Archive for the ‘recession’ 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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Santa Won’t Visit China’s Toymakers Much This Year

December 1, 2008

Dongguan, China, produces a vast amount of the toys that will end up under Christmas trees around the world. Or it did, until all the factories there started to close because of the global economy….. leaving thousands of workers out of work and out of luck….

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At about six o’clock Thursday evening, around what used to be quitting time for the day shift at the He Jun toy factory in Dongguan, China, 40-year-old Wei Dong Li made his way to the factory’s front entrance, his three-year-old son Qian Jie tugging at his sleeve. The factory is now closed; a few security guards stand inside the locked gate. Posted each evening at the front entrance is a sheaf of documents: the latest rulings from a local court on compensation claims filed by many of He Jun’s 4,000 workers, Wei included. “They process a few of them a day, so I come back every other day to check and see if my case is on the list,” Wei says. He has no luck again. “I’ll just wait some more,” he says. “I have nothing else to do at this point.”

By Bill Powell
Time Magazine

Dongguan, along with a handful of similar, nearby towns, is the real Santa’s factory at the North Pole. A sprawling, charmless city of 7.5 million that sits 80 km southeast of Guangzhou, the provincial capital of Guangdong in southern China, Dongguan produces a vast amount of the toys that will end up under Christmas trees around the world. Toys were one of the critical, low-wage, low-tech industries on which China built its economic ascent over the past 30 years. But as workers such as Wei know better than anyone, 2008 is the year that that part of China’s miracle has come to an end.

It’s been six weeks since He Jun, a Hong Kong-listed company, shuttered two of its biggest factories in China — suddenly and without any warning, former workers say. They were among the latest and largest factory closures in China’s battered low-end industries: toy manufacturers, textile companies and shoe makers most prominent among them. China’s steadily appreciating renminbi currency — which makes Chinese goods more expensive in key exports markets like the U.S. — as well as higher costs embedded in a new labor law enacted last year were already wreaking havoc with companies that survived even in the best of times on the thinnest of profit margins. Now, with a global recession gathering pace, the best of times are gone, and the pain in what had been booming areas in southern China is spreading quickly. Fully half of China’s toy exporters, which sent nearly $8 billion worth of Barbies and Thomas the Tank Engines to export markets in 2007, were driven out of business in the first seven months of this year, Beijing’s General Administration of Customs said in a recent report. In the city of Shenzhen, the other major manufacturing center in Guangdong province, 50,000 people have already lost their jobs this year. And in Beijing last week, Zhang Ping, chairman of the National Development and Reform Commission, the nation’s key economic policy-making body, bluntly warned that “excessive production cuts and business closures will cause massive unemployment and that will lead to instability.”

In Dongguan, it already has. Earlier last week, on the evening of November 25, another large toy manufacturer here, Kai Da Manufacturing, laid off more than 600 of its workers because of slowing production. According to participants and eyewitnesses to what followed, a large group of the workers gathered in the front courtyard of the factory demanding to know what compensation they would receive. At first, a company manager told them that anyone with a good work record and less than five years service would receive less than 10,000 RMB—less than $1,500 at today’s exchange rates. Anyone with over seven years on the line and a good record would get 12,300 RMB or about $1,800.

Read the rest:
http://www.time.com/time/world/article/0,8599,
1862717,00.html?xid=rss-topstories

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

Massive Public Spending Hoped To End Global Recession

November 29, 2008

In a bid to jump-start the beleaguered global economy, countries around the world are introducing massive public spending programs aimed at creating millions of jobs, boosting the use of green energy and modernizing infrastructure in a way that could transform urban and rural landscapes.

The viability of some of the plans remains unclear. But observers say the number of countries moving in tandem underscores the perceived severity of the coming global recession and the view that governments must at least temporarily pick up the slack as the hard-hit private sector sheds jobs and cuts spending. 

 

By Anthony Faiola
Washington Post Staff Writer
Saturday, November 29, 2008; Page D01

It is time “to invest massively in infrastructure, in research, in innovation, in education, in training people, because it is now or never,” French President Nicolas Sarkozy said in a recent public address.

World leaders are pursuing a variety of strategies to tame the economic crisis, including moves to unclog credit markets, strengthen financial institutions and ease monetary policy. But fiscal stimulus packages, in particular, have emerged as a favorite tool of policymakers. Some countries’ plans are particularly bold: China is accelerating projects to build more nuclear power plants and a vast natural gas pipeline; Italy may erect the first bridge connecting Sicily to mainland Europe.

