Archive for the ‘downturn’ Category

Meltdown fallout: some parents rethink toy-buying

November 29, 2008

In a season that inspires earnest letters about toys, one notable batch is being sent not by kids to Santa’s workshop but by parents to the executive suites of real-world toy makers.

The message: Please, in these days of economic angst, cut back on marketing your products directly to our children.

By DAVID CRARY, AP National Writer

The letter-writing initiative was launched by the Boston-based Campaign for a Commercial-Free Childhood, which says roughly 1,400 of its members and supporters have contacted 24 leading toy companies and retailers to express concern about ads aimed at kids.

Jessica Luu, left, looks for deals as her friend's baby, Kaylee ... 
Jessica Luu, left, looks for deals as her friend’s baby, Kaylee Oliver, inspects a toy in the shopping cart, as shoppers at Toys ‘R’ Us at The Forum at Olympia Parkway in Selma, Texas look for the best savings on Black Friday, Nov. 28, 2008.(AP Photo/San Antonio Express-News, Bob Owen)

“Unfortunately, I will not be able to purchase many of the toys that my sons have asked for; we simply don’t have the money,” wrote Todd Helmkamp of Hudson, Ind. “By bombarding them with advertisements … you are placing parents like me in the unenviable position of having to tell our children that we can’t afford the toys you promote.”

The Toy Industry Association has responded with a firm defense of current marketing practices, asserting that children “are a vital part of the gift selection process.”

“If children are not aware of what is new and available, how will they be able to tell their families what their preferences are?” an industry statement said. “While there is certainly greater economic disturbance going on now, families have always faced different levels of economic well-being and have managed to tailor their spending to their means.”

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http://news.yahoo.com/s/ap/20081129/ap_
on_bi_ge/toy_worries;_ylt=AoWMb0EDdgDf8
Q0n2j_5kxGs0NUE

Stocks Slump As Signs Point To Harder Times

November 20, 2008

Market closes below 8,000 on news of business price cuts, fewer home starts; Fed anticipates further economic slowdown next year.

By Neil Irwin and David Cho
The Washington Post

Businesses cut prices at a record rate and builders started fewer new homes last month than anytime on record, according to new government data, as the outlook for the economy continues to dim.

An investor watches a market board indicating the Chinese stock ... 
An investor watches a market board indicating the Chinese stock market index in a trading house in central Beijing.(David Gray/Reuters)

The data helped spur another terrible day for the stock market, as did a projection of more hard times ahead by leaders of the Federal Reserve. A serious recession now appears all but assured.

The stock market fell another 5 percent, as measured by the Dow Jones industrial average, which closed below 8,000 for the first time in this bear market. New-home starts in October were the lowest since at least 1959, when the government began keeping data. The consumer price index plummeted by the most since that series of monthly data was started in 1947, as the economy slowed so abruptly that companies had to slash prices to sell products.

And Federal Reserve leaders released projections indicating they expect the economy to worsen significantly in the coming year. The most pessimistic of 17 Fed officials expects joblessness to rise to 8 percent at the end of 2009, which would be the highest in a quarter-century.

“We’re in the deep portion of the economic trough,” said Richard Yamarone, chief economist of Argus Research, explaining yesterday’s market sell-off. “So you have to expect a certain degree of negative sentiment, you almost have to expect doom and gloom at this point.”

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http://www.washingtonpost.com/w
p-dyn/content/article/2008/11/19
/AR2008111900943.html?hpid=topnews

At G-20, China Did Not Commit Bailout Funds Despite Huge Reserves

November 16, 2008

China got what it wanted in Washington’s financial summit — a promise of a bigger role for developing countries in global finance — but gave no sign Sunday whether it will respond by using any of its $1.9 trillion in reserves in a bailout fund.

By JOE McDONALD, AP Business Writer

China has been pushing for developing countries generally — and itself specifically — to have more influence at the International Monetary Fund and other global bodies. Analysts say that might be Beijing’s price to give in to foreign appeals to dip into its reserves and contribute money toward an IMF emergency loan fund for struggling countries.

The Washington summit was an “important and positive” step toward “the reform of the international financial structure,” foreign ministry spokesman Qin Gang said in a statement. It made no mention of possible bailout contributions, and a man who answered the phone at the ministry press office said he had no information.

Leaders from 21 nations, including China, and four international organizations attended the emergency two-day summit intended to address the financial crisis sweeping the globe.

Summit participants vowed Saturday at the conclusion of the two-day conference to cooperate more closely, keep a sharper eye out for potential problems and give bigger roles to fast-rising nations. But the leaders avoided many of the harder details leaving them to be worked out before their next summit, after President George W. Bush is gone and President-elect Barack Obama is in the White House.

