Posts Tagged ‘News’
Is “Recession” really going on in US economy? Is US currently in the state of recession? Are US citizens face-to-face with recession? Are people living under the fear of ending up with loss of their jobs, losing into stack markets, going bankrupt, heading to ever highest inflation in the economy, huge downfall in property rates and a lot more…..
Recession is a state when country’s GDP or Gross Domestic Product descents for two sequential quarters. Recession in an economy focuses on negative growth of GDP over two consecutive quarters. This negative growth during recession is more seeable in people’s income, bank balances, payroll systems, lowering employment opportunities, reducing retail sales, lower investment returns and various others.
As per experts, the normal period of recession in an economy is about 1-2 years. The whole economy slows down during recession which leads to panic in the country. The hard time of downfall causes lot of stress in the economy. People point out the root of recession towards government. On the other hand, it is important to know that recession is somehow deflation. If the government tries to improve on economy’s GDP, it has to invest in a lot more money in order to improve liquidity. But this causes an increase in inflation and ultimately stagflation. Hence, government has to make a choice whether to increase liquidity or reduce increase rate.
The U.S. GDP was down 0.2% in the third quarter of 2008, with U.S. economists forecasting a 0.8% fall in the fourth quarter. International Monetary Fund experts forecast the U.S. economy’s growth at 1.6% for 2008. However, they say, in 2009 the U.S. GDP is expected to increase by only 0.1%. Recession has lead to a reduction in global economic growth in U.S., from this year’s 3.9% to 3% in 2009, according to IMF experts. Each quarterly GDP report gets three releases….. In their Q3 2008 GDP report, the preliminary report showed a slowdown of .5%, slightly more than the advance estimate of .3% while advance report showed a downfall in growth by .3%, the second time in a year.
During the rough sledding of recession, with all the above mentioned consequences, people certainly look for options to successfully deal with the alarming situation and emerge out of it without getting much affected. But since we survive in this economy, we can’t get rid of such a national downfall when every other citizen is suffering. Certainly there are ways to beat the recession in the economy and come out as a more confident one. Lowering down interest rates is one of the major steps that government can take to slightly correct the situation. Everyone in the economy has to be focused towards what they do best. Spend less on luxuries, stick to the necessities, save money are the best steps one can do in their general lives. People should not lose hope and confidence as these are the best remedies to success. After all, this is not the end of the world.
The 116 banks that are receiving billions in taxpayer-provided bailout money this year actually paid out $1.6 billion in compensation and benefits to their top executives last year – even though the results at some of these institutions were so poor that they would soon have to turn to Washington for a government-engineered rescue.
The $1.6 billion was paid out to nearly 600 executives at the 116 banks that have so far accepted federal money to bolster their financial foundations, The Associated Press concluded after a review of U.S. securities filings. In addition to salary, the compensation included bonuses paid in both cash and stock. The benefits reaped by top executives included the use of company jets for personal purposes, personal chauffeurs, home-security services, country-club memberships and professional-wealth-management services, the news service said.
U.S. Rep. Barney Frank, D-Mass., a longtime critic of the fat pay packages given to U.S. executives, said the bonuses and perks tallied by The AP review amounted to a bribe paid “to get [CEOs] to do the jobs for which they are well paid in the first place.”
“Most of us sign on to do jobs and we do them best we can,” Frank, chairman of the House Financial Services committee, told the news service. But “we’re told that some of the most highly paid people in executive positions are different. They need extra money to be motivated!”
The AP review is just the latest in a series of media investigations that have questioned the effectiveness of – and banks’ commitment to – the so-called “Troubled Assets Relief Program” (TARP), part of an overall $700 billion bailout plan that was originally unveiled in late September.
The plan was originally conceived to boost the strength of U.S. financial institutions by having the federal government purchase non-performing mortgages and other bad assets. In November, the Bush administration changed TARP’s objectives, instructing the U.S. Treasury Department to pump tax dollars directly into banks in a bid to prevent wholesale economic collapse.
