com “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.

Sources: http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20090219/FREE/902199983/1011/REG

http://www.presstv.com/detail.aspx?id=86943

http://www.walletpop.com/blog/2009/10/30/first-taxpayer-charged-in-ubs-scandal/

Unemployment Rates Looking Up

2009-12-04T12:29:00.000-08:00

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.

http://money.cnn.com/2009/12/04/news/economy/job_seasons/index.htm

http://money.cnn.com/2009/12/04/news/economy/jobs_november/index.htm

http://online.wsj.com/article/SB125993225142676615.html?mod=rss_Today%27s_Most_Popular

Why Wells Fargo hasn't paid back the US Government

2009-12-04T09:32:00.000-08:00

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.

Sources:

http://money.cnn.com/2009/12/03/news/companies/what.next.wells.fortune/index.htm

http://www.tradingmarkets.com/.site/news/Stock%20News/2667537/

http://www.qando.net/?p=187

Job Market Shows Big Improvement

2009-12-04T09:22:00.000-08:00

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.

Sources:

http://money.cnn.com/2009/12/04/news/economy/jobs_november/index.htm

http://www.nytimes.com/2009/12/05/business/economy/05jobs.html?hp

http://www.google.com/hostednews/afp/article/ALeqM5hJg6PAuVUa6hTGTw0DA5-fAHx-NA

Dubai Needs Money

2009-12-03T11:30:00.000-08:00

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.

Source 1

Source 2

Source 3

Money Problems in Dubai

2009-12-01T11:49:00.000-08:00

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.

http://money.cnn.com/2009/11/27/markets/markets_newyork/?postversion=2009112714
http://online.wsj.com/article/BT-CO-20091127-708480.html
http://news.xinhuanet.com/english/2009-11/28/content_12552796.htm

Food Stamps

2009-11-28T23:06:00.000-08:00

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.

Sources:
http://www.nytimes.com/2009/11/29/us/29foodstamps.html?_r=1&hp
http://news.yahoo.com/s/ap/20091127/ap_on_he_me/us_med_children_food_stamps
http://www.cbsnews.com/stories/2008/03/31/eveningnews/main3984469.shtml

Strategy During the Current Economy

2009-11-27T22:55:00.000-08:00

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.

Sources:
http://www.nytimes.com/2009/11/28/your-money/28interns.html?_r=1&ref=business
http://online.wsj.com/article/SB125926676195965443.html
http://www.nytimes.com/2009/11/28/business/global/28return.html?scp=1&sq=&st=nyt

Investing in the next big thing: China

2009-11-27T22:27:00.000-08:00

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.

Sources:
http://moneycentral.msn.com/content/P37592.asp
http://online.wsj.com/article/SB10001424052748703499404574560940890771698.html
http://www.businessweek.com/globalbiz/content/apr2006/gb20060420_304668.htm

Financial Crisis Affects Black Friday Shopping

2009-11-27T14:24:00.000-08:00

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.

Sources:
http://www.nytimes.com/2009/11/28/business/28shop.html?ref=business
http://www.ocregister.com/articles/orange-221034-across-shopping.html
http://news.yahoo.com/s/ap/20091127/ap_on_bi_ge/us_black_friday_holiday_shopping

Dubai Debt Affects Stocks in US and Asia

2009-11-27T13:50:00.000-08:00

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?

Sources:
http://www.nytimes.com/2009/11/28/business/28markets.html?_r=1&hp
http://business.timesonline.co.uk/tol/business/markets/the_gulf/article6934261.ece
http://news.yahoo.com/s/ap/20091127/ap_on_bi_st_ma_re/us_wall_street

Is Economy really Imporving ???

2009-10-22T18:53:00.000-07:00

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.

Source 1

Source 2

Source 3

Home Buyer Credit Fraud

2009-10-22T09:30:00.000-07:00

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.

http://news.yahoo.com/s/ap/20091022/ap_on_go_co/us_homebuyers_tax_credit
http://news.yahoo.com/s/ap/20091022/ap_on_bi_ge/us_mortgage_rates_3
http://money.cnn.com/2009/10/21/real_estate/commercial_real_estate_bubble.fortune/index.htm?postversion=2009102210

New jobless claims rise more than expected to 531K

2009-10-22T08:15:00.000-07:00

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.

Click here to read more

Changes in the Banking Industry

2009-10-21T20:31:00.001-07:00

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.

http://www.reuters.com/article/ousivMolt/idUSTRE59J3YR20091020
http://online.wsj.com/article/BT-CO-20091021-717400.html
http://www.reuters.com/article/companyNewsAndPR/idUSN2148823220091021

Credit Rating Agencies and the Next Financial Crisis

2009-10-21T15:52:00.000-07:00

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: http://www.huffingtonpost.com/chairman-ed-towns/credit-rating-agencies-an_b_325704.html

Free Credit Report Scams Increase As Credit Crisis Gets Worse

2009-10-20T12:16:00.001-07:00

By: Zachary Pienkowski

As the worlds economic crisis deepens more and more people are for the first time in their lives, having to deal with bad credit. And like a lot of average consumers, many of these people have never seen real copies of their credit report before. Once someone decides to try to increase their credit rating one of the first things they usually do is try to find out how to get copies of their credit reports.

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.

To continue reading on this topic click here

The Fair Credit Reporting Act (FCRA) and the Privacy of Your Credit Report

2009-10-20T12:15:00.000-07:00

Posted by: Anshu Dixit

Top News
•Companies Unblock Links to Free Credit Report Site. The major credit reporting agencies have unblocked links to the free credit report site, annualcreditreport.com. In December 2004, EPIC and other groups urged the Federal Trade Commission to order that the links be unblocked. Congressman Barney Frank (D-MA) wrote (pdf) to the credit industry trade group to summarize changes made at the site to make it more consumer friendly. The World Privacy Forum recommends in a report that individuals call to get their free credit report instead of using the web site to avoid privacy-invasive practices of the credit reporting agencies. For more information, see the EPIC Fair Credit Reporting Act Page. (Mar. 21)
•Coalition Urges FTC to Unblock Links to Free Credit Site. EPIC and five privacy and consumer groups have called upon the FTC to order credit reporting agencies to stop blocking web hyperlinks to a site that provides free credit reports. The letter argues that blocking links violates federal regulations, and that, "Whether intentional or not, every subtle and not so subtle web design tactic has been employed to make www.annualcreditreport.com difficult to find and use." EPIC has posted a webpage that circumvents the blocking. (Dec. 7, 2004)
•Free Credit Report Site Blocks Web Links. Nationwide credit reporting agencies are required under federal law to provide a free credit report to residents of western states online starting December 1, 2004. However, the credit reporting agencies have blocked links to the free site, citing bogus security concerns. By blocking outside links, the companies create a greater risk of phishing because consumers have to type in the URL, and the companies can steer consumers to their expensive, unnecessary credit monitoring services, avoiding their duty to provide free reports. To get your free report, paste the following URL into your browser: http://www.annualcreditreport.com. (Dec. 4, 2004)
Introduction
The Fair Credit Reporting Act (FCRA), Public Law No. 91-508, was enacted in 1970 to promote accuracy, fairness, and the privacy of personal information assembled by Credit Reporting Agencies (CRAs).

CRAs assemble reports on individuals for businesses, including credit card companies, banks, employers, landlords, and others. The FCRA provides important protections for credit reports, consumer investigatory reports, and employment background checks. The FCRA is a complex statute that has been significantly altered since 1970 by Congress and the courts. The Act's primary protection requires that CRAs follow "reasonable procedures" to protect the confidentiality, accuracy, and relevance of credit information. To do so, the FCRA establishes a framework of Fair Information Practices for personal information that include rights of data quality (right to access and correct), data security, use limitations, requirements for data destruction, notice, user participation (consent), and accountability.

The Federal Trade Commission (FTC) issues commentaries on the statute, but does not engage in rulemaking for the FCRA.

CRAs may also be referred to as "credit bureaus" or "consumer reporting agencies."

Click here for more

Can I really fix my credit?

2009-10-20T12:12:00.000-07:00

Post by Lingxiao Li
Of course you can! Many of our readers (even yours truly) have cleared up a few blemishes on their reports. And by the way: everything a credit repair clinic can do for you, you can do for yourself at little or no cost. That being said, we know that sometimes people feel overwhelmed with the process and want to ask a live person a question if they get stumped. If you do, you can set up a paid consultation with one of our counselors for a small fee.

Make sure you also read our article, "The 5 Biggest Mistakes People Make in Credit Repair". We've also started a FREE credit repair video series.

What the information provided in this page does is help you fix ERRORS on your credit report and clean up those "questionable" items. While no one can legally remove accurate negative information from a credit report, the law does allow you to request an investigation of information in your file that you dispute as inaccurate or incomplete. On the other hand, *nudge* *nudge*, *wink* *wink*, it is perfectly legal to challenge ANYTHING on your credit report. There is no charge for requesting an investigation. The whole key to the credit repair procedure is that if the credit bureaus cannot verify information on your credit report they must remove it. For instance, if a credit bureau cannot contact a collection agency which is reporting a collection on your report, they cannot verify the information, and the credit bureau must delete the entry.
Read more here.

Revised formula puts 1 in 6 Americans in poverty

2009-10-20T09:44:00.000-07:00

By: Zachary Pienkowski

WASHINGTON (AP) -- The level of poverty in America is even worse than first believed.

A revised formula for calculating medical costs and geographic variations show that approximately 47.4 million Americans last year lived in poverty, 7 million more than the government's official figure.

The disparity occurs because of differing formulas the Census Bureau and the National Academy of Science use for calculating the poverty rate. The NAS formula shows the poverty rate to be at 15.8 percent, or nearly 1 in 6 Americans, according to calculations released this week. That's higher than the 13.2 percent, or 39.8 million, figure made available recently under the original government formula.

That measure, created in 1955, does not factor in rising medical care, transportation, child care or geographical variations in living costs. Nor does it consider non-cash government aid when calculating income. As a result, official figures released last month by Census may have overlooked millions of poor people, many of them 65 and older.

According to the revised NAS formula:

--About 18.7 percent of Americans 65 and older, or nearly 7.1 million, are in poverty compared to 9.7 percent, or 3.7 million, under the traditional measure. That's due to out-of-pocket expenses from rising Medicare premiums, deductibles and a coverage gap in the prescription drug benefit.

