World The Economy of Fail - The Latest Financial Crisis News Thread

[The Helper]

Associated Press to cut 10 pct jobs in '09: sources

The Associated Press plans to cut up to 10 percent of its workforce in 2009, according to sources at the news service, as it copes with tough financial times and ailing member newspapers.

The AP has one of the world's largest news-gathering teams, employing about 3,000 journalists, and a total of about 4,100 people worldwide. The cuts could amount to about 400 employees.

AP Chief Executive Tom Curley delivered the news as part of a "town hall" meeting with employees.

"All areas and ways of doing business are being reviewed," said an AP statement provided to Reuters. "The AP, which recently instituted a strategic hiring freeze, may need to reduce staff over the next year. If so, it hopes to achieve much of the reduction through attrition."

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[The Helper]

Weather Channel lays off staff

The Weather Channel, which NBC Universal bought in September, has laid off some of its staff. It is unclear how many people were cut or whether they are receiving a severance package.

NBC Universal and Weather Channel officials would not comment beyond a statement.

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[The Helper]

New York Times cuts dividend, 'reevaluates' assets

The New York Times Co slashed its dividend by almost three-quarters and said it would cut spending and reevaluate its assets to cope with a slump in advertising revenue that is gouging U.S. newspaper publishers.

The Times cut its dividend to 6 cents a share from 23 cents a share, or 74 percent, and said in a statement that it would reduce capital spending and lower its operating costs.

The trustees of the Ochs-Sulzberger family's shares in the Times said they support the move, but called it difficult.

The family's statement amounts to a vote of confidence in the Times as buzz builds among industry watchers over whether the family would sell the company and The New York Times newspaper, ending more than a century of family ownership.

Here.

 

[The Helper]

U.S. Stocks Rally as Obama Picks Tim Geithner to Head Treasury

Nov. 21 (Bloomberg) -- U.S. stocks rallied and the Standard & Poor’s 500 Index rebounded from an 11-year low after President-elect Barack Obama picked New York Federal Reserve Bank chief Timothy Geithner to head the Treasury.

“This news could really give the stock market a badly needed shot in the arm,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, wrote in an e-mail to clients. Geithner is a “fantastic choice to help lead the financial markets out of the wilderness.”

Citigroup Inc. pared a 35 percent slide and JPMorgan Chase & Co. trimmed a 16 percent tumble in the final hour as a Democratic aide said Obama will name Geithner to replace Henry Paulson. National-Oilwell Varco Inc. and Chesapeake Energy jumped more than 20 percent as oil rose for the first time in six days. The rally came after this week’s rout dragged the S&P 500’s price-to-earnings valuation to the cheapest since 1995.

The S&P 500, which capped a third-straight weekly decline, surged 6.3 percent to 800.03. The Dow Jones Industrial Average rose 494.13 points, or 6.5 percent, to 8,046.42, while the Nasdaq Composite Index added 5.2 percent to 1,384.35. Almost five stocks gained for each that fell on the New York Stock Exchange.

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[The Helper]

Battered E*Trade banking on government funds

NEW YORK (Reuters) - The troubles at E*Trade Financial Corp (ETFC.O: Quote, Profile, Research, Stock Buzz) have worsened and now hinge on whether it can secure U.S. government funds that would bring some relief to its book of bad mortgage loans.

Shares of the discount brokerage tumbled below $1 to its lowest price ever this week, indicating that investors think chances are slim it will secure the $800 million it applied for under the Troubled Asset Relief Program (TARP) rescue program.

Competitors, including Charles Schwab Corp (SCHW.O: Quote, Profile, Research, Stock Buzz) and TD Ameritrade Holding Corp (AMTD.O: Quote, Profile, Research, Stock Buzz), have said they are loath to bid for the smaller and now very cheap company, but have made no secret they covet E*Trade's brokerage business, which has kept it afloat despite the drag of its mortgage business.

Roger Freeman, a Barclays Capital analyst attending a business update hosted by Schwab this week, said E*Trade's existence "depends on whether it gets the TARP."

