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

[The Helper]

Nissan to slash 20,000 jobs

TOKYO (Reuters) - Nissan Motor Co said it would cut 20,000 jobs and joined a growing list of automakers warning of red ink this year in what would mark its first loss since Chief Executive Carlos Ghosn took the reins a decade ago.

The spreading global recession has put consumers off buying expensive goods and even if they wanted to purchase a car, financing has become difficult due to a dearth of credit.

Saddled with excess capacity and headcount and with sales plummeting in developed markets, Japan's No.3 automaker has already taken a number of steps to cut production and staff, including through 1,200 voluntary buyouts in the United States.

With these and other measures, including reducing 12,000 jobs in Japan mostly through natural attrition, Nissan said it would reduce groupwide headcount by a total 20,000 by the end of March 2010, equivalent to 8.5 percent of the workforce.

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[The Helper]

U.S. Taxpayers Risk $9.7 Trillion on Bailouts as Senate Votes

Feb. 9 (Bloomberg) -- The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.

The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged to provide up to $5.7 trillion more if needed. The total already tapped has decreased about 1 percent since November, mostly because foreign central banks are using fewer dollars in currency-exchange agreements called swaps. The Senate is to vote early this week on a stimulus package totaling at least $780 billion that President Barack Obama says is needed to avert a deeper recession. That measure would need to be reconciled with an $819 billion plan the House approved last month.

Only the stimulus package to be approved this week, the $700 billion Troubled Asset Relief Program passed four months ago and $168 billion in tax cuts and rebates approved in 2008 have been voted on by lawmakers. The remaining $8 trillion in commitments are lending programs and guarantees, almost all under the authority of the Fed and the FDIC. The recipients’ names have not been disclosed.

“We’ve seen money go out the back door of this government unlike any time in the history of our country,” Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor Feb. 3. “Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?”

 

[The Helper]

Chrysler and GM Might be forced to Bankruptcy to repay Govt Debt.

Feb. 9 (Bloomberg) -- General Motors Corp. and Chrysler LLC may have to be forced into bankruptcy by the U.S. government to assure repayment of $17.4 billion in federal bailout loans, a course of action the automakers claim would destroy them.

U.S. taxpayers currently take a backseat to prior creditors, including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc., according to loan agreements posted on the U.S. Treasury’s Web site. The government has hired a law firm to help establish its place at the front of the line for repayment, two people involved in the work said last week.

If federal officials fail to get a consensual agreement to change their position regarding repayment, they have the option to force the companies into bankruptcy as a condition of more bailout aid. The government would finance the bankruptcy with a so-called “debtor in possession” or DIP loan, a lender status that gives the U.S. priority over other creditors, said Don Workman, a partner at Baker & Hostetler LLP.

“They are negotiating to see if they can reach an agreement,” said Workman, a bankruptcy lawyer based in Washington. “If not, they are saying ‘We are pretty darn sure that a bankruptcy judge will allow us’” to be first in line for repayment.

 

[The Helper]

Fannie, Freddie Funding Needs May Pass $200 Billion, FHFA Says

Feb. 10 (Bloomberg) -- Fannie Mae and Freddie Mac, the mortgage-finance companies seized by regulators, may need more than the $200 billion in funding pledged by the U.S. government if the housing market continues to deteriorate, Federal Housing Finance Agency Director James Lockhart said.

The companies’ needs will depend largely on the direction of home prices, Lockhart said in an interview in Las Vegas yesterday. His comments followed statements from Fannie Mae in November and Freddie Mac Chairman John Koskinen last week that the government’s funding commitment through 2009 may fall short of what the companies need to make good on their obligations.

“When we sized the amount in September, we obviously looked at stress tests and what was happening in the marketplace,” Lockhart said. “There’s been some significant events since then that weren’t in our forecast.”

The U.S. housing market lost $3.3 trillion in value last year and almost one in six owners with mortgages owed more than their homes were worth, according to a Feb. 3 report from Zillow.com. Following a record boom, home prices are down 25 percent on average since mid-2006 amid a tightening of lending standards and an economic recession, the S&P/Case-Shiller Composite 20-city price index shows.