Ideally, TARP was supposed to jumpstart bank-to-bank and bank-to-consumer lending, helping to unfreeze a credit crisis that may be the worst the U.S. economy has experienced since the Great Depression. But that hasn’t happened. Instead, as a Money Morning investigation has shown, banks are using the money to buy other banks in a dual effort to build market share for when the economy recovers, and to perhaps make themselves “too big to fail” in the interim, many experts say.
TARP did set restrictions on some executive compensation for participating banks, but it did not limit salaries and bonuses unless they had the effect of encouraging excessive risk to the institution. Banks were barred from presenting so-called “golden parachute” financial packages to departing or ousted executives and from deducting some executive pay for tax purposes.
The AP study found that the 116 banks received $188 billion in TARP money. The study also discovered that:
- The average amount paid to each of the 116 banks’ top executives was $2.6 million in salary, bonuses and benefits.
Lloyd C. Blankfein, president and chief executive officer of Goldman Sachs Group Inc. (GS), took home nearly $54 million in compensation in 2007. The company’s top five executives received a total of $242 million. On Oct. 28, Goldman received $10 billion in federal bailout money. On Dec. 16, Goldman reported a $2.12 billion quarterly loss, its first since it went public back in 1999. So for 2008, Goldman’s seven top-paid execs will work for their base salaries of $600,000 each, but will forgo any cash and stock bonuses, the company said. Facing increasing concern by its own shareholders on executive payments, the company described its pay plan in a written report back in the spring as being essential to retain and motivate executives “whose efforts and judgments are vital to our continued success, by setting their compensation at appropriate and competitive levels.” Goldman spokesman Ed Canaday would not elaborate beyond that written report.
Even where banks slashed pay, some executives still reaped a payday of seven – or even eight – figures. Richard D. Fairbank, the chairman of Capital One Financial Corp. (COF), which received $3.56 billion in bailout money back on Nov. 14, took a $1 million hit in compensation after his company had a disappointing year, but still got $17 million in stock options.
Merrill Lynch & Co. (MER) CEO John A. Thain topped all banking chieftains with more than $83 million in total earnings in 2007. Thain, a former chief operating officer for Goldman Sachs, took over the top job at Merrill in December 2007, avoiding the blame for a year in which Merrill lost $7.8 billion. Since he began work late in the year, he landed a $15 million signing bonus, $57,692 in salary, and an additional $68 million in stock options. Like Goldman, Merrill got $10 billion from taxpayers on Oct. 28. Merrill shareholders have approved its sale to Bank of America Corp. (BAC), though the value of the deal has plunged to $20 billion (from $50 billion at the time the deal was announced) as a result of the stock market decline. BofA will reportedly slash 35,000 jobs as a result of the combination.
JPMorgan Chase & Co. (JPM) CEO James Dimon ran up a $211,182 private jet travel tab last year, because his family lived in Chicago and he was commuting to New York. JP Morgan received $25 billion in bailout funds.
Bank of New York Mellon Corp., (BK) CEO Robert P. Kelly received $66,748 for financial services – on top of his $975,000 salary and $7.5 million bonus. His car and driver cost $178,879. Kelly also received $846,000 in relocation expenses, including help selling his home in Pittsburgh and purchasing one in Manhattan, the company said. At Goldman, the bill for leased cars and drivers ran as high as $233,000 per executive. The firm told its shareholders this year that financial counseling and chauffeurs are important because it grants executives more time to focus on their jobs.
Wells Fargo & Co. (WFC), which received $25 billion in bailout cash, gave its top executives as much as $20,000 each for personal financial planners.When asked to justify the personal use of company aircraft for some executives, banks cite security as a key reason. But U.S. Rep. Brad Sherman, D-Calif., questioned that rationale, saying executives visit many locations more vulnerable than the nation’s security-conscious commercial air terminals.
U.S. Rep. Brad Sherman, D-Calif., a member of the House Financial Services Committee, said excessive pay and perks undermines the development of good economic policies at banks and fuels an already problematic pay spiral in the U.S. financial sector. And that’s especially difficult for shareholders and taxpayers to accept when virtually the entire sector needs bailing out [Check out this related story on the growing U.S. CEO pay controversy that appears elsewhere in today’s issue of Money Morning].
