CEOs of Ford, GM Will Accept $1 Salaries in U.S. Bailout; UAW Leaders to Meet to Discuss Labor Pacts
The Big Three auto makers will submit recovery plans to Congress on Tuesday that emphasize cost-cutting, downsizing and renewed emphasis on higher-mileage cars in a bid to win support for a federal bailout.
Ford Motor Co. Chief Executive Alan Mulally plans to tell Congress he is accelerating his company's development of hybrid and electric vehicles and is willing to cut his salary to $1 a year if Ford uses any federal funds.
General Motors Corp. is expected to focus on efforts to lighten the company's heavy debt load and consolidate or sell at least one of its eight automotive brands, most likely Saab, people familiar with the matter said. GM CEO Rick Wagoner also will take a $1 salary, those people said. Chrysler LLC is likely to emphasize its need for cash to stabilize the company and eventually join an alliance with one or more foreign auto makers, a person close to Chrysler said.
Meanwhile, top leaders and consultants for the United Auto Workers union, under pressure to deliver concessions, will meet Wednesday in Detroit to discuss potentially tweaking labor agreements, people familiar with the matter said Monday.
For the further article go on:
http://online.wsj.com/article/SB122817144031770385.html?mod=rss_whats_news_us#
Comment:
As in earlier comments discussed in this blog, the big three are struggling not only because of the bad economy but also because they missed the train to focus on highly fuel-efficient cars. Especially because they are focused on powerful cars like the huge pick-ups which a lot of Americans really like. But those trucks are not really competitive like in Europe where the focus is more on cars with alternative energy use. Finally, the big three have to realize it in a hurting way. At least, they are taking drastic measures now in order to get more competitive again and to lower the financial burden.
Oezguer (Oscar).
Thursday, December 4, 2008
China Fears Restive Migrants As Jobs Disappear in Cities
SHUANGFU VILLAGE, China -- Fan Junchao has spent most of the past five years living hundreds of miles from his small family farm here. Encouraged by the local government, he leased out his meager plot and worked on construction crews in big cities, making several times what he could have earned on crops.
Laid off migrant workers across China are returning home to villages like Shuangfu, above.
Now his construction project has been halted, and Mr. Fan has returned home. "Right now, I don't have a plan," he says. "I'm just taking it one step at a time."
Mr. Fan is among hundreds of thousands of China's 130 million migrant workers -- known as the "floating population" -- being cast out of urban jobs in factories and at construction sites.
China's roaring industrial economy has been abruptly quieted by the effects of the global financial crisis. Rural provinces that supplied much of China's factory manpower are watching the beginnings of a wave of reverse migration that has the potential to shake the stability of the world's most populous nation.
Fast-rising unemployment has led to an unusual series of strikes and protests. Normally cautious government officials have offered quick concessions and talk openly of their worries about social unrest. Laid-off factory workers in Dongguan overturned patrol cars and clashed with police last Tuesday, and hundreds of taxis parked in front of a government office in nearby Chaozhou over the weekend, one of a series of driver protests.
On Wednesday, workers let go from a liquor factory in northern China mounted a protest in Beijing, at the parent company's headquarters. In the latest sign of economic stress, China's currency fell Monday by its single largest margin on record against the dollar, on expectations the central bank might devalue it to prop up sagging growth.
As the government tries to calm tensions in the cities, it also fears that newly unemployed migrants returning home could upend the already-strained social system in the countryside.
For the rest of the article go on:
http://online.wsj.com/article/SB122816637753369999.html?mod=rss_whats_news_us#
Comment:
China was not the economically wealthiest country before the boom started. This boom mostly has happened in urban areas. Although rural areas have not directly profited from this boom, rural citizens saw the opportunities in the big cities and migrated. The result was that these citizens from rural areas also gained indirectly a piece of that big cake.
Since China is not immune to recession the bad economy also affects China. The former rural citizens migrate back to the their homes, which will have also have an affect on China's economy. It will be interesting to follow how China will hold up.