China says it will cooperate with the IMF but Chinese officials say its most important role will be to preserve global growth by keeping its own economy healthy. Beijing announced a 4 trillion yuan ($586 billion) stimulus package last week, at a time of slowing economic growth and fears that falling exports could lead to layoffs and factory closures.

“China’s economic power is growing, so China could contribute and help ease the financial crisis,” said Wu Jinglian, a prominent economist and Cabinet adviser. “But the first priority is to keep our own economy growing. That will benefit every country in the world.”

A woman cooks while her husband playing computer games inside ...
A woman cooks while her husband playing computer games inside the prefabricated temporary housing in Yingxiu, Sichuan Province in China Nov. 8, 2008. Six months after the worst quake to hit China in three decades, the future remains uncertain for many survivors. Jobs are hard to come by, and government aid payments are about to end. Many people are still in temporary housing. China’s leaders have called reconstruction a priority. Last week, the government announced plans to pump $146 billion into the effort over the next three years. Some 120 billion yuan ($17.5 billion) will be spent on ensuring schools, hospitals and other public facilities are built to higher standards.(AP Photo/Andy Wong)

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http://news.yahoo.com/s/ap/20081116/ap_on_re_as/as_asia_meltdown_summit_1

Vietnam in quandary over inflation, global economic downturn

November 16, 2008

Vietnam, like much of the world, is trying to stimulate its economy amid the global downturn, but it is in a quandary because it must also keep rampant inflation from flaring up again, say experts.

With a small and relatively insulated banking sector, Vietnam was not directly exposed to the subprime crisis that sparked the Wall Street meltdown and the subsequent worldwide credit crunch and financial turmoil.

But the wider economic repercussions of what has been called the worst global economic crisis since the Great Depression are already being felt in Vietnam, especially in the crucial export sector.

Containers are seen piling up at Saigon port in Ho Chi Minh ...
Containers are seen piling up at Saigon port in Ho Chi Minh city in June 2008. Vietnam, like much of the world, is trying to stimulate its economy amid the global downturn, but it is in a quandary because it must also keep rampant inflation from flaring up again, say experts.(AFP/File/Hoang Dinh Nam)

Amid slackening overseas demand, Vietnam’s monthly exports have steadily fallen from US$6.5 billion (US$1 = RM3.59) in July, to US$6 billion in August,US$5.1 billion in October.

 

And, although it’s too early to say foreigners are pulling out of financial markets, in the past month they have been net sellers of bonds and stocks.

Inflation has been in double digits all year and stood at 26.7 per cent in October, a slight fall after a drop in global energy and commodity prices. The government’s target is to bring annual inflation down to 23-24 per cent in 2008, and to less than 15 per cent in 2009.

Aiming to reduce liquidity to fight inflation, the government had raised interest rates and bank reserve requirements several times this year. But this has also starved businesses of credit for investment and working capital, forcing the central bank to reverse its monetary policy as both local and international factors have slowed economic growth in Vietnam.

A farmer throws a net to catch fish on a flooded paddy field ... 
A farmer throws a net to catch fish on a flooded paddy field in Phuong My village, 25 km (16 miles) outside Hanoi November 12, 2008. Hanoi reported 22 deaths from the worst inundations in more than three decades, officials said.REUTERS/Kham (VIETNAM)

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http://www.btimes.com.my/Current_News/
BTIMES/articles/vope/Article/

Credit Rating Downgrade Likely for Pakistan, Sri Lanka, Vietnam in Crisis

November 10, 2008

Pakistan, Sri Lanka and Vietnam are the Asian countries most at risk of a credit-rating downgrade as the global economy heads into a recession and funds become scarcer, said Standard & Poor’s.

“Pakistan is the weakest, followed by Sri Lanka, then Vietnam,” said Elena Okorotchenko, head of Asian sovereign ratings at S&P. “Pakistan faces severe pressure from the external side, the fiscal side, the monetary side, economic growth and politics. There are five angles in which we analyze a country’s ratings and Pakistan is negative on all counts.”

Foreign investors are exiting Asia’s emerging markets as they seek less-risky returns amid the worst financial crisis since the Great Depression. That’s making it more difficult for nations in the region to pay for imports and is shrinking their foreign reserves.

By Patricia Lui, Bloomberg

A foreign currency bank clerk works next to bundles of banknotes ...

“No country is immune from the global turmoil,” Okorotchenko said in a Nov. 5 interview in Singapore. “Asia is facing this crisis in a far stronger position than 10 years ago. But even countries with very strong fundamentals are facing fund pull-outs as investors de-leveraging have no regard for fundamentals.”

