Posted tagged ‘Mortgage Crisis’

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.

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TIME Magazine Article (I’m In It)

February 19, 2009

We’re in the print issue dated March 2 and should be in stores soon!!! Kate Winslet is on the cover, just FYI!

UPDATE: I’m on the COVER too in a small picture in the top right corner next to the March 2, 2009 date 🙂

But if you want a peek, the article is available online now.

Its a brief 2-3 paragraph mention near the end of the article but it’s still great to be a part of an article in TIME Magazine.

I’ve got a link to it below and the full text of the article and an “OK” picture of us (no kids though) 🙂

I love the “worried” look on my face! The only thing I wish could have been included in this article is how much my in-laws were a help to us. I feel as though the section is too slanted to how we helped them when in reality, we helped each other. They were very instrumental in making things work and I don’t want to come across as looking as though we supported them. This is not the case. We supported each other 🙂

Now we can be as famous as Casey Anthony! Without the drama that comes with it of course!!

Credit: Mark Richards

Credit: Mark Richards

From TIME:

Jennifer Bliss was no fledgling lawyer when she moved back in with her parents. At 39, she had burned through her retirement funds after losing her law-firm job in July 2007. She gave the bank the keys to the home she was unable to sell in Grand Rapids, Mich., and last November, she packed up her two Great Danes and moved about 60 miles, to Lansing, to live with her mother and stepfather. “This has been awful,” says Bliss, who has sent out some 600 résumés nationwide looking for legal work or a managerial position in another field. “I went to law school to have a solid profession so that I wouldn’t wind up in a situation like this.”

The term boomerang children used to refer to young adults moving back in with their parents, but the recession is forcing people in their 30s and 40s and older–often with a spouse and kids in tow–to bunk in with the ‘rents until they regain their financial footing. Since the recession began in December 2007, the U.S. has lost 3.6 million jobs. An AARP survey released in May found that more than a third of retirees have had to help a child pay bills in the past year. And the number of multigenerational households has increased from 5 million in 2000 to 6.2 million in 2008, according to AARP. Cramped quarters, wounded pride and general anxiety about the global economic crisis do not the most pleasant living situation make. But there are ways to ease the transition.

Talk about expectations. And be sure to discuss one another’s needs up front, says Brian Carpenter, a psychology professor at Washington University in St. Louis, Mo. Failure to do so can lead to a lot of friction. That’s what happened when Michael Gallagher, 40, moved in with his mother in Los Angeles in October 2007 after he was downsized from his job as an audio engineer. “When he came home to live, I was thinking ‘family,’ and he was thinking ‘roommate,'” says BJ Gallagher, 59, an author and a video producer. “I would feel bad when he wouldn’t say hello when he walked in the door.” At the same time, her son felt she was checking up on him and “lurking” around, she says. “We both ended up disappointed and annoyed until we discussed it and dealt with it.”

Donna Butts, executive director of Generations United, an intergenerational advocacy group based in Washington, says it’s a good idea to create an approximate timetable for achieving specific goals (à la “get a job,” “move out”).

Build in privacy. If possible, everyone should have at least some space of his or her own. For instance, when Michael Gallagher took over the part of his mother’s house that she had been using as an office, she moved her computer and video equipment into a much smaller room adjoining her bedroom. “We each needed our own space. There was no way around that,” BJ says of the rearranging she did to accommodate her son.

Share household expenses. Pay parents rent, or help with bills, and take over chores like mowing the lawn. “This way, everyone is helping in some way, and no one feels taken advantage of,” says Elizabeth Carll, a psychologist in Huntington, N.Y., who is an expert on dealing with stress. Bliss does all the cooking and cleaning. Michael Gallagher buys his own food, and beyond that, his mother says, he has “paid in trade” by persuading her to have the hip replacement she had needed for a while and by taking care of her postsurgery.

Grandparents rule. In late 2006, John Kreuzer, 30, and his wife moved from Portland, Ore., into his in-laws’ house in San Jose, Calif., because he got a p.r. job in Silicon Valley. They decided to keep staying there–with their two little kids–because Kreuzer’s father-in-law was laid off. As the job market got tighter, it just made sense for everyone to share living expenses in such a high-cost area, Kreuzer says.

Along the way, there have been differences of opinion when it comes to child-rearing. Kreuzer has explained to his children that they must abide by their grandparents’ rules, e.g., no roughhousing indoors. “My in-laws really help out with the kids while my wife and I are working,” he says. “I know that once we move out, my children will miss their time together with Grandma and Pop-Pop.”

Once we move out? That brings up one last point.

Be realistic. The economy has to turn around someday, and in the meantime, rents are falling.

In March, Kreuzer and his family are moving into a nearby town house with rent so cheap, he can continue to help his in-laws pay their monthly bills.

Michael Gallagher also found a killer deal on a rental. He moved out of his mom’s place in November, but she has yet to rearrange her stuff. “I’m not moving anything back just yet,” she says. “With this awful economy, he could boomerang right back in here.”

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.

US Government to Seize Fannie Mae and Freddie Mac

September 6, 2008

Senior officials within the Bush administration and the Federal Reserve have called in top executives of Fannie Mae and Freddie Mac, and told them that the government is preparing to place the two companies under federal control.

From the New York Times:

The plan, which would place the companies into a conservatorship, was outlined in separate meetings with the chief executives at the office of the companies’ new regulator. The executives were told that, under the plan, they and their boards would be replaced and shareholders would be virtually wiped out, but that the companies would be able to continue functioning with the government generally standing behind their debt, people briefed on the discussions said.

It is not possible to calculate the cost of any government bailout, but the huge potential liabilities of the companies could cost taxpayers tens of billions of dollars and make any rescue among the largest in the nation’s history.

The drastic effort follows the bailout this year of Bear Stearns, the investment bank, as government officials continue to grapple with how to stem the credit crisis and housing crisis that have hobbled the economy. With Bear Stearns, the government provided guarantees, and the bulk of its assets were transferred to JPMorgan Chase, leaving shareholders with a nominal amount.

Under a conservatorship, the common and preferred shares of Fannie and Freddie would be reduced to little or nothing, and any losses on mortgages they own or guarantee could be paid by taxpayers. Shareholders have already lost billions of dollars as the stocks have plunged more than 80 percent this year.

For months, administration officials have grappled with the steady erosion of the books of the two mortgage finance giants. A fierce behind-the-scenes debate among policy makers has been waged over whether to seize the companies or let them work out their problems. It will be interesting to see what happens after the government steps in. Thoughts?