Archive for the ‘Recession’ Category
Banks’ Self-Dealing Super-Charged Financial Crisis
Over the last two years of the housing bubble, Wall Street bankers perpetrated one of the greatest episodes of self-dealing in financial history
Faced with increasing difficulty in selling the mortgage-backed securities that had been among their most lucrative products, the banks hit on a solution that preserved their quarterly earnings and huge bonuses:
They created fake demand.
A ProPublica analysis shows for the first time the extent to which banks — primarily Merrill Lynch, but also Citigroup, UBS and others — bought their own products and cranked up an assembly line that otherwise should have flagged.
The products they were buying and selling were at the heart of the 2008 meltdown — collections of mortgage bonds known as collateralized debt obligations, or CDOs. Read the rest of this entry »
Economy poised on the brink of deflation
US stagnation, stock market redemption and Canadian credit crunch point to perfect storm
Business media talking heads promoting when caution is indicated
The press and the government declared the recession ended months ago but the economy is probably poised on the edge of a decade long decline according to economists.
BNN is reporting deflation fears in the US. Over the weekend, one of the BNN commentators made a compelling but nerve wracking case for deflation in Canada.
Cautious people are increasing their savings by paying down debt and hoarding cash.
The US economy shed 131,000 jobs in July, leaving 14.6 Americans out of work. WSJ: U.S. Job Market Loses Steam Canada lost 139,000 jobs in July 2010. CBC
Both the US and Canada have borrowed heavily on the future with record deficits to end the recession but it has not happened. President Obama’s optimism has given frustration at his inability to make a dent in the economic crisis. Read the rest of this entry »
Las Vegas Tourism Boom Gone Bust
Nevada’s Economic Misery May Be America’s Future
Last man left before the bank takes everything
Huffington Post – So many homes in Las Vegas have been foreclosed upon that banks rarely bother to hang a “For Sale” sign on the front lawn anymore. Instead, visitors identify bank-owned properties by the brown grass and the 8.5 x 11-inch sheet of paper taped to the front door or the garage.
On a cul-de-sac in the once-pleasant neighborhood of Silverado Ranch, Larry Wood is the last remaining resident. Two of the four homes are in foreclosure and a third is a “party rental” only occupied by rowdy tourists on weekends. One of his neighbors made a few bucks before abandoning the home, he says. “They sold all the palm trees and just walked away from it,” says Wood, sporting a “Freedom Isn’t Free” T-shirt. “It’s a great neighborhood. I guess that people weren’t financially set up to get through the crash.” Read the rest of this entry »
President Obama’s 10 most important letters come from you
Obama reads 10 personal letters each day
Jennifer Cline of Monroe, Mich., never expected to receive a response to her three-page handwritten letter. The president's embossed stationery arrived three weeks later. Sarah L. Voisin-The Washington Post
Washington Post – The black binder arrived at the White House residence just before 8 p.m., and President Obama took it upstairs to begin his nightly reading. The briefing book was dated Jan. 8, 2010, but it looked like the same package delivered every night, with printouts of speeches, policy recommendations and scheduling notes. Near the back was a purple folder, which Obama often flips to first.
“MEMORANDUM TO THE PRESIDENT,” read a sheet clipped to the folder. “Per your request, we have attached 10 pieces of unvetted correspondence addressed to you.”
Inside, Obama found crinkled notebook pages, smudged ink, cursive handwriting and misspelled words — a collection of 10 original letters that he considers among his most important daily reading material, aides said. Ever since he requested a sampling of mail on his second day in office, the letters have become a staple of his presidency. Some he immediately reads out loud to his wife; others he distributes to senior staff members aboard Air Force One. Some are from students requesting help with homework; others are from constituents demanding jobs or health care. About half of the letters, Obama said during a recent speech, “call me an idiot.” Read the rest of this entry »
Justice denied for Nortel disabled pensioners
If the partial settlement wasn’t bad enough, the court has rejected that deal as preferential over other debt holders while politicians ponder
Nortel pensioners and their supporters rallied on Parliament Hill Thursday. Photograph by: Pat McGrath, The Ottawa Citizen
The inequity of a legal system that can reward executives with millions of dollars in bonuses while forcing pensioners with disabilities onto welfare was backed by the Ontario Super Court as the Nortel $57 million pension agreement was thrown out.
In a previous story we reported the views of Nortel’s pensioned employees who lost their benefits as a result of Nortel’s bankruptcy. Nortel pays bonuses to execs and pittance to retirees and disabled.
That agreement which only lasted until the end of 2010 has been thrown out by a judge as prejudicial to other creditors. Once again the legal system has prejudice the employees in favor of executives and bankers.
While the Harper Conservative government talks and promises to reform Canada’s pension system, they are marking time with no laws that could save these employees. This is a travesty in Canada that the recession and it’s aftermath has made urgent. The Tories fiddle while Canadian employees take the heat.
The Opposition NDP and Liberals could force the minority government’s hand on this issue. Is their talk supporting pension reform mere political rhetoric, just another bluff from Jack Layton and Michael Ignatieff?
Is Goldman Sachs profiting from financial crisis in Greece
Even worse, are they and other US banks the cause of Greece’s financial dire straits?
SEC Ben Bernanke made the comments while testifying on the US economy photo: BBC
Testifying yesterday before the Senate Banking Committee, SEC Chairman Ben Bernanke said the Goldman Sachs and other US banks are being investigated for potentially setting up the current crisis in Greece. To top it off, Goldman is suspected of shorting the finances of Greece, betting that the economy will fail.