Pakistan’s credit rating was cut by S&P on Oct. 6 to CCC+, or seven levels below investment grade, on concern it won’t be able to pay its $3 billion debt servicing costs due in the coming year. It approached the International Monetary Fund last month for a bailout package after its foreign reserves shrunk to $3.71 billion on Oct. 25 from $14.2 billion a year ago.

Funding difficulties are the biggest threat to Sri Lanka’s ratings, Okorotchenko said. S&P rates Sri Lanka’s long-term foreign currency debt at B+ with negative outlook.

Funding Concerns

“Sri Lanka is facing funding concerns with rising short- term commercial debt while expectations of efforts to bring down fiscal deficits have proved incorrect,” she said. “I cannot know at this stage if they will go to the IMF but they will definitely need to think of their funding sources.”

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http://www.bloomberg.com/apps/new
s?pid=20601068&sid=aWqb_B39k7mQ

On Vietnam factory floor, worries grow about global downturn

October 19, 2008

VAN LAM, Vietnam (AFP) – The whirr of 200 sewing machines fills a Vietnamese factory hall, where workers and bosses hope desperately that the wheels will keep spinning once the global downturn hits home.

Row upon row of workers, most of them women, are busy making handbags, backpacks and briefcases for customers as far away as Germany, Hungary and Mexico in this plant, set amid rice fields on the outskirts of Hanoi.

               File photo shows workers sewing on a production ... 
Workers sewing on a production line at a garment factory in Ho Chi Minh City. The whirr of 200 sewing machines fills a Vietnamese factory hall, where workers and bosses hope desperately that the wheels will keep spinning once the global downturn hits home.Photo:/AFP

They are the backbone of Vietnam’s post-war success story, part of an army of low-wage labourers who have transformed a poverty stricken command economy since Vietnam in the 1980s embraced the Asian model of export-led growth.

For more than a decade, textile and apparel exports have helped drive national economic growth rates above 7.5 percent — lifting the fortunes of businesses such as the Ladoda Company, whose staff grew to 400 from 15 in 16 years.

But now — with the dark clouds of recession gathering over the United States, Europe and many of Vietnam’s other export markets — many of the workers here have started to worry that tougher times may lie ahead.

“I heard on TV and the radio that the world economy is in bad shape,” said 33-year-old Nguyen Thi Thuy, who supports two children with her performance based wage of around 1.7 million dong (100 dollars) a month.

“I am sure it will affect Vietnam and our company in some way.”

It is a concern shared by the management of the company, although both Thuy and her boss said that through hard work and innovation this family-run business hoped to dodge the bullet of a global downturn.

“We are worried,” admitted deputy…

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http://ca.news.yahoo.com/s/afp/081019/world/
finance_banking_vietnam_exports_1

Payrolls May Have Slumped for Third Month: U.S. Economy Preview

March 30, 2008

By Bob Willis

March 30 (Bloomberg) — The U.S. lost jobs for a third month in March and manufacturing contracted at the fastest pace in five years, signs the economy continues to turn down, economists said before reports this week.

Payrolls probably shrank by 50,000, according to the median estimate of economists surveyed by Bloomberg News before the Labor Department’s April 4 report. The last time the economy lost jobs for at least three consecutive months coincided with the start of the Iraq War in 2003.

“The economy has slipped into a recession,” said Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. in New York. “We expect the labor market to weaken, with payrolls falling steadily through the middle of next year.”

Job losses, slumping confidence and the biggest plunge in housing in a generation all point to a slowdown in consumer spending that will weaken growth. Federal Reserve Chairman Ben S. Bernanke will testify before Congress this week after lowering interest rates and extending credit to non-banks in an attempt to calm financial markets.

The projected decrease in payrolls would follow a decline of 63,000 in February and a smaller drop in January. The jobless rate likely rose to 5 percent from 4.8 percent, the survey said.

Factory payrolls in March probably shrank by 40,000 workers, reflecting automakers’ efforts to trim costs and a strike at a suppler for General Motors Corp., economists project the jobs report may show.

Strike’s Influence

A walkout by workers at American Axle & Manufacturing over pay and benefits that started on Feb. 26 has idled almost half of GM’s North American workforce. The payroll figures may be reduced by as much as 20,000 workers because of the effects of the strike, according to Morgan Stanley economist David Greenlaw.

Ford Motor Co., which lost $15.3 billion in the past two years, may cut more jobs in North America, Chief Executive Officer Alan Mulally said earlier this month.

