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Oct
20
Ben Bernanke, It’s time for stimulus plan
Filed Under Economy, Lead Story, News | Leave a Comment
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
General Motors and Chrysler Pushing for an Urgent Deal
Filed Under Economy, Finance, Lead Story, News | Leave a Comment
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
Parts of the United States are already in the grip of a recession and it may take the credit system a few months before it can start lending smoothly again, revealed a top economic advisor from the Bush administration on Sunday.
Speaking on the Sunday at the CNN Late Night Edition, Ed Lazear noted that national unemployment rate stands at 6.1% and that in some states like California it was even higher. Lazear who heads the White House Council of Economic Advisors admitted that “certain parts of the country” are experiencing economic conditions that “anyone would characterize as recession.”
Economists predict that in the last three months of this year as well as in the first 90 days of the next year, United States will continue to witness economic slowdown, thus meeting the classic definition of a recession which requires two consecutive quarters of economic contraction. While many economic experts have for quite some time now believed that United States is in the grip of a recession, the term has never – till now – been used by the White House. This is because the technical definition has not been met as yet and because it carries such a negative weight which is particularly significant in an election year.
Oct
18
Printing and more
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Oct
6
Stock markets across Asia dived Monday with major indexes plunging 4% or more in a wave of selling driven by a global credit financial crisis.
In Tokyo, the Nikkei 225 Average closed at 4.3% lower at 10473.09, the lowest since February 2004. Japanese stocks sank for a third session, leading shares of Mitsubishi UFJ Financial to fall by 9% while those of Sony Corp hit the lowest in more than five years.
In China too stocks plunged sharply as the markets opened after a week-long National holidays. In keeping with the southward trend of the rest of the region, the Shanghai composite plunged by 5.2% to 2173.74 while the Shenzan All Share Index slipped by 3.8% to 590.91.
this downward trend dragged along China-related stocks in Hong Kong too as the Hang Seng China Enterprises Index fell by 6.6% to end at 8416.90 while the Hang Seng Index slid by 5% to close at 16803.76, the lowest in over two years. Jakarta stocks, on the other hand dived by whopping 10% amid fears of a raging financial crisis across the globe. India’s Sensex too dropped by 5.4% to 11855.72, thus falling below the 12000 point mark for the first time since September 2006.
Sep
29
According to a trade group report released on Tuesday slow-moving economy could result the weakest holiday sale season in six years for the nation’s retailers.
According to NRF (National Retail Federation) estimate between November and December retail sales will increase by 2.2 percent, that is nearly half of the last year rate and lower than the ten-year average of 4.4 percent which was achieved in the 2007 and weakest since 2002 that is to say six years back when sales increased by 1.3 percent.
NRF Chief Economist Rosalind Wells stated that buyers will be enforced to be extremely conservative with their holiday spending because of recent financial pressure and weakening confidence in economy. NRF indicated factors that will affect consumer spending during holiday season. It stated that dimness in the housing market, rising joblessness and uninspiring income growth are among the challenges that American consumers will face this holiday season along with high energy and food costs. It added that in the coming months consumer confidence will be wear down because of the nation’s financial system calamity.
Well said that it is expected that consumer will behave economically and will be less eager to gorge on discretionary items in this season.
Sep
22
Analysts suggest banks to take benefit of the recent rally by raising capital
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Friedman, Billings, Ramsey analyst wrote in a note to clients that, banks and thrifts must raise capital and they get a good opportunity to issue equity with less dilution by a recent rally in shares though Bush administration’s $700 billion bailout plan will most likely help.
Analyst Paul Miller believes that bank’s capital levels will not get expected benefit of the Bush administration’s $700 billion bailout plan for Wall Street and stated that banks and thrifts must raise capital now to take benefit of the recent rally in share prices.
To avoid added financial market chaos that risks pushing the economy into a profound and damaging recession Bush administration and Congress ramp up talks on an extraordinary $700 billion bank bailout on Sunday. U.S. Treasury will be empowered under biggest bank rescue plan, to obtain noxious mortgage linked debt from financial firms, with U.S. subsidiaries of foreign banks.
Miller said that, though this plan does not offer any straight aid for defaulted homeowners or for the residential housing market, projected government plan appears as a move in the right direction to calm down the mortgage market. This step will reduce the existing poor performing securities.
