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British Prime Minister Gordon Brown warned Friday that a failure to tackle volatility in oil prices could cost the global economy trillions of dollars and hurt both producers and consumers.
Brown told an energy summit in London that the wild variation in crude prices was the "most pressing challenge" facing the international community and called for improved regulation of oil markets to stabilize prices.
Oil prices have fallen to four-year lows this week despite OPEC's agreement on Wednesday to slash global output.
The British leader pushed for greater investment in clean energy technology as he addressed energy and oil ministers from 27 key oil-producing and consuming countries.
The meeting, also attended by OPEC leaders, is a follow up to June's gathering of oil ministers in Saudi Arabia when prices were at record highs above $140 per barrel and talks centered on how to increase supply to keep up with demand. Crude has since tumbled to around $40.
"Wild fluctuations in market prices harm nations all round the world," Brown said. "They damage consumers and producers alike."
"The risk now is that investment in oil and other energy sources will once again stagnate, supply capacity will begin to tighten just as demand responds to improving economic conditions," he added.
Such failure to invest could cost the world economy an estimated $1.3 trillion a year by 2030, Brown warned.
The Organization of Petroleum Exporting Countries attempted to boost prices this week by slashing a record 2.2 million barrels from its daily production as of Jan. 1, while the bloc's outsiders Russia and Azerbaijan announced their own cutbacks of hundreds of thousands of barrels from the market.
But oil prices tumbled despite the announcement, a clear indication of the growing belief that the world is heading for a long and painful recession in which energy use will continue to erode.
Brown said that the "visionary internationalism" highlighted in the response to the global banking crisis in recent months should now be applied to energy challenges.
When oil prices sink too low, oil-producing countries have less money to invest in production for the future — creating the risk of a spike in prices down the line.
"We all know that extreme oil prices whether too high or too low are as bad for producers as they are for consumers," said OPEC Secretary-General Abdullah El-Badri.
Saudi Arabian oil minister Ali Naimi agreed that the high volatility was the biggest issue facing the oil market. Saudi Arabia is OPEC's de-factor leader.
"The world's present financial climate is clearly one that inhibits innovation," he said. "Oil prices must be maintained at a level that encourages investment, especially in alternative energy sources."
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Oil futures slumped in New York as concern mounted that rising stockpiles at Cushing, Oklahoma, will leave little room to store supplies for delivery next year.
“World crude oil prices are currently driven by barrels of crude in Cushing and not by the OPEC announcement of a 4 million barrels a day cut,” said Olivier Jakob, managing director of Petromatrix GmbH in Switzerland.
Crude oil stockpiles at Cushing, where oil that’s traded on in New York is delivered, climbed 21 percent to 27.5 million barrels last week, the highest since May 2007, the government said in a report on Dec. 17. OPEC’s biggest production cut in more than a decade this week has failed to stop the slump in prices as the deepening global recession saps demand.
Crude oil for delivery in January fell as much as 7.7% to $33.44 a barrel on the New York Mercantile Exchange. The contract expires today.
The more active February contract fell as much as 77 cents, or 1.9 percent, to $40.90 a barrel. It traded at $41.78 a barrel at 1:43 p.m. London time.
“Front-month WTI has been much weaker than anything else in the oil market,” said Mike Wittner, head of oil research at Societe Generale SA in London. “There is a lot of physical crude at Cushing.”
Brent crude for February settlement was at $43.78 a barrel, up 42 cents, on London’s ICE Futures Europe exchange at 1:08 a.m. local time. Brent oil has traded above West Texas Intermediate since Dec. 12 as the build-up in U.S. supplies suppresses New York prices.
Full Capacity
Crude inventories in Cushing may increase to full capacity within “a matter of two or three weeks,” Barclays Capital analysts led by Paul Horsnell said in a research note Dec. 17.
The Organization of Petroleum Exporting Countries, which pumps 40 percent of the world’s oil, agreed on Dec. 17 to cut output by 2.46 million barrels a day starting on Jan. 1. Still, prices have slumped 37 percent this month and are headed for the second-biggest decline in more than five years.
World oil consumption next year will drop by 0.2 percent to 85.68 million barrels a day, OPEC said in a Dec. 15 report. The U.S. Energy Department said on Dec. 9 that global demand will decline 0.5 percent to 85.3 million barrels a day.
OPEC may meet again in Kuwait on Jan. 19 to discuss further production cuts, Chakib Khelil, the president of the group, said today. OPEC will continue reducing output as demand falls, Khelil said in an interview in London.
Fog forecast for Port Arthur today may prolong the closure of the ship channel used to supply crude oil to local refineries. Dense fog is likely in coastal southeast Texas this morning, the National Weather Service said in the latest forecast on its Web Site.
Friday, December 19, 2008
To survive GM and Chrysler Will Get $13.4 Billion in U.S. Loans
The fall economy of US is showing the mystery of US history ,To survive against the fallen economy the US govt initiated to support General Motors Corp. and Chrysler LLC .
General Motors Corp. and Chrysler LLC will get $13.4 billion in initial government loans to keep operating in exchange for a restructuring under a rescue plan that President George W. Bush will announce this morning.
The money will be drawn from the Troubled Asset Relief Program and the automakers will get an additional $4 billion from the fund in February for a total of $17.4 billion in assistance, according to a statement from the Bush administration. The money would allow GM and Chrysler to keep operating until March.
Under the terms of the plan, if the companies can’t demonstrate financial viability by March 31 the loans will be called and the money must be returned, the statement said. The government’s debt would have priority over any other debts. The companies also must provide the government with warrants for non-voting stock.
The companies also must accept limits on executive compensation and management and labor must negotiate new wage and benefit agreements by the deadline, according to an administration official who briefed reporters on the plan.
Government officials will examine all financial statements and records of the car companies. The government has the authority to block any transaction over $100 million.
The package is intended for GM and Chrysler initially; Ford Motor Co. has said it can continue operations under current circumstances.
Bush is scheduled to announce the plan at 9 a.m. Washington time from the White House.