Sherman told The AP that he wants the banks to appear before Congress, like the automakers did, and spell out their spending plans for the bailout money.
Said Sherman: “The tougher we are on the executives that come to Washington, the fewer will come for a bailout.”
[Editor’s Note: The ongoing financial crisis has changed the investing game forever, making uncertainty the norm and creating a whole set of new rules that will help determine who wins and who loses. Investors who ignore this “New Reality” will struggle, and will find their financial forays to be frustrating and unrewarding. But investors who embrace this change will not only survive – they will thrive.
Money Morning Investment Director Keith Fitz-Gerald has already isolated these new rules and has unlocked the key to what he refers to as “The Golden Age of Wealth Creation.” But Fitz-Gerald brings more than a realization – and an understanding – to the table, here. After a decade of work, he’s also developed a new computerized trading model based on a mathematical concept known as “fractals.” This system allows him to predict price movements of broad indexes, or individual stocks, with a high degree of certainty. And it’s particularly well suited to the kind of market we’re all facing right now. Check out our latest report on these new rules, and this new market environment.]
Global recession is now a given. Australia is also headed for at least a mild recession.
The key issue is the depth and duration of the slump.
At the moment, leading indicators for global and Australian growth are still in free fall.
The AMP’s Dr Shane Oliver says much of this bad news has already been factored into share markets, but as the news remains bleak shares are still under pressure.
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Lehman Brothers’ collapse in September and the resulting panic it set off in global money markets, and more broadly in confidence, has caused immense damage to the global economic outlook.
In particular, it would seem that the efforts by the US Government to convince Congress to pass the bank rescue program last month by arguing it is a Main Street problem as well as a Wall Street problem has convinced investors and the wider global population of the seriousness of the situation.
This has led to a sharp deterioration in economic data recently.
Recession is now a given in key advanced economies – Japan and Europe have already had two consecutive negative quarters and it is only a matter of time before it is “officially” declared in the US as well.
Recession is also probable in Australia.
And the emerging world will be running far enough below potential to qualify as a recession as well (even though growth will still be positive).
Right now, leading indicators of economic growth are still pointing down and provide no indication of when the slump will end and of how deep it will be. (See the next chart.)
Not a normal post war slump
The current situation is very different to that going into past post war recessions for several reasons.
Normal post war recessions were part of a cycle which saw inflationary pressures build during an economic upturn, interest rates rise, demand slow and inventories rise resulting in a downturn which is ultimately turned around via lower interest rates and after de-stocking has run its course.
The current cycle has some elements of this and it was made worse by the huge surge in oil and commodity prices into mid year which saw interest rates increased or maintained at higher levels than should have been the case.
But two considerations make this global slump potentially more serious and hence add to the level of uncertainty.
Firstly, we are faced with significant systemic risk as the flow of credit has been radically impaired by a severe loss of confidence on the back of the subprime mortgage crisis and subsequent banking problems.
The resultant pressure to reduce gearing (whether in hedge funds, real estate investment trusts or indebted households) has meant that the current slump has many of the signs of a debt-deflation cycle described by economist Irving Fisher in relation to the Great Depression.
In a debt deflation spiral: distressed selling of assets leads to wealth destruction, which leads to falling spending which leads to rising unemployment and then more distressed selling of assets (including houses) and more falls in asset prices, etc.
The UK & US are already in a form of this.
On top of this most countries are weakening at the same time. For example, back in the early 1990s, the US had a recession in 1990 and then recovered but Japan and Europe did not really succumb till 1992.
So the synchronisation in the economic downturns in the US, Japan and Europe is now making the global downturn a lot worse. As a result, weighted average growth in the world’s advanced countries is now expected to contract for the first time in the post war period. See the next chart.
While the emerging world is coming from a higher growth base than was the case going into the early 1980s and early 1990s downturns, momentum here is also fading rapidly.
As a result, there is greater than normal uncertainty regarding the economic outlook. Our base case would see the global recession last to around mid 2009.