Oezguer (Oscar).
Laid off migrant workers across China are returning home to villages like Shuangfu, above.
Now his construction project has been halted, and Mr. Fan has returned home. "Right now, I don't have a plan," he says. "I'm just taking it one step at a time."
Mr. Fan is among hundreds of thousands of China's 130 million migrant workers -- known as the "floating population" -- being cast out of urban jobs in factories and at construction sites.
China's roaring industrial economy has been abruptly quieted by the effects of the global financial crisis. Rural provinces that supplied much of China's factory manpower are watching the beginnings of a wave of reverse migration that has the potential to shake the stability of the world's most populous nation.
Fast-rising unemployment has led to an unusual series of strikes and protests. Normally cautious government officials have offered quick concessions and talk openly of their worries about social unrest. Laid-off factory workers in Dongguan overturned patrol cars and clashed with police last Tuesday, and hundreds of taxis parked in front of a government office in nearby Chaozhou over the weekend, one of a series of driver protests.
On Wednesday, workers let go from a liquor factory in northern China mounted a protest in Beijing, at the parent company's headquarters. In the latest sign of economic stress, China's currency fell Monday by its single largest margin on record against the dollar, on expectations the central bank might devalue it to prop up sagging growth.
As the government tries to calm tensions in the cities, it also fears that newly unemployed migrants returning home could upend the already-strained social system in the countryside.
For the rest of the article go on:
http://online.wsj.com/article/SB122816637753369999.html?mod=rss_whats_news_us#
Comment:
China was not the economically wealthiest country before the boom started. This boom mostly has happened in urban areas. Although rural areas have not directly profited from this boom, rural citizens saw the opportunities in the big cities and migrated. The result was that these citizens from rural areas also gained indirectly a piece of that big cake.
Since China is not immune to recession the bad economy also affects China. The former rural citizens migrate back to the their homes, which will have also have an affect on China's economy. It will be interesting to follow how China will hold up.
Oezguer (Oscar).
Wednesday, November 26, 2008
Germany's economy – A little stimulus
Even in recession, Germany is the last of the small spenders
CHINA is to spend $586 billion to prop up growth. Japan plans $275 billion-worth of economic stimulus. America’s government is expected to pump out still more cash. Into this fiscal pot Germany has tossed a few coins: it has unfurled an “umbrella for jobs”, 15 small-bore measures that include €12 billion ($15 billion) of fresh spending over two years, or roughly 0.25% of GDP. This will trigger €50 billion of investment, promised Chancellor Angela Merkel. But pressure is on the world’s third-largest economy, which sank deeply into recession in the third quarter, to do more.
The German budget was close to balance in 2007 and may be in surplus this year, a claim few other rich countries can make (see chart). The world’s biggest exporter of goods boasts a current-account surplus that is expected to reach 7% of GDP this year. Rather than spend, Germans have been paying higher taxes and exercising wage restraint to make their firms more competitive: consumption has been flat. This suggests that Germany should be among the first to seize the Keynesian moment that the financial crisis has brought about. Its trading partners certainly think so. Germany “has the possibility to use tax policy to support demand,” says the European Union’s economics commissioner, Joaquín Almunia.
So what holds it back? Spending packages enacted to fight slumps in the 1970s produced little but new debt. Since then the prevailing wisdom has been that they do not work. Governments that boost spending in bad times rarely pare it back later. When people see that debts, and thus taxes, are heading up they tend to save more rather than spend, says Joachim Scheide of the Kiel Institute for the World Economy (this phenomenon is known as Ricardian equivalence). The grand coalition of Ms Merkel’s Christian Democratic Union (CDU) and the Social Democratic Party (SPD) was set on balancing the federal budget by 2011. The target will not be met, the government admits, but that is no reason to splurge. Even the term economic package is taboo. The umbrella “is not a stimulus package of the old style,” insists the finance minister, Peer Steinbrück.