Previous related post http://businesstension.blogspot.com/2008/12/us-economy-car-market-frastation-just.html
General Motors Corp. and Chrysler LLC will get $13.4 billion in initial government loans to keep operating in exchange for a restructuring under a rescue plan that President George W. Bush will announce this morning.
The money will be drawn from the Troubled Asset Relief Program and the automakers will get an additional $4 billion from the fund in February for a total of $17.4 billion in assistance, according to a statement from the Bush administration. The money would allow GM and Chrysler to keep operating until March.
Under the terms of the plan, if the companies can’t demonstrate financial viability by March 31 the loans will be called and the money must be returned, the statement said. The government’s debt would have priority over any other debts. The companies also must provide the government with warrants for non-voting stock.
The companies also must accept limits on executive compensation and management and labor must negotiate new wage and benefit agreements by the deadline, according to an administration official who briefed reporters on the plan.
Government officials will examine all financial statements and records of the car companies. The government has the authority to block any transaction over $100 million.
The package is intended for GM and Chrysler initially; Ford Motor Co. has said it can continue operations under current circumstances.
Bush is scheduled to announce the plan at 9 a.m. Washington time from the White House.
Previous related post http://businesstension.blogspot.com/2008/12/us-economy-car-market-frastation-just.html
Thursday, December 18, 2008
US Economy : Car Market Frastation just BAD TIME
GM, Chrysler Shutter Factories, Await Bush Decision
NOT BAD ITS JUST WORST,THE US ECONOMY IS POSSED IN THE POSITION THAT THE BIG INDUSTRY CANNOT RUN FURTHER.....SEEMS SO
Struggling U.S. automakers are launching a round of severe cutbacks as they wait for a government rescue, with Chrysler saying yesterday it will idle all 30 of its U.S. factories for one month.
General Motors Corp., Ford Motor Co. and Chrysler LLC will shutter about 59 factories over the next month as they struggle to adapt to the worst sales in 26 years and await a verdict on a U.S. rescue of the industry.
The closings show how far automakers are going to conserve cash and prune output under the pressures of a shrinking U.S. market, dwindling access to credit for dealers and demands for advance payments by some GM and Chrysler parts suppliers.
“No one is immune,” said Ed Kim, director of industry analysis for consulting firm AutoPacific Inc. in Tustin, California. The industry is “imploding to a degree I’ve never imagined could happen, and at a speed I’d never expected.”
GM, the biggest U.S. automaker, and No. 3 Chrysler are counting on President George W. Bush to approve emergency loans to help them stave off a collapse that would threaten millions of jobs. Without $14 billion in federal aid, the manufacturers will be out of money by early 2009, they say.
Bush told Fox News Channel yesterday he was still “thinking through” details of any government assistance. Congress deadlocked on a bailout last week, spurring the White House to reverse its stance and consider tapping money from the $700 billion bank-bailout fund.
Closing Plants
GM, Ford and Chrysler began another round of pullbacks yesterday, burdened by U.S. sales declines this year of 22 percent, 19 percent and 28 percent, respectively, compared with the 16 percent industrywide average.
Chrysler will shut all 30 of its plants for at least a month starting Dec. 19, and Ford plans to idle nine of 15 North American assembly plants in the first week of January.
Ford said its move was part of a previously announced plan to reduce first-quarter North American production by 38 percent. The second-biggest U.S. automaker acted after Detroit-based GM’s Dec. 12 decision to cut 250,000 units of production from its first-quarter North American plans, affecting 20 plants. That was equal to almost 30 percent of GM’s 2008 first-quarter sales.
GM said yesterday that a new $370 million factory making engines for the Chevrolet Volt electric car is being delayed to conserve cash.
‘Bad Times’
“You need to have a hoard of cash built up from the good times to get you through the bad times,” said Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Michigan. “The bad times are here, the bad sales are here and GM and Chrysler just don’t have the cash.”
GM, which reported having $16.2 billion as of Sept. 30, needs at least $11 billion to pay monthly bills. Chrysler ended last quarter with $6.1 billion and needs at least $3 billion to operate, Chief Executive Officer Robert Nardelli told Congress on Nov. 18. Ford has said it doesn’t need emergency aid.
The Wall Street Journal said yesterday that Chrysler owner Cerberus Capital Management LP reopened talks on a GM merger. GM spokesman Tony Cervone said the company isn’t in negotiations and hadn’t altered its Nov. 7 position to end discussions on a “strategic acquisition” while it seeks government loans.
GM fell 10 cents to $4.27 at 9:41 a.m. in New York Stock Exchange composite trading, while Ford slid 5 cents to $3.09. GM’s 82 percent plunge this year through yesterday is the most among the 30 stocks in the Dow Jones Industrial Average. Dearborn, Michigan-based Ford was down 53 percent.
Lending Shutoff
Chrysler Financial, the automaker’s credit arm, said it may temporarily halt the loans used by dealers to buy vehicles as the retailers drain $60 million a day from the account that helps finance their borrowing.
GM is awaiting the results of lender GMAC LLC’s bid to convert to a bank through a debt swap in order to tap the Troubled Asset Relief Program, the bailout fund that Bush may now use for the automakers. Detroit-based GMAC provides financing for about 75 percent of GM’s inventory.
GM and Auburn Hills, Michigan-based Chrysler both have been pressed by a small number of suppliers for cash payments for parts on concern that the automakers might file for bankruptcy, people familiar with the matter said last week.
The Pontiac division at GM may be pared to a single model from six following a drop in sales every year since 1999, Mark LaNeve, North American sales chief, said in an interview.
North American output for Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co., Japan’s three biggest automakers, is being reduced, too, down more than 300,000 units from a year earlier. All three have announced cuts to scheduled production.
Toyota stopped assembly work at its San Antonio pickup truck plant for 15 weeks this year because of rising inventory and this week, it indefinitely halted construction of a Mississippi plant that was to produce Prius hybrids by 2010.
“When you’ve got the economy in the situation that it is now, it’s not just the Big 3’s customers that are affected,” said AutoPacific’s Kim. “It’s everyone’s customers. It is all interconnected.”