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[The Helper]

Worst of financial crisis yet to come: IMF chief economist

The IMF's chief economist has warned that the global financial crisis is set to worsen and that the situation will not improve until 2010, a report said Saturday.

Olivier Blanchard also warned that the institution does not have the funds to solve every economic problem.

"The worst is yet to come," Blanchard said in an interview with the Finanz und Wirtschaft newspaper, adding that "a lot of time is needed before the situation becomes normal."

He said economic growth would not kick in until 2010 and it will take another year before the global financial situation became normal again.

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[The Helper]

Obama: 'Millions of jobs' in danger next year

WASHINGTON - U.S. President-elect Barack Obama said on Saturday that he was crafting an aggressive, two-year stimulus plan to revive the troubled economy, warning that swift action was needed to prevent a deep slump and a spiral of falling prices.

"If we don't act swiftly and boldly, most experts now believe that we could lose millions of jobs next year," Obama said in prepared remarks for the weekly Democratic radio and video address.

"We now risk falling into a deflationary spiral that could increase our massive debt even further," he said.

A day after U.S. stock markets rallied on his apparent choice of Timothy Geithner as Treasury secretary, Obama gave a bleak assessment of the economy in his most detailed comments on the subject since winning the Nov. 4 election.

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[The Helper]

Fed Pledges Top $7.4 Trillion to Ease Frozen Credit

Nov. 24 (Bloomberg) -- The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.

The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.

When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in.

“Whether it’s lending or spending, it’s tax dollars that are going out the window and we end up holding collateral we don’t know anything about,” said Congressman Scott Garrett, a New Jersey Republican who serves on the House Financial Services Committee. “The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones.”

here.

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That's 7.4 Trillion dollars people. Anybody who in there right mind thinks we have that kind of money is insane. How can they even say it with a straight face?

 

[The Helper]

Government unveils bold plan to rescue Citigroup

WASHINGTON (AP) - Rushing to rescue Citigroup, the government agreed to shoulder hundreds of billions of possible losses at the stricken bank and to plow a fresh $20 billion into the company.

Regulators hope the dramatic action will bolster badly shaken confidence in the once mighty banking giant as well as the nation's financial system, a goal that so far has been elusive despite a flurry of government interventions to battle the worst global crisis since the 1930s.

The action, announced late Sunday by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp., is aimed at shoring up a huge financial institution whose collapse would wreak havoc on the already fragile financial system and the U.S. economy.

"With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy," the three agencies said in a joint statement. "We will continue to use all of our resources to preserve the strength of our banking institutions, and promote the process of repair and recovery and to manage risks."

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[The Helper]

U.S. Stocks Post Biggest Two-Day Rally Since 1987 on Citigroup

Nov. 24 (Bloomberg) -- U.S. stocks posted the biggest two- day rally since 1987 after the government guaranteed $306 billion of troubled Citigroup Inc. assets and lawmakers pledged to pass another economic stimulus package.

Citigroup, which lost 60 percent of its market value last week, rebounded 58 percent after the Treasury also agreed to inject $20 billion into the company. JPMorgan Chase & Co. and Bank of America Corp. jumped more than 21 percent, catapulting the Standard & Poor’s 500 Financials Index to a record gain, as the government rescue boosted confidence in the banking system. Home Depot Inc. and General Electric Co. climbed more than 8 percent on speculation the stimulus will spur economic growth.

The S&P 500 surged 6.5 percent to 851.81, capping a two-day gain of more than 13 percent. The Dow Jones Industrial Average climbed 396.97 points, or 4.9 percent, to 8,443.39. The Nasdaq Composite rose 6.3 percent to 1,472.02. Europe’s Dow Jones Stoxx 600 climbed 8.4 percent, while the MSCI Asia Pacific Index slipped 0.7 percent.