--About 14.3 percent of people 18 to 64, or 27 million, are in poverty, compared to 11.7 percent under the traditional measure. Many of the additional poor are low-income, working people with transportation and child-care costs.

--Child poverty is lower, at about 17.9 percent, or roughly 13.3 million, compared to 19 percent under the traditional measure. That's because single mothers and their children disproportionately receive non-cash aid such as food stamps.

--Poverty rates were higher for non-Hispanic whites (11 percent), Asians (17 percent) and Hispanics (29 percent) when compared to the traditional measure. For blacks, poverty remained flat at 24.7 percent, due to the cushioning effect of non-cash aid.

--The Northeast and West saw bigger jumps in poverty, due largely to cities with higher costs of living such as New York, Boston, Los Angeles and San Francisco.

To finish reading this article click here

Obama Seeks More Payouts

2009-10-20T07:56:00.000-07:00

Posted by Jennifer Chang

By ELIZABETH WILLIAMSON and HENRY J. PULIZZI

WASHINGTON -- President Barack Obama said he will press Congress to provide $250 payments to 57 million seniors, veterans and people with disabilities next year, a $13 billion effort to offset an expected announcement this week that there will be no cost-of-living increase in Social Security payments.

The proposed $250 payment is equivalent to a 2% increase for the average retiree receiving Social Security benefits, the White House said. Notably, it would act as additional economic stimulus at a time when the government is concerned about rising joblessness.
A decline in the rate of inflation precluded any cost-of-living increase next year.

"These payments will provide aid to more than 50 million people in the coming year, relief that will not only make a difference for them, but for our economy as a whole," Mr. Obama said.

Administration officials said in a briefing that they had no plan to offset the $13 billion cost, but would negotiate with Congress to find a means of financing it. The proposal requires approval by Congress, where concern over the escalating federal deficit has fueled questions about new spending. Click Here to Read More

Financial Crisis Worked Out Well for Goldman Sachs

2009-10-18T21:22:00.000-07:00

Posted by Scarlett Lu

Goldman Sachs reported its earnings today. For the quarter, profits from trading and principal investment were $10.03 billion, up from $2.7 billion for the same quarter last year.

A year ago the company was saved by Treasury Secretary Hank Paulson, who intervened on its behalf. So it is interesting, to say the least, that last year's flirt with disaster turned out to be so great for Goldman Sachs. Now that they are a regular commercial bank they actually trade more, which makes sense: if the US Treasury covered my losses, I would also be happy to take major risks.

And they can lever up, since much of their assets are valued at what Goldman says they are worth.

What's more, compensation is up to $17 billion so far this year, up from $11 billion during the same period last year. That is $527,000 per employee, up 46% from last year's figure. I don't resent them that, since every Goldman employee I ever came in contact with was bright, competent and professional, so they probably deserve it.

Read more at: http://www.huffingtonpost.com/alan-schram/financial-crisis-worked-o_b_323184.html

Government or Banks???

2009-10-15T19:21:00.000-07:00

By Anshu Dixit

Bank plays an important role in our life. Many of our life’s big decisions depend on these banks. All of us know that due to the current economic situation most of the industries are not doing really good. Bank industry is one of them. A crisis of historic proportions struck financial institutions in the U.S. and globally in September, 2008. Major financial markets went into a free-fall after The U.S. government took over mortgage lenders Fannie Mae and Freddie Mac. As a result, several banks and investment firms were went bankrupt or were bought by other companies at well below their value. Research has shown that majority of people blaming investments system banking industry for this financial disaster. But banks are one of those firms as well who is bearing losses. For example, JPMorgan Chase & Co's robust $3.6 billion quarterly profit this year. JPMorgan's earnings were not uniformly positive. As expected, losses on loans still rose and net charge-offs on consumer loans climbed to $7 billion. Does not it show that our economic condition is improving? Like some people are blaming financial institutions for this crisis, some other people are blaming our government policies for this economic problem. On the other hand some people are supporting our government as well. Paul Krugman a columnist on the Op-Ed Page and continues as professor of Economics and International Affairs at Princeton University, said in his article that “So what saved us from a full replay of the Great Depression? The answer, almost surely, lies in the very different role played by government.” He thinks that government has done a lot for to come out from this economic problem. And if we will flip the coin, other side some people are blaming the government for all this. So, who is really to balm for? Banks or the government.

Source 1

Source 2

Source 3

Government Intervention, Regulatory Policy, and the Financial Crisis

2009-10-15T16:19:00.000-07:00

By Anshu Dixit

This video explains how the housing bubble is probably the biggest reason why America now faces a financial crisis. But what caused the bubble, and why are there now so many foreclosures causing so much damage in the rest of the financial sector?

Click here to see this video...

Is the US becoming a Socialist State

2009-10-15T15:05:00.000-07:00

By: Michael Herscovici

Many believe that the US as we knew it is over. The days of pure capitalism as well as huge financial companies running free have come to an end. But is the US losing its identity and becoming more and more like a socialist state by the day? According to several sources they are.

According to one report:"The American Heritage Dictionary defines socialism as a system of social organization in which the means of producing and distributing goods are owned by a centralized government that plans and controls the economy.
Socialism requires a totalitarian system -- that gives the ruling gang the power to distribute the fruits of other people's labor to its political pals. That is what is happening to the United States as President Obama proceeds with his goal of 'remaking America.'"

But what does this mean? Many feel that the Obama administration is taking control of many of the financial institutions is a move to socialism and one that violates the very core of this country. Obama believes that to restore the ecomony the government needs to step in and make sure that things are done right. There are many people that disagree but one thing remains certain, is the US losing its identity as a captialist state by continuing to take over more and more banks and financial organization. Only time will tell if the move is a perminate one.

Source 1

Source 2

Source 3

Global finance crisis crunches marriages

2009-10-15T13:05:00.000-07:00

By Lingxiao Li
Global markets may be edging toward recovery, but the worst impact of the global financial crunch on families and couples may be still ahead, a leading Australian charity said Wednesday.
"The economy, we've been told, is showing 'green shoots'. We've certainly not seen that," Kasy Chambers, executive director of Anglicare Australia, told Reuters.
The crisis of the past year is still driving a wedge between couples and families, and could bring higher rates of divorce and breakup in the months ahead as more people lose jobs and come under financial stress, Chambers said, releasing a new report on the impact of the global crisis on families.
"If one member of a couple experiences unemployment in one calendar year, they are 70 percent more likely to experience divorce in the following year," she said.
The report said the financial fallout may continue for almost another year as companies tried and sometimes failed to retain staff. One in three families have already experienced financial distress this year, government reports show. Read More.

Explaining the financial crisis

2009-10-15T12:33:00.000-07:00

This is a funny video explaining the financial crisis

Posted By: Michael Herscovici

More Bailouts: Next FDIC

2009-10-15T11:45:00.000-07:00

By: Jennifer Chang

After taking over many banks, the FDIC is in the red and may not have enough money to cover the rest of the banks. Insuring each bank deposit up to $100,000 in 8500 banks, the government fund has been keeping a list of banks to watch out for. In 2007, 3 banks failed, and in 2008 the number of banks failed grew to 25. At the beginning of the year, there were 90 banks on the watch list held by the FDIC. That number has grown to 117 banks, which is the highest number in five years.
The FDIC has predicted that the number of bank failures will increase, and it will cost $100 billion in the next four years. In dire need of cash, regulators are now thinking of ways to replenish money quickly. The FDIC chairman has stated that the fund is considering all options including borrowing from the US Treasury. Bank analysts have stated they expect continued bad news about the fund for the next few years. Until the FDIC is out of the red, regulators are going to have to find ways to replenish the fund quickly, especially to cover the expected number of banks that will fail in this coming year.

Sources:

http://abcnews.go.com/Business/story?id=5660122&page=1&page=1

http://www.cbsnews.com/blogs/2009/09/22/business/econwatch/entry5328732.shtml

http://money.cnn.com/2009/10/14/news/companies/fdic_deposit_fund/index.htm?postversion=2009101415

Rescession and Housing Market

2009-10-14T15:50:00.000-07:00

Posted by Scarlett Lu

Expensive houses are losing more value than lower priced houses. Mortgages for expensive housing are suffering delinquency and foreclosure. Mortgage payments are increasing and wealthy homeowners are falling behind on their payments. The market for expensive homes is deteriorating more quickly than the subprime housing market. The more expensive a home is the harder it is to sell. So people are lowering the prices so someone can buy it. The number of wealthy homeowners will also decrease. People are unable to pay back mortgages. People who lost their jobs during the recession are unable to pay their mortgages. Deals are incredible for homes now. Home prices declines dramatically; it dropped by 21% from their 2006 peaks. The shrinking economy will result in additional layoffs, the unemployment rate is now 6.5% and expect to increase in the coming year, by the end of 2009, the unemployment rate is expect to rise to 9%(predicted by Goldman Sachs). Loans to buy home totaled $718 billion this year, down 2% from $731 billion last year. These days more than 40% of mortgages made at the Bank of America are for homes. Loans for homes expect to rise by 12% in 2010 as existing home sales recover and prices start stabilizing.

http://business.theatlantic.com/2009/10/housing_crisis_worse_on_the_high_end.php
http://www.cnbc.com/id/26441417
http://www.latimes.com/business/la-fi-mortgage14-2009oct14,0,7151440.story

Having a cash stash is still important during recovery

2009-10-13T18:51:00.000-07:00

By: Zachary Pienkowski

During the last few weeks, several economists have claimed they believe the economic recession has come to an end. However, financial experts warn that this does not necessarily mean individual households will feel any difference for a while yet. Claims that the recession is over only apply to the technical definition of the word, meaning that economic contraction has stopped. Over the last 2 years many people have been forced to learn how to budget and save money in the event of layoff. Despite the beginning of economic recovery, interest rates are very low and the stock market has been steadily increasing, leaving people with the tricky decision of where to keep their extra cash. Since the unemployment rate is at 9%, and is expected to increase to over 10% it is recommended that people have enough cash stashed away in a liquid fund to cover 6 full months of expenses. Right now if six full months of expenses can not be covered, you should continue to fund that account until that goal is met. Investing in money market accounts and 6-month cd's just are not worth return right now for having to have your money locked up for a set period of time. Once your 6 month nest egg is complete, it is a good time to start investing in a stock fund that matches your current level of risk tolerance. The economy is going to continue to feel like a recession for a while, but if you think the economy is going to continue to grow, investing in a growth fund might be the right choice.