But given deleveraging and the uncertainties it sets off, a longer and deeper recession stretching into 2010 is possible.
Rapid government policy – to stabilise money markets along with fiscal stimulus and lower interest rates – should head off the deep recession scenario (or a 1930s depression).
Australia is currently better placed than many countries.
Our financial system is less impaired, it has more scope for policy easing, growth in its trading partners will likely remain above that in the advanced world and the fall in the $A will provide a boost to domestic production.
But even in Australia the risks are high given our high levels of household debt and house prices relative to income and Australia’s high reliance on foreign capital.
Our leading indicator for Australia now points to growth slowing to 0.5% over the next six months and it’s rapidly falling to the levels associated with the early 1990s recession.
This along with the still deteriorating global outlook, plunging confidence and negative wealth effects indicates Australia will at least have a mild recession at some point in the next year.
During the last two recessions in Australia, unemployment rose by 5 percentage points and inflation fell by an average 5 percentage points.
Inflation will fall sharply as lower commodity prices and the slump in the economy feed through.
Unemployment is likely to rise to between 7 to 9%.
What to watch
Given the uncertainty regarding the outlook, and specifically the lack of certainty between whether the world is facing a mild or deep recession, we are monitoring a range of signposts.
To gain confidence in our base case view that global growth will start to stabilise around the middle of next year and improve thereafter we are looking for:
• A rapid further decline in short term interest rates relative to long term rates.
• More global rate cuts and more fiscal stimulus quickly.
• A slowing rate of decline in US house prices.
• US consumer spending to slow but not collapse.
• A stabilisation in consumer confidence in key countries.
• A modest pick-up in corporate defaults.
• An easing in bank lending standards.
• A further improvement in money markets.
• A fall in private sector borrowing rates.
• An improvement in broad money supply measures relative to the monetary base, indicating monetary easing is getting traction.
• A stabilisation in global trade indicators.
• A stabilisation/improvement in China’s growth.
• Weekly auction clearance rates are also worth watching in Australia.
While there has been some improvement in some of these signposts it is not enough to provide confidence yet.
Implications
The bleak and uncertain economic outlook has several implications for investors:
Firstly short term cash rates are likely to fall a lot further. Japan and the US are in a race to zero.
In Australia, the Reserve Bank is likely to cut by another 0.75% to 1% next month and the cash rate will probably ultimately bottom out below 3% next year.
Just as shares led on the way down they will lead on the way up.
Having now had 50% plus falls shares are already factoring in a recession. But while they are great value from a long term perspective the uncertainty about the outlook and the continuing flow of bleak news means it’s too early to say the bear market is over.
Commodity prices and currencies like the $A lag the economic cycle and so it’s hard to see them moving higher until there is more confidence that global growth is back on track.
In the meantime, more weakness in commodity prices and resource stocks is likely.
Unlisted assets – including housing and commercial property – are now more vulnerable than financial assets which have already been hit hard.
Conclusion
While the next year is likely to be pretty tough, all is not lost. Australia’s long term growth prospects remain bright given our exposure to China which will resume its rapid industrialisation process after the current pause and our financial system is in far better shape than in many other countries.
And in the short term it should be borne in mind that a lot of stimulus is being pumped into the household sector, with lots more to come.
A middle income Australian family with a $250,000 mortgage, two kids and two cars will be seeing their finances bolstered considerably.
their mortgage interest bill will have fallen by about $375 a month (and will fall a lot further) since August, their monthly petrol bill will have fallen by about $95 since July and, if they qualify, they will get a one off $1000 per child payment next month.
Of course, the uncertainty caused by rising unemployment will mean a big chunk of this will be saved, but it will certainly help avoid a big collapse in spending and more importantly at some point later next year will help drive a recovery.
Many people are wandering why the United Kingdom government decided to deposit nearly $90 billion into banks, while lending back $350 billion to the taxpayers. When it came time to make the final decision, the UK government realized they had no choice. Panic in the markets is at a steady increase, while banking shares have been at a steady downfall. British Prime Minister Gordon Brown, along with the help of Chancellor Alistair Darling, knew that something must be done immediately to bring back the confidence within the banking industry. Urgent action was agreed upon, and a bailout plan was put into action.