 

[The Helper]

Stocks in Europe, Asia, U.S. Futures Decline; Kazakhmys Falls

Feb. 10 (Bloomberg) -- Stocks in Europe and Asia dropped and U.S. index futures slipped, led by companies most tied to the economy on concern U.S. plans to increase spending and shore up banks won’t be enough to revive growth.

Kazakhmys Plc lost 6.5 percent, leading commodity producers lower, as base metals slid and President Barack Obama said the world’s largest economy faces a “full-blown crisis.” Samsung Electronics Co., which gets 14 percent of its sales from the Americas, slid 1.3 percent in Seoul. Nordea Bank AB tumbled 3.5 percent after the biggest Nordic lender by market value said it would raise capital after loan losses jumped.

The MSCI World Index fell for the first time in six days, losing 0.3 percent to 873.97 at 12:52 p.m. in London. The gauge of 23 developed nations has climbed 4.2 percent this month amid speculation the deteriorating U.S. economy would force Congress to reach a compromise on Obama’s stimulus package.

“Investors are looking for something substantial that can back up some of their positions they have been taking,” said Kevin Lilley, a London-based fund manager at Royal London Asset Management, which oversees about $63 billion. The U.S. financial- rescue announcement is “critical and is what everyone is waiting for.”

 

[The Helper]

Gold Bullion sales hit record in rush to safety

Investors are buying record amounts of gold bars and coins, shunning risky assets for the relative safety of bullion amid renewed fears about the health of the global financial system.

The US Mint sold 92,000 ounces of its popular American Eagle coin last month, almost four times that which it sold a year ago and more than it shipped during the whole of the first half of 2007.

Other countries’ mints have also reported strong sales. “Large purchases of coins are perhaps the ultimate sign of safe-haven gold buying,” said John Reade, a precious metals strategist at UBS.

Inflows into gold-backed exchange traded funds surged in January, pushing their bullion holdings to an all-time high of 1,317 tonnes. Last month’s flows of 105 tonnes were above September’s previous record of 104 tonnes, and absorbed about half the world’s gold mine output for January, said Barclays Capital.

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[The Helper]

Schwarzenegger sues to furlough more Calif workers

Gov. Arnold Schwarzenegger sued the state's Democratic controller Monday, trying to force furloughs for 15,000 more government workers to address California's $42 billion deficit.

The Republican governor already ordered more than 200,000 state government workers to take two days off each month without pay and projected it would save $1.3 billion through June 2010. The first furlough day was last Friday.

But the court ruling that upheld Schwarzenegger's authority to order the furloughs did not address employees of state constitutional officers or members of a tax panel, the Board of Equalization.

The lawsuit filed Monday seeks an injunction that would force Controller John Chiang to reduce the hours of those employees. Chiang's office cuts the checks to state workers.

 

[The Helper]

Sirius preparing possible bankruptcy filing: report

NEW YORK (Reuters) - Sirius XM Radio Inc has been working with its advisers to prepare for a possible bankruptcy filing, the New York Times reported on its website on Tuesday, citing people close to the company.

The move could put pressure on satellite television company EchoStar Corp, which reportedly holds a substantial amount of Sirius XM debt. The Wall Street Journal reported Monday that EchoStar chief Charles Ergen made an offer to take control of the satellite radio company late last year, but he was rebuffed.

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[The Helper]

To keep pace, Intel plans $7B on factory upgrades

The company's investment, announced Tuesday by Intel CEO Paul Otellini at a speech in Washington, speaks to the semiconductor industry's need to keep investing heavily, regardless of the poor economic climate that has led Intel to cut jobs.

The investment could be a boon to companies that produce chip-making equipment, like Applied Materials Inc. and KLA-Tencor Corp., and is another example of how Intel's deep pockets have kept rival Advanced Micro Devices Inc. at bay.

AMD, having lost nearly $7 billion over the past two years, wants to break off its factories into a separate company to unload debt and save money. A shareholder vote was scheduled for Tuesday, but was postponed until next week because only 42 percent of investors had voted. AMD needed at least half to go forward. AMD said nearly all the votes were in favor of the plan, but Wall Street apparently viewed the news as another setback for the beleaguered chip maker. AMD shares dropped 25 cents, or 10.6 percent, to $2.11.