Sources:
http://money.cnn.com/galleries/2009/moneymag/0910/gallery.spend_1000.moneymag/5.html

http://www.newsweek.com/id/208633

http://www.marketwatch.com/story/bernanke-declares-the-recession-over-2009-09-15

Deadbeat Banks Fail to Pay TARP Dividends

2009-10-13T18:44:00.000-07:00

By: Zachary Pienkowski

NEW YORK (TheStreet) -- Thirty-three banks missed their August dividend payments to the Treasury Department for money granted through the Troubled Asset Relief Program, or TARP.

TARP began almost a year ago with some arm-twisting from the Treasury Secretary at the time, former Goldman Sachs Chief Executive Officer Henry Paulson. He told nine of the largest U.S. banks, including Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Morgan Stanley and Goldman Sachs, they had to accept billions of dollars in support from the government even if they didn't need it.

While many big banks have already repaid TARP in full, it's clear the banks that have deferred their dividend payments are still short of capital.

For the four largest companies missing TARP dividend payments, the total deferred was an estimated $41.6 million. The biggest bank was New York-based CIT Group, which is negotiating with creditors to avoid filing for bankruptcy. CIT received $2.3 billion in government money in December. The bank would represent the first significant loss to TARP.

To continue reading on this topic click here

Recession may be over, but recovery is painful

2009-10-13T08:17:00.000-07:00

Posted by: Jennifer Chang

By Chris Isidore, CNNMoney.com senior writer
October 12, 2009: 10:28 AM ET

NEW YORK (CNNMoney.com) -- More than 80% of top economists believe that the recession that started almost two years ago is finally over. But most don't expect meaningful improvement in jobs, credit or housing for months to come.
That's according to a survey released Monday by the National Association for Business Economics (NABE). The group asked 43 top economists last month if they believe the battered U.S. economy has pulled out of the worst U.S. downturn since World War II. Those surveyed include economists from leading Wall Street firms and major corporations, as well as from highly respected universities and research firms.
Thirty-five respondents, or 81%, believe the recovery has begun. Only four, or 9%, believe the economy is still in a recession. The other four say they're uncertain.
Economists in the survey forecast that the U.S. economy grew at an annual rate of 3% in the three months that ended in September, though the official reading of gross domestic product won't be out for weeks.
And all of the economists surveyed expect the recovery to be slow and painful, leaving many people and businesses feeling the effects of the downturn for years to come. Click Here to Read more

Healthcare, financial regulation and unemployment benefits a priority for Congress this week

2009-10-12T16:06:00.000-07:00

By: Amy Williams
Posted by: Scarlett Lu

Congress returns to work Tuesday after taking an extended weekend to honor Columbus Day and by the looks of the schedule, they'll have plenty to keep them busy.

All eyes will be on the Senate Finance Committee as it prepares to vote on Max Baucus's (D-MT) $829 billion healthcare bill. While the measure is expected to pass through committee, not everyone has pledged full support, namely Olympia Snowe (R-ME). Baucus was buoyed last week by the Congressional Budget Office's assessment of his bill whereby the non-partisan agency declared that his legislation would help reduce the deficit over the next 10 years. On Monday, however, the American Health Insurance Plans (AHIP) rained on Baucus's parade by criticizing his healthcare legislation stating it would cost Americans more money by 2019. click here to read more

US Deficit effects everything

2009-10-09T06:33:00.000-07:00

By: Jennifer Chang

The Congress Budget Office estimated the federal deficit to be $1.4 trillion on Wednesday. Despite the large deficit, Democrats are pushing Obama to extend elements on the stimulus package. Also, with job employment rates not picking up, the White House is planning to extend unemployment benefits. Congressional leaders are also pushing to give tax credit to employers who hire new employees. The big issue with this is employers taking advantage by firing their current employees and re-hiring them to earn the tax credit. President Obama had originally pushed for this plan but it was rejected do to this concern. Despite this year being the largest deficit in US history, Democrats continue to push for more stimulus plans and more money-spending bills, which will only be an opening for Republican criticism.
Besides this massive budget deficit, the healthcare plan is still being pushed through by Democrats. According to the CBO, the $83 billion healthcare plan will eventually lower the deficit, by creating an $81 billion surplus, but Republicans argue that the plan will only reduce the deficit because of increases in taxes and fees that Americans will have to pay. Whether or not the healthcare plan will actually go through remains to be seen as the Senate continues to ask Democrats for more disclosure on the plan, saying they will not vote on it until they get it.

Sources:

http://online.wsj.com/article/SB125495949171872049.html
http://features.csmonitor.com/politics/2009/10/08/new-healthcare-bill-wont-hurt-deficit-what-about-your-wallet/
http://www.bloomberg.com/apps/news?pid=20601103&sid=a2F9BBYF3eCE

How to Keep Your Family Together During a Financial Crisis

2009-10-08T19:30:00.000-07:00

Posted By- Anshu Dixit

By Matthew Paulson

There's going to be a time in your life where there's not a lot of money around for whatever reason and it's going to add stress to your life and put strain on your family. It could be anything: a job loss, a medical issues, a loss in the family, a lawsuit, an unexpected bill, a natural disaster, a fire, or something of the store. Money is going to be tight and your stress levels are going to increase, that's reality.

You can handle the added stress from the weight of your financial problems in two ways. The first is that you can let them get to you, you'll become moody, angry, depressed and unpleasant to be around. These actions are perfectly natural, but you have to resist them for the sake of your family. The other way you can handle this adversity is to treat it like a challenge, something to take head on and overcome...

Click here for more

what to do...what not to do?

2009-10-08T19:17:00.000-07:00

BY- Anshu Dixit

what to do...what not to do?

Financial crises have affected every part of the society. People in upper class, upper-middle class, middle class, and working class, everyone has seen many problems due to the financial crisis of 2008. This financial crisis was problematic for everyone, especially for the women, as single parents. This financial crisis problem has not only affected our monetary conditions but our family conditions as well. There are many problems have risen due to this financial downturn in our economy, and in our families as well. So many people have financial problems because we have such a high unemployment rate. More than 70 percent of both men and women admitted making significant spending changes, including a decision to limit or eliminate the purchase of items deemed non-essential. More than 80 percent of both men and women also admitted that it was unlikely they would be able to retire when they wanted and with the amount of money anticipated as recently as one year ago. Bigger problem than unemployment and cutting costs is “suicides” cases, and number is not declining. The Samaritans of New York have seen calls rise more than 16 percent in the past year, many of them money-related. The Switchboard of Miami has recorded more than 500 foreclosure-related calls in the year 2008 and most of them were women. To find out some of the potential solution, some of the business women gather in Miami Beach to discuss economic future, such as, what kind of framework does our nation need in this situation, Americans should start saving more and many other points. It's sure to be a long and painful phase for many for us, our nation or in other words for everyone.

· http://www.huffingtonpost.com/2008/10/14/financial-crisis-suicide_n_134453.html

· http://www.miamiherald.com/news/breaking-news/story/1272998.html

· http://www.cbsnews.com/blogs/2008/10/22/couricandco/entry4539917.shtml

· http://www.sciencedaily.com/releases/2009/03/090312115049.htm

The great tax drought of 2009

2009-10-08T10:09:00.000-07:00

Posted by: Jennifer Chang

By Jeanne Sahadi, CNNMoney.com senior writer
Last Updated: October 7, 2009: 3:56 PM ET

NEW YORK (CNNMoney.com) -- You don't need a Ph.D in economics to know that the government fiscal year that ended last week was ugly for the budget.
Much attention has been paid this year to the record-high spending and deficit accrued because of the financial and economic crisis.
But one of the driving factors that has gotten less notice: plummeting tax revenue. The crisis, after all, walloped company profits and savaged Americans' income stream.
Through the end of August, Uncle Sam collected 25% less in tax revenue for the year than he did during the same period a year earlier. The two biggest culprits -- a 56% drop in corporate income tax revenue and a 20% drop in individual income tax revenue.
On balance, the Congressional Budget Office expects that tax receipts will be 14.9% of gross domestic product this year, well below the historical 18.3%average.
While revenue forecasts for next year are better, the CBO estimates tax receipts will only make up about 15.7% of GDP. Click Here to Read More

Financial Crisis Hurting Nursing Homes

2009-10-07T17:38:00.001-07:00

Posted by Scarlett Lu

Nursing homes have been facing difficulties during the recession. Many nursing homes are on the verge of bankruptcy and others have already filed for chapter 11 protection. The senior facility faces many state government cuts that affect their services. Since people are living longe, nursing home care is increasing. Medicaid accounts for 2/3 of all dollars spent. The recent state cuts Medicaid reimbursements by 8% . The nursing home industry is able to make money on their Medicare reimbursements and the money they make helps offset what they lose in Medicaid. However the cuts in Medicaid will affect nursing homes in poor and rural areas because they rely heavily on Medicare reimbursements.

American Association of Retired Persons wants to increase spending by $45 million a year on programs to help the elderly. Nursing homes need more beds; elderly need home and community based care. Keeping the Medicare budget means that it can only be spent on seniors.

If Medicare reimbursements are cut the employees at nursing homes will be the first to be affected by this. People will lose their jobs and the elderly will not receive the care they need.

http://www.redorbit.com/news/health/522645/aarp_nursing_homes_face_off/index.html

http://www.adaction.org/pages/issues/all-policy-resolutions/social-amp-domestic/140-the-nursing-home-crisis-public-policy-gone-awry.php

http://www.upnorthlive.com/news/story_print.aspx?id=359346&type=story

The Lehman Myth in the Financial Crisis

2009-10-06T19:54:00.000-07:00

Posted by Scarlett Lu
David A. Skeel is the S. Samuel Arsht professor of corporate law at the University of Pennsylvania School of Law.

