US Economy

Obama Administration completed their plan for Addtional Aid To Automakers

2009-03-29T19:51:00.003+06:00

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

2009-03-29T19:46:00.000+06:00

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

2009-03-27T11:15:00.002+06:00

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?

2009-03-27T11:04:00.003+06:00

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

2009-03-26T11:44:00.004+06:00

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

2009-03-26T11:27:00.003+06:00

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!

2009-03-25T22:07:00.002+06:00

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

2009-03-25T21:57:00.003+06:00

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

2009-03-21T21:18:00.002+06:00

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

2009-03-21T21:03:00.003+06:00

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.

Alaska Governor Refuse To Accept 30% of Stimulas Fund

2009-03-21T01:33:00.003+06:00

Republican governor Sarah Palin do not agree to accept nearly 30% of stimulus budget allocation for Alaska.

The Obama administration offered $930 Million (expected) for Alaska as stimulus budget to revive the local economy to generate the synergy effect for the whole US Economy.

Palin said, she on behalf of Alaska would only accept those money which are for timely, targeted and temporary projects. She also said that she has no interest to accept any fund which will bind the future of their state.

Palins' rejection of $100 million for education made many person totally surprised. Many person even mentioned this as an act to show her opposite standing of Obama administration only.

In such instance, Palin totally left the matter on to the shoulders of legislators of Alaska. She asked them to take the right decision. But the legislators will have a very small amount of time as they need to decide on or before 3rd April.

The Alaska Governor accepted the additional funding for the following projects:

$116 million for a University of Alaska Fairbanks research vessel.
$68 million for water and sewer project.
$ 39 million for public housing project.
$21 million for education and job training.

Fiat Denied To Accept Debts of Chrysler

2009-03-20T23:03:00.004+06:00

The Italian Automaker Fiat made it very clear to the world, they will not assume any debts of Chrysler-current or future- through the process of recent negotiation to generating association between the two large auto makers. This statement of Fiat is totally opposite of the statement made by Chrysler.

The statement of Fiat Group include " intends to make absolutely clear that the proposed alliance will not entail the assumption of any current or future indebtedness to Chrysler."

The statement of Chrysler, the video featured film, where the CEO have mentioned the Italian automakers would be responsible for 35% of the Chrysler's debt to the USA government. After the Fiat clear-cut statement, journalists are looking to have some response from Chrysler although no response was made.

Due to the Chrysler statement about sharing debt with Fiat, the share price of Fiat Group slipped from his position which again started to get back his position after the Fiat statement.

Through the current proposed deal, Chrysler will get the chance to enter in the market of small cars with Fiat's car design and engine. And Fiat, on the other hand, will get the chance to re-enter USA market with their Alfa Romeo Brand and latest model of Fiat-500.

Former AIG Head Denies to Have Retention Bonus System

2009-03-20T22:52:00.003+06:00

The former Chief Executive of AIG, Hank Greenberg demanded, their was no place of any retention bonus system under his leadership. Although he admitted the presence of Performance bonus which basically linked with performance. The former CEO was on the news again as AIG declared a huge bonus as retention bonus to his executives during the time of such economic status in USA.

He said, on an interview of broadcasted nationally through CBC, "When i was their, nobody had a contract with the company, including me. If you do not do the job, you don not deserve to be there. We had a bonus plan based on performance."

The interview was broadcasted nationally just one day after The House passed the bill to impose additional 90% tax on executives of companies getting assistance from US government.

Greenberg also mentioned that he did not think the present CEO, Liddy, is enough qualified to run the company. He also mentioned that he feel the need of replacement of the current CEO.

It need to have attention that Greenberg also filed a sue against AIG for some facts of not presenting right facts to him which AIG mentioned not good in merit.

$5 Billion Government Aid For Auto Suppliers

2009-03-20T11:19:00.004+06:00

The Treasury Department of USA announce an aid program of $5 billion auto parts suppliers. The proposed aid is linked with the government's effort to stable major US auto makers during this economic crisis.

The fund will be distributed through Troubled Assets Relief Program (TARP). Large suppliers of only USA would become eligible for this supplier aid program.

3 major automakers of USA- GM Corp., Chrysler LLC and Ford Motor Co. will get the opportunity to use this program to provide assistance to their suppliers. Basically, these three companies will have the large role to determine which parts suppliers of them need to have this assistance.

GM and Chrysler already agreed to use this aid program where Ford is still unwilling to participate in this program.

The government proposed this aid program which intended to have the financial stability. And by ensuring their stability, government is trying to ensuring the automakers stability.

In general, suppliers of different parts of cars received their payments for those shipment with in 45-60 days. Under normal situation, the suppliers get credit, against the commitment of having payment from automakers, from banks to ensure their financial stability. But in this economic crisis period, banks are unwilling to provide any credit to those suppliers as many uncertainty exist with in the motor industry. The governments aid will provide assistance in this situation.

