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

[The Helper]

Fed Readies for Balance Sheet Tool as Rate Nears Zero

Dec. 16 (Bloomberg) -- The Federal Reserve may today reduce its main interest rate to the lowest level on record and prepare for one of the boldest experiments in its 94-year history: using its balance sheet as the key tool for monetary policy.

The Fed’s Open Market Committee will probably cut the benchmark rate in half, to 0.5 percent, according to the median of 84 forecasts in a Bloomberg News survey. The central bank may also signal plans to channel credit to businesses and consumers by further enlarging its $2.26 trillion of assets.

Chairman Ben S. Bernanke plans new steps to combat the credit crunch and prevent the worst recession in a quarter century from turning into a depression. The danger is the Fed’s credibility could be hurt if policy makers don’t clearly communicate a new strategy of manipulating the supply of money, at a time when FOMC members have diverging views on the subject.

“We expect the FOMC to leave the policy outlook open- ended,” said Louis Crandall, chief economist at Wrightson ICAP LLC, the world’s largest broker of trades between banks, in Jersey City, New Jersey. “The FOMC may have no choice but to muddle along for a while longer” because “there is no sign that a consensus on a new approach has begun to emerge,” he said.

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[The Helper]

U.S. homes lose $2 trillion in value in '08

Home prices are have been hit hard, yet there is still no end in sight to the foreclosure crisis, according to Zillow.com.

NEW YORK (CNNMoney.com) -- American homeowners will collectively lose more than $2 trillion in home value by the end of 2008, according to a report released Monday.

The real estate Web site Zillow.com calculated that home values have dropped 8.4% year-over-year during the first three quarters of 2008, compared with the same period of 2007.

Some 11.7 million Americans are now "underwater," owing more on their mortgage balances than their homes are worth.

Zillow collects home values and analyzes home price trends in 163 markets; all but 30 registered price drops over the nine months ended Sept. 30, compared with the same nine-month period of 2007.

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This is just the beginning of this. I just saw another report on this that says there alot more of these sub prime things coming up.

 

[The Helper]

Chrysler says to shut down all production for month

DETROIT (Reuters) - Citing a credit crisis and dwindling sales, Chrysler LLC on Wednesday said it would shut down all of its manufacturing operations from the end of this week for at least a month.

The blanket shutdown marked a deepening of the financial crisis for the embattled U.S. auto industry and came as Chrysler and its larger rival General Motors Corp both seek to shore up cash as they seek a federal bailout they say they need to survive.

Chrysler, considered the weakest of the Detroit automakers, made the announcement on its plant shutdown in a letter sent on Wednesday to its employees, suppliers and the United Auto Workers union that was also posted on its website.

Chrysler said its dealers were getting car shoppers into showrooms but losing between 20 percent and 25 percent of those potential sales because of the lack of consumer financing for new car purchases.

More.

The sad thing is they still have to pay everyone they employ while they are shut down. They are just stopping all other costs to try and make it through because there owners are not willing to bail out there old company. Trust me, the owners of Chrysler or the Investors of Chrysler would bail them out if they thought they stood a chance.

They are trying to force a bailout. What is the govt going to do when it runs out of money? Its called Hyperinflation my friends. Not Good.

 

[The Helper]

Dollar Drop - Dollar No Longer Haven After Fed Moves Rate Near Zero

Dec. 17 (Bloomberg) -- The world’s biggest currency-trading firms say the dollar’s appeal as a haven amid the financial crisis all but evaporated.

The U.S. currency slid to a 13-year low against the yen today and had its biggest one-day decline versus the euro after the Federal Reserve reduced its target interest rate yesterday to a range of zero to 0.25 percent, the lowest among the world’s biggest economies. CMC Markets said today the currency’s prospects appear “ominous.” State Street Global markets said the dollar’s outlook has been “undermined.”

“The dollar has been under heavy downward pressure,” said Robert Minikin, a senior currency strategist in London at Standard Chartered Bank Plc. “This move is very well-justified and has a long way to run.” Standard Chartered is preparing to cut its dollar forecasts, Minikin said.