Intel's stock fell 83 cents, or 5.6 percent, to $14.08.

 

[The Helper]

Sega to Close Arcades, Cancel Games, Lay Off Hundreds

The house that Sonic built is getting significantly smaller.

Sega's Japanese main branch said Tuesday that it will close 110 arcades, cancel some games in development and seek to lay off 18 percent of its staff. In a series of press releases, the game publisher said that these cost-cutting moves come in anticipation of its recording an annual loss of 25 billion yen (about $238 million) during the fiscal year that will end March 31.

Arcades: Sega owns and operates 450 videogame arcades in Japan, and said it would close 110 of them that show "poor future potential and profitability." This move "may" make the company's arcades profitable even if the that segment of the business gets tighter in the coming fiscal year, Sega said.

Software development: Sega says it will chop 20 percent off its research-and-development budget for arcade and consumer games. The company plans to do this by "consolidating titles to be developed" and "enhancing the self-manufacture ratio."

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[The Helper]

China to stick with US bonds

China will continue to buy US Treasury bonds even though it knows the dollar will depreciate because such investments remain its “only option” in a perilous world, a senior Chinese banking regulator said on Wednesday.

China has used the dollars it accumulates selling manufactured goods to US consumers to accumulate the world’s largest holding of Treasuries.

However, the increasing US budget deficit and its potential impact on the dollar have raised questions about the future Chinese appetite for US debt.

Luo Ping, a director-general at the China Banking Regulatory Commission, said after a speech in New York on Wednesday that China would continue to buy Treasuries in spite of its misgivings about US finances.

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And that my friends, is why China is still a third world country. They have absolutely no confidence in themselves to put that money in their country - they would rather loan it to us to never get paid back.

 

[Jedimindtrixxx]

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And that my friends, is why China is still a third world country. They have absolutely no confidence in themselves to put that money in their country - they would rather loan it to us to never get paid back.

yet is still a world power

thx for posting all this TH, im doing economic geography right now and this has been a big help

 

[The Helper]

Obama to sign stimulus bill Tuesday

WASHINGTON (Reuters) - President Barack Obama will sign the $787 billion economic stimulus bill on Tuesday in Denver, a White House official said on Saturday.

Obama on Saturday hailed congressional approval of the stimulus bill as a "major milestone on our road to recovery" and vowed to move swiftly to set the plan in motion.

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[The Helper]

[US News] How the economic stimulus plan could affect you

Article covers information on Taxes, Health Insurance, Infrastructure, Energy, Schools, National debt, Environment, Police, Higher Education and The Poor.

Basically, what we are getting for our money.

Kind of a poor mans summary/guide of hype for people not willing to read 1100 pages.

I dont know how accurate it is though

The maximum Pell Grant, which helps the lowest-income students attend college, would increase from $4,731 currently to $5,350 starting July 1 and $5,550 in 2010-2011. That would cover three-quarters of the average cost of a four-year college. An extra 800,000 students, or about 7 million, would now get Pell funding.

They wish it cost that much for college.

 

[The Helper]

White House dampens stimulus expectations

WASHINGTON (Reuters)- President Barack Obama's aides warned Americans on Sunday not to expect instant miracles from the $787 billion economic stimulus bill he will sign this week, but said it would help eventually.

Obama is due to sign the bill passed last week by Congress in Denver on Tuesday. It was the first major legislative victory of his young presidency, which could rise or fall with its success or failure.

"There will be signs of activity very quickly," David Axelrod, the White House senior adviser, said on "Fox News Sunday." "But it's going to take time for that to show up in the statistics. The president has said it's likely to get worse before it gets better."

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[The Helper]

Kan. suspends income tax refunds, may miss payroll

TOPEKA, Kan. - Kansas has suspended income tax refunds and may not be able to pay employees on time, the state's budget director said Monday.

The state doesn't have enough money in its main bank account to pay its bills, prompting Democratic Gov. Kathleen Sebelius to suggest transferring $225 million from other accounts throughout state government. But the move required approval from legislative leaders, and the GOP refused Monday.