America’s great corporate and financial crises are usually accompanied by spectacular corporate scandals that provide a simple, roughly accurate storyline for the crisis as a whole. Early in the Great Depression, Franklin D. Roosevelt railed against the “Ishmael or Insull whose hand is against every man’s” — a reference to Samuel Insull, whose utilities empire had imploded in scandal. The Insull story, along with several other scandals, inspired the securities laws of 1933 and 1934 and other important corporate reforms. Sixty years earlier, the Philadelphia banker and railroad magnate, Jay Cooke, had been the face of the Panic of 1873.

The current crisis has been deficient in these terms. In the absence of obvious, hissable villains and a simple story line, the conventional wisdom seems to focus more on the crisis itself than on its causes, with the Lehman Brothers bankruptcy now viewed as its pivotal moment. The Lehman story line is worrisome for at least two reasons: it threatens to distract attention from the causes of the crisis and the story line itself is deeply mistaken.

The absence of a simple story line was brought home to me when I began giving occasional talks about the crisis in late 2007 and early 2008. click to read more.

Signs of recovery in some US areas

2009-10-05T18:18:00.000-07:00

By: Zachary Pienkowski

Signs of a slow and fitful recovery emerged in August in some communities across the country where unemployment dropped and foreclosures stabilized, according to The Associated Press' monthly analysis of economic stress in more than 3,100 U.S. counties.

The average county stress score fell slightly, and fewer counties qualified as economically distressed.

But those glimmers of hope are providing scant benefit for most people suffering from the recession. Some of the statistical improvements in employment were inflated by seasonal jobs, workers who quit the labor force and temporary federal stimulus money.

"It's pretty clear that even though the recession likely has ended, not too many people are likely going to be humming that Bobby McFerrin tune, 'Don't Worry, Be Happy,'" said Sean Snaith, an economist at the University of Central Florida.

The latest results of the AP's Economic Stress Index showed the pain easing in some of the nation's hardest hit areas, such as Elkhart, Ind., and pockets of the Carolinas. But foreclosure hotbeds in metro Las Vegas and South Florida continued to suffer.

The AP calculates a score from 1 to 100 based on a county's unemployment, foreclosure and bankruptcy rates. Under a rough rule of thumb, a county is considered stressed when its score exceeds 11. The average county's Stress score dipped to 10.3 in August, from 10.54 in July, the first drop in three months. In August 2008, it was 6.94.

To read more on this topic click here

Education for Money OR Money for Education?

2009-10-01T17:56:00.000-07:00

By Anshu Dixit

Every one of us is affected by financial crisis one way or other. The financial crisis is severely affecting our colleges and universities. Education cost has gone up during this economic problem instead to going down. Here we are in the situation where people have stayed unemployed for more than 6 months or more and can afford the things they used to; things are getting expensive day by day. But people do not have enough money to spend. People are looking for alternatives, but is there any alternative for higher education. Right, there is no alternative for education. However, there are some options for the people who cannot afford the cost of higher studies. Such as, some students are either going to public colleges or community colleges or taking online classes. Online degree program is attracting many people who cannot afford going to colleges due to financial and family problem. For example, while taking online classes a person can save the cost of dorm or housing and a student can work as many as hours they want according to their flexibility. On the other hand, colleges are proving the options of loans to pay off the cost, where there is no surety if you would be able to pay off our loan or not. Is education the thing that we need to earn money later by working or we need money to get education now?

Sources:

http://www.cnn.com/video/#/video/bestoftv/2009/06/23/ldt.ferre.learning.online.cnn?iref=videosearch

http://www.docstoc.com/docs/2590739/The-Financial-Crisis-of-American-Higher-Education-and-the-Future-

http://www.nytimes.com/2009/09/05/your-money/paying-for-college/05money.html

The Financial Crisis and America’s Casino Culture

2009-10-01T16:09:00.000-07:00

Posted By Anshu Dixit

By PETER S. GOODMAN

Published: September 19, 2009

Throughout the history of American commercial life, one cultural trait has tended to dominate: Americans are optimists, a people prone to seeing the glass as not merely half-full but rapidly expanding, and bearing liquid that might yet be turned into gold.

This exuberant optimism has proven beneficial, emboldening risk-taking that has achieved innovation and wealth. It has prompted entrepreneurs to invest borrowed money in untested ideas that sometimes yield breakthroughs. It has encouraged ordinary people to accept debt in the name of accelerated gain — more comfortable homes, higher education, late-model cars.

Click here for more

Is FDIC A Broken Promise?

2009-10-01T08:36:00.001-07:00

By: Michael Herscovici

A lot of people have invested in banks thinking that their money would be safe. Afterall, the FDIC will protect us right? We always knew that if all the people asked for all their money back, there was no way the FDIC could possibly pay it all back. Due to the current financial crisis, it seems as though this theory is being put to the test.

According to multiple reports, the FDIC is asking for aide to pay off all the investors that lost money due to the current crisis. This time last year the FDIC fund had more than $50 billion dollars in it, however, at the end of this week, the fund will be in the red.

What the FDIC is asking for is that banks prepay for the next three years of fees right now, to help the FDIC cover the banks current loses. The banks really do not have any other alternative. If they do not pay, they risk losing the FDIC insurance which will surely lead to a bank run on most banks which would put them out of business. So its either pay a little now or lose it all eventually. Also, isn't the banks poor manangement of funds what put them in this position in the first place?

If this plan goes through, the FDIC will receive $45 billion dollars in much needed funding. This is the 3rd time this year the FDIC has needed to raise funds to protect consumers.

Source 1

Source 2

Source 3

Financal Crisis For Children

2009-10-01T08:31:00.000-07:00

Posted by: Michael Herscovici

This short clip explain the current financial crisis we are in.

Click Here to view.

Swine flu -- and no paid sick leave

2009-10-01T06:58:00.000-07:00

Almost half of America's workers can't take paid sick leave. With swine flu cases on the rise, that problem could hasten the pandemic's spread.

Posted by: Jennifer Chang

By Neil deMause, CNNMoney.com contributing writer

September 28, 2009: 3:54 AM ET

NEW YORK (CNNMoney.com) -- As the H1N1 swine flu virus starts its second major sweep through the U.S., business owners are bracing for the impact of a worse-than-usual flu season on their workforces. That's reviving debate on a contentious issue: What kind of sick leave should companies offer employees -- and should it be mandated by law?

"On the one hand, you have all of our top officials saying, 'Do the responsible thing. If you're sick, stay home,'" says Debra Ness, president of the National Partnership for Women and Families, a Washington, D.C.-based advocacy group that is pushing for paid sick leave laws. "You have advice from the Centers for Disease Control on exactly how many days you should stay home, and how many days we need to keep kids at home. And at the same time, we have a country where almost half the workforce doesn't have a single paid sick day."

Currently, 48% of the U.S. private-sector workforce can't take paid leave without advance notice, according to the National Partnership. In response, unions and worker advocates have intensified their campaign for local laws requiring businesses to offer paid sick leave. San Francisco voters passed a law requiring paid sick leave for all workers, full- or part-time, by referendum in 2006, and Washington, D.C., followed with its own law last year, though it exempted new hires and restaurant staff who earn part of their pay in tips.

Now 15 states and cities have paid sick leave bills in the works. Earlier this year, Connecticut narrowly missed becoming the first state to mandate paid sick time, when the state legislature fell one vote short of passing a bill that would have required businesses with 50 employees or more to provide up to six and a half paid sick days per year.

With swine flu panic beginning to build -- reports of flu-like illness are already up sharply three months before the traditional start of flu season -- some elected officials are taking the opportunity to press for new legislation.

"This is definitely pressing because of all the projections of how the swine flu and the regular flu season will be affecting people," says Shula Warren, chief of staff for New York City council member Gale Brewer. Click Here to Read More

Protect your family from income challenges during the financial crisis

2009-09-29T18:24:00.000-07:00

Posted by: Scarlett Lu

How to protect your family from challenges in the Financial Crisis.

To experience a financial crisis is frustrating,during a financial crisis we may lose our job and businesses might close down. Everyone faces a financial crisis of some sort throughout our lifetime. An accident can destroy the financial stability of many families. We should be prepare for tough times. Layoffs can cause families barely make their monthly payments; but if .Big companies can close down causing thousands of people to lose their jobs. I you lose your job, don't panic. Work with what you have and figure out what you have. Cut down on your spending. Work with your creditors and keep a positive attitude.

We should have a financial plan to meeting our life goals through good management of our finances. Good planning can help families save money and prepare for financial emergencies. Plan ahead so you will have savings if you were ever to lose your job. Smart financial planning includes: Protecting your family by getting Health Insurance, Life and disability coverage, estate planning, and have college savings.

http://www.businessdayonline.com/index.php?option=com_content&view=article&id=5315:protect-your-income-from-challenges-of-financial-crisis&catid=55:personal-finance&Itemid=327

http://www.ehow.com/how_4562030_protect-family-financial-crisis.html

http://www.fitpregnancy.com/yournewlife/work_money/smart-financial-planning-for-families-45760492.html

Market Frenzy May Be Over

2009-09-29T14:08:00.001-07:00

By: Zachary Pienkowski

Recent studies and trends have shown that the utter chaos that has been the stock market over the last year and a half may be over. On September 29, 2008 the market took its largest point drop in history after the news that congress had rejected the $700 billion stimulus plan for our downward spiraling economy. While some thought the eventual approval of this plan would help calm the storm, the stock market continued to take a large number of plunges throughout 2008. Even when things appeared to be turning around and financial analysts and economists urged people to invest, they were still extremely hesitant because investors were unwilling to lose what they had left. Many people saw their retirement pools that took 30 years to accumulate nearly cut in half in a matter of months. Since late August of 2009, the lack of volatility in the market has been an encouraging sign for investors, as well as small but steady increases in the Dow and S&P 500. Strategists attribute this period of recovery to the lack of volatility in the markets and a return to normalcy in the credit markets as well. A large number of Americans are still concerned though because the national unemployment rate is near 10% and and companies that are showing profits are mostly doing so by significantly cutting costs and laying off workers. This may lead to smaller profits reported and investors having to comes to terms with the idea that we may not see a market like we had before the collapse for a long time. This may not necessarily be a bad thing though because it should result in a more stable economy in the long run.