For the complete article see the link below:
Link:
http://www.economist.com/world/europe/displaystory.cfm?story_id=12607268&fsrc=rss
Comment:
Whereas all other countries or economies spend tremendous amounts of money to get out of the recession, Germany has been more than moderate, which is very fascinating. One of the reasons is probably that Germany has a way better economic foundation, such as levying huge amounts of taxes, than most other countries do and additionally the fact that they are the world's biggest exporter. So, with these prerequisites Germany needs a little stimulus to boost the economy than their counterparts need. If Germany's plan works out, will be very interesting to follow.
Oezguer (Oscar).
Britain's recession - Job losses – When it gets personal
Job losses The downturn is now gripping the labour market
FOR many Britons, especially workers and those looking for jobs, the past few days were when it all sank in. Falling GDP is one thing, a worry to be sure but still abstract. Lay-offs are another, evoking the insecurity of the recession in the early 1990s.
Scarcely a day goes past now without an announcement of job cuts. On November 13th BT, a telecoms company that has cut 4,000 jobs since April, said it planned to get rid of a further 6,000 by next spring; most of the losses, which include workers employed by outside contractors as well as the firm’s own staff, will be in Britain. On November 17th Citigroup outlined big job losses around the world; among these will be some of the American bank’s 11,000 employees in Britain. The following day Wolseley, a building-materials firm, said that it would cut around 2,000 British jobs.
Already, unemployment has started a menacing climb. The jobless rate has risen from 5.2% in the first three months of 2008 to 5.8% in the third quarter. That has taken the number of people out of work and looking for jobs to over 1.8m, the highest since 1997. The narrower measure of people claiming unemployment benefit (which excludes in particular many jobless women because their partners’ earnings make them ineligible for it) is poised to break through the politically sensitive 1m mark. The three months to October saw a rise of 108,500, the biggest such increase since the end of 1992.
It will get a lot worse before it gets better. A forecast from the Confederation of British Industry (CBI) this week portrays the pain that lies ahead. The employers’ group thinks the claimant count will rise to 1.9m in 2010, and the wider measure of unemployment to 2.9m. That will push the jobless rate to 9%, worryingly close to the previous peak of 10.7% in 1993 (see chart).
All this will put a chill in the air after 15 years in which workers have generally not had to worry about losing their jobs. Indeed, employment grew steadily, on an annual basis, from a low of 25.3m in 1993 to a peak of 29.5m this spring. When the economy slowed, as it did in 2002 and 2005, employers did not sack workers but instead clung on to them.
But in the third quarter of this year, employment fell by almost 100,000 from the previous three months. That decline looks set to worsen as firms batten down the hatches. Employers were reluctant to get rid of staff because redundancies are expensive and destroy morale among those who keep their jobs, says John Philpott, chief economist of the Chartered Institute of Personnel and Development. Now many believe they have no other option. Although a slowdown in immigration may soften the blow for those seeking work, the impact will still be severe.
Initially, job cuts were most apparent in finance and homebuilding. Now they are spreading throughout the private sector, says Lai Wah Co, the CBI’s head of economic analysis. Manufacturers surveyed by her group are more pessimistic about the outlook for production over the next three months than at any time since 1980.
The regional profile of the recession is changing too. London is particularly vulnerable because of its dependence on financial services. A study for the Local Government Association published this week suggests that London will lose 374,000 jobs—a bigger share of its employment than elsewhere—over the next two years.
But early hopes that other regions might get off lightly have been dashed. Over the past year, the jobless rate has risen more in the north-east and in Yorkshire and the Humber than in London, and by as much in Wales. As the economic woe ripples out from finance, no part of the country will be spared a sharp rise in unemployment, says Mr Philpott. Across Britain, the recession is turning personal.
Link:
http://www.economist.com/world/britain/PrinterFriendly.cfm?story_id=12641916
Comment:
The recession started in the U.S., belongs to one of the causes why recessions in other countries started as well. The affects of the U.S. recession have also an impact on Great Britain's economy, because American companies located in GB cut back in labor.