“Job one is to continue to repair the psychology of this market, and the bailout or the help for Citigroup is an important part of that puzzle,” James Dunigan, managing executive for investments at PNC Wealth Management in Philadelphia, said on Bloomberg Television. PNC Wealth Management oversees $63 billion.

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[The Helper]

Stocks fall sharply on consumer spending worries

Monday December 1

NEW YORK (AP) -- Confirmation that the nation is in a recession and signs pointing to a prolonged downturn sent Wall Street plunging once again Monday, hurtling the Dow Jones industrials down more than 440 points and erasing a huge chunk of last week's big gains. All the major indexes fell more than 5 percent.

The market began the day sliding on initial reports that the holiday shopping season, while better than some retailers and analysts feared, was mixed, a sign that Americans are very reluctant to spend. That has Wall Street concerned about the impact of a continuing drop in consumer spending on the sagging economy.

According to preliminary figures released by RCT ShopperTrak, a research firm that tracks total retail sales at more than 50,000 outlets, sales rose 3 percent to $10.6 billion on Black Friday. But some analysts are concerned that Black Friday's results aren't indicative of the rest of the weekend; RCT ShopperTrak is expected to release data for the combined Friday and Saturday period later Monday.

Meanwhile, downbeat economic reports on the manufacturing sector and construction spending only added to investors' concerns.

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[The Helper]

Panel says US has been in recession since Dec. '07

WASHINGTON (AP) - The U.S. economy has been in a recession since December 2007, the National Bureau of Economic Research said Monday.

The NBER—a private, nonprofit research organization—said its group of academic economists who determine business cycles met and decided that the U.S. recession began last December.

By one benchmark, a recession occurs whenever the gross domestic product, the total output of goods and services, declines for two consecutive quarters. The GDP turned negative in the July-September quarter of this year, and many economists believe it is falling in the current quarter at an even sharper rate.

But the NBER's dating committee uses broader and more precise measures, including employment data. In a news release, the group said its cycle dating committee held a telephone conference call on Friday and made the determination on when the recession began.

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[eellem1]

I like many are actually in a depression.

 

[The Helper]

Down we go again: Fourth-worst drop ever for Dow

Wall Street breaks 5-day win streak as stocks plunge; Dow down 680 in 4th-worst decline

NEW YORK (AP) -- The stock market suffered one of its worst days since the financial meltdown Monday, slicing 680 points off the Dow Jones industrial average as Wall Street snapped out of its daydream of a rally and once again faced the harsh reality of a recession.

Not only did stocks end their five-day winning streak, they erased more than half the gains. The Standard & Poor's 500 stock index, one of the broadest market gauges, lost nearly 9 percent.

Erasing any lingering doubts, there was also finally an officially declared recession -- in progress in the United States since December 2007, according to the National Bureau of Economic Research, the nonprofit group of economists that classifies business cycles.

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[Septimus]

Return to $1 gas? Energy prices evaporate

COLUMBUS, Ohio (AP) -- Oil prices hit four-year lows Friday as employers cut the highest number of jobs in 34 years. The continuing decline in prices is so dramatic and so sudden that it is raising the prospect that gas prices could soon fall below $1 a gallon.
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The worst jobs data in 34 years on Friday just added more fuel to the deepening global recession as U.S. employers slashed a far worse-than-expected 533,000 jobs in November and the unemployment rate rose to a 15-year high of 6.7 percent.

A gallon of gasoline can be had for 50 cents less than it cost just last month, and people are starting to talk about $1 gas.

Granted, gas prices are a long way off from that magic number last seen in March 1999 when prices were at 97 cents a gallon, according to motor club AAA. Prices at the pump fell 1.6 cents overnight to $1.773 nationally, according to AAA, the Oil Price Information Service and Wright Express.

But consider what has happened since July 11 when a barrel of oil hit a record $147.27 and a gallon of gas was $4.117 on July 17. In less than five months, oil has fallen 72 percent.

Just this week, in which the National Bureau of Economic Research determined that the U.S. is in recession, oil has fallen 25 percent.