The UK government created a plan that consisted of funding the banks with over $90 billion, in exchange for shares, in hopes of reassuring the markets that the credit crunch would be survived. The loans received from the banks would total over $350 billion and would be used to stabilize the economy. The banks are currently reluctant to loan to one another, which is much needed for day-to-day business. The UK government has high hopes that this bailout will get cash flowing through the system once again.
A lot of taxpayers have been asking where this bailout idea originated. A similar plan was put into action in Sweden in the early 1990’s, due to a devastating banking crisis. The plan proved to be a huge success for Sweden. Taxpayers eventually received a return on their capital investment after the bank’s share prices began to increase.
The UK government decided against a U.S. style bailout for several reasons. The $700 billion bailout introduced by the U.S. government has been criticized by many. Critics say the U.S. bailout is aimed only to purchase the bad debt held by banks, and capitalize over time by doing so. This plan does not offer the banks an opportunity to recapitalize in exchange for a share holding in which could also bring the taxpayer a return. This creates a perception of greater risk for the taxpayer.
The banks are extremely satisfied with the UK’s bailout plan. They have been trying hard to earn enough cash to even the balance sheets after the runs on their share prices. Abbey, Barclays, HBOS, Lloyds TSB, Nationwide Building Society, RBS and Standard Chartered have all committed to participating in the government plan. In return for the bailout plan, the UK government is asking for preference shares. The government will require the banks to implement new rules that will control executive income and dividend payments. The banks will also be asked to lend more to small businesses and homebuyers.
The UK government has faith that they will see the same success that was achieved in Sweden, however, there is always a potential risk. If the plan were to fail, the money markets would remain frozen, and confidence would continue to decrease. If share prices continue sliding, the taxpayer will lose even more. If the banks use all of the government lending, and are unable to pay it back, the financial crisis could last for years. However, the UK government remains optimistic that bank share prices will rebound, eventually resulting in profit.
For more information on the United Kingdom visit http://www.ukbailout.com.
Banking has evolved with time. The entire infrastructure and concept of traditional piled files and documents has given away to a much more sophisticated and sleek outlook. Moreover with technology growing with a rapid pace the time consuming factor has been replaced with doorstep banking methods which permits you to carry on with your banking 24/7 without having to pay the bank any visit. Money orders and transfers have taken a backseat for Online Money transfers, Card and mobile banking.
When Banking started of for Independent India, you had Nationalized and regional banks handling the country’s finances. As the years progressed you had more branches opening up. The 80s and 90s saw a whole lot of Global Banks like Standard Chartered, Barclays, Grindlays opening their banks up in India. Still banking didn’t seem to be convenient. The modus of transaction was pretty gloomy and boring with people having to wait their turns to visit the teller’s counter to complete their transactions. With technology coupled with the internet coming into play banking solutions have become more custom made for the average consumer. Online Banking ensures that a person is tuned completely with his finances at any given point from any part of the world. Ditto for mobile banking. The last couple of decades also saw numerous Indians migrate abroad on a bid to pursue their lives and carrier. Getting monetary transactions wasn’t easy then. Postal services and courier faux passes weren’t that convincing. Now with banks offering many solutions NRI Banking has also been made easier.
Various facilities for NRI Banking consist of NRI Savings account, NRI Term Deposits and provision to remit money to India. Mobile Banking and Online Banking also offer Mobile bill payment and online bill payments respectively. Typical business banking ensures commercial as well as retail banking services. In Commercial Banking, various corporate entities and major industrial houses are liable to be offered loans to proceed with their business and financial commitments. This kind of banking is generally profitable as it includes a large amount of money. Incase of retail banking services which is basically mass marketing business transactions, direct transaction with individuals which includes loans, various accounts and deposits, and locker facilities banks look to improve their consumer base. Establishing good customer relationship strengthens your financial base as with every major deal that you incorporate via your customers adds to your treasury. As of now the Retail section is undergoing a strain courtesy the recession. The failure to repay debts has seen the fall of global financial houses. So it is very important that a thorough examination is done to ensure know your customer (KYC) norms prior to issuing major loans.