Sources:

http://money.cnn.com/2009/09/28/markets/thebuzz/index.htm
http://money.cnn.com/2009/09/29/markets/thebuzz/index.htm
http://finance.yahoo.com/news/Drop-in-consumer-confidence-apf-1913425646.html?x=0&sec=topStories&pos=main&asset=&ccode=

Study: Bad economy may be good for your health

2009-09-29T07:21:00.000-07:00

By: Theresa Tamkins
Posted By: Lily Mei

Are you finally ready for some good news about the recession? As it turns out, a shaky economy might actually be good for your health.

In a bad economy, therapists often suggest taking control of things patients can, including eating right, exercising.

Although it seems hard to believe, a new analysis of the Great Depression -- the mother of all economic bad times -- suggests that mortality dropped and life expectancy increased during that period.
Researchers estimate that around that time, a year with a 5 percent drop in the gross domestic product was associated with a 1.9-year gain in life expectancy, while a 5 percent rise in the GDP lowered life expectancy by about one to two months.
And it's not just the Great Depression, says José A. Tapia Granados, M.D., of the Institute for Social Research at the University of Michigan, Ann Arbor.
Past research has shown similar results -- at least a drop in mortality -- in periods of U.S. economic recession during the 1980s and 1990s, as well as in recessions in other countries, Tapia says. Health.com: How exercise may boost your mood
"In some sense it is good news," he explains. "The usual view of a period of recession is that everything is bad during these periods."
In a study published this week in Proceedings of the National Academy of Sciences, Tapia and his colleague Ana V. Diez Roux analyzed the economic growth and population health in the United States between 1920 and 1940, including the years of the Great Depression, which lasted from 1929 to 1933.
Life expectancy in general increased 8.8 years between 1920 and 1940, but gains fluctuated with the economy. Health.com: Will your depression diagnosis protect you from employment discrimination?
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They found that mortality declined and life expectancy increased during the Great Depression, as well as in the recessions of 1921 and 1938, compared with other years during that period. Suicides did increase during the Great Depression, but they made up less than 2 percent of deaths during that time.

Click here to read more

G-20 to supplant G-8 as international economic council

2009-09-28T18:59:00.000-07:00

By: Zachary Pienkowski

Leaders of the G-20 economic summit will announce Friday that the group will become the new permanent council for international economic cooperation, senior U.S. officials told CNN Thursday.

The move comes in the wake of a major push by President Obama, the officials said. The G-20 will now essentially eclipse the G-8, which will continue to meet on major security issues but carry much less influence.

"It's a reflection of the world economy today and the players that make it up," said one senior official. Nations like China, Brazil and India -- which were locked out of the more elite G-8 -- will be part of the larger group.

The Group of 20 -- leaders of 20 countries representing 90 percent of the world's economic output -- are meeting in Pittsburgh for a two-day summit, focusing on the financial crisis and how to avoid a future repeat. The gathering is Obama's first time hosting a major international summit.

"We're meeting at a time where, for the first time since London, certainly for the first time in a year, we're seeing the first signs of optimism about prospects for global recovery," U.S. Treasury Secretary Timothy Geithner told reporters Thursday. "I think the broad consensus of private economists and businesses are that we're beginning to see growth in the United States, and around the world we see exports rising and forecasts for growth are being revised upwards."

"This is encouraging," he said, "but we have a ways to go."

To continue reading on this topic, click here

Financial crisis rewriting the rulebook on personal investing

2009-09-28T05:32:00.000-07:00

By: Mark Jewell
Posted by: Scarlett Lu

BOSTON — Stocks always rise over the long run. Bonds are for retirees and investors with little taste for risk. Companies rarely cut their dividends.

Those are three of the long-followed rules of investing — and rules that, as investors learned during a year of the stock market's worst turmoil since the Depression, can't always be counted on.
The new rules: Bonds might be the better long-term bet. Diversifying your portfolio means more than just picking different types of stocks. And nothing, including the humdrum money market fund, is risk-free.

Not even blue chips such as Dow Chemical and General Electric, once considered so reliable they were deemed to be good for widows and orphans, were safe when everything seemed to be crashing.
At their lowest points over the past year, a share of GE or Dow could be purchased for less than the price of lunch at McDonald's. And both companies slashed their sacred dividend last year — Dow for the first time in 97 years, GE for the first time in 71.
As the meltdown helped take out half the stock market's value from its peak, investors and advisers began to question the time-honored strategies of the longest investing binge in American history, dating to the start of a bull market in 1982.
click here to read more

A Timeline of the Financial Crisis

2009-09-24T07:25:00.000-07:00

Some say that we are on the way out of this recession and financial crisis. But are we? When and where did it all begin?
It was in February of 2007 that the Federal Home Loan Mortgage Corporation decided they would no longer buy the most risky supreme mortgages and mortgage-related securities. This was the start to what was a downward spiral in the housing market and our economy. People no longer could pay for their homes and real estate was hard to sell. Then in April, the New Century Financial Corporation, a leading subprime mortgage lender, filed for Chapter 11 bankruptcy protection. Chapter 11 was a way for companies to restructure their business model and pay investors over time.
Skipping ahead, more mortgage companies went under and filed for bankruptcy. In 2008, banks were being hit hard and were being taken over by other banks. This included JPMorgan taking over Chase, and Bank of America taking over Countrywide Financial.
The Fed stepped in many times to try to stimulate the economy throughout these last 3 years. They met again a few days ago again to hash out more problems. Are we on an upturn now? That’s for each one of us to decide.

By: Kelsey Hoffman

Sources:
http://timeline.stlouisfed.org/index.cfm?p=timeline
http://en.wikipedia.org/wiki/Subprime_crisis_impact_timeline
http://www.foxbusiness.com/story/markets/economy/timeline-financial-crisis/

Is the Economy Healing Yet?

2009-09-24T06:39:00.000-07:00

By, Meredith Anderson

Our government has been trying hard to help our country out of this recession. The auto plan, the Recovery Act, the housing plan, and many other acts have been helping our economy strengthen ever so slightly. However we are not totally out of the hole yet and the climb back to a healthy economy is still quite a while away. Obama lets the country know that although things are looking in a more positive direction we still some hard times to face. “But economic improvements do not mean that hard times are over -- 2009 will continue to be a difficult year for America's economy. ... The severity of this recession will cause more job loss, more foreclosures and more pain before it ends.” To further back up Obama’s statement Federal Reserve Chairmen Ben Bernake says, “"full recovery is likely to take more than two or three years."

For lots of us it is hard to know whether or not we are improving. We rely on the media and our government to tell us where we are headed. The problem with this is that everyone seems to be confused about what’s good and what’s bad. Not only has our economy spiraled our perception of what is a healthy economy is becoming slightly impaired as well.

Sources:

http://edition.cnn.com/2009/POLITICS/04/14/obama.economy/index.html
https://www.eccu.org/resources/thebuzz/2008/october/14
http://www.usatoday.com/money/economy/2009-02-24-bernanke-economy_N.htm

Government & The Financial Crisis

2009-09-23T17:42:00.000-07:00

By, Amy Nightingale

While Sarah Palin was at a conference in Hong Kong, she gave a speech where she spoke about her thoughts on the causes behind the current financial crisis to a group of executives and bankers. She said, “ We got into this mess because of government interference in the first place. We’re not interested in government fixes, we’re interested in freedom.”

Palin attacked the Federal Reserve’s low interest rates as the main reason why the U.S. is in its current financial position. She feels that the low rates caused people to buy homes, which they were unable to afford. Sarah Palin was speaking against the Obama administration, and wasn’t taking into account the progresss that they have made.

Obama spoke this week at this year’s Group of 20 Summit. The Pittsburgh Summit is a conference where leaders can meet to discuss the hard work that the government has done in confronting the global economic crisis. At the summit, the leaders will be attempting to create an exit strategy for the programs that were necessary in the financial crisis which have resulted in additional government debt.

References:

http://edition.cnn.com/2009/WORLD/americas/09/23/economic.summit/

http://www.americanbankingnews.com/2009/09/23/sarah-palin-government-cause-of-financial-crisis/

http://topics.nytimes.com/top/reference/timestopics/organizations/g/group_of_20/index.html?scp=1-spot&sq=group%20of%2020&st=cse

Should We Worry About the Shrinking Dollar?

2009-09-23T07:09:00.000-07:00

By: Lily Mei

The dollar has been shrinking since March 2008, and at the end of last week the dollar was only 0.65 euro down from 0.80 from last month. The underlining question is should we be worried?
The answer is yes and no. Yes, because the shrinking dollar is a problem for investors especially if all your assets are in dollars and most of your goods and services are priced in other currencies. Luckily, most investors can protect their assets from further erosion of the dollar in three simple ways.
Essentially you would want to diversify your assets in foreign currency, gold, and/or a range of different sustainable commodities. There are risks in reinvesting your assets in any of these three ways. In general, if you are trading in foreign currencies you can faced hefty tax rates.
Gold may be the safest way because in history whenever there was a recession the price of gold usually increase. Furthermore, if the dollar keeps dropping, you may want to think of stocks and bonds in euro, yen, or rubles because they will tend to become more valuable than buying in dollar.
Overall, in time the dollar may strengthen once again, but in a scenario of a long-term decline in dollar it may not be bad to rethink and plan ahead of diversifying your dollar valued assets so you wouldn’t suffer as much of a loss.

Sources:

http://articles.moneycentral.msn.com/Investing/Dispatch/061128.aspx

http://www.bloomberg.com/apps/news?pid=20601100&sid=apvyWkjStAL0

http://online.wsj.com/article/SB125271048869905007.html

http://www.economist.com/opinion/displayStory.cfm?story_id=2404984

Panel Probing Crisis Adds to Role

2009-09-21T19:10:00.000-07:00

WASHINGTON -- Members of a bipartisan federal panel investigating the financial crisis made clear at their first meeting Thursday that they plan to work closely with congressional leaders to help shape pending overhauls of financial rules.
View Full ImageBloomberg News
Former Sen. Bob Graham, left, and Phil Angelides leave a meeting of the commission probing the financial crisis in Washington on Thursday.

