Posted tagged ‘Credit Crunch’

Dow Plunges To 12-Year Low

February 23, 2009

Investors unable to extinguish their worries about a recession that has no end in sight lowered stocks again today.

The Dow  tumbled 251 points to its lowest close since Oct. 28, 1997.

From the Associated Press:

All the major indexes slid more than 3 percent. The Dow is just over 100 points from 7,000.

“People left and right are throwing in the towel,” said Keith Springer, president of Capital Financial Advisory Services.

Investors pounded most financial stocks even as government agencies led by the Treasury Department said they would launch a revamped bank rescue program this week. The plan includes the option of increasing government ownership in financial institutions without having to pour more taxpayer money into them.

Although the government has said it doesn’t want to nationalize banks, many investors are clearly still concerned that this could be a possibility as banks continue to suffer severe losses because of the recession. They’re also worried that banks’ losses will keep escalating as the recession sends more borrowers into default.

“The biggest thing I see here is the incredible pessimism,” Springer said. “The government is doing a lousy job of alleviating fears.”

The Treasury and other agencies issued a statement after The Wall Street Journal reported that Citigroup is in talks for the government to boost its stake in the bank to as much as 40 percent. Analysts said the market, which initially rose on the statement, wanted more details of the government’s plans.

“It’s only a very partial picture of what we may get,” said Quincy Krosby, chief investment strategist at The Hartford. “This proverbial lack of clarity is damaging market psychology.”

Meanwhile, technology stocks fell after The Journal reported that Yahoo Inc.’s new chief executive plans to reorganize the company. But the selling came across the market as pessimism about the recession and its toll on companies deepened.

“There’s no where to hide anymore,” said Jim Herrick, director of equity trading at Baird & Co.

TIME Magazine in February?

January 30, 2009

Well, I may finally get my shot at fame and fortune! Well, more than likely it will be neither but still this could be a pretty cool event in my life.

I took a little time away from the Caylee/Casey Anthony case (as well as all the other topics that I cover in my spare time) to be interviewed a few months back by a reporter at TIME Magazine.

Well, it turns out the article is going to be published (fingers crossed) for the February 9 issue! Not 100% sure yet if it will be in print or just online but either way, I’m looking forward to it.

Without ruining the story, it’s about families who have come together to find ways to survive the downturn of the economy. As most of you know, my wife and our two children moved in with my in laws in November, 2006. We’ve lived together since then and it has been very beneficial to us all. Bills and rent are paid and the in laws get to see their grand kids every day. Nothing wrong with that.

We have a photo shoot scheduled for 9 a.m. (PT) tomorrow so that should be exciting. I’ll have to give an update when I find out confirmation on the issue date. I’ve been told February 9, but we’ll see…

Anyways…Hope you all have a great night! And make sure to check out TIME when our inclusion appears 🙂

Citigroup Backs Off Purchase of $50 Million Corporate Jet

January 27, 2009

Citigroup, which received a large taxpayer-funded rescue last year, canceled plans to buy a $50 million executive jet after news of the new plane drew rebukes from politicians.

They also lost $7,300 of my credit card debt which was transferred to another bank. I have not been happy with Citibank in quite some time. They raised my APR from 9.9% to 15.99% for the reason that “they were losing too much money”. I requested numerous times to have my APR lowered but was turned down each time. (Until last week when after I transferred my balance, I had my rate dropped to 12.99%).

Goodbye Citi…you will not be missed by me!

From MSNBC:

The bank is under heavy pressure from regulators and elected officials after receiving $45 billion of capital from the U.S. government last year, including a $20 billion emergency infusion in November.

On Monday, Citigroup said it was going through with plans to buy a $50 million jet, which a person familiar with the matter said was a Dassault Falcon 7X. The bank said the new plane would cut its costs and it was financing the purchase by selling older jets.

But on Tuesday, a spokesman said Citigroup has no intention of taking delivery of any new aircraft.

On Tuesday, CNBC said it has learned that the Treasury Department put pressure on Citi not to accept the plane. Citing sources, CNBC said someone in the department called the bank to express “disappointment” in Citi’s original decision to take delivery. The call was said not to be from new Treasury Secretary Tim Geithner.

Citigroup had ordered the executive jet in 2005, and was scheduled to receive it later this year. The bank said on Monday that canceling the deal would force it to pay millions of dollars of penalties.

The jet quickly became a lightning rod of criticism. A White House spokesman said President Barack Obama does not believe “that’s the best use of money” by companies receiving taxpayer assistance.

Bank of America To Cut Up To 35,000 Jobs

December 11, 2008

Bank of America has announced that it expects to cut 30,000 to 35,000 jobs over the next three years.

From the Associated Press:

The final number could be even higher, analysts say. Charlotte, North Carolina-based Bank of America said it hasn’t yet completed its analysis for eliminating positions, and won’t until early next year. The company and Merrill have about 308,000 employees in total, and the cuts will affect workers from both companies and all types of businesses.

Bank of America is considered one of the country’s healthier banks, and its decision to slash so many jobs illustrates the breadth of the layoffs hitting the United States. The nation lost more than half a million jobs in November alone, and economists expect many more to come.

Bank of America’s action is a particularly hard blow for Charlotte — which is also home to the beleaguered Wachovia Corp., a once strong bank that is now being acquired by Wells Fargo & Co. in what amounts to a fire sale. Just three months ago, when the Merrill Lynch deal was announced, Charlotte was dubbed Wall Street South; now, the banking center is being hit as hard as Wall Street and other towns across America, where people go to work in the morning unsure if they will still have a job that night.