Banks also provide special facilities to their HNI (High net individual) worth customers. These people generally have a huge amount invested with the financial house and indulge in hefty transactions. They are provided with world class banking facilities termed as Priority Banking and Premier Banking, both words justifying their meaning. Savings account for the average investor has also been made easier where you no longer need a referral to open an account or minimum balance to save in your account (* condition applies in both cases). Currently the major Global players in the Indian Finance Sector include Standard and Chartered, HSBC and Barclays. Banks of Indian origin that have gradually made waves include ICICI, HDFC, SBI and Axis Bank. All in all modern day banking has every element that ensures Wealth Management Services for the longer run.
Issues surrounding the environment have been high on everyone’s agenda in recent years thanks to stark realisation that our fossil fuel supplies are quickly running out. Alongside financial worries caused by the recent credit crunch, the environment is causing a particular stir amongst fleet managers and vehicle fleets as many find themselves faced with a difficult conundrum; do they look for ways to help lower their carbon emissions by investing in more environmentally friendly vehicles or should they try to save money and continue using their existing fleet vehicles? Or is it possible to have both?
The solution is in fact very easy with the utilisation of GPS tracking technology. Having already established itself as one of the most significant inventions of the 21st century, GPS vehicle tracking systems are now helping to bridge the void between environmental concerns and the ever rising costs of operating a vehicle fleet. As a result thousands of UK companies are now investing in tracking systems in order to help them meet environmental targets as well as keep fleet running costs to a bare minimum.
In order to explain how GPS vehicle tracking systems can prove so effective it is first necessary to explain where environmental and economical issues meet within a vehicle fleet. When you consider a large vehicle fleet that has multiple vehicles in national locations across the UK, moving in different directions at different speeds with drivers from all different driving backgrounds, you can imagine that keeping track of each vehicle is hard enough without even thinking about fuel usage and your company’s carbon footprint.
But this is exactly the challenge that fleet managers face daily and with the introduction of new ‘Duty of Care’ legislation and the ‘Corporate Manslaughter Act’ there is now even more pressure on transport companies to have a tight grip on every tiny aspect of their fleet, from working hours to unnecessary fuel usage. GPS tracking has however stepped in and come to the aid of many fleet organisations by combining most of these elements within a centralised software or Internet platform.
A GPS tracking device will record, monitor and relay data back to a central computer enabling fleet managers to see exactly where their vehicles are at any given time but also provides them with additional but equally important data concerning driver behaviour, MPG and route tracking information. Whilst on the surface this may seem like information fleet managers would have been using for years, advancements in vehicle tracking systems are now so sophisticated that they can even help managers save money on road tax and toll road fees.
When it comes to GPS technology the impact it can have on any vehicle fleet is immense, providing that the data is used efficiently by those in charge. Poor driver behaviour such as harsh acceleration, stops and starts, idling and so on can actually end up costing a company a great deal of money in both fuel expenses and vehicle wear and tear. GPS tracking systems can highlight where different drivers are going wrong leaving fleet managers with enough evidence to insist on further driver training and education.
In an economical sense GPS tracking of driver behaviour can help to reduce wear and tear saving money on maintenance costs, reduce insurance premiums thanks to no accidents or damage, and also reduce fuel costs which in turn should lead to less fuel being wasted thus contributing to cutting carbon emissions. It has also been suggested that vehicles in poor condition are also likely to be less environmentally friendly so keeping a track of miles travelled (MPG) and vehicle service dates can ensure that all vehicles are operating to the highest environmental standard possible. Taken literally this should also result in a more economically friendly vehicle with maximum MPG achieved and engines running more efficiently.
Another environmental and economical advantage of vehicle tracking systems is that sophisticated tracking systems can also guide drivers on the most direct routes from A to B allowing drivers to get more done and also saving money on those ever increasing fuel prices.
More money can be saved considering that new rules have been introduced with regards to road tax where by vehicles that use less fuel and are seen to actively contribute towards climate change will have to pay less road tax than those that do not.