Yesterday’s rate cut brings the Fed’s target to below the Bank of Japan’s for the first time since January 1993. U.S. policy makers repeated plans to buy agency debt and mortgage- backed securities and said they will study buying Treasuries, a policy known as quantitative easing.

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This is not good news at all. I love Peter Schiff but I dont want his stuff to come true but based on what the govt has been doing it looks it might. Not looking good. Someone needs to get a clue pretty quick or at least come out and speak the truth.

Someone should ask Ron Paul's opinion on this but he would just defer to Peter Schiff. Bad news people.

 

[The Helper]

Oil tumbles below $40 for first time since 2004

Oil prices tumbled below $40 for the first time since the summer of 2004 Wednesday despite an announcement from OPEC of a record production cut of 2.2 million barrels a day.

Markets had already priced in a vastly reduced flow of oil and traders focused instead on troubling economic data that points to a long and severe recession.

Light, sweet crude for January delivery tumbled 8 percent, or $3.54, to settle at $40.06 on the New York Mercantile Exchange. Benchmark crude prices fell as low as $39.88, a price last seen in July 2004.

"There's just so much oil in inventory out there right now," said Michael Lynch, president of Strategic Energy & Economic Research. "Nobody wants to buy this stuff."

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[TFlan]

I love how the less gas costs, the less I seem to go out for a drive... but when gas was reaching 5$ a gallon I was driving 24.7

:nuts:

 

[BANANAMAN]

it's weird.

Filipinos complain when gas prices are high and yet when faced with a economic crisis they don't care as long as the gas is cheap :nuts:

 

[BANANAMAN]

We are all F#$%ed

 

[BANANAMAN]

Does this affect other countries as well?

 

[The Helper]

Does this affect other countries as well?

Everyone who is pegged to America. All of America's Enemies just got stronger today. The US is in some serious bad economic area right now that firepower just wont solve.

 

[BlowingKush]

Gas goes from 4.30 to 2 bucks over a period of 6 months.

I seriously doubt the demand for oil has dropped 50% this quickly.
Half of the people on this planet didn't decide to suddenly stop going to work.
I seriously doubt the movement of worldwide food and parcel has dropped 50%, and that the world has become 50% more efficient.
Yes there has been some reduction in oil demand, but over 50%? in 6 months!?? whatthefuckever.
Oh, wait. Maybe twice the amount of oil refinerys in the world magically appeared out of thin air.

Just like the terrorism warning going red then orange then yellow then red then orange then red then yellow, the system is working us over again.They allow the economy to recover just a little, so the powers that be can rape us again a little bit longer. Gas prices will go back up. I think the oil producers were scared that we might actually make 4 or 5 electric cars, and had to drop the prices for a while to stem this development.

Don't believe for a second that gas prices are not a manufactured price.

 

[The Helper]

Borrowers rushing to refinance loans as rates drop

WASHINGTON – Homeowners around the country are scrambling to refinance their mortgages at the lowest rates since the early 1960s as the economy staggers through what's likely to be the worst recession in decades.

Mortgage brokers are already reporting a surge of calls from borrowers trying to take advantage of the Federal Reserve's extraordinary actions this week. Meanwhile, President-elect Barack Obama is laying the groundwork for a giant economic stimulus package, worth possibly $850 billion over two years, which Democratic congressional leaders say could be passed within two weeks of Obama taking office.

The latest jobs data from the government showed that new claims for unemployment benefits dropped last week but remain near a 26-year high. The Labor Department on Thursday said its tally of initial jobless benefit claims fell to a seasonally adjusted 554,000 from an upwardly revised figure of 575,000 the previous week. The new tally was slightly below economists' expectations of 558,000 claims.

Another slight improvement was seen in the number of people who continue to receive jobless benefits, which declined to 4.38 million from 4.43 million the previous week. Economists expected a slight increase to 4.45 million.

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[The Helper]

More California Towns Face Bankruptcy

RIO VISTA, Calif. -- California may soon have more bankrupt towns on its hands.

The city of Vallejo, Calif., gained national attention earlier this year by filing for Chapter 9 bankruptcy protection. Now, two neighbors are fighting to avoid the same fate, as the state's economic crisis spreads.