That could help speed the balky legislative process. But it could also complicate the commission's already tricky task of maintaining internal harmony, given the partisan divides that could emerge over the legislation -- and the number of political figures among the blue-ribbon panel's membership.
The 10-member commission, created by Congress earlier this year, is headed by Phil Angelides, a former California state treasurer and one-time Democratic gubernatorial candidate, and its vice chairman is former House Ways and Means Chairman Bill Thomas, a sometimes-combative conservative Republican. Other members include a Democratic former U.S. senator, Bob Graham of Florida, as well as Keith Hennessey, a top economic adviser to former President George W. Bush, and Doug Holtz-Eakin, a top economic strategist for 2008 Republican presidential candidate John McCain.

Click here to read more...

Posted by: Kelsey Hoffman

Transcript of September 'Money Summit: Money & Main St.'

2009-09-21T17:52:00.000-07:00

Posted by: Lily Mei

(CNN) -- Anderson Cooper, Ali Velshi and the CNN Money Team hosted a special "CNN Money Summit: Money & Main St." Thursday night, September 17. Here's a transcript of the show:

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Two topics in the hour ahead: the economy and you.

ANDERSON COOPER, CNN HOST: It's been one year since Lehman Brothers declared bankruptcy putting into motion a series of events that plowed the American economy deeper into recession and cost you money.

VELSHI: Everyone felt the effects as the crisis rippled through the job, housing and stock markets.

COOPER: In the hour ahead, we're going to figure out what happened over the past year and point you in the right direction for the year and years ahead. Our panel of experts will give you the tools you need to profit and even prosper.

Tonight on this CNN MONEY SUMMIT: MONEY AND MAIN STREET.

A year after the fall of Lehman Brothers there's good news and bad from the guys who crunch the economic numbers.

First the good, Federal Reserve Chairman Ben Bernanke said earlier this week the recession is very likely over. The bad news, not all economists agree with him nor do most Americans.

New polling we did for this program shows 86 percent of the country still feels we are in a recession. And more than three quarters of all Americans say it's a pretty bad one.

But it's not all doom and gloom. There is good news, things are improving in some areas very quickly.

We're going to be discussing this tonight with our panel: Fortune magazine senior editor Leigh Gallagher; an economist and author, Stephen Leeb; Christine Romans, host of CNN's "Your Money;" also Money magazine senior writers Walter Updegrave and Donna Rosato; and Ryan Mack, president of Optimum Capital -- Ali.

VELSHI: Anderson, thanks.

But first, how did we get here? One year ago this week, America's subprime crisis became a global financial crisis. What had been a downturn fueled by falling home prices and mortgage defaults became in a matter of days something much bigger.

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Facts and the Financial Crisis

2009-09-21T17:27:00.000-07:00

Facts and the Financial Crisis
Published: September 19, 2009

By, Amy Nightingale Group 3A

The Financial Crisis Inquiry Commission, created by Congress to examine the causes of the crisis, held its first public meeting last week. In his opening remarks, the chairman, Phil Angelides, a former California state treasurer, likened the group’s potential impact to that of the Pecora hearings in the 1930s, which examined the stock market crash of 1929 and led to transformational changes in banking, investing and financial regulation.

And yet, last week’s meeting was oddly inauspicious, feeding doubts about the commission’s ability to realize that potential.
For starters, the meeting was a long time coming, and thin on substance. It has been four months since Congress passed a law authorizing the commission and two months since lawmakers selected its 10 commissioners — six chosen by the Democratic leadership and four by the Republican leadership.

For starters, the meeting was a long time coming, and thin on substance. It has been four months since Congress passed a law authorizing the commission and two months since lawmakers selected its 10 commissioners — six chosen by the Democratic leadership and four by the Republican leadership.

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Oil Prices Effected by Economy

2009-09-21T17:09:00.000-07:00

LONDON (Reuters) -- Oil prices fell 3.2% Monday, to below $70 a barrel, as further signs of weak fuel demand raised expectations that prices may have raced ahead of the nascent economic recovery.

Oil prices have more than doubled since hitting lows near $30 a barrel at the height of the global economic crisis, but the market has come under pressure since touching a one-year high of $75 a barrel almost a month ago.

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Posted by, Meredith Anderson

Detroit’s Taking on the Financial Crisis, With Fashion?

2009-09-20T12:16:00.000-07:00

By: Sara Sindelar

Fashion is a major industry and it is feeling the pain of the crisis as well. When you think of Detroit you think auto industry but fashion is taking over in the city. Detroit is trying to change the city instead of losing it to the financial crisis. “As that business [auto industry] fades and its jobs disappear, city planners are hoping to redeploy the city's creative minds and craftsmen toward a new and growing field: fashion.” (CNN Money). Detroit has held their own fashion week since 2005 and they are hoping that they will gain strong enough PR for the local designers to be featured in national stores. One woman who was laid off from the auto industry started a handbag line; a previous finance worker left to start a men’s suit collection; the industry is growing in Detroit. "Creative industries build a vibrant community that young professionals want to live in," Detroit Regional Chamber COO Tammy Carnrike says. This can gain young population which can lead to an increase in the Detroit economy. So watch out New York and Los Angeles, Detroit is ready to be next in fashion.

The fashion industry is and will continue to change as the recession continues. Designers are making more affordable and accessible clothing and people are starting up fashion lines after being laid off. "I want this line to be accessible," says designer Richard Chai. This is the A-word that was not previously used on the runway for high fashion. “But this is the new fashion economy. Less glamorous. More sellable.” (Wall Street Journal).

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Crisis panel vows: We will be relevant

2009-09-20T12:11:00.000-07:00

Posted By: Sara Sindelar

Congressionally-appointed panel convenes to discover causes of financial crisis. It is determined to be helpful, even as lawmakers move ahead without them.

WASHINGTON (CNNMoney.com) -- Capping a week that highlighted the one-year anniversary of the financial collapse, a panel aimed at getting to the bottom of its cause is just now getting on its feet.
The Financial Crisis Inquiry Commission's members want to "shed light" on why the collapse happened and make recommendations to avoid future crises. Their final report is 15 months away, but congressional leaders are already pushing ahead on bills to revamp financial rules to avoid the next crisis.
The congressionally appointed group, funded with $8 million, met for the first time publicly on Thursday and pledged that its work will serve as more than window dressing for politicians worried about the appearance that they allowed the financial crisis to happen.

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Job Market Hurting Because of Economy

2009-09-17T10:27:00.000-07:00

By, Meredith Anderson

Our economy is hurting right now. With people spending way less and companies cutting cost everywhere they can, you can bet the countries employment is feeling the pain as well. Our unemployment is at a record high for young people at 25.5%. Everyone wants to stay in college anyway but now graduation comes with a scarier price tag. The “real world” as mom and dad have been calling it for years, is even more intense and competitive these days.

Right here in Syracuse we are feeling the effects of the economy. Carrier cut 24 people in its engineering department. This means that as of Sept 30, 2009 24 families will lose a great portion of their income. Carrier says that these job cuts were just in response to the weakening economy.

Job cuts have been a huge issue when it comes to the downsizing of our economy not only to college grads but as well as people who have worked for years at companies. In 2008 when the recession really took a turn there were nearly 1,000,000 layoffs! Staying in school doesn’t seem like a bad alternative right now.

Sources:

http://www.powerful-sample-resume-formats.com/could-my-college-education-be-hurting-me-in-a-blue-collar-job-market.html

http://www.gather.com/viewArticle.action?articleId=281474977802219

http://www.syracuse.com/news/index.ssf/2008/08/carrier_to_cut_24_jobs_due_to.html

Saving for Retirement in your 20s

2009-09-17T09:08:00.000-07:00

By: Lily Mei

It’s easy to understand why retirement plans don’t loom in mind to most 20-year-olds. Most of them are more concerned about kick-starting their careers, not ending them in the long distant future.

But the fact that if you’re young and start saving it gives you the leverage to be extremely rich in your retirement years. That’s because when you’re in your 20s, you can invest relatively little for a short period and wind up with far more money than someone older who saves much more over a longer period.

Consider this scenario: If you start saving for retirement at the tender age of 26, putting away about $1500 a year for just 45 years, you’ll have around $500,000 at the end with annual earnings of 8%. Now, let’s say you wait until you’re 36 to start saving. You put away the same $1500 a year, but for 30 years and earnings grow at 8% a year. When you’re 66 you only have about $200,000 less than half of what you could have if you started saving earlier.

Sources:

http://www.oprah.com/article/money/personalfinance/20090122_expert_retirement

http://www.money-zine.com/Financial-Planning/Retirement/Retirement-Planning-in-Your-20s/

http://www.usnews.com/usnews/biztech/articles/060428/28tips_retirement.htm

Money flowing from financial system to tax payers, Obama says

2009-09-17T08:40:00.000-07:00

Posted by: Lily Mei

NEW YORK (CNN) -- President Obama said Monday that the need for the federal government to help prop up the nation's hard-hit financial system is fading.

President Obama says he wants to end the idea that some firms are "too big to fail."

"While there continues to be a need for government involvement to stabilize the financial system, that necessity is waning," he told an audience of key financial and political leaders at New York's famed Federal Hall on Wall Street.

"After months in which public dollars were flowing into our financial system, we are finally beginning to see money flowing back to taxpayers."

Obama noted that although taxpayers won't necessarily "escape the worst financial crisis in decades entirely unscathed," banks have repaid more than $70 billion in government bailout funds.

He called for the closure of regulatory loopholes that contributed to the current financial crisis.

"We've got to close the loopholes that were at the heart of the crisis. Where there were gaps in the rules, regulators lacked the authority to take action," he said.

This weakness "in oversight engendered systematic, and systemic, abuse."

The president said that, while "holding the Federal Reserve fully accountable for regulation of the largest, most interconnected firms, we'll create an oversight council to bring together regulators from across markets to share information, to identify gaps in regulation, and to tackle issues that don't fit neatly into an organizational chart."

Obama noted that, under his plan, "we'll also require these financial firms to meet stronger capital and liquidity requirements and observe greater constraints on their risky behavior."

The only way to avoid a repeat of the financial crisis, he said, "is to ensure that large firms can't take risks that threaten our entire financial system and to make sure they have the resources to weather even the worst of economic storms."

