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Nov
8
Most US retailers reported double digit declines in sales on Thursday for the month of October even as the industry geared up for the crucial holiday shopping season, just days away.
The fall in October sales figures come after a lack-luster September and predict a holiday shopping season that might see some of weakest numbers in recent times. This is mainly because of restricted consumer spending which marked the steepest decline in the last seventeen year when it fell 3.1% in the third quarter.
The retail industry is also anticipating further bad news on Friday when the Labor Department comes out with the employment figures which many expect will reveal thousands of jobs lost in the past month. Job cuts are especially detrimental to retail activity since it restricts the spending power of consumers.
Another trend obvious in the retail figures of October revealed that the economic downturn had affected the entire spectrum of retailers, from the luxury stores to the discount outlets. On the higher end, luxury department chain Neiman Marcus reported the steepest drop - 27.3% - while others to experience two-digit sales decline were Abercrombie & Fitch, Gap, Nordstrom. Among the discount stores the main retailers to be affected were Costco, Big Lots, Target, Ross Stores, T.J.Maxx and others.
Nov
7
The days of dizzying Wall Street salaries seem to coming to an end in the wake of the recent market meltdown which has left several finance giants either bankrupt or seeking the refuge of federal bail out.
A study conducted by the consulting firm Johnson Associates reports that bonus for Wall Street executives which had soared to record peaks in recent years are set to drop by 20 to 35 percent across the industry. Bonuses for the top managerial level are in fact estimated to plunge as much as by 70 percent. Another report released in the New York Assembly on Wednesday said that Wall Street bonuses could come down by a whopping 41.3 percent next year.
The Johnson study is based on a survey of banks and money management forms and also takes into account compensation figures disclosed in corporate filings. The study is conducted every year by the private consulting firm but this year it will be especially scrutinized as pressure mounts from political quarters on the finance industry to pare down salaries and bonuses.
The Attorney General of New York Andrew M Cuomo said in an interview on Wednesday that even if executive bonuses are slashed by 70 percent, it might not be enough to cope with the extent of losses which have necessitated a $700 billion federal bail out plan.
Nov
4
South Korea plans to introduce a stimulus package worth $11 billion or 14 trillion won next year in order to fight the biggest financial crisis to grip the nation since it required IMF aid almost a decade ago.
In an attempt to boost the flagging South Korean economy, the country’s finance minister Kang Mang Soo announced that the government will come up with a 14 trillion won stimulus package in 2009 of which 4.3 trillion won will be spent on regional infrastructure. Another 3 trillion won will be provided for tax benefits and mainly extended to investments made in factories. The South Korean government has already approved relief measures of up to 33 trillion won this year.
The news of an economic stimulus package was well-received by the financial markets in South Korea which witnessed a rise in both currency and stocks. According to government agencies, the stimulus plan will add another percentage point to economic growth next year and generate at least 200,000 jobs in the country. Last week the central bank of South Korea cut benchmark rates by a record percentage point and was offered aid worth $30 billion by the US Federal Reserve after local financial markets plunged to new lows.
Nov
1
American Express Co announced on Thursday that it intends to undertake a host of cost-saving measures including a 10% cut in workforce in an attempt to deal with bad loans and rising funding costs.
The decision of American Express to slash its workforce by 10% would mean a loss of 7000 jobs in the company’s biggest restructuring plan since 2001. the company also said in its announcement that the layoffs will lead to pre-tax restructuring fees of $370 million to $440 million in the fourth quarter. By cutting jobs, freezing hiring for open positions and suspending management-level salary raises for 2009, American Express hopes to save around $700 million in a year. the pruning of staff will take place across markets and business units and mainly apply to those managerial positions that do not directly deal with customers.
Among other cost-saving measures that the company plans to enforce are reducing travel and consulting expenses as well as scaling back investments. Overall American Express expects to generate around $1.8 billion next year by the implementation of various cost-saving policies. American Express is the fourth-largest credit card company in the United States and was one of the first to warn at the beginning of the year that consumer spending was slowing down and delinquencies were on the rise.
Oct
30
For the third time in six weeks, China’s central bank cut the benchmark deposit and lending rates bringing it down by a further 0.27% on Wednesday.
The People’s Bank of China announced on Wednesday that from now on one-year bank loans will cost 6.66% as compared to the earlier cost of 6.93% while the deposit rates too will fall from 3.87% to 3.60%. The website of China’s central bank also stated that the new rates will take effect from Thursday. There was no reason given for the latest round of cuts in the benchmark rates by the People’s Bank of China.
Before this China’s central bank had reduced its benchmark lending and deposit rates on two occasions – on September 15 as well as October 8. The second reduction in interest rates and reserve requirements by the People’s Bank of China had coincided with rate cuts by central banks of leading economies across the world.
The global credit crisis that gripped world markets recently led to coordinated attempts by several governments to shore up the global banking system. As part of this intervention major central banks announced reduction in benchmark lending rates in an attempt to pump in more liquidity into a financial system crippled by frozen credit lines.
Oct
22
China’s Growth Rate Slides Below 10%
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In a sign that the recent global finance crisis may have had some effect on every economy, China’s growth rate dipped below 10% for the first time in several years of high-speed development.