Bernanke told the Senate Committee that Goldman, over a ten year period, set up sophisticated credit arrangements that disguised the true nature and amount of Greece’s debt.
“We are looking into a number of questions related to Goldman Sachs and other companies and their derivatives arrangements with Greece,” Bernanke said, testifying before the Senate banking committee.”
“Addressing concerns that financial firms have been engaging in trades to bet on a Greek default, Bernanke said that “using these instruments in a way that intentionally destabilizes a company or a country is counterproductive, and I’m sure the SEC will be looking into that.” Washington Post
Read the rest of this entry »
Global trade falls a devastating 12 percent
Worst decline since World War II
Slate – When things started to look bad for the economy in 2008, the hope was that the problems would be confined to the United States and some other major economics; that China, India, and other large, emerging markets would continue to pump out manufactured goods and resources and keep global trade healthy. But that’s not how things played out.
When Lehman Bros. collapsed, bringing Wall Street and the banking industry down with it, global demand fell in every market. The World Trade Organization forecast a 10 percent decline in global trade for last year. That, it turns out, was also false optimism: “Global trade flows contracted by a catastrophic 12 percent in 2009, the fastest pace since the second world war, Pascal Lamy, director general of the World Trade Organization revealed [Wednesday],” the Guardian reported. Lamy explained that 2009 saw the worst contraction in global trade in generations due to simultaneous reduction in demand across all economies. In his speech, Lamy also noted that early signs show trade is slowly recovering: “Certainly there is a pick-up. Whether this pick-up is short term … or whether this is sustainable … is difficult to say but we certainly are picking up.” Guardian
Commercial real estate headed for foreclosure crisis
A mortgage crisis like the one that has devastated homeowners is enveloping the nation’s office and retail buildings
The Boulevard at the Capital Centre in Largo lost several retailers and then had to extend a $71.5 million loan. (Marvin Joseph/The Post)
The foreclosure wave is likely to swamp many smaller community banks across the country, and many well-known properties, including Washington’s Mayflower Hotel and the Boulevard at the Capital Centre in Largo, are at risk, industry analysts say.
The new round of financial pain, which some had anticipated but hoped to avoid, now seems all but certain. “There’s been an enormous bubble in commercial real estate, and it has to come down,” said Elizabeth Warren, chairman of the Congressional Oversight Panel, the watchdog created by Congress to monitor the financial bailout. “There will be significant bankruptcies among developers and significant failures among community banks.” Read the rest of this entry »
Next ten years will likely wipe out retirement dreams
If you thought the last 10 years were rough on retirement savings, fasten your safety belt
RBC is reporting the obvious today – RRSP contributions to continue declining through 2020, says RBC Economics
The reasons were predicted in 1996 by Economist David Foot. The Baby Boomers who fueled the post war economic boom are going to earn less, spend less and stop saving.
Population Projections for Canada, Provinces and Territories 2005-2031 Statistics Canada
The chart above shows the trend under worst, average and best case scenarios – sometime between now and 2015 there will be more retired people and fewer working people.
Layoffs continue in media
AOL laid off 2,500 this week. The company is spinning off from Time Warner and must be profitable it says.
AP (Associated Press) the media co-op laid off 90 people to meet its payroll. The non-profit is trying to reduce member fees in the wake of the newspaper meltdown.
BusinessWeek laid off 150 people. Print magazines are dying.
The contrarians are USA Today which reports increased readers this year and a new daily in Detroit The Detroit Daily Press
Olive Crane accuses Ghiz government of spendthrift ways
Opposition leader Olive Crane, all the government can do is spend, spend, spend
Question Period – Is that all you can do is spend spend spend, asks Opposition leader Olive Crane
Crane accuses the Province of PEI of spending spending spending. Spending beyond their means. She said PEI is the only province that has no plan to reduce the deficit.
Ghiz responded by accusing the former government of cutting health care to the bone. His government has spent on health care.
In her last question, Crane asks “Are you comfortable to constantly spend spend spending and expanding the bureaucracy during the recession?”
Ghiz pointed to improvements in health care as wise spending in his new rat-a-tat-tat machine gun speaking style. He listed a litany of improvements in PEI’s health care since he became premier.
We won`t pay for content get it!
Internet may kill Saturday delivery of USPS photo: Washington Post
Another study tells the old media newspapers and networks Internet users don`t pay for content
Last week it was Rupert Murdoch putting up a paywall against Google. This week the Globe and Mail, Global and the National Post want us to pay through Kindle for free news.
A new study from Forrester Research, which polled around 4,700 U.S. consumers, 80% of whom indicated they’re unwilling to pay for access to newspaper and magazine articles and other content. ComputerWorld
It is easy to see how big publishers with lots of brick and mortar will struggle to find a new economical model for their business.
Fresh round of layoffs signal recession still going strong
The rise in the stock market has led some to conclude the recession is over
Tell that to the tens of millions of unemployed who will be welcoming new members shortly. Until people feel secure in their incomes, a recovery is a long way off.
Here are a few layoff notices handed out in the last week.
Canadian Manufacturers Association president Jayson Myers says “that even after shedding 200,000 jobs in the past year, a significant number of employers are still planning to lay off workers in the next few months.” CP