Read the rest:
http://www.washingtonpost.com/w
p-dyn/content/article/2008/11/28
/AR2008112802660.html?hpid=topnews

Vietnam PM Puts Together Measures To Avert Recession; More Floods, Rain In Central

November 28, 2008

Vietnam’s Prime Minister Nguyen Tan Dung has put together a package of measures to help prevent the economy falling into recession but the government has yet to detail what those measures will be.

The prime minister, who met with officials from various ministries late Thursday, said the impact of the global financial crisis is increasingly spreading to Vietnam and hurting its exports, tourism and especially the stock market.

“Vietnam’s economy is slowing down, with the threat of recession looming large,” Dung said in a statement published Friday on the government’s Web site.

“All the state organizations should combine their efforts to prevent recession, support production and maintain reasonable economic growth,” Dung noted.

From Dow Jones

He said the package includes measures to boost production and exports, stimulate domestic consumption, increase loans, support the poor and a review of taxation.

No further details were available although state media reported that ministers proposed a further cut in benchmark interest rates to 10% from the current 11% and delaying the implementation of a planned capital gains tax to July from January.

Ministers also proposed increasing the disbursement of state funds for welfare, healthcare, education and infrastructure projects, plus reducing taxes for businesses.

Neither did the government say how much it plans to spend, although analysts have speculated that it could be for around US$1 billion.

Vietnam, once expected to be the next Asian boom economy, has suffered a marked slowdown in economic growth.

In late September, the government estimated that gross domestic product expanded 6.5% in January through September from a year earlier compared with 8.2% growth in same period of 2007.

That slowdown was in part due to government spending cuts and price controls on some goods to stem inflation that still stood at an elevated 24.2% on year in November. Slowing offshore demand for Vietnamese goods and falling inward investment have added to the woes lately.

Vietnam’s key stock-market index, which has declined 67% so far this year, ended up 3.7% Friday after state media announced that the government will take urgent measures to support the economy.

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Officials say floods and landslides triggered by several days of heavy rain have killed 13 people in central Vietnam this week.

Disaster official Le Viet Binh of Quang Ngai province says rains have stopped but water levels remained very high on Friday, hindering rescue efforts. Floods and landslides have claimed four lives in the province.

“We have mobilised militiamen and police to rush food aid and medicine to one isolated district,” Binh says.

Binh Dinh province is the worst-hit, with five people being drowned, according to the provincial Web site.

Vietnam Airlines says dozens of flights to the seaside city of Nha Trang have been cancelled.

Vietnam is prone to floods and storms that kill hundreds of people each year.

FDR and Obama: Similar in Anticipated Trouble, Hope?

November 21, 2008

Americans knew they were in for hard times when they elected Franklin Delano Roosevelt.  They were seeking hope.  But they had no idea of what really God had placed ahead.

Most of this is from Wikipedia:

FDR was the the thirty-second President of the United States. Elected to four terms in office, he served from 1933 to 1945 and is the only U.S. president to have served more than two terms. Franklin and Theodore Roosevelt were related but only distantly. They were fifth cousins. He was a central figure of the 20th century during a time of worldwide economic crisis and world war.

During the Great Depression of the 1930s, Roosevelt created the New Deal to provide relief for the unemployed, recovery of the economy, and reform of the economic and banking systems.

Although recovery of the economy was incomplete until almost 1940, the programs he initiated such as the Federal Deposit Insurance Corporation (FDIC), Tennessee Valley Authority (TVA), and the United States Securities and Exchange Commission (SEC) continue to have instrumental roles in the nation’s commerce. One of his most important legacies is the Social Security system.

As Britain warred with Nazi Germany, Roosevelt provided Lend-Lease aid to Winston Churchill and the British war effort before America’s entry into World War II in December, 1941. On the home front he introduced price controls and rationing, and relocation camps for 120,000 Japanese-Americans. Roosevelt led the United States as it became the ‘Arsenal of Democracy‘. Roosevelt, working closely with his aide Harry Hopkins, made the United States the principal arms supplier and financier of the Allies. America had a vast expansion of industry, the achievement of full employment, and new opportunities opened for African-Americans and women. The new Conservative coalition argued unemployment disappeared and closed most relief programs like the Works Progress Administratio (WPA) and Civilian Conservation Corps. As the Allies neared victory, Roosevelt played a critical role in shaping the post-war world, particularly through the Yalta Conference and the creation of the United Nations.

FDR consoled America through the Pearl Harbor attack and empowered engineers and scientists to create the atomic bomb.