Budget Director Duane Goossen said that without the money, he's not sure the state can meet its payroll. State employees are due to be paid again Friday.

Goossen said the state stopped processing income tax refunds last week.

 

[The Helper]

California lawmakers fail to pass budget deal

California legislators tried and failed for a second day Sunday to close a $40 billion hole in the state's budget, still one Republican vote short of approving a package that contains $14.3 billion in tax increases.

State Sen. Abel Maldonado, a moderate Republican from Santa Maria, indicated in an interview with The Bee that he was willing to consider casting the decisive vote if he was satisfied with the final version of the tax proposal.

"I'm very concerned with the tax package," said Maldonado, who early Sunday had been quoted as saying he was adamantly opposed to the tax hikes. "We're still working on that. Everything's fluid. I don't like tax increases. … let me just work on the tax issue. I'm working on that. I don't want my state to go off the cliff, OK? I don't want that."

Legislative leaders and Gov. Arnold Schwarzenegger sought to find a way to persuade Maldonado to vote for the tax bill.

 

[The Helper]

Stocks in Europe, Asia, Brazil Retreat; Legal & General Drops

Feb. 16 (Bloomberg) -- Stocks in Europe, Asia and Latin America fell as Japan’s economy contracted the most since 1974, Britain was warned it faces the worst recession in almost three decades, the Group of Seven offered no solution to revive global growth and commodity prices sank.

Legal & General Group Plc dropped 11 percent on speculation the 173-year-old British insurer may have to cut its dividend to boost capital reserves. Takefuji Corp. slid 9.5 percent after Japan’s third-biggest consumer lender forecast a full-year loss and the country’s gross domestic product contracted at an annual 12.7 percent pace. Lojas Renner SA fell after analysts said the Brazilian clothing retailer’s profitability likely dropped.

“It is all just illustrating that we are really in a deep recession,” said Mike Lenhoff, who helps oversee about $36.4 billion as chief strategist at Brewin Dolphin Securities Ltd. in London. “Markets aren’t getting any relief from any good news at the moment. It is going to remain under pressure for a while.”

The MSCI World Index decreased 0.7 percent to 831.04 at 2:43 p.m. in New York, extending its 2009 retreat to 9.7 percent. The gauge of 23 developed markets has dropped for five days as companies from Electricite de France SA to Diageo Plc posted disappointing results and U.S. Treasury Secretary Timothy Geithner failed to convince investors his bank rescue will work.

 

[The Helper]

Dow nears 10-year low

A global wave of selling from Hong Kong to Stockholm to London battered financial markets on Tuesday, sending shares sharply lower on Wall Street. The major indexes were down about 3 percent as investors worried about how banks, automakers and entire countries would fare in a deepening recession.

At 11 a.m., the Dow Jones industrial average was down more than 240 points, coming within range of its lowest levels in more than a decade. The Standard & Poor's 500-stock index slid more than 3.5 percent, dropping below 800.

The downward spiral came as President Barack Obama flew to Denver to sign the $787 billion economic stimulus package into law, officials at General Motors and Chrysler were preparing to submit major restructuring plans to the U.S. government after receiving billions in bailout money.

General Motors stock, which was more than $25 last February, was trading lower on Tuesday, at about $2.30 a share. Shares of the Ford Motor Company, which has not received any bailout funds, were down 3 percent.

 

[The Helper]

Oil slips below $35 as global markets slump

HOUSTON (AP) -- A new batch of lousy economic news dragged oil prices down nearly 8 percent Tuesday, as signs from across the globe pointed to a prolonged and painful recession.

Light, sweet crude for March delivery fell $2.87 to $34.64 a barrel on the New York Mercantile Exchange after settling at $37.51 on Friday. Nymex was closed for the Presidents Day holiday on Monday.

Energy analysts at Raymond James & Associates said broader market concerns continue to weigh heavily on crude prices, even as President Barack Obama prepared to sign into law the $787 billion stimulus package Tuesday.

"The market doesn't seem to think that this plan is going to solve the economic problems in the short term," Raymond James said in a note to clients Tuesday.