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How to save money during the financial crisis

2009-09-16T20:29:00.000-07:00

By Kelsey Hoffman

There are some key points we need to keep in mind in order to save money during this financial crisis. It all comes down to self-discipline and setting goals. People have to be in control of themselves before they are in control of their money.

The first thing that needs to be done to budget your money is to write out all the necessities for life. These expenses include food, rent/mortgage, utilities, clothing, medical expenses, insurance, etc. Next, you need to write out all the other smaller expenses that you incur on a daily basis. From here there need to be short and long term goals set. These may be goals like “I want to have $100 in my bank account by the end of the month” or longer term goals including “I want to own my own house in 10 years”.

After expenses and goals are laid out, you need to figure out how much needs to be saved per period in order for you to reach those goals. It is also important here to see what small expenses can be eliminated.

After saving for a while it is a good idea to reassess your goals and make sure they are still reasonable. If they are not reasonable, then rewriting your goals and make them more sensible and in accordance with your realistic revenue and expenses.

Sources:

http://www.wikihow.com/Save-Money

http://www.ehow.com/how_4716327_save-money-during-financial-crisis.html

http://www.associatedcontent.com/article/1101686/top_five_ways_to_save_money_during.html

Unemployment and Wages Rise Despite Recession, Similar to Great Depression

2009-09-16T19:58:00.001-07:00

By: Nicole Nelson

Surprisingly, wages for workers have actually increased over the past year. It was thought that hourly wages might actually start to fall, but according to government surveys, wage growth has actually increased over the past months. During the past month, average weekly pay rose from $612 to $618. Again, this is surprising because the unemployment rate is higher now than it has been in over twenty six years. Although unemployment is so high, Leondhart states that the recession has been very concentrated and what and who it is effecting. He also states that if you haven’t lost your job by now, you are safer than you were a couple months ago. He figures that the employment rate is so high that its unlikely that it could get any higher. Another interesting fact is that prices have fallen about two percent while average weekly pay has remained constant or risen.

The most interesting fact about the entire raise in weekly pay is that it is very similar to what happened in the Great Depression. Because of deflation during the Great Depression, if you had a job you were actually living pretty comfortably. Similar to now, since prices are falling but if you have a job your pay is not on the same scale, you too are living “comfortably”.

References:
http://www.nytimes.com/2009/09/16/business/economy/16leonhardt.html
http://economix.blogs.nytimes.com/2009/09/16/reader-responses-sticky-wages/

Has Obama Helped Us Move Forward Yet?

2009-09-14T21:00:00.000-07:00

WASHINGTON (CNNMoney.com) -- Just a month after taking office, President Obama asked Congress to move fast to reform the "outdated" system of financial oversight and install "tough, new common-sense rules of the road" for Wall Street.
Now, as Obama gave a major address on Monday marking the one-year anniversary of the Lehman Brothers collapse, things haven't advanced very far.

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Posted By,

Meredith Anderson

Lehman and the Financial Crisis

2009-09-14T20:18:00.000-07:00

One year ago today Lehman Brothers filed for bankruptcy. The weeks that followed are among the most dramatic in U.S. history. They led to a massive government intervention in the financial system—an intervention that will likely change that system forever.

Many people say that letting Lehman fail was the mistake that caused the financial crisis. To them, the lesson is that the government should never allow any "systemically important" financial institution to fail. If only Lehman had been bailed out, the story goes, we could have avoided much of a 45% drop in the S&P 500, a 4% drop in output, the rise in unemployment to 9.7% from 6.2%, and the $784 billion "stimulus" to top off a $1.59 trillion deficit.

This story is false.

The Lehman failure was not an isolated event. It was a movement in a dramatic crescendo of failures.

to read more click here

Posted by: Nicole Nelson

Obama Urges Wall Street Not to Ignore Lessons of Crisis

2009-09-14T15:05:00.000-07:00

WASHINGTON -- President Barack Obama warned Wall Street that it wouldn't be wise to ignore lessons from last year's economic turmoil, pressing the financial sector to join his effort to remake financial regulation by the end of the year.

In a major address in New York, Mr. Obama said the storms of the financial crisis "are beginning to break" with less need for the government to get involved in the financial system. But he pressed Wall Street not to grow complacent as the economy returns to normal, saying banks shouldn't expect taxpayers to come to the rescue again.

"Unfortunately, there are some in the financial industry who are misreading this moment," Mr. Obama said. "Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they are choosing to ignore them. They do so not just at their own peril, but at our nation's."

Click here to read more.

Posted by: Kelsey Hoffman

Trials Continue on Merrill Lynch’s Bonuses Paid Out

2009-09-11T16:42:00.000-07:00

By: Sara Sindelar

Everyone wants to be rewarded for their hard work but there is a line that does not need to be crossed. It was no surprise that C-suite level executives are treated very well but after the recession started more details were given out. I do not think you can find many people that will agree with the amount in bonuses and the VIP treatment that corporate executives get.

“Regulators have claimed that BofA had said in its proxy statement that it would not pay out bonuses to Merrill employees in fiscal year 2008, when, in fact, the bank authorized bonus payments of as much as $5.8 billion. Of that allowance, $3.6 billion was paid out in 2008 to more than 39,000 Merrill employees.” (CNN Money)”

This week in court discussions on how the banks, Merrill Lynch and Bank of America, should be punished for going against what their proxy statement promised. There are questions being thrown around about who is to blame about the pay out. No matter who signed the checks it is still wrong that so many corporate executives are gaining so much money especially during this recession. Even though the government is making strides to cut down corporate spending it will still happen and more needs to be done in order to control unnecessary spending by corporations. Hopefully there will be consequences for this pay out of bonuses in court.

References:
http://www.boston.com/business/articles/2009/08/25/sec_bank_defend_bonus_settlement/
http://money.cnn.com/2009/09/09/news/companies/bofa_sec/index.htm?postversion=2009091015
http://online.wsj.com/article/SB123750034629289161.html

GM: Satisfaction guaranteed - mostly

2009-09-11T13:48:00.000-07:00

GM: Satisfaction guaranteed - mostly

Most people would be surprised by how good GM's current crop really is, but there are still some weak spots.

NEW YORK (CNNMoney.com) -- When General Motors announced its new money back guarantee Thursday many people no doubt envisioned the automaker's Detroit headquarters buried under a mountain of returned Chevys and Buicks.

But judging from the latest crop of vehicles, that nightmare probably won't happen.

For the most part, GM has much to be proud of. The company has indeed produced cars that can compete with the rest of the industry, as Bob Lutz said when he unveiled the money-back guarantee.

Click here to Read More
Posted by: Sara Sindelar

Triple - A Failure: The Rating Game

2009-09-10T09:12:00.000-07:00

Posted by: Lily Mei

Obscure and dry-seeming as it was, this business offered a certain magic. The magic consisted of turning risky mortgages into investments that would be suitable for investors who would know nothing about the underlying loans. To get why this is impressive, you have to think about all that determines whether a mortgage is safe. Who owns the property? What is his or her income? Bundle hundreds of mortgages into a single security and the questions multiply; no investor could begin to answer them. But suppose the security had a rating. If it were rated triple-A by a firm like Moody’s, then the investor could forget about the underlying mortgages. He wouldn’t need to know what properties were in the pool, only that the pool was triple-A — it was just as safe, in theory, as other triple-A securities.
Over the last decade, Moody’s and its two principal competitors, Standard & Poor’s and Fitch, played this game to perfection — putting what amounted to gold seals on mortgage securities that investors swept up with increasing élan. For the rating agencies, this business was extremely lucrative. Their profits surged, Moody’s in particular: it went public, saw its stock increase sixfold and its earnings grow by 900 percent.
By providing the mortgage industry with an entree to Wall Street, the agencies also transformed what had been among the sleepiest corners of finance. No longer did mortgage banks have to wait 10 or 20 or 30 years to get their money back from homeowners. Now they sold their loans into securitized pools and — their capital thus replenished — wrote new loans at a much quicker pace.
Mortgage volume surged; in 2006, it topped $2.5 trillion. Also, many more mortgages were issued to risky subprime borrowers. Almost all of those subprime loans ended up in securitized pools; indeed, the reason banks were willing to issue so many risky loans is that they could fob them off on Wall Street.

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Airlines Increase Prices, Decrease Quality, and Sales Plunge

2009-09-10T06:22:00.000-07:00

By, Meredith Anderson

It’s frustrating that because of our current economic conditions that vacations and gateways seem way too expensive to afford. Ticket sales have increased largely in the last two years. Even with special offers sales are still much lower than they were only a short twelve months ago. The truth is that flying isn’t the experience it used to be. The once amenities that once made the flying more comfortable and enjoyable will now cost you quite a bit extra. For a meal and a pillow and blanket might now run you up to $25 additional dollars on top of your pricey ticket. Before you even board the plane you are faced with additional fees. Baggage fees and booking fees have become somewhat of a serious inconvenience for many flyers. It’s not only American airlines as well as European and other major airlines. “Customers are struggling to survive in the current market and the very last thing they need is a cost increase,” said the AEA’s Ulrich Schulte-Strathaus. Not only are individuals themselves cutting travel, businesses have trimmed down there travel budgets relatively a lot. According to a recent survey conducted by Business Travel Coalition one in four companies have called for emergency cuts of travel budget in response to this finical crisis. With the economy the way it is, airlines are just going to have to take a back seat to our current finances.

Sources:
http://blog.taragana.com/n/airlines-say-airport-fee-increases-are-hurting-ability-to-weather-economic-crisis-117129/
http://www.articlesbase.com/finance-articles/why-global-financial-crisis-forces-travel-cuts-822340.html
http://www.moneywise.co.uk/news-views/blogs/nathalie-bonney/2009-07-09/are-low-cost-airlines-really%E2%80%A6-low-cost

What Caused the Financial Crisis?

2009-09-09T21:58:00.000-07:00

By: Nicole Nelson

Although there is not one specific cause to the financial crisis that occurred in 2008, there is speculation on root causes of the crisis. Many people are placing the blame solely on the housing market and the fact that mortgages were being given to people that may not have been able to pay for them. Others place the blame on politics and their role in government banks, interest rates, etc. Again, no one is right or wrong in their opinions, but a financial crisis does not occur just because of bad mortgages or bad interest rates. Financial crisis’s happen because bad financial decisions were being made by a lot of people for a significant period of time. Some of the reasons that caused the crisis was “cheap credit” was being given. As mentioned, people were being loaned money to invest in real estate or other areas when they didn’t have the money to. Also, companies were buying out other companies and taking out huge amounts of debt to do so without actually creating any value. Mortgage brokers were also authorizing mortgages and then selling them off without actually taking any responsibility if they could not be paid. Overall, there was not one simple reason that the United States got into the position it is now, various circumstances caused us to be in the financial crisis we are currently in.