The Chinese government announced on Monday that the growth of the nation’s gross domestic product had fallen to 9.9% in the third quarter of this year. However China’s National Bureau of Statistics clarified that the decline was the result of the government’s efforts to cool down the economy after its exports recorded feverish growth in past quarters. NBS chief, Yao Jingyuan, in fact, described the slide in GDP growth rate as a “hard-earned achievement”.
Independent analysts however believe that the decline in its GDP rate is an indicator that China has been feeling the impact of a global slowdown due to falling demand of its exports in the US and other markets. Car sales have plunged in America and Western Europe while China’s toy industry is reportedly retrenching workers by the thousands as its export orders are cut down.
At the same time, any GDP rate of 9.9% is impressive according to international standards. What makes the slide in China’s growth rate significant is that it comes after two successive quarters of growth rate above 10% and thus may be an indication that its economy is slowing down.
Oct
20
Ben Bernanke, It’s time for stimulus plan
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The United States’ Federal Reserve Chief says lawmakers ought conceive another stimulus plan to bolster the economy
Ben Bernanke says congress should consider creating another stimulus plan to give the economy a boost. The man was addressing the House Budget Committee, asserting that congress must act and provide further help to the economy. Bernanke went on to say “With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate,”.
Analysts believe that Bernanke testification increases the probability for another stimulus plan for the United States. If so, such a plan would come into existence after the November 4th election but before the new president is in office along with a fresh congress.
Congress passed a $170 billion plan - nearly $100 billion in payments to tax filers earlier this year in order to restore consumer confidence and boost business spending. Brian Bethune, who is the chief US financial economist research firm Global Insight, said “Effectively, the Fed chairman is giving Congress a green light to go ahead with an additional fiscal stimulus package,”.
Nancy Pelosi welcomed Bernanke’s comments and issued a statement which read “Chairman Bernanke added his voice to the chorus of economists, experts and policymakers who insist that America needs a job-creating recovery package to get our economy back on track and to restore consumer and investor confidence,”.
Ben Bernanke has met both critiscism and praise for his assessment of the United States economy, his comments coming at a time when the United States is just under 2 weeks away from presidential elections may be a cause of concern.
Oct
20
Dutch Government to Inject EUR10 billion in ING
Filed Under Economy, Finance, Investing, News | Leave a Comment
After government intervention from the United States to South Korea to Germany, and now the Dutch government is set to take action to protect the nations economy from the global financial crisis. It would be injecting about10 billion Euros into ING Groep NV (ING) in an accord signed with the Dutch Central bank.
ING, banking and insurance group, attempted to pad its capital position in order to brace itself from the effects of the global crisis. ING in an official statement said it would issue EUR10 billion worth of non-voting Tier-1 securities to the Dutch State Bank.
ING Chief Executive Michel Tilmant said “Our capital position was in line with previously targeted levels and regulatory requirements. However, market conditions have changed dramatically in recent weeks and have led to an internationally recognized belief that going forward, in this market environment, capital requirements for financial institutions should be higher,”
The Dutch government would get 2 seats on ING’s supervisory board and 8% annual interest on the securities. Giving the Dutch government veto rights on acquisitions and investments involving more than 25% of the invested funds.
The Dutch financial minister said that ING was a healthy company and the move was made to maintain the company’s strength during the global financial turmoil.
Oct
20
General Motors and Chrysler Pushing for an Urgent Deal
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America’s biggest and the World’s Second largest automaker GM is feeling the heat from the Global financial crisis. The firm is seeking a merger deal with competitor Chrysler just days before the Presidential election. The US auto market has been hit hard and sales continue to decline. General Motors lost its position as the World’s Largest Automaker hardly a month ago.
According to a local Detroit Newspaper, executives from Cerberus Capital Management, a private equity group that bought an 80.1% stake in Chrysler from Daimler AG in August last year, and GM are eager to polish off the deal before their positions exacerbate by declining sales.
Both Companies losing money rapidly, according to estimates made by various analysts General Motors is burning at least 1 billion dollars per month to be specific. The credit crunch has left Banks and major financial organizations unwilling to lend money to the industry.
Both the Companies are hotfooting to conceal the deal before Americans head to the polls on Nov. 4th. They also are seeking help from the US government along the lines of the $700 Billion bailout plan. The US auto market accounts for a large number of jobs in Michigan and Ohio which both are significant game makers in US presidential race.
Oct
20
Global Financial summit Due after American Elections
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George W. Bush along with the French President, Nicolas Sarkozy, and the president of the European Commission, Jose Barroso, will be requesting world leaders to attend a summit on the global financial crisis which is set to be held in the United States, after the Nov. 4th election.
“The first task is to stabilize the financial markets in our own countries,” claimed Bush while welcoming both the leaders to the Presidential retreat at camp David , “Given that the world has never been more interconnected, it is essential that we work together because we’re in this crisis together.”
The 3 leaders issued a joint statement yesterday, “the challenges facing the global economy.” They claimed that the first summit will attempt“agreement on principles of reform needed to avoid a repetition and assure global prosperity in the future,”.Future Meetings `would be designed to implement agreement on specific steps to be taken to meet those principles,”
This measure comes after European Leaders seeked an emergency meeting of the world’s richest nations better-known as the Group of 8, along with emerging economies like China and India, in order to inspect and repair global financial regulatory systems.
The November summit will include leaders from both developed and developing countries.
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