Archive for the ‘finance’ Category

Recession is Official: Could Last Into, Past 2010

December 2, 2008

The economy’s yearlong downturn, officially declared a recession Monday, could last well into next year or even beyond, challenging the government to devise new responses as traditional methods show limited results.

The National Bureau of Economic Research, the private body charged with determining the onset of a recession as well as its endpoint, said Monday that the current downturn met its definition of a recession: “a significant decline in economic activity spread across the economy, lasting more than a few months.”

By the Los Angeles Times

Read the rest:
http://www.latimes.com/business
/la-fi-econ2-2008dec02,0,25
87872.story

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Pakistan: Near Economic Collapse and Besieged By Terrorists Now Must Deal With U.S., India

December 1, 2008

Indian accusations of a Pakistani hand in last week’s Mumbai massacre couldn’t have come at a worse time for the government in Islamabad: As a Taliban insurgency continues to simmer in the tribal areas along the Afghan border, clashes on Sunday between rival political groups in the southern metropolis of Karachi killed 13 people and wounded 70.

The country is on the verge of economic collapse, its desperate pleas for financial assistance from China and Saudi Arabia last month having been rebuffed, forcing Pakistan to accept loans from the International Monetary Fund – but those loans come with stern conditions limiting government spending, the implementation of which will risk inflaming further unrest. A suspected U.S. predator drone attack in the tribal areas on Saturday – one of dozens in recent months – has further alienated a population already suspicious of U.S. interference. Hardly surprising, then, that Pakistani leaders have reacted with alarm to politicians and the media in India pointing a finger at Pakistan-based terror groups over the Mumbai attack. Some foreign investigators have made similar claims, although not in any official capacity.

Most Pakistanis reacted with horror to news of the Mumbai killing spree starting Wednesday, having lived through equally devastating attacks on their own soil. But that initial sympathy quickly gave way to hostility as the focus of blame landed on Pakistan – a knee-jerk first reaction, rather than one based on any solid evidence. “It is a tragic incident, and we also felt bad about it as Pakistan is going through the same problem,” says Abdur Rashid, a 67-year-old retired government servant in Rawalpindi, near Islamabad. “But it was really unfortunate to see that even before the operation [to clear out the attackers] was finished, the Indian government stated that Pakistan is involved. It sounds that the entire incident was concocted to punish Pakistan.” See images of Mumbai after the siege….

Read the rest from MUZI:
http://dailynews.muzi.com/news/ll/english/10083894.shtml

It’s official: US is in recession

December 1, 2008

Just one year ago, people at the White House and thus the rest of the U.S. government, wouldn’t even say the word “recession.”  Well, what a difference a year makes….

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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.

The White House commented on the news that a second downturn has officially begun on President George W. Bush‘s watch without ever actually using the word “recession,” a term the president and his aides have repeatedly avoided. Instead, spokesman Tony Fratto remarked upon the fact that NBER “determines the start and end dates of business cycles.”

“What’s important is what is being done about it,” Fratto said. “The most important things we can do for the economy right now are to return the financial and credit markets to normal, and to continue to make progress in housing, and that’s where we’ll continue to focus.”

Euros and US dollar banknotes in a cash register. The euro slipped ...

Read the rest:
http://news.yahoo.com/s/ap/20081201/ap_on_bi_ge/re
cession;_ylt=Av4rK9gOMufRFmgh8CgxMWms0NUE

Managing risk in an unstable world: Government, finance and security

December 1, 2008

How can we reduce risk for individuals? That’s a natural question when a financial crisis has vaporized trillions of dollars of personal wealth in residential real estate and financial instruments. The problem is, when you try to reduce risk for individuals too much, you end up making things much riskier.

By Michael Barone
The Washington Times
Case in point: The financial system over the last decade. Our current difficulties arose from “the idea,” as Nicole Gelinas describes it in the New York Post, “that any loan, bond or other bank asset could be sliced up and turned into an instantly liquid, priceable and tradable security, with all its risks engineered away.” The securitization of mortgages seemed to reduce risk for everyone – for the lender (who avoided risk of nonpayment by selling the mortgage), for the borrower (who got the mortgage at a lower rate than otherwise) and for the purchaser (because all those mortgages couldn’t got belly up at once, could they?).

The problem was that the risk models were based on the experience of only the last seven years or so, and that both the Clinton and Bush administrations and Fannie Mae and Freddie Mac encouraged the granting of mortgages to borrowers who were, by previous standards, uncreditworthy.

So eliminating risk ended up creating huge risk for everyone – so huge that just about no one, even the Treasury armed with $700 billion – wants to purchase the securitized mortgages in bank portfolios.