GPS tracking then has many advantages both economically and environmentally and for most fleet managers it is not a matter of priorities but more a situation where less is more on both accounts, except for Miles per Gallon (MPG) that is!
In the 80s and 90s the economy wasn’t really that bad for some. As a matter of more millionaire were created during that time then in other time in this nation history. If that didn’t get you attention listen to this. >In 1989, the number had reached 1.3 million. In the past decade, the number of American families whose net worth is at least $1 million has soared to 5 million”. But, what will happen now after soaring gas prices, war in Iraq and Afghanistan. If that wasn’t enough The Fannie Mae, Freddie Mac mortgage disaster could send ripple effects across this country for the next 10-20 years. The solution to the problem a economic bailout doesn’t look to promising now. Nor, does the stimulus package. Will the Bailout Plan create more millionaires or billionaires? I don’t think so. Will the stimulus create more millionaires or billionaires? I can’t really say, but opportunities in a tough economy must be taken advantage of. Businesses must be created that would offer discounts and income that will be enough that one can survive on.
It appears that the internet opportunities can offer just that. With the gas prices up one day and down the next, the internet offers savings. A home based business would reduce travel and other expenses. Some businesses already online offer discount coupon and savings to shop at popular stores, while others offer deals on computers and communication items. To make it in this economy one must become a wise steward. Money management and wise calculated choice could create millionaires even today. But, it will not be like the 80s and the 90s. Perhaps, you can prevent foreclosure on your home. That would be nice. The question is for those that are not millionaires or billionaires, what is your bailout plan? Is there a stimulus package that could ever get you out of the debt that you are in? If your answer is no. Then you need to consider creating your financial bailout plan today before it’s too late.
References:
Dinesh D’Souza, a research scholar at the American Enterprise Institute, is working on his forthcoming book, The Moral Conundrum of Success.
http://www.forbes.com/forbes/1999/1011/6409050a_print.html
Article by Will Robinson for http://mybailoutbusiness.net
The bargaining negotiation between General Motors and United Auto Workers had been on going since last week through hourly extensions after the expiration of the contracts at midnight of September 14. The two parties are working on a new contract, but at the moment are focusing on the health trust proposal of GM for the retired UAW members.
GM has proposed to pay the union for the creation of a trust fund that will lift the billions worth of health obligation from the automaker, according to media reports, citing anonymous people involved in the talks.
There had been progress on the talks. Non-economic issues like grievance procedures, absenteeism and others had already been settled, according to the anonymous sources.
After rejecting the trust fund proposal of GM last Tuesday, UAW president Ron Gettelfinger called a Voluntary Employees Beneficiary Association or VEBA. However, the discussion on the trust fund still continued said one of the two sources.
“I can tell you its being worked on,” the person said Thursday.
GM had been appointed as the lead company representing Chrysler LLC (producer of Dodge air filter recharge kit) and Ford Motors. Whatever terms will be agreed upon by GM and UAW will also apply to the two other Detroit-based auto makers. With the benefits of the trust for GM, the lead company badly wants the union to agree to the trust proposal.
All economic issues like pay, work rules, job security promises and health care contributions will be dependent on an agreed VEBA making the negotiations slower.
In addition to very relevant information revealed by the two people, the UAW is said to be bargaining on taking the trust fund in return of GM’s creation of new vehicles in factories all over the US.
According to a note released by Deutsche Bank analyst Rod Lache for the investors, he said that the union had already agreed to the VEBA concept, but do not conform to the terms of the company.
“The UAW knows that GM cannot sign a contract that excludes a VEBA deal at this point, and that they cannot accept the consequences of an uncompetitive cost structure either,” Lache wrote.
“Without a VEBA deal, GM has threatened to begin a much more aggressive downsizing of its U.S. manufacturing base.”
The note also said that GM knows that if the negotiations failed, they are risking a strike.
“It is our belief that the most likely outcome is that GM and the UAW will reach a compromise and pursue a VEBA solution after a few days of drama,” he wrote.