To contact the reporters on this story: Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net; Greg Bensinger in New York at
Japanese currency surges to 13-year high against greenback following U.S.
Dollar falls against yen, euro.Central bank slashing rates... The U.S. dollar fell to a 13-year low against the yen and weakened against the euro Wednesday, a day after the Federal Reserve cut its key short-term interest rates to historic lows.
The Japanese currency reached a 13-year high against the dollar Wednesday, falling to ¥87.23 from ¥88.95 late Tuesday. The last time the yen was this strong was July 1995. Since mid-September, the yen has gained nearly 15% against the dollar.
The Bank of Japan will make an interest rate announcement on Friday. Many of the bank's watchers expect it to hold the rate firm at 0.3%, according to Steve Malyon, currency strategist at Scotia Capital. Japan has the second-lowest interest rate among the world's major economies.
The euro jumped 3.8 cents against the dollar Wednesday, to $1.4418 from $1.4038 late Tuesday. The last time the euro was this strong against the dollar was in late September. Since then, the dollar has gained 2.57% against the 15-nation currency.
The European Central Bank's next meeting is set for January, and investors are watching to see whether the bank will keep its rate firm after slashing it to 2.5% earlier this month.
The dollar made a slight gain Wednesday against the pound, on news of a high level of U.K. jobless claims and that the Bank of England held back when it lowered interest rates to 1 percentage point at its Dec. 4. meeting, fearing a bolder move could pose a risk to the economy.
The rate holds at 2%, the lowest in the bank's history, and it is expected to be lowered once again when policymakers meet in January, according to a note Malyon wrote to investors.
The pound dropped to $1.5534 from $1.5581 late Tuesday. The dollar has gained 14.3% against sterling since mid-September.
Concerns ahead
On Tuesday, the U.S. central bank cut its federal funds rate from 1% to a range between 0% and 0.25%, the bank's 10th cut since September 2007.
While interest rate cuts are the Federal Reserve's main tool for boosting economic activity, many currency analysts worry about the long-term effects of lower interest rates on the dollar.
Cutting interest rates to such historic lows could drive up inflation and reduce the appeal of many assets that are priced in dollars.
Meanwhile, the dollar's status as the world's reserve currency is being hampered by lower rates and the cost of the government's bailouts, according to Ashraf Laidi, currency strategist at CMC Markets.
In addition to aggressive rate cuts, the government has been forced to essentially print more money to help pay for several new initiatives aimed at aiding the weak economy. Flooding the economy with cash has helped ease the credit crunch, but it has also worked to undermine the dollar's strength, Laidi said.
Having interest rates approaching 0% gives rise to "ominous prospects for the greenback once global economic stability starts to build up," Laidi said.
Economy
Oil sank to a 4 1/2-year low after OPEC reported it will cut production in a bid to prop up prices driven lower by global economic downturn.
The Japanese currency reached a 13-year high against the dollar Wednesday, falling to ¥87.23 from ¥88.95 late Tuesday. The last time the yen was this strong was July 1995. Since mid-September, the yen has gained nearly 15% against the dollar.
The Bank of Japan will make an interest rate announcement on Friday. Many of the bank's watchers expect it to hold the rate firm at 0.3%, according to Steve Malyon, currency strategist at Scotia Capital. Japan has the second-lowest interest rate among the world's major economies.
The euro jumped 3.8 cents against the dollar Wednesday, to $1.4418 from $1.4038 late Tuesday. The last time the euro was this strong against the dollar was in late September. Since then, the dollar has gained 2.57% against the 15-nation currency.
The European Central Bank's next meeting is set for January, and investors are watching to see whether the bank will keep its rate firm after slashing it to 2.5% earlier this month.
The dollar made a slight gain Wednesday against the pound, on news of a high level of U.K. jobless claims and that the Bank of England held back when it lowered interest rates to 1 percentage point at its Dec. 4. meeting, fearing a bolder move could pose a risk to the economy.
The rate holds at 2%, the lowest in the bank's history, and it is expected to be lowered once again when policymakers meet in January, according to a note Malyon wrote to investors.
The pound dropped to $1.5534 from $1.5581 late Tuesday. The dollar has gained 14.3% against sterling since mid-September.
Concerns ahead
On Tuesday, the U.S. central bank cut its federal funds rate from 1% to a range between 0% and 0.25%, the bank's 10th cut since September 2007.
While interest rate cuts are the Federal Reserve's main tool for boosting economic activity, many currency analysts worry about the long-term effects of lower interest rates on the dollar.
Cutting interest rates to such historic lows could drive up inflation and reduce the appeal of many assets that are priced in dollars.
Meanwhile, the dollar's status as the world's reserve currency is being hampered by lower rates and the cost of the government's bailouts, according to Ashraf Laidi, currency strategist at CMC Markets.
In addition to aggressive rate cuts, the government has been forced to essentially print more money to help pay for several new initiatives aimed at aiding the weak economy. Flooding the economy with cash has helped ease the credit crunch, but it has also worked to undermine the dollar's strength, Laidi said.
Having interest rates approaching 0% gives rise to "ominous prospects for the greenback once global economic stability starts to build up," Laidi said.
Economy
Oil sank to a 4 1/2-year low after OPEC reported it will cut production in a bid to prop up prices driven lower by global economic downturn.
Track 17 major currencies
U.S. crude for January delivery sank $3.54 to settle at $40.06 a barrel on the New York Mercantile Exchange, the lowest settlement price since July 13, 2004, when oil settled at $39.44.
Kiss the dollar rally goodbyeMorgan Stanley suffers $2.3 billion lossOil rises as
U.S. crude for January delivery sank $3.54 to settle at $40.06 a barrel on the New York Mercantile Exchange, the lowest settlement price since July 13, 2004, when oil settled at $39.44.