On Friday, light, sweet crude for January delivery settled at $40.81 a barrel on the New York Mercantile Exchange, down by nearly $3 per barrel. Prices fell as low at $40.50, levels last seen in December 2004.

Gasoline futures for January delivery tumbled to 90 cents.

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[The Helper]

NY Times Co. to borrow against building

The New York Times Company plans to borrow up to $225 million against its mid-Manhattan headquarters building, to ease a potential cash flow squeeze as the company grapples with tighter credit and shrinking profits.

The company has retained Cushman & Wakefield, the real estate firm, to act as its agent to secure financing, either in the form of a mortgage or a sale-leaseback arrangement, said James Follo, the Times Company's chief financial officer.

The Times Company owns 58 percent of the 52-story, 1.5 million-square-foot tower on Eighth Avenue, which was designed by the architect Renzo Piano, and completed last year. The developer Forest City Ratner owns the rest of the building. The Times Company's portion of the building is not currently mortgaged, and some investors have complained that the company has too much of its capital tied up in that real estate.

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[The Helper]

McDonald's same-store sales jump in November

NEW YORK (AP) -- Consumers hungry for a deal boosted worldwide sales at McDonald's Corp.'s established locations by 7.7 percent in November, the fast-food leader said Monday.

Even recession-wary consumers in the U.S. were enticed by the Golden Arches during the month. U.S. same-store sales -- or sales at locations open at least a year -- rose 4.5 percent.

The Oak Brook, Ill.-based chain said the rise came from strong sales of breakfast items, chicken sandwiches and the chain's value menu options. The increase comes even as U.S. consumers increasingly opt for eating at home to conserve cash.

The past few months have been difficult ones for the restaurant industry due to the deepening of the now yearlong recession. McDonald's has been one of the few bright spots in the sector, reporting a same-store sales increase in October of 8.2 percent while several of its pricier sit-down competitors reported double-digit drops. Many chains have yet to report their November same-store sales, but analysts are expecting a similarly dismal showing.

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[The Helper]

Investor fear drives US Treasury yields to near zero

The panic in global financial markets has sparked an unprecedented rush into safe US Treasury securities, driving yields on short-term government notes down to almost zero.

Due to stampeding demand for safe short-term investments, the US Treasury's four-week and three-month bills on Friday yielded an effective rate of 0.01 percent -- down sharply from 1.515 percent and 1.785 percent, respectively, in early September.

Other Treasuries are also showing record low yields. The 10-year bond yield fell as low as 2.505 percent and the 30-year bond yield slid to 3.005 percent at one point on Friday. The six-month bond yielded a mere 0.20 percent.

The low yields reflect a surge in demand for these instruments, seen as the safest in the world during times of turmoil.

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[The Helper]

Santa's Not Coming: All KB Toys Stores To Be Liquidated And Closed

KB Toys has returned to Chapter 11 bankruptcy, says the Wall Street Journal, and will be liquidated by its parent company — Prentice Capital Management.

"Going out of business" sales will begin quickly at the chain's 277 retail outlets, 40 larger KB Toy Works stores, 114 outlet stores and 30 temporary "holiday stores."

The WSJ says the liquidation was prompted by a 20% decrease in sales in the second half of this year.

Read the news here.

 

[The Helper]

Best Buy 3Q profit sinks, offers staff buyouts

MINNEAPOLIS – Best Buy Co., the nation's biggest consumer electronics retailer, said Tuesday that its third-quarter profit sank as it faced dramatic changes in consumer spending and added it will offer buyout packages to nearly all its corporate employees in an effort to cut costs.

The company also plans to cut capital spending by 50 percent in 2009 and open "significantly" fewer stores in the U.S., Canada and China.

Chief Executive Brad Anderson called the past 90 days the "most challenging consumer environment our company has ever faced," and said there has been a "dramatic and potentially long-lasting change in consumer behavior."

The company had already seen its biggest rival, Circuit City Stores Inc., file for Chapter 11 bankruptcy protection in November.

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