Obama Administration completed their plan for Addtional Aid To Automakers

The Obama Administration finalize their plan to provide some more financial support to General Motors (GM) and Chrysler to ensure their sustainability in the present global financial crisis. The administration is trying to add a mechanism in the plan so that companies need to take strict cost cutting decisions to have the government fund.

GM and Chrysler already received $17.4 billion as government id to survive. In addition to this, GM asked for another $16.6 billion government aid when Chrysler asked for $5 billion.

With this government aids, the auto makers basically continue their regular activities at the time they are formulating their cost cutting strategy for future. The Obama administration already made their stand very clear that if the companies failed to formulate the required cost saving decisions then they will be disqualified for additional assistance. They mention, bankruptcy is yet an option for these two companies if they and their stakeholders don't agree to made some sacrifice. They mention, in case of their disagreement they might have to make more bigger sacrifice. US Administration basically preparing the plan to stimulated the companies cost saving process installation.

US President Barack Obama is expected to declare the plan on coming Monday.

CEOs have a meeting with Barack Obama

On Friday, CEO's of top 15 US banks expressed their positive signal towards the administration's proposed strategy to survive the banking sector and revive the economy., They, in general, mention the proposed plan as a good one for present situation but they also expressed their need of full detail plan for further activity.

The CEO's, invited by president Obama, have a meeting on Friday in White House for discussing the present situation of economic downturn. Prior to this meeting, Timothy Geithner, The Secretary of Treasury, has a close door meeting with these executives on Thursday night.

The bankers all agreeing on the fact that every body's co-operation is the most important thing for facing and overcoming the crisis. They said they will work with the administration's plan to bring the better future. They said, they are happy to see the government's attempt to help them survive in this financial crisis. They expressed government's attempt to help the banking sector to ensure more lending activity is the right decision to revive the economy.

US administration announced their plan to recover the banking sector from their toxic assets by buying those assets from respective banks. For this reason, government will build a collaboration with private investors and expected to but $1 trillion of toxic assets from the banking sector. US administration will try, by buying those resources from bank, to make the banks for sustainable in the economy so that they can perform their desired function of economy-that is giving lending facility to the required industry for their need.

US President Barack Obama mentioned the meeting as a very positive one while the CEO's also mentioned the meeting as same.

Overhauling Plan for FInancial System Disclosed By Administration

On Thursday, Obama Administration disclose a detail plan to have further control over the financial system and to impose some more regulation on major players of financial systems to prevent the system from any further instability.

Treasury Secretary Timothy Geithner present the plan. He mentioned that the changes are required to fix the loop holes of the financial system that are being exposed in the current financial crisis. The main purpose of the plan is to repair the system that becomes proved as unstable and fragile.

The proposal need the approval from congressional authority. Some highlights of the plan are:

• Impose tough standards on financial institutions.
• Extending Federal Regulations for the first time to all trading in financial derivatives, exotic financial instruments.
• Companies need to have a hedge funds and other private pools of capital to registered with SEC. The minimum threshold is yet to determined.
• Creating a systemic risk regulator to monitor the bigger institutions.
• Extending more authority to take over major non-banking financial institutions in case of any requirement.
  

Economy Shows Positive Signs But Would It Long Last?

In February, USA experienced a sudden jump in orders for big ticket manufactured goods and new homes sales. But experts of economy predict this jump will not last for long and will disappeared as the recession persist more.

On last Wednesday, the Commerce Department said, the orders for durable goods (manufactured products expected to last at least for 3 years) had experienced a jump of 3.4% in February and it was much better than the pre-estimated fall of 2%. This jump is the first upward movement for the last 6 months. The department also included, the new homes sales also experienced a sudden jump in sales and break their continuous declining trend in February.

But experts did not agree on the point that this upward movement will sustain and become the signal for economic recovery. They, in general, mentioned this jump as a blink after the record decline in January. They also mentioned, the jump of durable products order were due to government order of military air crafts and parts. They also mention, although their is an increase in sales of new homes yet the real estate sector need 12.2 months more to sell all the prepared homes if the current trend exist.

The Economist mention this jump as a good signal for the recovery and it also indicate people are feeling some sort of confidence with governments attempt to revive the economy. Although such jumps may not last for long due to the expectation of prolonged recession. but it indicate to reach the point of recovery.

The Bank Rescue Plan: Positive or Negative

On last Monday, US government announced the long waiting recovery plan for banking sector who stuck with huge toxic assets. After the announcement major share markets responded very positively. But would this plan can bring the ultimate success. After the disclose of the plan, people are divided into two group. Some people find this plan as the right one when many others have doubt in their mind.

The main part of the plan is to develop a joint venture between government and private investors who will buy the toxic assets from banks. Through this it will help the banking sector to recover from those toxic assets. In this process the banking sector become more stable and will start to play their own role in healing the economy. On the other hand the joint venture will sell those assets at later time to generate some more profit.

People who have the doubt asked, how the government will decide the price of those toxic assets. If they pay little then ultimately banking sector have to resume a big lose. On the other hand if they pay more , then that will create lose for the general tax-payers.