Thursday’s announcement of job cuts at Bank of America was hardly unexpected, considering the merger and the wave of job losses seen in the banking industry and in other sectors over the past few months. Bank of America and Merrill Lynch have already eliminated thousands of investment banking jobs over the past year, as have other banks, in an effort to lower costs as they face increasing defaults in mortgages, credit card debt and other loans.

Sony Eliminates 8,000 Jobs

December 9, 2008

Sony has announced that the company will eliminate 8,000 jobs and rein in planned investment as it reacts to the global economic slowdown.

From CRN:

Sony said Tuesday it would cut 8,000 jobs in reaction to sluggish sales, particularly of its televisions and digital cameras. That number comprises regular workers and represents 4 percent of Sony’s entire workforce. Sony also said it plans to reduce head count in its seasonal and temporary workforces. The move is aimed at slashing $1.1 billion in operational and investment costs. Sony’s investment in the electronics business will decrease by approximately 30 percent in the fiscal year ending March 31, 2010. That includes plans to cut investment expenditures this fiscal year by outsourcing part of the company’s proposed increase in the manufacturing of CMOS image sensors for use in mobile phones to third parties.

According to Sony, certain short-term measures have already been taken, including adjusting production, lowering inventory levels and reducing operational expenses. But the appreciation of the yen means that the Japanese manufacturer will need to adjust product pricing, downsize and realign domestic and overseas manufacturing sites, reallocate its workforce and reduce head count.

Sony’s moves will have global impact. For example, the company is postponing plans to invest in production expansion at the Nitra plant in Slovakia, which assembles LCD televisions for the European market. Further, the manufacturer plans to close two overseas manufacturing sites, including the Sony Dax Technology Center in France, which manufactures tape and other recording media. Overall, the total number of manufacturing sites will be reduced by roughly 10 percent, from the current total of 57, by March 31, 2010.

From the New York Times:

Sony, which had already announced scattered cost-savings measures, blamed the rapid deterioration in the global economic outlook and the strength of the Japanese currency for the cuts.

“These initiatives are in response to the sudden and rapid changes in the global economic environment,” Sony, which has 160,000 employees, said in a statement. Sony aims save more than 100 billion yen, or $1.1 billion, a year through the measures, which also include shutting several plants.

About 10 percent of the company’s 57 plants will be shut, including 2 overseas sites, and plans to expand a site in Slovakia where LCD televisions for the European market are assembled have been delayed. The statement did specify which plants will be closed.

Sony will also trim spending in semiconductors and will outsource a part of the production it had planned for image sensors for cellphones.

“Based on such measures, Sony is planning to reduce investment in the electronics business by approximately 30 percent” in the fiscal year ending March 2010, the company said.

The announcements highlight the extent of the pain many Asian exporters — especially in Japan — are facing as the global financial crisis deepens. Like other Japanese manufacturers, Sony has suffered from slowing consumer demand, aggravated by the yen’s rally against the dollar and the euro in recent months, which makes Japanese goods more expensive for consumers in the United States and Europe.

Citibank Hardship Reaches the Consumer (Me)

November 25, 2008

How surprised was I last Friday to get a notice in the mail from my credit card company, Citibank, who was raising my APR to 15.99%. I have been a Citibank customer for ten years and just a few months ago, finally got my APR down to 9.99%.

I contacted Citibank to see about this change and was hoping to keep my APR at 9.99%.

Here is the response that I got:

The change proposed to your purchase APR was due to a reexamination of our policies was needed given the severe changes in the financial markets. Our costs in borrowing the money we use to lend have gone up significantly.

In addition we are seeing dramatically higher loan losses and delinquencies for many of our customers. We must manage to the dramatic changes we are seeing by changing some of our rates and fees in order to continue to provide you with products, benefits and services we have today.

More information on the proposed changes can be found online at http://www.federalreserve.gov.

Thank you for using our website.

Well thank you Citibank for explaining that YOUR financial problems are the reason that MY APR is going up. I’m so glad to be doing business with you.

For now, I will NO LONGER be using my credit card for any purchases, and as soon as I can transfer my balance to another company, you will lose a customer of ten years.

AIG Suspending Millions in Executive Payouts

October 23, 2008

It’s about time! American International Group has agreed to suspend payments to executives from a $600 million bonus fund as well as $19 million in payments to its former chief executive, this according to New York’s attorney general Andrew Cuomo.

From the New York Times:

The moves are the latest steps in an effort by the attorney general, Andrew M. Cuomo, to prevent bonuses and other compensation to former executives at A.I.G., which in recent weeks has received tens of billions of dollars in loans from the Federal Reserve. “There should not even be any contemplation of bonuses for executive performance because I find it hard to conceive of a situation that you could justify a performance bonus for management that virtually bankrupted the company,” Mr. Cuomo said on a conference call with reporters on Wednesday afternoon.

According to a letter Mr. Cuomo sent to A.I.G.’s current chief executive, Edward M. Liddy, the company has agreed to freeze $19 million in remaining payments to Martin J. Sullivan, the company’s former chief executive who was ousted in June. Mr. Cuomo said he did not know how much Mr. Sullivan might have already been paid under his employment contract.

The company also agreed not to make any payments from a $600 million deferred compensation and bonus fund for executives of A.I.G.’s financial products unit, which undertook many of the complex financial transactions that pushed the company to the brink of collapse. Mr. Cuomo said that Joseph Cassano, who headed that unit, stood to receive $70 million from the fund.

“We have received the letter and the letter is consistent with our discussions with the attorney general and with actions we have taken,” said Joe Norton, a spokesman for A.I.G.

Mr. Cuomo has already called on A.I.G. to assist in efforts to recover payments already made to executives at the company. On the call with reporters, Mr. Cuomo suggested that his actions offered a template for dealing with executive compensation at companies now receiving taxpayer money through the bailout approved by Congress this month.