Great Britain is facing the worst recession since the early 1990s. Job losses belong to the agenda.
Oezguer (Oscar).
Oil demand
The world’s demand for primary energy will grow by 45% between 2006 and 2030, according to new forecasts from the International Energy Agency (IEA). The global demand for oil is expected to rise from 85m to 106m barrels a day. The thirst for oil among the mostly rich countries in the OECD is set to fall—so that all and more of the increase in oil demand will come from developing economies. The IEA reckons China will account for 43% of the rise in demand, with India and the Middle East contributing around 20% each. With oil consumption comes pollution. The IEA predicts that three-quarters of the increase in emissions between now and 2030 will come from China, India and the Middle East.Link:
http://www.economist.com/markets/indicators/displaystory.cfm?story_id=12607120&fsrc=rss
Comment:
The economy is very oil hungry which the chart above shows clearly. The economy is doing remarkable efforts in every aspect to improve fuel efficiency or invent alternative usages of other energy sources, such as hybrid cars, photovoltaics, etc. But all these efforts and ideas seem to develop very slow compared to our hunger for more and more oil. Without shifting in the highest gear for more improvements and consistent usage of alternative energy by everybody, there will be a disaster once all oil resources exhausted.
Oezguer (Oscar).
The car industry – Pass the plate
If Detroit’s carmakers are bailed out, Europe’s will be next in line
NOT only in Washington, DC, is there a fierce debate over state aid to the beleaguered car industry. On November 18th, just as the bosses of General Motors (GM), Ford and Chrysler were lining up before the Senate banking committee to ask for help, the directors of the European Investment Bank, the European Union’s lending arm, were considering whether to give Europe’s carmakers €40 billion ($51 billion) in soft loans. The previous day the German chancellor, Angela Merkel, had met executives of GM’s European subsidiary, Opel, to discuss guaranteeing a €1 billion liquidity line in the “worst case” of its American parent going bankrupt.
Despite the appearance of similarity on both sides of the Atlantic, however, there are big differences. For one thing, the plight of the Detroit Three is much more urgent. GM’s boss, Rick Wagoner, told the senators that the economy faced “catastrophic collapse” if bridging loans were not quickly made available. He gave warning that by the year’s end GM might not have enough money to pay its bills. Ford’s cash position is stronger—company insiders reckon that it might be able to scrape through on its own resources—but its chief executive, Alan Mulally, was not on Capitol Hill just for the ride. He fears that if either Chrysler or GM (particularly GM, since it is so much bigger) were to fail, the impact on the parts suppliers on which all three firms depend could bring down Ford as well.
The Detroit Three can be reasonably confident of getting some help—eventually. Next year a sympathetic President Obama, and big Democratic majorities in both houses of the new Congress, should ensure that. But will that be too late? As The Economist went to press there seemed little chance that the Senate would pass a bill to allow the carmakers to get $25 billion of bridging finance from the $700 billion package set up to bail out the financial system. Many Republicans strongly opposed the idea of diverting funds to carmakers.
The condition of Europe’s carmakers is hardly healthy, but unlike their Detroit counterparts they are still some way from the critical list. J.D. Power, a market-research firm, forecasts that the western European market will shrink by 7.9% this year, compared with a 16% drop in America. But things are getting grimmer by the day. J.D. Power expects a further 10.5% contraction in Europe in 2009. Renault, which is cutting 6,000 jobs in Europe, thinks the market could shrink by 20%.
As in America, there is disagreement both within the industry and among politicians about whether special aid is needed and, if so, what form it should take. Already, there has been a chorus of dissent over the prospect of Opel being singled out for help. And if aid is provided, what strings should be attached? The European Commission, which has been battling the carmakers over the introduction of tough CO2-emission rules in 2012, will want to make any aid dependent on assurances that the industry will build more fuel-efficient cars (an echo of a $25 billion package approved by Congress in September, from which nothing has yet been disbursed).