Some experts also urged, whether the private investors will participate in this this program. Although US officials mentioned, they already received some response from the investors to participate in this program, but their is a big question on investors participation.

Many experts admitted, the participation of private investors will ultimately reduce the large risk of lose from the tax-payers shoulders.

President Obama expressed, he was very confident that his administration's new plan will help the banks to remove their toxic assets. But at the same time, he urges everybody to hold their patients as the total situation need some time to recover from the recession.

Mark Zandic, Chief Economist at Moody's Economy.com said the plan "has a good chance of success". He mentioned , participation of government is a very good indication for the ultimate success.

It need to be admitted that, today we are sitting in the very early stage to identify the success or failure of the proposed plan. But the first impression of the plan generated some positive indication of success in our mind.

The Bank Rescue Plan: US Government Disclose Finally

On Monday, US authorities disclose their plan to remove the toxic assets from bank statements. This is the latest move of Obama Administration to revive the economy and this plan is intended to play a very critical role in the Obama's multi-pronged plan to encounter the recession.

The main part of the plan is to develop a joint venture between government and private investors who will buy the toxic assets from banks. Through this it will help the banking sector to recover from those toxic assets. In this process the banking sector become more stable and will start to play their own role in healing the economy.

The government and private investors will sold those toxic assets at times when the economy is in good condition. If everything goes fine, then both the party will be successful to generate some profit. In case of more worse situation, the private investors investment will be protected by government.

At the same time Bank Supervisors will conduct a stress test on the bank to determine how much capital it would need if economy worsens. Then treasury will provide that much as capital and in exchange bank will share their ownership with government.

Jump In New Home Sales in USA!

Their is an unexpected 4.7% jump in February in New House selling sector. Although, the prices are continuously falling but their is an increase in sales of New House in February. At the same time, the construction of new house jumped 22% in February.

Sales was continued to decline in Northeast (3.3%) and Midwest (9.1%). But sales were increased in South by 9.7% and also in West by 6.6%.

Although, the sales price is continued to decline even in this increase in sales increase. The median home price was slipped from $245,300 to$200,900 with in one year of time.

The experts of this sector and the economist do not agree to mention this increase as a signal of recovery but they mention such incident as a good one for the sector along with the economy.

It is being identified that, even their is an increase in New Homes Sales, more than another 12.2 months will be needed to sell all the homes that are already being made, if the current sales trend continue its same path with same direction.

Americans Need To Be More Patient: President Obama

President Barack Obama gave his second Prime Time news conference on Tuesday night. He mentioned his expectation about the coming economic revival and also display his anger about AIG bonus incident. But he also make some expression so that investors get confidence on the economic revival plan.

During that speech, Obama seems to be determined not to expresse any emotion. In this speech he also mention the urgeny of having the budget without any modification. He mentioned, his proposed budget plan is very much important to achieve the economic revival and to face the global economic downtime.

President Obama asked his fellow Americans to hold a bit patients as better days are coming and his multi-proned revival plan is going to achieve the desired success.

Deeper Budget Deficite Than Expected: US Auditor

On last Friday, US Congressional Auditors said, US President Barack Obama's budget will expected to produce $9.3 trillion as budget deficit over the next decade. This deficit amount is 4 time higher than that of previous president Bush Jr.

Moreover, the Auditors expectations are differing largely with the administration's expectations. The US Administration previously expected $2.3 trillion as budget deficit.

The huge budget deficit ultimately giving a signal that current US Administration need to raise the tax level to overcome the budget deficit after the situation improved.

White House Budget Chief Peter Orszag already mentioned Auditor's expectations as too much pessimistic. They still believe, The Obama's budget, if enacted, will produce much less deficit then expectations.

Republican politicians are on their shoes after the publication of Auditor's comment. They urged everybody to treat this as wake up call for the Administration. But Obama indicate that he will continue all his activity as per planed.

Obama propose $3.6 trillion as budget for 2010 which contain programs with high hope to fight against the global recession.

Rescue Plan for Banks Is Knocking At The Door

The Wall Street reported, US government is going to announce the rescue plan for banks on next Monday. It is expected that this plan will give the direction to remove the bad or toxic assets for banks financial statement. This is a very important plan as it can play the major role to face the existing credit crisis and also make the banking sector a bit more stable then present.

The newspaper also mentioned in their report that the Barack Obama administration is prepared the plan based on 3 stage action plan. Through this 3 stage action plan they will try to control the toxic assets of the banks. Currently, the Obama administration is fighting with the fear of having more deeper recession.

The basic attempt of this plan is to remove those bad assets from the banks balance sheet. It need to be mentioned that last year the ex-president Bush administration also tried to do so but could not managed to achieve the success.

Obama's Treasury Secretary, Timothy Geithner has said, he also try again to remove the bad assets from the banks financial statement.

But many large private investors are fearing that they may be dragged in to this plan to participate in the rescue plan of banks. As they are less interested to participate in the proposed plan of recovery under any governments direct regulation.