Through all of FDR’s many trials he was crippled and in a wheel chair or in heavy steel braces.

Barack Obama’s tasks might be tall but as we compare him to FDR we should be cautious.

Related
“American Press has Turned Into a Joke” Comparing Obama To FDR, Lincoln

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.”

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

Japan Slides Into Recession; Obama Presidency Seen as No Help

November 17, 2008

Japan’s economy slid into a recession for the first time since 2001, the government said Monday, as companies sharply cut back on spending in the third quarter amid the unfolding global financial crisis.

The world’s second-largest economy contracted at an annual pace of 0.4 percent in the July-September period after a declining an annualized 3.7 percent in the second quarter. That means Japan, along with the 15-nation euro-zone, is now technically in a recession, defined as two straight quarters of contraction.

The result was worse than expected. Economists surveyed by Kyodo News agency had predicted gross domestic product would gain an annualized 0.1 percent.

Japan’s Economy Minister Kaoru Yosano said following the data’s release that “the economy is in a recessionary phase.”

But the worst may be yet to come, especially with dramatic declines in demand from consumers overseas for Japan’s autos and electronics gadgets. Hurt also by a strengthening yen, a growing number of exporters big and small are slashing their profit, sales and spending projections for the full fiscal year through March.

Toyota Motor Corp., for example, has cut net profit full-year profit forecast to 550 billion yen ($5.5 billion) — about a third of last year’s earnings. And Sony Corp., whose July-September profit plunged 72 percent, expects to make 59 percent less this fiscal year than last year.

“What we’re starting to see is the extent of deterioration in external demand start to weigh more heavily on the Japanese economy,” said Glen Maguire, chief Asia economist at Societe Generale. “And I think looking forward, there’s every indication that dynamic is going to continue.”

Read the rest:
http://news.yahoo.com/s/ap/20081117/ap_on_bi_ge/as_jap
an_economy;_ylt=ApHIyzOiyEFeB_wFtelfrris0NUE

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For Japan, Obama Signals A Shift Closer to China, Away From “Traditional” Asian Allies
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The Japanese do not share the jubilation seen almost everywhere following the election of Barack Obama. 

Economically, Japan sees an Obama White House funding the American Big Three Automakers: GM, Chrysler and Ford.  And that’s bad for Japan’s automakers.

Japan, for one nation, prefers to allow the “system” to work without more government intervention.

On the foreign policy level, Japan fears North Korea’s erratic behavior and nuclear capability.  It also fears China as a tradition enemy of immense wealth, population and size which can easily overwhelm the economy of Japan.

Japan fears the presidency of Barack Obama.  “So far, no good,” one senior diplomat told Peace and Freedom.

John E. Carey
Wakefield Chapal, Virginia

Related:
Obama Not Such A Hero In Japan

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)

Read the rest from AFP:
http://www.btimes.com.my/Current_News/
BTIMES/articles/vope/Article/

‘Socialism’? It’s Already Here.

November 15, 2008

Conservatism’s current intellectual chaos reverberated in the Republican ticket’s end-of-campaign crescendo of surreal warnings that big government — verily, “socialism” — would impend were Democrats elected.
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John McCain and Sarah Palin experienced this epiphany when Barack Obama told a Toledo plumber that he would “spread the wealth around.”
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America can’t have that, exclaimed the Republican ticket while Republicans — whose prescription drug entitlement is the largest expansion of the welfare state since President Lyndon Johnson‘s Great Society gave birth to Medicare in 1965; and a majority of whom in Congress supported a lavish farm bill at a time of record profits for the less than 2 percent of the American people-cum-corporations who farm — and their administration were partially nationalizing the banking system, putting Detroit on the dole and looking around to see if some bit of what is smilingly called “the private sector” has been inadvertently left off the ever-expanding list of entities eligible for a bailout from the $1 trillion or so that is to be “spread around.”

The seepage of government into everywhere is, we are assured, to be temporary and nonpolitical. Well. 

By George F. Will
The Washington Post
Sunday, November 16, 2008; Page B07

Probably as temporary as New York City’s rent controls, which were born as emergency responses to the Second World War and are still distorting the city’s housing market. The Depression, which FDR failed to end but which Japan’s attack on Pearl Harbor did end, was the excuse for agriculture subsidies that have lived past three score years and 10. ….

An employee working as a money changer prepares U.S. dollar ...

Read the rest:
http://www.washingtonpost.com/w
p-dyn/content/article/2008/11/14
/AR2008111403045.html?hpid=opinionsbox1