In this program, auto companies need to pay 5% fee for assistance for up to $250,000 million to participate in the program. And suppliers, who intended to participate in this program, have to agree with government conditions and also need to to pay a fee to participate in the program.

Laege Tax Defaulters Get Government Assistance!

2009-03-20T09:52:00.002+06:00

In a recent fact finding, it has been identified that at least 13 companies have huge amount of unpaid federal taxes who receives billions of money from the Government Bail-Out Program. The so-far expected amount of unpaid tax is more than $220 million.

Republican Senator, John Lewis who chaired A House subcommittee of overseeing the Federal Bail-out told, two companies owe more than $100 million separately. He said in his statement, " It is shameful. It is a disgrace. We are going to get to bottom of what is going on here."

The House Ways and Means subcommittee on oversight identify the unpaid taxes of these companies by reviewing their tax records.

The committee mention that they can not disclose the company names due to legal issues.

Lewis added that the panel is planing to review all the tax records of those companies receiving monetary assistance from the government during the present economic crisis.

It is the legal procedure that banks and other companies need to sign a contract mentioning that they don not have unpaid federal taxes for becoming eligible for government monetary assistance. The Lewis panel identify that the Treasury Department did not perform any back check the tax records of those companies.

The Internal Revenue Service (IRS) expressed their interest that all these companies will pay their undue taxes very soon.

Till to-date, the Troubles Asset Relief Program (TARP), has paid more than $300 billions to different companies, with billions on their way.

New Tax Imposed on Executives

2009-03-20T08:29:00.003+06:00

Based on the Bonus Crisis of AIG, the House passed a bill to impose a new tax on executives who received any amount as bonus working in those companies who received assistance from US government during the recent economic crisis. The bill was passed with the vote of 328-93. US President Barack Obama give his positive impression regarding the bill.

Obama said in a statement " I look forward to receiving a final product that will serve as a strong signal to the executives who run these firms that such compensation will not be tolerated."

But, John Boehner, the Republican Leader of The House mentioned the total process of House to pass the bill "Political Circus" and gave his vote against the bill along with 6 Democrats. But his 85 fellow Republicans also support the bill with 243 Democrats.

With this bill, US government will impose a 90% tax on bonus amount given to employees with family income above $250,000 at AIG and other companies who received at least $5 billion as government assistance.

The vote was conducted just after a 40 minute long debate. The total process indicates how quick the House can react on something when their exist some common political will among the members of the House.

During the last week, the insurance giant AIG announced the bonus totaling $165 million for its employees. AIG has received $182.5 billion from Obama's administration as assistance. At present, US Government hold the 80% of AIG's ownership.

AIG Bonus Crisis: Pressure on Treasury Secretary

2009-03-19T21:50:00.004+06:00

The recent AIG bonus crisis create a huge pressure on Treasury Secretary Timothy Geithner of the new US government. US President Barack Obama already announced his full support to him.

Obama said, " I have complete confidence in Tim Geithner" on Wednesday.

We understand this sort of full support is not at all required in the situation where everything is in right order. Rather, this sort of statement was used, in past, to give a signal to the person need to do all his activity in a more responsible manner.

On the other hand, Obama and his new government continuously asked a single question, "Whether the Treasury Secretary is going to left out from the government or not." As Republican members already demanded his resignation from his post.

Many sources claimed that through this incident, the career of the Treasury Secretary was at the risk just like the economy.

Federal Reserve's Plan to Revive US Economy

2009-03-19T21:35:00.005+06:00

Federal Reserve initiated a brave and smart plan of $1.8 trillion to revive the damaged economy. According to the plan, Federal Reserve will spend maximum $300 billion to buy long-term government bonds and additional $750 billion in mortgage blocked securities.

At the same time, The Federal Chairman Ben Bernanke also set the short term bank lending rate within the range of 0-0.25%. Economists expects the new rate for lending will be carried for this whole year.

The lending rate revision is well expected for everybody but the additional $1.82 trillion plan is the total surprising for all.

Based on the Federal plan, all the major stock markets experiencing positive movement for maximum indicators

Employees Started To Return The Bonus: AIG CEO

2009-03-19T20:50:00.004+06:00

The CEO of AIG, Edward Liddy who is now under intense pressure from US Government along with the Congress, announced, some of their executives already started to returning all or part of their bonus amount totaling of $165 million.

On the opposite, the Democratic leaders of the house announced a plan for having a vote on legislation to impose 90% additional tax to executives of those companies who received government assistance during the present economic crisis. It is needed to mention that AIG received $182 billion as government assistance.

President Obama already clear his standings by mentioning the AIG executives bonus as Outrageous Bonus as disclosed his administrations willingness to open a new agency which will govern all the companies receiving financial assistance during this economic crisis.

