The stock market shrugged off the government's stimulus bill yesterday. They don't think it will work. And with the continued plunge in the economy it is unclear whether it's the solution. It could be Mr.Obama and the Congress have no answers and are acting like they do. Continued layoffs by major corporations along with record drops in economic activity guarantee that the crisis will continue. This problem could be insoluble by a government and business community that created the problem in the first place. It looks like we are on our own.
This from the Huffington Post:
Former U.S. Federal Reserve Chairman Alan Greenspan said on Tuesday that the global recession will "surely be the longest and deepest" since the 1930s, adding that the Obama administration's Troubled Asset Relief Program will be insufficient to plug the yawning financial gap.
"Since the collapse of Lehman Brothers in September, we have been exposed to the most rapid and unremitting set of gloomy statistics that I have ever seen," the former Fed chairman said a meeting of the Economic Club of New York, according to Politico.
Greenspan later tagged the current crisis a "once-in-a-century type event."
The move was an about-face for the free-market economist.
While Greenspan steered clear of his role in the market collapse, "he did take a new swipe at the market's self-correcting tendencies and bowed his head to a new period of increased regulation," the Wall Street Journal reported.
"All of the sophisticated mathematics and computer wizardry essentially rested on one central premise: that enlightened self interest of owners and managers of financial institutions would lead them to maintain a sufficient buffer against insolvency by actively monitoring and managing their firms' capital and risk positions," the Fed chairman said. The premise failed in the summer of 2007, he said, leaving him "deeply dismayed."
In other, un-Greenspan-like news, he told the Financial Times that he supported the nationalization of banks.
"It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring," he said. "I understand that once in a hundred years this is what you do."
Nationalisations would "allow the government to transfer toxic assets to a bad bank without the problem of how to price them."
They key to saving the economy is jobs. Without jobs Americans cannot buy thus the economy doesn't grow. Obama and Congress should have concentrated on creating and saving jobs.
Goodyear Tire & Rubber, the biggest U.S. tire maker, plans to cut 5,000 jobs this year after posting a fourth-quarter loss of $330 million on a 21% decline in sales.
The cuts equal almost 7% of the Akron, Ohio-based company's work force and follow about 4,000 jobs it eliminated in the second half of last year.
Goodyear's loss amounted to $1.37 a share, or $1.18 a share excluding one-time charges or gains. Wall Street anticipated a loss of $1.03 a share on that basis, according to a Thomson Reuters analysts' survey.
Sales dipped to $4.1 billion from $5.2 billion a year earlier.
The economy pushed down the number of tires sold by 19% in the quarter, the company said Wednesday.
And stop bailing out the car companies. The government should be bailing out the economy not individual corporations. No matter how big they are. If the economy grows then the car companies will flourish. Don't put the cart before the horse. If are going to give GM our tax dollars make them a loan with a 20 percent interest rate. The same rate credit card companies charge consumers.
General Motors Corp. asked the U.S. for as much as $16.6 billion in new loans, more than doubling the aid to date, and said it needs some of the cash next month to survive as it sheds brands and cuts 47,000 more jobs worldwide.
Chrysler LLC, propped up like GM with federal assistance, said it’s seeking $5 billion more from the government and will shed 3,000 more positions.
The automakers’ fates are now in the hands of the Obama administration, which must decide whether to give them the additional money or let them go bankrupt. Robert Gibbs, President Barack Obama’s chief spokesman, yesterday didn’t rule out forcing the companies to restructure through bankruptcy.
“Most of the low-hanging fruit when it comes to cost cutting is gone,” said Rebecca Lindland, an IHS Global Insight Inc. analyst in Lexington, Massachusetts. “You get to the point where you’re throwing good money after bad.”
GM and Chrysler met a deadline yesterday to report progress in revamping operations with $17.4 billion in loans granted so far and got a boost from tentative accords with the United Auto Workers to cut labor costs. Now, they must show the U.S. by March 31 that they can return to profit in order to keep the money.
‘Tighten Things Down’
“We will tighten things down and hang on as long as we can” as the new request is considered, GM Chief Executive Officer Rick Wagoner said today in a Bloomberg Television interview. GM said it will run out of cash without a payment of $2 billion in March.
Maybe it's time to start bailing out yourself. We are headed for hard times. DON'T count on the government. But don't stick your money under a mattress either.
Debt-saddled Americans aren't going to get any life-altering cash out of the latest stimulus plan; it promises to put an additional $7.70 a week into most paychecks. But it's a sign of something bigger for many borrowers: The chance to build their own bailouts.
With some new debt-reducing tools, including a new foreclosure-relief program, and a bit of Washington-willed forbearance, it's time for cash-strapped folks to get on top of their bills. Make that just-in-time: households are spending almost 18 percent of their disposable income just making their monthly minimum payments, according to the Federal Reserve Board. Average household consumer debt tops $23,000, down 3.1 percent from year ago-levels, as consumers spent much of 2008 holding the line on their spending.
Digging out of that is a completely different exercise for folks who have the cash and credit ratings than it is for those who don't. That's especially true when it comes to mortgages, where if you don't need the money, it's there for the taking. With a credit score over 740, you can still get a 30-year fixed rate loan in the neighborhood of 5 percent, according to Bankrate.com. That's a great long-term deal that can boost your monthly cash flow and lock in a low rate for decades to come.
