Posts Tagged 'Economic Meltdown'

Senate Rejects Auto Bailout Plan

Global economic trends continue gloomy, with ongoing problems compounded by the Senate rejection of the $14 billion bailout for the auto industry. The bill’s collapse sent shock waves through the global market, prompting losses across all the main indexes. However, given the weight of the auto industry in the economy, it is unlikely that the US government will allow for the bankruptcy of one or more of the Big Three.

Assessment: Some deal will be hammered out in the Near Future that will prevent the loss of the 3 million jobs that the auto industry sustains.

Anti-Debt Ad

Cool ad from Dutch agency Rich aimed at keeping people from cheerfully diving into a well of debt. The campaign could hardly be more timely. At this time of impending financial doom, people do need every help they can get to stay cool and not get into a “Who cares? Let’s enjoy it while we can” kind of nihilistic spending spree.

It also comes to show (to those who still need proof of this, which by now I hope will be the last members of a pre-modern tribe verging on extinction) that advertising is a tool that can be used in a plethora of situations, not all of them having to do with getting people to spend, spend, spend. And what do you know, it may even serve to counter, not bolster, consumerism.

And while we’re at it, wouldn’t it be great to inject one of this guys into the heads of stock traders and CEOs all over the world? Wouldn’t that be a fresh way to address the financial crisis, to give them a conscience instead of a new pile of money to play with? Just a thought.

In Cash-Rich Japan, World’s Financial Woes Inspire a Grand Plan – washingtonpost.com

Kotaro Tamura, an investment banker turned Japanese lawmaker, has an immodest proposal for healing the sick global economy, making all Japanese richer and compelling the United States to be more deferential toward Japan.

“We are in a special position because we have huge money,” Tamura said, referring to about $950 billion in government foreign reserves, $1.5 trillion in public pension funds and $15 trillion in personal financial assets, about $8 trillion of which is on deposit at shockingly low interest rates in Japanese banks.

“We should send the signal that we are ready to save the world with this money,” he said in an interview.

Tamura leads a group of 65 lawmakers from the ruling Liberal Democratic Party who have proposed to Prime Minister Taro Aso that Japan treat the global financial meltdown “as a huge opportunity for us.”

They are urging the government to inject some of its abundant cash into troubled U.S. and European banks, in return for equity, and to purchase distressed corporate assets at fire-sale prices.

“The economy of every major power has crashed, and Japan has the least tainted market in the world,” Tamura said.

“Everything is very cheap right now [in world stock markets], and 10 years from now we would make very big money,” he said

Finally, Tamura said, Japan could gain much more than mere money by coming to the aid of the United States and its many distressed companies. “If we can save the United States economy, then the U.S. government will owe us in other ways,” he said.

A U.S. move that has offended many Japanese is the Bush administration’s decision last weekend to take North Korea off its list of states that sponsor terrorism.

The Japanese public vehemently opposes the delisting because North Korea has refused to provide satisfactory information about the fate of eight Japanese citizens who were abducted by North Korean agents during the 1970s and ’80s.

“If we make the proper moves with our money, we can gain diplomatic fruit,” Tamura said. “We can insist that the United States put more pressure on North Korea. As I said, this is a huge opportunity for us.”

via In Cash-Rich Japan, World’s Financial Woes Inspire a Grand Plan – washingtonpost.com

Wall Street bankers in line for $70bn payout | Business | The Guardian

The sums that continue to be spent by Wall Street firms on payroll, payoffs and, most controversially, bonuses appear to bear no relation to the losses incurred by investors in the banks. Shares in Citigroup and Goldman Sachs have declined by more than 45% since the start of the year. Merrill Lynch and Morgan Stanley have fallen by more than 60%. JP MorganChase fell 6.4% and Lehman Brothers has collapsed.

At one point last week the Morgan Stanley $10.7bn pay pot for the year to date was greater than the entire stock market value of the business. In effect, staff, on receiving their remuneration, could club together and buy the bank.

