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

[Mac Dre]

Not Vallejo! Not Black Angus Steak House! Fuck our lives..

 

[The Helper]

Circuit City to liquidate remaining US stores

Bankrupt Circuit City Stores Inc., the nation's second-biggest consumer electronics retailer, said Friday it failed to find a buyer and will liquidate its 567 U.S. stores. The closures could send another 30,000 people into the ranks of the unemployed.

"This is the only possible path for our company," James A. Marcum, acting chief executive, said in a statement. "We are extremely disappointed by this outcome."

The company had been seeking a buyer or a deal to refinance its debt, but the hobbled credit market and consumer worries proved insurmountable.

The liquidation of Circuit City is the latest fallout from the worst holiday shopping season in four decases. People have slashed their spending since the financial meltdown in September as they worry about their job security and declining retirement funds.

 

[The Helper]

Citigroup Splits Into Two After Losing $8.3 Billion

Citigroup, scrambling to survive losses triggered by the credit crunch, unveiled plans to split in two and shed troubled assets, and reported a quarterly loss of $8.29 billion.

The banking giant also said it expected more departures from its embattled board, which is losing former Treasury Secretary Robert Rubin as a director later this year.

Still, the bank's shares [C 3.50 -0.33 (-8.62%) ] rose, in part because investors hoped the plan to separate its most troubled assets into a new company would help revive the company.

"It's one of the first steps toward some positive news and the end of this nightmare," said Michael Holland, founder of Holland & Co in New York, which manages more than $4 billion of investment.

 

[The Helper]

Calif. tax refunds to be delayed starting Feb. 1

SACRAMENTO, Calif. (AP) - California's controller says he will begin a 30-day delay on tax refunds and other payments starting Feb. 1 because the state is running out of money.

Controller John Chiang said Friday he must delay $3.7 billion in payments next month because lawmakers have failed to address California's growing deficit.

With a $41.6 billion shortfall over the next year-and-a-half, the state is on the brink of issuing IOUs.

 

[The Helper]

Hertz to cut more than 4,000 jobs

DETROIT (Reuters) - Hertz Global Holdings Inc said on Friday that it would cut more than 4,000 jobs in a worldwide restructuring through the first quarter due to falling demand, and the car rental company's shares fell nearly 9 percent.

Hertz expects annualized savings of $150 million to $170 million in 2009 from the job cuts, it said. It expects to take a fourth-quarter charge of $20 million to $25 million for the cuts.

The cuts are in the car and equipment rental businesses as well as in corporate and support areas in all regions focused on positions that do not have direct contact with customers, Hertz said in a statement.

Hertz will have cut its workforce by 32 percent since August 2006 with the latest round of reductions, it said.

More.

 

[The Helper]

Clear Channel Downsizing

The new owners of radio giant Clear Channel Communications will next week begin implementing a massive restructuring plan that seeks to cut $400 million in costs at the company, The Post has learned.

According to three sources with knowledge of the plan, the restructuring will include layoffs across the company's radio, outdoor advertising and international divisions as well as cuts to programming budgets and consolidation of back-office operations.

A precise headcount for the layoffs could not be obtained. Clear Channel has about 30,000 employees worldwide.

The company is also likely to move toward a "national programming" model that would require less local-level staffing, despite being criticized in the past for a similar action using centralized disc jockeys that made it appear as though they were broadcasting from local stations.

 

[The Helper]

Paulson, Bair Raise ‘Aggregator Bank’ for Toxic Debt

Jan. 16 (Bloomberg) -- The heads of the U.S. Treasury and Federal Deposit Insurance Corp. gave further momentum to the idea of a new government-backed bank to remove toxic assets from lenders’ balance sheets.

“A lot of work has been done on an aggregator bank” and other ways of using the $700 billion financial-rescue fund “to let it go further when it comes to dealing with illiquid assets,” Treasury Secretary Henry Paulson told reporters today in Washington. FDIC Chairman Sheila Bair praised the idea in an interview on CNBC, saying it might have “some merit.”

Today’s remarks come days before President-elect Barack Obama takes office, and signal a readiness among regulators to undertake what’s likely to be the most radical effort yet to unfreeze lending. Fed Chairman Ben S. Bernanke earlier this week urged a “comprehensive plan” to address illiquid assets, floating the idea of a “bad bank.”

Investors continue to question banks’ viability even after officials committed the first $350 billion from the Troubled Asset Relief Program and after a doubling in the Fed’s balance sheet to $2.1 trillion. Bank of America Corp. today required a further $20 billion injection of taxpayer funds and government backing for a $118 billion pool of bad assets.

 

[BANANAMAN]

we're all f**ked now.

If blizzard goes down the drain mass chaos would ensue. Probably from the south koreans

 

[The Helper]

Long lines, few bargains as Circuit City fire sale begins

Bargain hunters descended like vultures upon shuttering Circuit City stores over the weekend, but from what I'm hearing, true bargains are hard to come by. Also: Don't worry, your extended warranty is still good.