“The old ways of doing business are gone,” Joe Hinrichs, Ford’s manufacturing chief, and Marty Mulloy, vice president of labor affairs, said in a March 19 commentary sent to newspapers in communities where Ford has plants. “We must continue to downsize and simply will not have enough jobs for all of our current hourly workers.”

Job losses in financial markets are also mounting following the collapse in subprime lending.

Wall Street banks hit by mortgage losses and writedowns have cut more than 34,000 jobs in the past nine months, the most since the dot-com boom fizzled in 2001, according to the Securities Industry and Financial Markets Association.

Job Losses

This year, banks including Lehman, Citigroup Inc. and Morgan Stanley have been reducing staff in fixed income trading, securitization and investment banking. So far, Lehman has eliminated 18 percent of its workforce, Morgan Stanley has cut 6.2 percent, and Merrill Lynch & Co. has trimmed 4.5 percent.

“Rising unemployment should continue to slow wage growth, adding to the strain on consumers,” said Lehman’s Harris.

Manufacturers are retrenching as demand weakens. The Tempe, Arizona-based Institute for Supply Management may report April 1 that its factory index fell to 47.5 this month, the lowest level since April 2003, from 48.3 in February, according to the survey median. A reading of 50 is the dividing line between expansion and contraction.

The following day, the Commerce Department may report that factory orders in February dropped 0.8 percent following a 2.5 percent decline the prior month.

Services Contract

In another sign that the housing recession is dragging down other areas, service industries contracted for a third month in March, the ISM is projected to report on April 3.

The group’s non-manufacturing index, which covers 90 percent of the economy, fell to 48.5 this month, from 49.3 in February, according to the median forecast. Services haven’t contracted for three consecutive months since 2001-2002, when the economy was emerging from the last recession.

“The tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters,” the Fed said March 18 following its last policy meeting. “Growth in consumer spending has slowed and labor markets have softened.”

Bernanke will elaborate on the outlook before the Joint Economic Committee of Congress on April 2.

Seeking to ease credit, restore confidence to financial markets and cushion the slowdown, the Fed on March 18 lowered its key rate by three-quarters of a point and vowed to act “as needed” to cushion the economy. The Fed has cut the benchmark rate by 3 percentage points since September.

Macy’s Will Cut About 2,300 Employees

February 7, 2008

CINCINNATI (AP — Feb. 6) – Department store operator Macy’s Inc. said Wednesday it will cut about 2,300 management jobs as it consolidates three regional divisions and decentralizes buying in a bid to reduce costs and boost sales.

The Cincinnati-based retailer said it will immediately begin consolidating its Minneapolis-based Macy’s North headquarters into its New York-based Macy’s East, its St. Louis-based Macy’s Midwest organization into its Atlanta-based Macy’s South and its Seattle-based Macy’s Northwest headquarters into its San Francisco-based Macy’s West.

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http://money.aol.com/news/articles/_a/macys-will-cut-about-2300-employees/20080206151409990001?ncid=NWS00010000000001

U.S. Concern Over Economy Is Highest in Years

February 4, 2008

By Michael Abramowitz and Jon Cohen
Washington Post Staff Writers
Monday, February 4, 2008; Page A01

Public views of the national economy are now more negative than at any point in nearly 15 years, and few people believe that the kind of stimulus plan being devised by President Bush and Congress is enough to stave off or soften a recession, according to a Washington Post-ABC News poll.

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 http://www.washingtonpost.com/wp-dyn/content/article/2008/02/03/AR2008020303148.html?hpid=topnews

Bush sees serious signs U.S. economy is weakening

February 1, 2008

By Tabassum Zakaria
Reuters
Friday, February 1, 2008

KANSAS CITY, Missouri (Reuters) – President George W. Bush on Friday said there were troubling signs of economic weakening and urged Congress to move on a stimulus package to help prop up the economy, which has been hit by a housing slump and credit crisis.

U.S. President George W. Bush talks about the economy after ...
U.S. President George W. Bush talks about the economy after touring Hallmark Card headquarters and visitors’ center in Kansas City February 1, 2008.
REUTERS/Larry Downing (UNITED STATES)

Bush’s comments mirrored his efforts in his State of the Union address on Monday to calm Americans’ recession fears and came on the heels of a government report earlier on Friday showing U.S. employers cut payrolls for the first time in 4-1/2 years in January.

“There are certainly some troubling signs, serious signs that the economy is weakening and we’ve got to do something about it,” Bush told employees at Hallmark Cards Inc. in Kansas City, Missouri.

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http://www.washingtonpost.com/wp-dyn/content/article/2008/02/01/AR2008020101618.html?wpisrc=rss_politics/administration