Kiss the dollar rally goodbyeMorgan Stanley suffers $2.3 billion lossOil rises as
Wednesday, December 17, 2008
France is going to invest $480 million in nanotechnologies-European sessions on innovation
The first "European Sessions on Innovation" on 9th December aimed to launch a process of dynamic innovation in Europe, as part of Europe's response to the economic and financial crisis in the context of globalisation. This process should continue throughout 2009, the European Year of Innovation. French President Nicolas Sarkozy suggested a new innovation policy in Europe. He put forward the creation a European Acadamy for Science and Technology and suggested to European countries which already dedicate more than 2% of the GDP to research the signature of an "innovation pact" that will then be open to the 27 Member State in order to "turn our research potential into growthAt the first European sessions on innovation, on Dec. 9 in Paris, the President of the French Republic and President of the European Council, Nicolas Sarkozy, announced the French government plans to double its research credits and strengthen the development of clusters in the French cities of Saclay, Grenoble and Toulouse, as a prelude to The European Year of Innovation in 2009.
The research investment will amount to 350 million euros over a period of five years, said Sarkozy.
In his speech at the first European sessions on innovation, the French president declared: "We will create, in Saclay, centers of nanotechnology integration, where fundamental research will collaborate with companies so as to develop technologies, file patents and make products."
He added: "We will double our annual contribution to research projects in nanotechnologies, to 70 million euros per year, resulting in 350 million euros over five years. We will create a fund to invest in patents based on these technologies and valorize them within companies."
Sarkozy concluded: "I want France to be at the forefront of nanotechnologies, notably in the research on their impact on health. This will be financed as part of the Grenelle of the environment."
The setting up of the European sessions on innovation was based on the diagnosis that, despite the efforts undertaken within the framework of the European Research Area, there is still too great a disassociation between fundamental research and applied research in Europe and private funding of technological research remains insufficient.
Topics included "Improving the funding of innovative start-ups", "Better valuing public research and transferring results to the socio-economic world", "Mobilizing all the necessary human, financial and political resources to stimulate creativity and innovation in Europe" and "Regional policies for innovation".
The event gathered players of innovation from all European countries, including researchers, academics, large and small innovative enterprises, scientific culture actors, specialists of intellectual property and funding of small and medium enterprises, experts in capital risk and investment funds specializing in risk financing and business creation and managers of companies and research valuation bodies.
The research investment will amount to 350 million euros over a period of five years, said Sarkozy.
In his speech at the first European sessions on innovation, the French president declared: "We will create, in Saclay, centers of nanotechnology integration, where fundamental research will collaborate with companies so as to develop technologies, file patents and make products."
He added: "We will double our annual contribution to research projects in nanotechnologies, to 70 million euros per year, resulting in 350 million euros over five years. We will create a fund to invest in patents based on these technologies and valorize them within companies."
Sarkozy concluded: "I want France to be at the forefront of nanotechnologies, notably in the research on their impact on health. This will be financed as part of the Grenelle of the environment."
The setting up of the European sessions on innovation was based on the diagnosis that, despite the efforts undertaken within the framework of the European Research Area, there is still too great a disassociation between fundamental research and applied research in Europe and private funding of technological research remains insufficient.
Topics included "Improving the funding of innovative start-ups", "Better valuing public research and transferring results to the socio-economic world", "Mobilizing all the necessary human, financial and political resources to stimulate creativity and innovation in Europe" and "Regional policies for innovation".
The event gathered players of innovation from all European countries, including researchers, academics, large and small innovative enterprises, scientific culture actors, specialists of intellectual property and funding of small and medium enterprises, experts in capital risk and investment funds specializing in risk financing and business creation and managers of companies and research valuation bodies.
Tuesday, December 16, 2008
A series of initiatives to combat the financial crisis by Obama
The Bush administration came under renewed pressure from fellow Republicans who urged the government extract stiffer concessions from labor and other groups than Democrats and the White House previously agreed were needed to qualify for aid.
The incoming Obama administration is considering a series of initiatives to combat the financial crisis, including some efforts to help banks that the Bush administration has tried with limited success.
On Tuesday, members of President-elect Barack Obama's economic team briefed Mr. Obama on ways to address the financial crisis and also on plans for an economic-stimulus package.
While Treasury Secretary Henry Paulson has seized on equity investments in banks as Treasury's primary mechanism to help resolve the financial crisis, the Obama team is developing a broader approach that would likely incorporate multiple remedies.
The new administration is "trying to put components together that...will be complementary...while recognizing there's no easy answer," said a person familiar with its plans.
The Obama team, hoping to avoid the criticism leveled at Mr. Paulson by lawmakers that he lacks a consistent strategy, is also working to come up with a way to cogently explain the rationale behind its approach.
One key distinction will be in the approach to helping homeowners facing foreclosure. Mr. Paulson and the White House have resisted calls to embark on a government rescue of homeowners. The Obama team, by contrast, sees that as a critical leg of its financial-crisis rescue plan, people familiar with the matter said.
Democratic lawmakers are pushing for Mr. Obama to take steps quickly to help at-risk borrowers. Details of the Obama foreclosure plan aren't known, in part because they are still being hashed out.
In a fresh sign of the magnitude of the financial crisis, the Federal Deposit Insurance Corp. braced for more bloodletting in the U.S. banking industry. The five-member board of the FDIC, which is in charge of unwinding failed banks, voted Tuesday to increase the agency's 2009 budget to $2.24 billion, an increase of $1 billion, compared with 2008, and said it planned to beef up its bank-examination and supervisory staff by more than 500 to 6,269. It would pay for the increase by levying higher fees on banks.
While Treasury Secretary Henry Paulson has seized on equity investments in banks as Treasury's primary mechanism to help resolve the financial crisis, the Obama team is developing a broader approach that would likely incorporate multiple remedies.
The new administration is "trying to put components together that...will be complementary...while recognizing there's no easy answer," said a person familiar with its plans.
The Obama team, hoping to avoid the criticism leveled at Mr. Paulson by lawmakers that he lacks a consistent strategy, is also working to come up with a way to cogently explain the rationale behind its approach.