The Circuit City liquidation sales began in earnest Sunday, just a couple days after the bankrupt retail chain announced it's throwing in the towel after 60 years of business. (Based on the 600-plus comments on my Circuit City post Friday, many disgruntled shoppers are more than happy to see the chain go under.)

Reports from the various shopping fronts detail long lines at the more than 500 remaining Circuit City stores over the weekend, with CNET News.com witnessing "pandemonium" at a southern California stores ("consumers swarming everywhere … seemingly snapping up anything that wasn't nailed down"), while Harry McCracken of Technologizer found long lines but a "sedate" scene in a south San Francisco outlet.

While the lines were lengthy, real bargains were apparently in short supply. ZDNet reports that the most popular items—flat-panel TVs, gaming consoles, and iPods—were either just 10 percent off of had no discount at all, with furniture and cables (ho, hum) getting a 30-percent sticker-price shave. (And remember, liquidation items are often marked up before discounts are applied.)

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These are the same liquidators that did Comp USA so watch out as they raised prices and ripped people off. Canadian readers should know that Circuit City US is the only one that is going out of business here.

 

[The Helper]

Bose Corp. to cut 1,000 jobs — 10 percent of staff

FRAMINGHAM, Mass. - Bose Corp., known for its high-end audio equipment, is cutting 1,000 jobs — about 10 percent of its work force.

"We have been staffed for a growing economy, not a global recession," Bose spokeswoman Carolyn Cinotti said in a statement Tuesday. "As a global company, we are responding to these challenges."

Cinotti said the job reductions would occur in "select areas, including manufacturing" and in the privately held company's Framingham headquarters. She declined to give other details.

 

[The Helper]

Time Warner's Warner Bros. cuts nearly 800 jobs

LOS ANGELES (AP) - Time Warner Inc.'s Warner Bros. Entertainment movie studio said Tuesday it is eliminating nearly 800 jobs, or 10 percent of its global work force, and is examining further cost reductions.
The cuts come after the studio posted a 9 percent drop in third-quarter revenue to $2.88 billion, despite the success of the summer blockbuster, "The Dark Knight." Earlier this month, parent Time Warner said it will post a loss for the full year due to a $25 billion write-down of its assets in cable, magazines and Internet, caused in part by the advertising slowdown.

"Despite the fact that the company performed solidly in 2008, this decision reflects changes necessary for stability and growth going forward," the studio's top executives, Chief Executive Barry Meyer and President Alan Horn, told employees in an e-mail Tuesday morning.

"Shifting consumer demand and the overall state of the economy have affected companies around the world, and Warner Bros. is not immune," they said.

 

[The Helper]

Crude Oil Falls Below $33 a Barrel on Dollar, Contract Expiry

Jan. 20 (Bloomberg) -- Crude oil fell below $33 a barrel in New York as the strengthening dollar reduced the appeal of commodity investments at a time when demand is declining and stockpiles are rising.

At Cushing, Oklahoma, where the benchmark oil for New York futures is stored, inventories have climbed to 33 million barrels, the highest since records started four years ago. The February contract will cease trading today, so traders have to sell futures or accept the barrels at a time of falling demand.

“Traders are rolling over to the next month to avoid delivery and the dollar is rallying,” said Andrey Kryuchenkov, an analyst with VTB Capital in London. “All this against a background of falling demand and easing geopolitical tensions.”

 

[The Helper]

Mexican mogul Slim sees opportunity in NY Times

MEXICO CITY (AP) -- A Latin American billionaire looks to expand his empire in the United States in a deal that could make him the largest shareholder of The New York Times Co.

The $250 million investment by Mexican tycoon Carlos Slim could provide some synergies with his telecommunications holdings in Latin America, analysts say.

Perhaps more importantly, Slim, reputed to be the world's second-richest man, would gain the prestige of owning one of the world's best-known and most influential newspapers.

"By having a stake in the New York Times, he's basically projecting himself as a powerbroker in this country, regardless of how his investment does," said Armand Peschard-Sverdrup, a senior associate of the Center For Strategic and International Studies, a Washington think tank.

 

[The Helper]

Fiat and Chrysler sign alliance plan

ROME (AP) -- Fiat and Chrysler said Tuesday they have agreed to form a strategic alliance that would give the Italian auto empire a 35-percent stake in the troubled U.S. carmaker and could eventually bring it full control.

The deal means Chrysler, which is fighting off bankruptcy and struggling to sell less fuel efficient larger models, would have access to new markets and cheaper, more environmentally friendly technologies.

Fiat Group SpA, which makes Fiat, Lancia and Alfa Romeo vehicles, would gain a foothold in the huge U.S. market. The company has bounced back recently with cars such as the tiny 500 two-door hatchback, a hit remake of an earlier iconic Fiat model that competes with Daimler AG's Smart, BMW AG's Mini and other very small cars.