References:

2008-2009 Financial Crisis - Cause and Effects

A Year After Financial Crisis, a New World Order Emerges

The Cause of the 2008 Financial Crisis

Airlines Feel Harsh Effects of Econmony

2009-09-08T10:34:00.000-07:00

As any frequent flier knows, the airline industry is, to quote Jimi Hendrix, "a frustrating mess." And about the only thing more frustrating than flying is trying to make money by investing in airline stocks.
Most major carriers routinely lose money, despite the fact that they now seem to charge you extra fees for everything but the pleasure of breathing the pressurized air. JetBlue (JBLU) is the only big airline expected to post a profit this year.

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Meredith Anderson

Five Lessons From the Financial Crisis

2009-09-08T10:19:00.000-07:00

By David Wessel

With the one-year anniversary of the collapse of Lehman Brothers approaching, economists are listing lessons learned. Among them is Richard Berner of Morgan Stanley.
Here are his five lessons, drawn from a presentation at recent conference sponsored last month by the Central Bank of Argentina and elaborated on in a note to clients last week:

1. “A strong and well-regulated financial system should be the first line of defense against

financial shocks …. [T]he more free-market oriented we want our economies to be, the more we need official supervision and oversight of our financial institutions and markets. That’s because truly free-market economies involve a high risk of business failure, and corresponding high risks to the financial institutions and investors that lend to and invest in those businesses. A key lesson from this crisis is that competition among lenders breeds innovation, but also instability.”

click here to read more

Posted by Nicole Nelson

Jeopardizing the Education for Our Future

2009-09-07T19:41:00.000-07:00

I think a very important aspect of the financial crisis is how it is affecting higher education institutes. Every year people pay thousands of dollars to go to college but in tough economic times it is getting harder and harder for people to get that type of money. In the past few years colleges have seen a decrease in their endowments as well as a slight decrease in their enrollment. Roger Goodman, vice president at Moody’s Investors Service, which assigns credit ratings to 500 schools, is quoted in a Reuters article in saying “What we may see is a shifting (of applicants) from the higher-priced, small, private colleges, to a lower-priced four-year university, and from the four-year universities to community colleges for a couple of years.” I think this is a very reasonable statement and I’ve definitely witnessed it firsthand with friends dropping out of their more expensive school and moving home to go to the local community college. It’s a shame really that the future leaders of America have to jeopardize their education because of the failing economy of today. Even with their decreased funds, schools are still helping students pay their way through school. The Department of Education has been allocating their $116 billion even more wisely now to help students and families pay for postsecondary education during this financial crisis.

References:
http://www.ed.gov/finaid/landing.jhtml
http://www.reuters.com/article/domesticNews/idUSTRE49T02E20081030
http://www.alternet.org/workplace/114996/financial_crisis_sends_tuition_costs_sky-high_as_colleges_face_crunch/

By Kelsey Hoffman

Financial Crisis: One Year Anniversary

2009-09-07T16:37:00.000-07:00

Nearly one year ago today is when the financial crisis hit the United States. On September 7, 2008, the United States government took control over Fannie Mae and Freddie Mac. The takeover along with the collapse of Lehman Brothers led to the worst financial crisis since the Great Depression.

Over the past year, economic conditions have had severe impacts on Americans. Banks have become reluctant to make loans, investors are taking their money out of the stock market and economic activity has slowed down. Most importantly, people have lost confidence in big companies. In their mindset, they feel if big corporations like Lehman Brothers and Merrill Lynch can’t make it, then neither can small businesses.

The current recession has lasted for a year thus far and there are no signs that it will be ending anytime soon. Economists are certain that it will take a long time before the economy begins to shape up and especially for jobs to be created. When President Barak Obama commented on the current financial crisis, he expressed his feelings on how he inherited it from President George Bush. In February, he announced his plan to buy toxic bank assets. Although it hasn’t been carried out as of yet, it will be launched within the upcoming months but will be smaller that it was originally foreseen.

Posted By: Amy Nightingale

References

http://www.washingtonpost.com/wp-dyn/content/article/2009/09/05/AR2009090502645.html

http://www.npr.org/templates/story/story.php?storyId=112614703

http://www.voanews.com/english/2009-09-07-voa32.cf

The Rise in Unemployment Causes Unease for the Class of 2010

2009-09-07T12:46:00.001-07:00

By: Sara Sindelar

As a senior in college my main concern is making it to the finish line in May, but more importantly, I hope to get there with a job offer in hand. Although the stock market is gradually making its way higher, the unemployment rate keeps increasing which makes all of us in the graduating class of 2010 more than a little uneasy. The Labor Department recently announced that the August unemployment rate reached 9.7% which was an increase from July’s 9.4% and a 26 year high. Compared to July, there were less job losses in August but the increase in the overall unemployment rate gives us cause for concern. Is there hope for the economy in the near future? “The data reinforced expectations that employers will begin adding jobs by early next year, though the pace of job creation remains uncertain.” (Wall Street Journal, September 4, 2009). Investors and consumers both need to gain confidence that the economy will turn around, it is a pure cycle. Jobs are created by increased demand by consumers for the goods and services offered so we need consumer confidence to grow before more jobs are created. An increase in consumer confidence will take a lot more time and action, only time will tell. Though, there may be some promising signs that the economy is making a positive turn I am still very uneasy about what the next months bring for all of us.

Reference:
http://thecaucus.blogs.nytimes.com/2009/09/04/the-early-word-unemployment-rate-goes-up/
http://money.cnn.com/2009/09/04/markets/markets_newyork/index.htm?postversion=2009090413
http://online.wsj.com/article/SB125206688861886325.html

By Sara Sindelar

Six myths about the financial crisis

2009-09-07T12:43:00.000-07:00

A comfortable, corporatist consensus is building up about how to deal with the financial crisis. Led by Alistair Darling and his French and German counterparts at the G20 finance ministers’ summit on the weekend, this consensus is essentially that the financial crisis “proves” that global free market capitalism has “failed” and that everything is the fault of overpaid greedy bankers unshackled by morality or law-makers and egged on by mega bonuses to ever more spectacular risk-taking. The world apparently needs nothing more than to close down the “casino banks,” ban dangerous speculative innovation and return to a sort of updated, over-regulated, post-war corporatism in order to recreate the happy days of the 1990s. The following six myths about the financial crisis demonstrate why this is the wrong approach.

MYTH 1: THE “EXPERIMENT” WITH FREE MARKETS HAS FAILED
The idea that the era of financial liberalisation is over seems to betray a rather dramatic failure of perspective. The last 18 months have certainly been painful. But the losses pale in comparison with the huge wealth creation of previous decades. World real GDP grew by around 145 per cent from 1980 to 2007.

By every conceivable measure the citizens of countries able to profit from this growth have higher life expectancy, cleaner water, better healthcare, higher standards of literacy and more freedom. The “experiment” with free markets has been an almost unqualified success.

The American Nobel laureate Gary Becker has calculated that even if the recession turns into a depression with a GDP fall of 10 per cent then the net growth in GDP from 1980 to 2010 would still be 120 per cent or about 2.7 per cent a year – a real per capita increase of nearly 40 per cent.

Even in this worst case, this is a “failure” that the citizens of the many countries unable fully to benefit from global capitalism would probably be happy to settle for.

Click here to read more..

Posted by: Amy Nightingale

The future of the 401(k)

2009-09-07T12:28:00.000-07:00

After the latest market drop, planners and investors are trying to figure out that means for their retirement plans.

NEW YORK (Fortune) -- Last year's meltdown was a sobering moment for 401(k) holders who were used to a market that only went up. Many of them thought of investing as risk free.
When that bubble popped along with housing and credit, 401(k) plan sponsors and investors wondered just what would happen next.

Kristi Mitchem, head of Barclays Global Investors' U.S. Defined Contribution business took some time to speak with Fortune about what is next for the 401(k) and how investors can get the most out of their retirement plans.

BGI manages 56% of the assets of the world's 100 largest pension plans and is the fourth-largest defined contribution plan manger in the U.S. It also helps companies make the shift to 401(k)s.

Click here to read more.

Posted by Sara Sindelar

Government plans bold financial bailout

2009-09-02T18:42:00.000-07:00

WASHINGTON - Struggling to stave off financial catastrophe, the Bush administration on Friday laid out a radical bailout plan with a jawdropping price tag — a takeover of a half-trillion dollars or more in worthless mortgages and other bad debt held by tottering institutions.
Relieved investors sent stocks soaring on Wall Street and around the globe. The Dow-Jones industrials average rose 368 points after surging 410 points the day before on rumors the federal action was afoot.
A grim-faced President Bush acknowledged risks to taxpayers in what would be the most sweeping government intervention to rescue failing financial institutions since the Great Depression. But he declared, “The risk of not acting would be far higher.”

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Posted by Kelsey Hoffman

What Caused The Economic Crisis Of 2008?

2009-04-27T12:43:00.000-07:00

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.

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Posted By Lee Ruth

US to take majority GM stake

2009-04-27T12:23:00.000-07:00

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.

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Financial Crisis; Job Market

2009-04-27T09:01:00.000-07:00

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

Youtube video...

Senate wants $5M to study financial crisis

2009-04-26T21:00:00.000-07:00

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.

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How to survive a financial crisis??

2009-04-26T12:27:00.000-07:00

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.

Sources:

http://www.thinkglink.com/article/2008/10/03/personal-finance-tips-for-financial-crisis

http://articles.moneycentral.msn.com/Investing/StockInvestingTrading/7-tips-surviving-a-financial-panic.aspx

http://www.articlesbase.com/internet-marketing-articles/tips-to-handle-a-financial-crisis-546679.html

Financial Crisis to threathen attempt to cut poverty

2009-04-26T11:50:00.000-07:00

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.

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