One key distinction will be in the approach to helping homeowners facing foreclosure. Mr. Paulson and the White House have resisted calls to embark on a government rescue of homeowners. The Obama team, by contrast, sees that as a critical leg of its financial-crisis rescue plan, people familiar with the matter said.
Democratic lawmakers are pushing for Mr. Obama to take steps quickly to help at-risk borrowers. Details of the Obama foreclosure plan aren't known, in part because they are still being hashed out.
In a fresh sign of the magnitude of the financial crisis, the Federal Deposit Insurance Corp. braced for more bloodletting in the U.S. banking industry. The five-member board of the FDIC, which is in charge of unwinding failed banks, voted Tuesday to increase the agency's 2009 budget to $2.24 billion, an increase of $1 billion, compared with 2008, and said it planned to beef up its bank-examination and supervisory staff by more than 500 to 6,269. It would pay for the increase by levying higher fees on banks.
While it is unclear exactly what the Obama financial rescue will look like, it is expected to continue Mr. Paulson's attempts at addressing the lack of capital at financial institutions. That could mean additional equity injections, as well as an effort to have the government boost the value of troubled assets, such as mortgage-backed securities.
"We are looking at a number of initiatives that will allow us to move aggressively and responsibly to address the economic and financial crisis both on Wall Street and Main Street, including programs to provide targeted foreclosure relief," said Stephanie Cutter, an Obama spokeswoman.
Mr. Paulson initially planned to help financial institutions by purchasing troubled assets through the $700 billion Troubled Asset Relief Program approved by Congress in October. Banks are struggling with a glut of those assets, which continue to fall in price, forcing the banks to write down the losses and take a financial hit.
But Mr. Paulson jettisoned that idea in favor of taking $250 billion of equity stakes in banks, arguing that was a quicker and more effective way to encourage banks to lend money to consumers, businesses and each other. However, the credit crisis has continued despite Treasury's efforts, prompting criticism from lawmakers and Wall Street.
On Tuesday, Mr. Paulson acknowledged that banks aren't lending enough money despite the government infusion, but said the U.S. didn't want to nationalize the industry and dictate the loans banks make.
Much of the Obama team's financial rescue package likely won't be known until the new administration takes office next month. Some of it depends on whether Mr. Paulson seeks the second half of the promised $700 billion. Treasury's initial $350 billion batch is rapidly dwindling and could be further drained by aid to struggling U.S. auto makers.
Lawmakers have made it clear that if Treasury wants to get the next tranche, it will need to come up with a foreclosure-mitigation plan and enact stricter requirements on banks that get government funds. Mr. Paulson has said he wants the Obama team to support any new programs, but the Obama team has yet to engage with Treasury on current efforts.
Mr. Paulson, in an interview with CNBC on Tuesday, said the government had enough "firepower," and suggested he had no current plans to tap the second tranche.
Some lawmakers want Mr. Paulson to request the funds. House Financial Services Chairman Barney Frank (D., Mass.) said he has told the Obama team it should work with Mr. Paulson to request the second $350 billion and embark quickly on a foreclosure-prevention plan.
"My hope is for them to agree with Paulson that he should request the second $350 billion as soon as we [Congress] reconvene," Mr. Frank said in an interview.
"We are looking at a number of initiatives that will allow us to move aggressively and responsibly to address the economic and financial crisis both on Wall Street and Main Street, including programs to provide targeted foreclosure relief," said Stephanie Cutter, an Obama spokeswoman.
Mr. Paulson initially planned to help financial institutions by purchasing troubled assets through the $700 billion Troubled Asset Relief Program approved by Congress in October. Banks are struggling with a glut of those assets, which continue to fall in price, forcing the banks to write down the losses and take a financial hit.
But Mr. Paulson jettisoned that idea in favor of taking $250 billion of equity stakes in banks, arguing that was a quicker and more effective way to encourage banks to lend money to consumers, businesses and each other. However, the credit crisis has continued despite Treasury's efforts, prompting criticism from lawmakers and Wall Street.
On Tuesday, Mr. Paulson acknowledged that banks aren't lending enough money despite the government infusion, but said the U.S. didn't want to nationalize the industry and dictate the loans banks make.
Much of the Obama team's financial rescue package likely won't be known until the new administration takes office next month. Some of it depends on whether Mr. Paulson seeks the second half of the promised $700 billion. Treasury's initial $350 billion batch is rapidly dwindling and could be further drained by aid to struggling U.S. auto makers.
Lawmakers have made it clear that if Treasury wants to get the next tranche, it will need to come up with a foreclosure-mitigation plan and enact stricter requirements on banks that get government funds. Mr. Paulson has said he wants the Obama team to support any new programs, but the Obama team has yet to engage with Treasury on current efforts.
Mr. Paulson, in an interview with CNBC on Tuesday, said the government had enough "firepower," and suggested he had no current plans to tap the second tranche.
Some lawmakers want Mr. Paulson to request the funds. House Financial Services Chairman Barney Frank (D., Mass.) said he has told the Obama team it should work with Mr. Paulson to request the second $350 billion and embark quickly on a foreclosure-prevention plan.
"My hope is for them to agree with Paulson that he should request the second $350 billion as soon as we [Congress] reconvene," Mr. Frank said in an interview.
SBA Chief vs real story -Interviews on Small Business and the Economy
World economy fallen down! specially US economy.
As the numbers roll in -- jobs lost, financial markets fall, bailouts -- I'm sitting in the middle of a 40-person company I started in 1988 and wondering, as I assume so many others are, how bad this is for other small businesses.
Sandy K. Baruah, Acting Administrator of the U.S. Small Business Administration, has media availability in Detroit, MI Wednesday, Dec. 17 to discuss the auto industry's impact on small business, the current economy, what SBA is doing to help small businesses, and how to keep America's entrepreneurs competitive.
Baruah will lead a small business town hall hosted by the Detroit Regional Chamber of Commerce that morning, from 7:30am - 9am, to address the challenges confronting entrepreneurs in the Detroit region. Information on the town hall can be found at http://www.detroitchamber.com/. Media is welcome to interview him at the event or schedule an interview at another time.