Isleton and Rio Vista, small towns roughly 50 miles northeast of San Francisco, say they have begun consulting with bankruptcy lawyers as they draw up plans to deal with their mounting budget crises. The towns' leaders say they hope to avoid bankruptcy, but concede the move may eventually be their only option.

"We're strapped for cash and by the end of March or early April we may not have enough money to pay for payroll," says Hector De La Rosa, Rio Vista's city manager.

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[The Helper]

Gannett to Furlough Workers for Week

The Gannett Company, the nation’s largest newspaper publisher, said on Wednesday that it would force thousands of its employees to take a week off without pay in an effort to avoid layoffs.

Gannett, which owns 85 daily newspapers across the United States including its flagship USA Today, said it could not say exactly how many people would be required to take time off, or how much money the company would save. But it said it would require unpaid leave for most of its 31,000 employees in this country.

Also on Wednesday, USA Today notified its staff of a one-year pay freeze for all employees.

“Most of our U.S. employees — including myself and all other top executives — will be furloughed for the equivalent of one week in the first quarter,” Craig A. Dubow, the chairman, president and chief executive, wrote in a memorandum to employees.

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[The Helper]

Citigroup Stock Falls Below Critical $5 Level

Shares of Citigroup are taking another run below $5, a critical point that could trigger mutual funds and pension plans to dump the company.

Most institutional investors—pension funds, endowments and the like—are prohibited from owning stock worth less than $5.

Citi stock is a staple of many such funds and could be battered even further should they decide to jettison the stock if it remains below that crucial level.

Citi's stock tumbled below $5 Wednesday as investors worried that that the bank's attempts to shed assets—such as the Smith Barney brokerage unit—won't raise enough capital to offset continued losses.

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[The Helper]

Bank of America may receive more bailout money

The U.S. Treasury Department is moving to provide Bank of America billions of dollars in additional aid as the bank struggles with mounting losses at Merrill Lynch, which it recently acquired, a person briefed on the talks said Wednesday.

It would be the second bank after Citigroup to receive an additional lifeline from the government.

U.S. regulators and executives at Bank of America, which has already received $25 billion from the Troubled Asset Relief Program, have grown increasingly concerned at greater-than-expected losses in the fourth quarter at Merrill, said the person, who spoke on condition of anonymity because he was not authorized to disclose the information. The move to help shore up Bank of America comes on the heels of greater U.S. government intervention in Citigroup. After pumping more than $45 billion in Treasury money onto its balance sheet, the government has put pressure on the bank to dismantle the troubled empire in an effort to stem losses and curb capital injections.

While Bank of America was viewed not that long ago as a pillar of strength in the banking sector, it has seen its stock plummet as investors worry that it has acquired companies with their own set of financial baggage.

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[The Helper]

Google Announces Layoffs

Google has announced layoffs. Not contractors. Not hourly workers. Googlers.

Not many, thankfully--only 100--and some may be able to find jobs elsewhere in the company. But they're all in HR, which tells you something about how quickly Google has scaled back its own growth expectations.

Whole story here.

 

[The Helper]

Black Angus Steakhouse Operator Files Bankruptcy

ARG Enterprises Inc., which operates 69 Black Angus Steakhouse restaurants in seven states in the western U.S., filed for bankruptcy protection, citing declining profits due to the economic slowdown in the U.S.

ARG, with headquarters in Los Altos, California, said in its Chapter 11 filing in U.S. Bankruptcy Court in Wilmington, Delaware, today that it has between $100 million and $500 million in both assets and debts.

“The debtors’ restaurants primarily are located in some of the areas hardest hit by the mortgage crisis, causing consumers in those markets to cut back on discretionary spending,” Lisa Poulin, the company’s chief restructuring officer, said in a declaration filed with the bankruptcy court.

It is the latest of several casual-dining style chains to file for protection in the last year, including Bennigan’s Steak and Ale restaurants and Buffet Holdings Inc.

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[Ninva]

Sigh. It's just all too depressing.

 

[MasterOfABCs]

This entire situation is depressing but it is also confusing.

I am not an economist but its very clear, to me at least, that the current economic downturn has been on the horizon for quite some number of years .

How is it that officials who have magnificent degrees and years of experience missed all of the warnings?

Its makes no sense.