The German makers, who build the biggest, fastest cars, and are therefore having to spend most to reduce their emissions, are in favour of such a subsidy. But the French and Italians, who specialise in producing economical cars, say they are quite capable of complying with the new rules without any help from the taxpayer—and do not see why the Germans should benefit from their own profligacy. They would prefer Europe-wide “scrapping” incentives to encourage sales of new cars.
Even within the commission, there are differences. “I’d welcome it if everything was done to prevent an important and traditional car producer in Europe from dropping out of the competition for reasons it is not responsible for,” says the industry commissioner, Günter Verheugen. But Neelie Kroes, the competition commissioner, rejects any comparison between the car industry and the financial sector, and has warned member countries against offering their carmakers unfair subsidies.
Much depends on what the Americans decide to do. One option for Europe, assuming the Detroit Three get their money, would be to complain to the World Trade Organisation. But Ford and GM are too important to Europe’s car industry to make that probable. The betting is that Europe’s carmakers will get a helping hand too—even if they do not really need it.
Link:
http://www.economist.com/business/displaystory.cfm?story_id=12638642&fsrc=rss
Comment:
It seems that Europe is playing tough hardball with the big three compared to the U.S. Europe does not want to grant the money right away like the U.S. government and waits up the worst case. In my point of view, the earlier the big three get the money the better they can turn things around. If Europe waits too long, it is just going to get more difficult for the car companies to get out of that mess. On the other hand, the big three are not the only car companies who are affected. So, by granting them the governmental help, other European car companies will jump on the band wagon and solicit money as well.
Oezguer (Oscar).
NOT only in Washington, DC, is there a fierce debate over state aid to the beleaguered car industry. On November 18th, just as the bosses of General Motors (GM), Ford and Chrysler were lining up before the Senate banking committee to ask for help, the directors of the European Investment Bank, the European Union’s lending arm, were considering whether to give Europe’s carmakers €40 billion ($51 billion) in soft loans. The previous day the German chancellor, Angela Merkel, had met executives of GM’s European subsidiary, Opel, to discuss guaranteeing a €1 billion liquidity line in the “worst case” of its American parent going bankrupt.
Despite the appearance of similarity on both sides of the Atlantic, however, there are big differences. For one thing, the plight of the Detroit Three is much more urgent. GM’s boss, Rick Wagoner, told the senators that the economy faced “catastrophic collapse” if bridging loans were not quickly made available. He gave warning that by the year’s end GM might not have enough money to pay its bills. Ford’s cash position is stronger—company insiders reckon that it might be able to scrape through on its own resources—but its chief executive, Alan Mulally, was not on Capitol Hill just for the ride. He fears that if either Chrysler or GM (particularly GM, since it is so much bigger) were to fail, the impact on the parts suppliers on which all three firms depend could bring down Ford as well.
The Detroit Three can be reasonably confident of getting some help—eventually. Next year a sympathetic President Obama, and big Democratic majorities in both houses of the new Congress, should ensure that. But will that be too late? As The Economist went to press there seemed little chance that the Senate would pass a bill to allow the carmakers to get $25 billion of bridging finance from the $700 billion package set up to bail out the financial system. Many Republicans strongly opposed the idea of diverting funds to carmakers.
The condition of Europe’s carmakers is hardly healthy, but unlike their Detroit counterparts they are still some way from the critical list. J.D. Power, a market-research firm, forecasts that the western European market will shrink by 7.9% this year, compared with a 16% drop in America. But things are getting grimmer by the day. J.D. Power expects a further 10.5% contraction in Europe in 2009. Renault, which is cutting 6,000 jobs in Europe, thinks the market could shrink by 20%.