Sep
19
Wall Street breakdown threaten economic activity on Main Street
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Breakdown on Wall Street, one of the most recent results of the housing mess, now frightens the already slowing and fading economic activity on Main Street. These pains now are extending all over by horrifying people, however primarily by halting the credit on which a large number of everyday transactions depend.
This week, loan providers that has already been raising obstructions for borrowers are not as much of keen to share there money. This results in further weaken consumer spending and budgets. For an example maximum credit limit is being reduced by American Express for half of its tens of millions of cardholders.
This credit shortage by the lenders led economy to struggle that is till now boosted by effortless credit for more than a decade. If this credit shrink remain continue it effects are likely to be seen on the businesses and consumers spending. They will be forced to cut their spending more immensely than they have already done.
According to Ethan Harris, chief domestic economist at Lehman Brothers this kind of waning consumer spending is normally seen in major recession. He called this period a slow moving recession in which economic growth will be almost nil.
As the value of homes falling, consumer spending has also been slowing that accounts for two-thirds of American economic activity.
On side by side this, Federal Reserve’s bank surveys shows a majority of the nation’s lenders had tightened standards for every type of credit that increased barriers for borrowings. As well as credit companies are also imposing elevated delinquency fees.
Sep
17
U.S stock futures dropped because of the worries regarding AIG’s ability to raise capital
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On Tuesday U.S. stock features extended losses by taking support of the concerns regarding AIG’s ability to raise funds which is effected by the uninspiring results from Goldman Sachs Group and cuts by credit agencies.
Kevin Giddis, managing director, Morgan Keegan & Co. Inc. stated that in an environment like this, any company with a leveraged balance sheet and business model that depends on the unwavering buoyancy from the market is susceptible to one level or another.
Late Monday four rating agencies downgraded AIG, which the insurer had formerly anticipated could lead counterparties to demand another $14.5 billion in collateral.
Subsequent to Goldman Sachs accounted a profit fall of 70 percent with Commerce Department report showing first plunge in consumer prices since October 2006, U.S. stock futures keep on sharply lower. While Nasdaq 100 futures plunged 14.75 points to 1,706.5, features for the S&P 500 dropped 21.8 points to 1,174.3 and at the same time futures for the Dow Jones Industrial Average knock down 134 points to 10,815.00.
As Lehman Brothers Holdings Inc. filed for bankruptcy protection and Merrill Lynch Co. Inc. rapidly arrived at a deal to be purchased by Bank of America Corp. the Dow Jones Industrial Average dived 504 points on Monday that is the nastiest single-day point fall since the Sept. 11 terrorist attacks.
Sep
16
Subsequent to the crumple of fourth largest US investment bank, Lehman Brothers that has filed for bankruptcy protection losses on stock markets have continued. With the UK’s FTSE 100 and Germany’s Dax both down 1.7 percent the European market started their day with stridently lower for a second day.
Markets of Japan, South Korea and Hong Kong were closed on Monday for a pubic holiday and today shares in those fell by over 5 percent. Lehman is the most recent sufferer of the credit crunch and is expected to sell its core assets to Barclays.
In morning trading FTSE 100 of foremost UK shares knock down 91 points to 5,113. On Monday, US stock market had its most horrible day’s trading as the Dow Jones index closing the day down 504.48 points, or 4.42 percent.
Japan’s benchmark Nikkei 225 index touched its three years low point and plummeted 5 percent. Shanghai’s index fell by about 3 percent and shares in South Korea and Hong Kong drop nearly 6 percent in value.
Asia’s central banks took the steps similar to their US and European counterparts to calm down the critical market. While Australia and India pumped cash into their money markets, The Bank of Japan brings in 2.5 trillion yen into the banking system. In an attempt to reassure markets and to help calm down crisis The US Federal Reserve has broadened its emergency lending scheme.
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- South Korea Plans $11 Billion Boost to Economy
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- US Justice Dept Clears Verizon-Alltel Merger
- Exxon Posts Record $14.8 Billion Profits in Third Quarter
- Fed Opens Swaps with Central Banks of Four Developing Nations
- Delta and Northwest Airlines Merger Given Clearance
- China Brings Down Interest Rates Still Further
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- Many a Nouveau Riche Figures in CNN Billionaire List
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