Read the rest:
http://www.washingtontimes.com/news/2008/dec/
01/managing-risk-in-an-unstable-world/

Free Media? Russia Investigates Financial Crisis Reporting

November 19, 2008

Prosecutors are launching inquiries across Russia against media reporting on the financial crisis in a bid to stem growing concern about its impact, the Kommersant newspaper reported on Wednesday.

“It’s not censorship. We’re just checking how reliable the information is,” a press official from the prosecutor general’s office was quoted as saying.

The official gave the example of unreliable reports about a bankruptcy causing a run on deposits from a bank in the Far Eastern port of Vladivostok.

AFP

File picture shows a vendor arranging newspapers at her stand ... 
File picture shows a vendor arranging newspapers at her stand in Moscow. Prosecutors are launching inquiries across Russia against media reporting on the financial crisis in a bid to stem growing concern about its impact, the Kommersant newspaper reported on Wednesday.(AFP/File)

Regional prosecutors have been ordered to check local media “in connection with measures taken by the Russian government to improve the situation in the financial sector and other sectors of the economy,” Kommersant said.

Investigators in Sverdlovsk, a key industrial region in the Ural mountains, are checking local media for attempts “to destabilise the situation in the region,” a spokeswoman for the local prosecutor’s office was quoted as saying.

“If we establish that the law has been violated, there could be disciplinary measures against the guilty, including criminal punishment,” she said.

Read the rest:
http://news.yahoo.com/s/afp/20081119/bs_afp/finance
economyrussiamediacrime_081119081653

Europe’s Biggest Economy Now In Recession

November 13, 2008

The recession is official after government figures showed that Europe’s largest economy contracted by 0.5% in the third quarter.

This is the second consecutive quarter that the economy has shrunk after a 0.4% contraction in the second quarter for Germany.

BBC

German car production line
Some German carmakers have had to cut back production

The fall in economic output, driven by falls in exports, was greater than many analysts had expected.

Rich countries’ think tank the OECD has also forecast a fall in Euro-area economic activity of 0.5% next year.

“A negative effect on gross domestic product came from foreign trade, with a strong increase in imports and weakening exports,” the Federal Statistics Office said.

Read the rest:
http://news.bbc.co.uk/2/hi/business/7726162.stm

Economy begs priority from Obama

November 7, 2008

Greeted with the stock market’s worst two-day drop in 21 years, President-elect Barack Obama will take on voters’ No. 1 concern Friday by fielding questions about the nations economic turmoil in his first news conference since Election Day.

President-elect Barack Obama leaves a gym in Chicago on Thursday. He also was briefed on a range of national security issues and returned congratulatory calls to world leaders.

Above: LOW PROFILE: President-elect Barack Obama leaves a gym in Chicago on Thursday. He also was briefed on a range of national security issues and returned congratulatory calls to world leaders.

Mr. Obama, who spent part of Thursday being briefed by President Bush’s top intelligence officer and talking with nine world leaders, will hold a meeting with his transition team of 17 economic advisers, including billionaire investor Warren Buffett, and then publicly tackle bad financial news that has returned with a vengeance since his election Tuesday.

By Jon Ward and Christina Bellantoni
The Washington Times

On Thursday, reports of the worst month for retailers in 35 years triggered a 443-point plunge in the Dow Jones Industrial Average that added to a nearly 500-point loss Wednesday to complete the worst two days for the Dow since 1987.

Retailers reported a “simply awful” month for sales in October and forecast a dismal 1 percent growth rate for the critical holiday season, during which most stores normally make about a quarter of their yearly sales.

Mr. Obama’s schedule was announced as he locked down his first major White House staff position when Rep. Rahm Emanuel, an Illinois Democrat and former senior adviser to President Clinton, agreed to become his chief of staff, and Mr. Bush vowed to help his successor navigate the transition of power.

In an emotional South Lawn address to executive branch employees, Mr. Bush warned that terrorists “would like nothing more than to exploit this period of change…

Read the rest:
http://www.washingtontimes.com/news/2008/nov/07/obama-faces-economy-early-days/

Since Obama Election, Stock Market Down 929 Points

November 6, 2008

Wall Street plunged for a second day, triggered by computer gear maker Cisco Systems warning of slumping demand and retailers reporting weak sales for October. Concerns about widespread economic weakness sent the major stock indexes down more than 4 percent Thursday, including the Dow Jones industrial average, which tumbled more than 440 points.