Rich Peoples Are Losing money in Present Economic Crisis

2009-03-13T11:35:00.002+06:00

The world is observing a critical economic turmoil in recent time. And we are observing that not only the Poor’s get the hit, the richest people of the world also having seriously affected from this economic crisis.

From the latest report from Forbes Magazine, we have identified that the number of billionaires in the world fell by nearly one third. The number of billionaires dropped to 793 from 1125. The large number of drops is happening in countries like Russia, India and Turkey.

In such economic critical time, Microsoft founder Bill Gates again upholds his position as the world’s richest man. He replaced the previous richest man Warren Buffet as the crisis just took away $2 trillion from Buffets wealth.

Now Bill Gates holds $ 40 billion in his account which was $58 billion last year. From the latest report we have identified that the current top 3 richest person of the world lost $68 billion in 2008. The total worth of all the billionaires fell from $4.4 trillion to $2.4 trillion.

The Top 10 Losers Among the billionaires

Anil Ambhani----------------------- Lost $ 31.9 Billion
Lakshmi Mittal--------------------- Lost $ 25.7 Billion
Warren Buffet---------------------- Lost $ 25 Billion
Carlos Slim Helu-------------------- Lost $ 25 Billion
K. P. Singh------------------------- Lost $ 25 Billion
Oleg Deripaska--------------------- Lost $ 24.5 Billion
Mukesh Ambani-------------------- Lost $ 23.5 Billion
Sheldon Adelson-------------------- Lost $22.6 Billion
Bill Gates--------------------------- Lost $18 Billion
Vladimir Potanin--------------------Lost $ 17.2 Billion

Atleast 9 were killed in Alabama by gunshots

2009-03-11T12:35:00.000+06:00

On Tuesday Alabama experiencing a mass gunfire on the street and killing of innocent people. Sources said, at least 10 people including the suspected gunman were killed in that shooting.
The shooter was in his mid-30s and police mentioned that there was no such motive for such killing.

The shooter’s victim’s include his own mother, the wife of a local deputy Sheriff and her 3-month old baby.

The incidents came to an end when the shooter died by self-inflicted gunshots.

Afgan Taliban's Claim US Presidents Comment as illogical

2009-03-11T12:22:00.001+06:00

On last Tuesday, The Afgan Taliban’s comments US President Barack Obama’s bid to reach out to moderate elements of the insurgents as illogical. They mention that the only solution will be the exit of foreign troops for ending the ongoing war in Afganistan.

The US President mentions such comment at the time with interview with New York Times. He expressed his intention to adopt similar tactics that were used in Iraq.

The Taliban spokesperson claimed that they are united, have one leader, one policy. He stated that The US President’s comment surprised them as there is no existence of moderate Taliban.

China accused US Navy to breach law

2009-03-10T13:10:00.001+06:00

A Hong Kong TV website reported on Tuesday that China accused a US naval ship to carrying out an illegal survey in China’s inland. Due to such incident global oil prices rose up by 3% on Monday as everybody fears of beginning a new confrontation between China and USA.

The confrontation, actually, will damage in the process of developing relationship between these two countries who are trying at their best to end the global financial crisis.

Both the government already accused each other to break the maritime law.

5 Detainees from Guantanamo Prison charged as mastermind for 1/11

2009-03-10T12:56:00.002+06:00

The 1/11 incidents have got new look. As five detainees of the Guantanamo Bay Prison had been charged for plotting the 1/11 attacks. They expressed their pride of their accomplishment in a document and their pride cause 3000 peoples dead.

The document will be expected to publish publicly. The sources mentioned that the five detainees were termed as “9/11 Shura Council” in that document.

Will Obama get support from all Senators

2009-02-24T05:05:00.003+06:00

US President just won his first economic challenge in the Congress as the Stimulus plan was approved. In the last statement he mentioned that with in the April US people will get the benefit from the stimulus plan. Everything seems very smooth unless some of US Senator show their reservation regarding the spending of money that they will receive as part of the stimulus plan. After coming from attending the dinner with President, some US senators, show their such reservation. All of them already mentioned their reasons for their reservation. As Senator Bobby Jindal mentioned that "the plan have too many strings with it". So far three Senators stated that they may not accept the money that they will have from the stimulus plan allocation. Fortunately all of these three Senators are Republican. And for this reason, experts mention, their position was basically influenced by traditional political attitude. On the other hand, Arnold Schwarzenegger, the Republican Senator from California stated that this is the time when we need to come across our own political believe and we need to united to face the economic challenges. At such a situation, Political Analyst of US proposed, US president should sit with all the Senators to overcome the differences they have regarding the Stimulus plan.
We are encountering the biggest economic turmoil worldwide and USA is getting a big hit. Now, to face this situation we have no option other then united as only united strength can encounter such turmoil.