WHO: SBA Acting Administrator Sandy K. Baruah
WHAT: Media interviews on the auto industry's impact on small business, the current economy, what SBA is doing to help small businesses during the economic downturn, and how to keep America's entrepreneurs competitive.
WHERE: Detroit, MI
WHEN: Wednesday, December 17, 2008
CONTACT: Christine Mangi at 202-205-6948 or Christine.mangi@sba.gov to arrange an interview.
BACKGROUND:
Sandy K. Baruah was designated Acting Administrator of the U.S. Small Business Administration on August 15, 2008. He has served in the Bush Administration since 2001. Prior to SBA, he was the Assistant Secretary for Economic Development at the Department of Commerce, and comes to SBA with a keen understanding on how to promote local business growth, manage organizational change, and respond to federal disasters.
Before joining President Bush's team, he spent seven years with a Portland, Oregon-based corporate management consulting firm. As a business consultant, he worked on engagements with clients such as Walt Disney World, Intel, Key Bank and Citizens Bank.
SOURCE: U.S. Small Business Administration U.S. Small Business Administration
Christine Mangi, 202-205-6948
Internet Address: www.sba.gov/news/
Copyright Business Wire 2008.
Baruah will lead a small business town hall hosted by the Detroit Regional Chamber of Commerce that morning, from 7:30am - 9am, to address the challenges confronting entrepreneurs in the Detroit region. Information on the town hall can be found at http://www.detroitchamber.com/. Media is welcome to interview him at the event or schedule an interview at another time.
WHO: SBA Acting Administrator Sandy K. Baruah
WHAT: Media interviews on the auto industry's impact on small business, the current economy, what SBA is doing to help small businesses during the economic downturn, and how to keep America's entrepreneurs competitive.
WHERE: Detroit, MI
WHEN: Wednesday, December 17, 2008
CONTACT: Christine Mangi at 202-205-6948 or Christine.mangi@sba.gov to arrange an interview.
BACKGROUND:
Sandy K. Baruah was designated Acting Administrator of the U.S. Small Business Administration on August 15, 2008. He has served in the Bush Administration since 2001. Prior to SBA, he was the Assistant Secretary for Economic Development at the Department of Commerce, and comes to SBA with a keen understanding on how to promote local business growth, manage organizational change, and respond to federal disasters.
Before joining President Bush's team, he spent seven years with a Portland, Oregon-based corporate management consulting firm. As a business consultant, he worked on engagements with clients such as Walt Disney World, Intel, Key Bank and Citizens Bank.
SOURCE: U.S. Small Business Administration U.S. Small Business Administration
Christine Mangi, 202-205-6948
Internet Address: www.sba.gov/news/
Copyright Business Wire 2008.
Real story on Small business:
I've been through recessions before. I was looking for my first job in 1971, buying our first house in 1982, and moving a company in 1992. In 2001 I laid off five people (of 33) in a single day.
That one was really hard. Our sales dropped steeply when the tech stocks fell, and we waited too long, got into real trouble, before we finally bit the bullet and cut the staff. What I discovered then was 1.) the 28 people who didn't get laid off were relieved to see we were dealing with the problem; they thought our response was long overdue; and 2.) hard as it is to lay off several people at once, it's not as hard as laying off an individual. An individual feels personal failure, but when it's a group, it's the company, or the economy, that caused it.
Now in this recession, which is certainly the worst in my lifetime, there's so much we don't know. I've read a lot of the available information of course, but it's pretty hard to gauge. For example, I've been watching as the official stats showed half a million jobs lost last month. And I followed as ADP showed small businesses increased jobs in September, but lost them in October and again in November. At the same time the SBA released a report showing that small businesses generate 80% of the new jobs.
But things are not that simple. Scott Shane asked Can Entrepreneurs Fix the Job Loss Problem on Small Business Trends earlier this week, and his answer is "the scale of the economic downturn is so large that we can't offset it just by boosting our level of entrepreneurial activity."
And then there are surveys like this one, which supposedly shows that 43% of small businesses aren't feeling the recession, and 4% say they're better off. Which is why I'm suggesting the survey we're going do to here.
One of the most important realities of small business in this country is how diverse and disconnected we really are. Small business owners don't vote alike, don't think alike, and don't respond to business crisis alike either. Four out of five small businesses are personal businesses with no employees. They're freelance writers, business consultants, graphic artists, designers, real estate brokers, butchers, bakers ... well, you get the idea.
While economists and politicians give "small business" credit for creating jobs, and there are several well meaning public agencies and business groups, we're still mostly out here in the trenches minding our own businesses, worrying, and wondering how bad things are and how bad they'll get. And when they'll turn around.
So I'd like to ask any and all small business owners, and yes definitely including those 21 million personal businesses, how are you doing? How bad is (or isn't) it?
With that in mind, please join me in collecting some real information, one person at a time, on what's going on throughout the economy with all those businesses that aren't big enough to attract news media attention, but are still there and, presumably, hurting as much as Wall Street and Detroit.
And to make this work, we want to start with the basics: Do you own the business? Do you have employees? How many people did you have six months ago, and how many today? What do you see happening to sales -- in percent growth or percent decline -- next year?
And from there, the stories. Add your own story. How are you weathering it, how bad is it, when will it turn around, what do you need, what have you done, what surprised you, what are you hoping, and what are you fearing?
And we'll be tracking responses and general results, so you can check back here to see what we come up with!
That one was really hard. Our sales dropped steeply when the tech stocks fell, and we waited too long, got into real trouble, before we finally bit the bullet and cut the staff. What I discovered then was 1.) the 28 people who didn't get laid off were relieved to see we were dealing with the problem; they thought our response was long overdue; and 2.) hard as it is to lay off several people at once, it's not as hard as laying off an individual. An individual feels personal failure, but when it's a group, it's the company, or the economy, that caused it.