Comments from Cisco that it saw a steep drop in orders in October and reports from retailers that consumers are skipping trips to the mall provided fresh evidence of the economy’s struggles. While sales at Wal-Mart Stores Inc. benefited from bargain-seekers, some specialty retailers posted huge drops in monthly sales.

Adding to investors’ list of worries, the Labor Department said the number of people continuing to draw unemployment benefits jumped to a 25-year high, increasing by 122,000 to 3.84 million in late October. It marked the highest level since late February 1983, when the economy was being buffeted by a protracted recession.

While new claims for unemployment benefits dipped by 4,000 to a seasonally adjusted level of 481,000 last week, the levels remain elevated. The findings added to the market’s unease ahead of Friday’s October employment report, a widely watched barometer of the economy’s health.

“I think everybody kind of simultaneously — the consumers and businesses — is tightening belts so that’s triggering a reasonably precipitous slowdown that’s widespread,” said Ed Hyland, global investment specialist at J.P. Morgan’s Private Bank. “This is something that we haven’t really seen, this level of this rapid and significant pullback both in the market and the economy.”

Thursday’s rout follows a drop of more than 5 percent in the market Wednesday that saw the Dow plunge nearly 500 points as investors fretted that weak readings on employment and downcast profit forecasts and job cuts from financial companies to steelmakers signaled broad economic troubles.

Still, the market’s two-day slide follows an enormous run-up since last week so some pullback was expected, analysts said. Through the six sessions that ended Tuesday, the benchmark Standard & Poor’s 500 index, surged 18.3 percent.

Read the rest:
http://biz.yahoo.com/ap/081106/wall_street.html
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By Alexandra Twin
CNN Money
NEW YORK (CNNMoney.com) — Stocks slumped for a second straight session Thursday, bringing the Dow’s losses to 929 points since Election Day, as fears of a prolonged recession sent investors running for the exits.

The Dow Jones industrial average (INDU) lost around 443 points, or 4.9%. The two-session decline of 929 points, or 9.7%, marked the biggest two-session point loss ever and the biggest two-session percentage decline in 21 years, according to Dow Jones.

The Standard & Poor’s 500 (SPX) index lost 5% and the Nasdaq composite (COMP) declined by 4.3%.

The Dow slumped 486 points Wednesday as President-elect Barack Obama’s historic victory gave way to worries about the economy he inherits. Those same worries continued to drag on stocks Thursday.

Read the rest:
http://money.cnn.com/2008/11/06/markets/markets_newyork/index.htm?postversion=2008110615

Moscow’s Challenge to Obama

November 6, 2008

In his maiden address to the Russian Parliament, President Dmitri Medvedev blamed the United States for Moscow’s war with Georgia and for the world financial crisis. Washington, Medvedev said, was threatening Russia’s security with the creation of a missile defense system and new NATO military bases around Russia‘s western and southern flanks. “We have gotten the clear impression that they are testing our strength,” Medvedev said in his speech, which was made on the day U.S. voters elected Barack Obama president, and which at times recalled Soviet era rhetoric.

By YURI ZARAKHOVICH
Time Magazine

In response, Medvedev said that Moscow had canceled the long planned dismantling of the Kozelsk ICBM Division and would deploy short-range Iskander missiles and electronic jamming systems in Kaliningrad, a Russian enclave sandwiched between Poland and Lithuania.

The Russian president’s words were presumably timed to remind America’s newly-elected president that Moscow still matters. But Medvedev’s threats are not quite as tough as they might sound. The Kozelsk Division consists of 46 missiles built in 1979. The weapons have now been in service three times longer than planned and the harsh truth is that Russia is struggling to build the next generation long-range missiles.

President Dmitry Medvedev announced plans Wednesday to deploy ... 
President Dmitry Medvedev announced plans Wednesday to deploy missiles on the EU’s doorstep in a warning shot to US president-elect Barack Obama and Washington’s allies in central Europe.(AFP/Alexander Nemenov)

Read the rest:
http://news.yahoo.com/s/time/20081106/wl_time/moscowschallenge
toobama;_ylt=Ai6H7qYXwiFKh.bZvg_3EkOs0NUE

Best Analysis of Obama’s Economic Challenges, From The BBC and Peter Morici, Univ of Maryland

November 6, 2008

This is an audio feed from the BBC, Thursday, November 5, 2008. 

The second audio segment features Professor Peter Morici of the University of Maryland, which is an excellent review of the challenges facing President Elect Obama….

Listen:
http://www.bbc.co.uk/mediaselector/check/worldservice/meta/tx/wbr?nbram=1&nbwm=1&size=au&lang=en-ws&bgc=003399&ls=p23&ls=35603