The two companies said in a joint statement that in exchange for sharing its small-car platforms and fuel-efficient engines, Fiat would take an "initial" 35-percent stake in Chrysler but would not invest cash.

 

[The Helper]

Roubini Predicts U.S. Losses May Reach $3.6 Trillion

Jan. 20 (Bloomberg) -- U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,” said New York University Professor Nouriel Roubini, who predicted last year’s economic crisis.

“I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers,” Roubini said at a conference in Dubai today. “If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis.”

Losses and writedowns at financial companies worldwide have risen to more than $1 trillion since the U.S. subprime mortgage market collapsed in 2007, according to data compiled by Bloomberg.

President Barack Obama will have to use as much as $1 trillion of public funds to shore up the capitalization of the banking sector, following the $350 billion injection by the Bush administration, Roubini told Bloomberg News. Congress last year approved a $700 billion rescue fund, of which half remains to be disbursed.

 

[The Helper]

No happy new year at Wells Fargo as stock dives 52%

The banking giant's shares plummet to an 11-year low after an analyst predicts that the company will cut its dividend to bolster its balance sheet.

Few bank stocks showed the strength that Wells Fargo & Co. did in 2008. This year, few are faring worse than Wells.

Shares of the San Francisco-based giant Tuesday plummeted $4.45, or 24%, to $14.23, an 11-year low.

The stock is down 52% just since Dec. 31, compared with a 43% drop on average for big U.S. bank stocks.

More.

 

[The Helper]

GM official says cash could run out by March 31

DETROIT (AP) - The target date for General Motors Corp. (GM) (GM) to get its second installment of government loans passed last week, but a top company executive says he expects the money to arrive in the next several days.

Fritz Henderson, GM's president and chief operating officer, said without the second installment of $5.4 billion, the company would run out of cash long before March 31.

In December, the Treasury Department authorized $13.4 billion in loans for GM and another $4 billion for Chrysler LLC to keep both automakers out of bankruptcy.

GM received $4 billion late last year and was to get $5.4 billion Jan. 16 and another $4 billion on Feb. 17, the day it is to submit its plan to show the government how it will become viable.

 

[The Helper]

State Street shares plummet 59% after it warns that losses may hit $9 billion

Shares of State Street Corp. shed more than half their value yesterday, as investors digested the company's warning about $9 billion in potential investment losses and projections for a tougher 2009.

The stock of the Boston financial services company plunged $21.46, or 59 percent, to $14.89, a level not seen since 1996. Although State Street reported 28 percent increases in revenue and earnings for last year, it said fourth-quarter earnings fell 71 percent from the year-ago period. And its chief executive, Ronald E. Logue, said revenue and earnings growth would be flat this year.

"State Street is a paradox right now," said Gerard Cassidy, a bank analyst at RBC Capital Markets in Portland, Maine. "On the one hand, its daily operations, its day-to-day business, in this environment is respectable. But the balance sheet, the unrealized losses in the investment portfolio are very, very substantial."

 

[The Helper]

Tech, financial stocks lead Wall Street higher - surges 200 points

NEW YORK (AP) -- IBM gave Wall Street a reprieve from bad news Wednesday and investors responded by giving stocks a big rebound from their Inauguration Day plunge.

The Dow Jones industrials surged nearly 200 points as gains by technology stocks and a partial recovery in financial shares pulled the market sharply higher. All the major indexes rose more than 2 percent after earnings reports and forecasts from PNC Financial Services Group Inc. and Bank of New York Mellon eased concerns that the troubles at financial giants like Citigroup Inc. were hitting all banks.

Some bounce would have been expected following Tuesday's sell-off that took the Dow down 332 points. But a better-than-expected 2009 forecast from IBM Corp. left technology shares looking like relatively safe bargains. Energy stocks also advanced as oil prices gained.

IBM said late Tuesday it expects its earnings for the new year to come in well above what analysts had been expecting and that its fourth-quarter profit jumped 12 percent, easily topping analysts' estimates. Swedish wireless equipment maker LM Ericsson also reported earnings that beat forecasts.

 

[The Helper]

Microsoft profit misses, to cut up to 5,000 jobs

NEW YORK (Reuters) - Microsoft Corp posted quarterly results that missed Wall Street expectations, announced it would cut up to 5,000 jobs and said it could no longer offer profit forecasts for the rest of the fiscal year.

Shares of Microsoft fell 8.5 percent in pre-market trading.

Microsoft posted a profit of $4.17 billion, or 47 cents per share, in its fiscal second quarter ended December 31, versus a profit of $4.71 billion, or 50 cents, a year earlier. Analysts were looking for earnings per share of 49 cents, according to Reuters Estimates.

Revenue rose 2 percent to $16.63 billion, missing the average analyst forecast of $17.1 billion.

More.