Now in this recession, which is certainly the worst in my lifetime, there's so much we don't know. I've read a lot of the available information of course, but it's pretty hard to gauge. For example, I've been watching as the official stats showed half a million jobs lost last month. And I followed as ADP showed small businesses increased jobs in September, but lost them in October and again in November. At the same time the SBA released a report showing that small businesses generate 80% of the new jobs.
But things are not that simple. Scott Shane asked Can Entrepreneurs Fix the Job Loss Problem on Small Business Trends earlier this week, and his answer is "the scale of the economic downturn is so large that we can't offset it just by boosting our level of entrepreneurial activity."
And then there are surveys like this one, which supposedly shows that 43% of small businesses aren't feeling the recession, and 4% say they're better off. Which is why I'm suggesting the survey we're going do to here.
One of the most important realities of small business in this country is how diverse and disconnected we really are. Small business owners don't vote alike, don't think alike, and don't respond to business crisis alike either. Four out of five small businesses are personal businesses with no employees. They're freelance writers, business consultants, graphic artists, designers, real estate brokers, butchers, bakers ... well, you get the idea.
While economists and politicians give "small business" credit for creating jobs, and there are several well meaning public agencies and business groups, we're still mostly out here in the trenches minding our own businesses, worrying, and wondering how bad things are and how bad they'll get. And when they'll turn around.
So I'd like to ask any and all small business owners, and yes definitely including those 21 million personal businesses, how are you doing? How bad is (or isn't) it?
With that in mind, please join me in collecting some real information, one person at a time, on what's going on throughout the economy with all those businesses that aren't big enough to attract news media attention, but are still there and, presumably, hurting as much as Wall Street and Detroit.
And to make this work, we want to start with the basics: Do you own the business? Do you have employees? How many people did you have six months ago, and how many today? What do you see happening to sales -- in percent growth or percent decline -- next year?
And from there, the stories. Add your own story. How are you weathering it, how bad is it, when will it turn around, what do you need, what have you done, what surprised you, what are you hoping, and what are you fearing?
And we'll be tracking responses and general results, so you can check back here to see what we come up with!
Saturday, December 13, 2008
Forcing people to look at things in new ways!
Economy is emerging to force people to look at things in new ways...........
source :www.bloomberg.com
Bob Corker said yesterday that a crisis like the U.S. automakers’ fight for survival can create opportunities by forcing people to look at things in new ways.
The first-term Republican might just as well have been talking about his own career.
Corker, a former mayor of Chattanooga who became a senator just two years ago and ranks last in seniority among the 10 Banking Committee Republicans, emerged from relative obscurity to become a key figure in the 11th-hour negotiations over a proposed $14 billion auto-industry loan package.
While the effort ultimately collapsed in partisan discord over union wages, Corker, 56, stands as a rare winner in the debate.
“I’m hard-pressed to think of another member who’s been here such a short period of time who’s made such an impression on colleagues of both sides of the aisle,” says Senate Republican Leader Mitch McConnell of Kentucky.
Majority Leader Harry Reid seconded McConnell’s assessment. “I’ve been extremely impressed with Bob Corker,” says Reid, a Nevada Democrat. Illinois Senator Dick Durbin, the No. 2 Democrat, says Corker did a “magnificent job.”
Corker tried to broker a deal after Senate Republicans turned their backs on appeals from Vice President Dick Cheney and White House Chief of Staff Josh Bolten to support the bailout package. The House had approved a plan, backed by President George W. Bush, for short-term loans to keep General Motors Corp. and Chrysler LLC from running out of cash early next year.
Plan B
Corker’s proposal became Plan B. His package sought to overcome Republican doubts, without alienating Democrats, by making creditors exchange some bonds for stock, and by cutting union wages to levels competitive with amounts paid at U.S. factories owned by European and Asian automakers.
“Crisis is when good things happen -- when you make people do things” they wouldn’t ordinarily do, Corker says.
When executives from Detroit’s Big Three automakers appeared before the banking committee last month, Corker originally suggested bankruptcy as a way to restructure the industry. He started moving toward efforts to broker a compromise after a Dec. 3 briefing on GM’s restructuring plan and a meeting with GM Chief Operating Officer Fritz Henderson.
The following day, he proposed a plan that became the blueprint for possible compromise, saying he was willing to give the automakers a chance to solve the crisis without bankruptcy if the government got a “big stick” to force reforms.
Closed-Door Talks
As the Senate considered the House-approved bailout on Dec. 11, the freshman Republican holed up for seven hours behind closed doors on the first floor of the Capitol with the Democrats’ top negotiator, Banking Committee Chairman Christopher Dodd, as dozens of reporters crowded the ornate hallway outside, waiting for news.
The talks included Stephen Feinberg, founder of Cerberus Capital Management LP, which owns Chrysler; Ford Motor Co. lobbyist Ziad Ojakli; GM lobbyist Ken Cole, and United Auto Workers union lobbyist Alan Reuther. Treasury Secretary Henry Paulson and GM’s Henderson kept tabs by telephone, Corker later said.
The sticking point, which ultimately killed prospects for an agreement, was a Republican demand to set a specific date for cutbacks in auto-worker wages and benefits. Corker says lawmakers were “three words” away from a deal. “Had we agreed on a date, any date that’s reasonable, I think it would have passed the Senate with 90 votes,” he says.
Falling Short
Instead, on a 52-35 tally, supporters of the package fell short of the 60 votes they needed to end Senate debate and proceed to a vote to approve the measure.
Dodd says wage-reduction demands had more to do with jabbing the Democrats’ loyal union constituency than with reforming the automobile industry.
The banking committee chairman, in response to a question, later acknowledged that Corker’s lack of seniority may have hindered his ability to sway more Republican colleagues. Still, “you’ll hear no criticism from me about how Bob Corker handled himself,” Dodd says. “I respect him immensely for stepping up and making the effort.”
Corker will have to make an even greater effort to build clout when the Senate reconvenes next month. There he’ll find himself in a minority wielding less influence, with Republicans holding 41 or 42 of the body’s 100 seats compared to 49 now.