In the first nine months of the year Citigroup, which employs thousands of staff in the UK, accrued $25.9bn for salaries and bonuses, an increase on the previous year of 4%. Earlier this week the bank accepted a $25bn investment by the US government as part of its bail-out plan.

At Goldman Sachs the figure was $11.4bn, Morgan Stanley $10.73bn, JP Morgan $6.53bn and Merrill Lynch $11.7bn. At Merrill, which was on the point of going bust last month before being taken over by Bank of America, the total accrued in the last quarter grew 76% to $3.49bn. At Morgan Stanley, the amount put aside for staff compensation also grew in the last quarter to the end of August by 3% to $3.7bn.

Days before it collapsed into bankruptcy protection a month ago Lehman Brothers revealed $6.12bn of staff pay plans in its corporate filings. These payouts, the bank insisted, were justified despite net revenue collapsing from $14.9bn to a net outgoing of $64m.

via Wall Street bankers in line for $70bn payout | Business | The Guardian

Will Fukuyama Embrace Socialism?

Since he broke loose from the neoconservatives, there’s no stopping him. Francis Fukuyama, once one of the movement’s luminaries, just can’t seem to stop seeing the shortcomings of the positions that until recently he espoused.

In an article published in the latest edition of Newsweek – ominously titled The Fall of America, Inc – Fukuyama muses about the deteriorating state of “brand America”.

Brand America was in good shape when it managed to propagate around the globe two glossy ideas: a vision of capitalism based in market deregulation, and the notion that the US is a moral power, a “force for good” in the world.

Iraq took care of the latest. Now the ongoing economic meltdown is taking care of the former, and brand America is hurting like never before.

Now that his old pals aren’t watching over his shoulder, Fukuyama isn’t afraid to point the finger at the conservatives that got carried away with their Reaganite mantras as the ones to blame for the current state of affairs.

I mean, don’t get him wrong: Fukuyama still has a poster of Reagan in his bedroom closet. The thing is that he now looks at it with the same nostalgia that drove “Mamma Mia” to the top of the box office. It was fun back in the day, but who would dress like that now, right?

Reagan (as his across-the-pound counterpart, Thatcher) was “right for his time”. The problem is that “what were once fresh ideas have hardened into hoary dogmas”. And what would this dreadful hoary dogmas be? Why, nothing less than excessive market deregulation.

“What!? Market deregulation? Excessive!?”. You can almost hear his neocons pals howling at the concept. For them, “excessive deregulation” seems as absurd a concept as “excessive faith” would to a priest.

But wait, there’s more: this “Reagan-era article of faith—financial deregulation—was pushed by an unholy alliance of true believers and Wall Street firms”. Yeah, I guess you can easily imagine all those CEOs floating in the air with their heads spinning around, while sacrificing a goat over the effigy of the SEC’s chairman.

Now that he has grown allergic to that kind of rituals, all it was needed was for Fukuyama to start pushing for higher taxes and increased government spending – the dreadful “big government”. Impossible, you say?

Guess again. Fukuyama has the audacity to say that the American economy grew just as fast during the Clinton years (with tax increases that lead to a budget surplus of $127 billions when he left office) as it did during the Reagan years (with tax cuts that lead to a deficit of $152 billions and a national debt of $3 trillion when he left office).

Not happy with implying that it’s OK to raise taxes – itself a mortal sin among conservatives – Fukuyama is also calling for a revamp of public services, thus increasing government spending in such dull areas like health and education, and not in the cool and neocon-approved areas of military and, well, military.

According to Fukuyama, “the entire American public sector—underfunded, deprofessionalized and demoralized—needs to be rebuilt and be given a new sense of pride.” How about that?

And now for the grand finale: “there are certain jobs that only the government can fulfill.”

Doesn’t he sound just like Chomsky? No wonder he had to leave the American Enterprise Institute gatherings. They skin people for much less there.


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