Frist’s Successor
Before this week, Corker was perhaps best-known for prevailing in a hard-fought 2006 race against then-U.S. Representative Harold Ford for the Tennessee seat vacated by former Senate Republican Leader Bill Frist.
Corker founded Bencor Corp., which got its start by installing drive-through windows at fast-food restaurants and grew into a shopping-center construction company with operations in 18 states. After selling his construction business, Corker ran commercial real estate companies. He was elected in March 2001 to a four-year term as mayor of Chattanooga, Tennessee’s fourth-largest city.
After the bailout failed in Congress, the Bush administration said yesterday that it may provide short-term auto-industry aid from the $700 billion financial rescue package approved earlier this year. Corker says an aid plan should include conditions similar to those he proposed, which Paulson could impose “by fiat.”
Reid says Corker’s efforts will “pay dividends next year” when a new Congress is likely to renew consideration of ways to bolster the automobile industry.
“We weren’t able, based on his good work, to arrive at something on which we could get enough Republicans to agree,” Reid said on the Senate floor after negotiations collapsed. “But he did some wonderful work, and I think the work he did is going to pay dividends next year.”
source :www.bloomberg.com
Bob Corker said yesterday that a crisis like the U.S. automakers’ fight for survival can create opportunities by forcing people to look at things in new ways.
The first-term Republican might just as well have been talking about his own career.
Corker, a former mayor of Chattanooga who became a senator just two years ago and ranks last in seniority among the 10 Banking Committee Republicans, emerged from relative obscurity to become a key figure in the 11th-hour negotiations over a proposed $14 billion auto-industry loan package.
While the effort ultimately collapsed in partisan discord over union wages, Corker, 56, stands as a rare winner in the debate.
“I’m hard-pressed to think of another member who’s been here such a short period of time who’s made such an impression on colleagues of both sides of the aisle,” says Senate Republican Leader Mitch McConnell of Kentucky.
Majority Leader Harry Reid seconded McConnell’s assessment. “I’ve been extremely impressed with Bob Corker,” says Reid, a Nevada Democrat. Illinois Senator Dick Durbin, the No. 2 Democrat, says Corker did a “magnificent job.”
Corker tried to broker a deal after Senate Republicans turned their backs on appeals from Vice President Dick Cheney and White House Chief of Staff Josh Bolten to support the bailout package. The House had approved a plan, backed by President George W. Bush, for short-term loans to keep General Motors Corp. and Chrysler LLC from running out of cash early next year.
Plan B
Corker’s proposal became Plan B. His package sought to overcome Republican doubts, without alienating Democrats, by making creditors exchange some bonds for stock, and by cutting union wages to levels competitive with amounts paid at U.S. factories owned by European and Asian automakers.
“Crisis is when good things happen -- when you make people do things” they wouldn’t ordinarily do, Corker says.
When executives from Detroit’s Big Three automakers appeared before the banking committee last month, Corker originally suggested bankruptcy as a way to restructure the industry. He started moving toward efforts to broker a compromise after a Dec. 3 briefing on GM’s restructuring plan and a meeting with GM Chief Operating Officer Fritz Henderson.
The following day, he proposed a plan that became the blueprint for possible compromise, saying he was willing to give the automakers a chance to solve the crisis without bankruptcy if the government got a “big stick” to force reforms.
Closed-Door Talks
As the Senate considered the House-approved bailout on Dec. 11, the freshman Republican holed up for seven hours behind closed doors on the first floor of the Capitol with the Democrats’ top negotiator, Banking Committee Chairman Christopher Dodd, as dozens of reporters crowded the ornate hallway outside, waiting for news.
The talks included Stephen Feinberg, founder of Cerberus Capital Management LP, which owns Chrysler; Ford Motor Co. lobbyist Ziad Ojakli; GM lobbyist Ken Cole, and United Auto Workers union lobbyist Alan Reuther. Treasury Secretary Henry Paulson and GM’s Henderson kept tabs by telephone, Corker later said.
The sticking point, which ultimately killed prospects for an agreement, was a Republican demand to set a specific date for cutbacks in auto-worker wages and benefits. Corker says lawmakers were “three words” away from a deal. “Had we agreed on a date, any date that’s reasonable, I think it would have passed the Senate with 90 votes,” he says.
Falling Short
Instead, on a 52-35 tally, supporters of the package fell short of the 60 votes they needed to end Senate debate and proceed to a vote to approve the measure.
Dodd says wage-reduction demands had more to do with jabbing the Democrats’ loyal union constituency than with reforming the automobile industry.
The banking committee chairman, in response to a question, later acknowledged that Corker’s lack of seniority may have hindered his ability to sway more Republican colleagues. Still, “you’ll hear no criticism from me about how Bob Corker handled himself,” Dodd says. “I respect him immensely for stepping up and making the effort.”
Corker will have to make an even greater effort to build clout when the Senate reconvenes next month. There he’ll find himself in a minority wielding less influence, with Republicans holding 41 or 42 of the body’s 100 seats compared to 49 now.
Frist’s Successor
Before this week, Corker was perhaps best-known for prevailing in a hard-fought 2006 race against then-U.S. Representative Harold Ford for the Tennessee seat vacated by former Senate Republican Leader Bill Frist.
Corker founded Bencor Corp., which got its start by installing drive-through windows at fast-food restaurants and grew into a shopping-center construction company with operations in 18 states. After selling his construction business, Corker ran commercial real estate companies. He was elected in March 2001 to a four-year term as mayor of Chattanooga, Tennessee’s fourth-largest city.
After the bailout failed in Congress, the Bush administration said yesterday that it may provide short-term auto-industry aid from the $700 billion financial rescue package approved earlier this year. Corker says an aid plan should include conditions similar to those he proposed, which Paulson could impose “by fiat.”
Reid says Corker’s efforts will “pay dividends next year” when a new Congress is likely to renew consideration of ways to bolster the automobile industry.
“We weren’t able, based on his good work, to arrive at something on which we could get enough Republicans to agree,” Reid said on the Senate floor after negotiations collapsed. “But he did some wonderful work, and I think the work he did is going to pay dividends next year.”
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