As in America, there is disagreement both within the industry and among politicians about whether special aid is needed and, if so, what form it should take. Already, there has been a chorus of dissent over the prospect of Opel being singled out for help. And if aid is provided, what strings should be attached? The European Commission, which has been battling the carmakers over the introduction of tough CO2-emission rules in 2012, will want to make any aid dependent on assurances that the industry will build more fuel-efficient cars (an echo of a $25 billion package approved by Congress in September, from which nothing has yet been disbursed).
The German makers, who build the biggest, fastest cars, and are therefore having to spend most to reduce their emissions, are in favour of such a subsidy. But the French and Italians, who specialise in producing economical cars, say they are quite capable of complying with the new rules without any help from the taxpayer—and do not see why the Germans should benefit from their own profligacy. They would prefer Europe-wide “scrapping” incentives to encourage sales of new cars.
Even within the commission, there are differences. “I’d welcome it if everything was done to prevent an important and traditional car producer in Europe from dropping out of the competition for reasons it is not responsible for,” says the industry commissioner, Günter Verheugen. But Neelie Kroes, the competition commissioner, rejects any comparison between the car industry and the financial sector, and has warned member countries against offering their carmakers unfair subsidies.
Much depends on what the Americans decide to do. One option for Europe, assuming the Detroit Three get their money, would be to complain to the World Trade Organisation. But Ford and GM are too important to Europe’s car industry to make that probable. The betting is that Europe’s carmakers will get a helping hand too—even if they do not really need it.
Link:
http://www.economist.com/business/displaystory.cfm?story_id=12638642&fsrc=rss
Comment:
It seems that Europe is playing tough hardball with the big three compared to the U.S. Europe does not want to grant the money right away like the U.S. government and waits up the worst case. In my point of view, the earlier the big three get the money the better they can turn things around. If Europe waits too long, it is just going to get more difficult for the car companies to get out of that mess. On the other hand, the big three are not the only car companies who are affected. So, by granting them the governmental help, other European car companies will jump on the band wagon and solicit money as well.
Oezguer (Oscar).
Gun sales – Booming
A surge in the run-up to the election
MANY sorts of Americans are happy that Barack Obama has been elected to be their 44th president: blacks, rich whites, Hispanics, women, the young. But no one seems happier, at the moment, than the owners of gun shops.
According to the National Instant Criminal Background Checks System (the FBI body that oversees applications for people who want to buy guns), the number of checks run between January and October this year rose by 9%, compared with the same period in 2007. Even more dramatically, the body reports that 15.4% more checks took place in October 2008 than in October 2007.
Gun enthusiasts reckon there is a simple reason: Barack Obama. “It’s clear from President-elect Obama’s voting record and statements that gun-control policies, including gun bans, will be back on the table. Law-abiding Americans are recognising this and acting accordingly,” says Ted Novin, director of public relations for the National Shooting Sports Foundation.
Mr Novin is perplexed by, and therefore wary of, the seemingly contradictory messages on guns that Mr Obama has put out during his time as an Illinois senator and as a presidential candidate. Back in the old days, Mr Obama used to sound supportive of the District of Columbia’s ban on handguns. But when this was overturned by the Supreme Court in June, Mr Obama welcomed the decision. Mr Novin says he does not understand what the president-elect means when he calls for “commonsense safety measures” for guns. To add to his perplexity, he notes that Mr Obama’s website stated that he “believes that the Second Amendment creates an individual right, and he respects the constitutional rights of Americans to bear arms.” What to believe?
The National Rifle Association (NRA) is equally unimpressed. “The President-elect’s campaign rhetoric did not match his voting record,” states Andrew Arulanandam, an NRA spokesman. The NRA thinks that next year the Democratic president and the incoming, more strongly Democratic, Congress will start by going for a ban on semi-automatic assault rifles, such as the Russian-made AK-47, or AR-15’s, which are a favourite with police departments. The association has sponsored a website, www.gunbanobama.com, whose title is self-explanatory.
Meanwhile, gun sales are going like gangbusters. Chuck Wiggins, manager of the Patriot Arms gun shop in a suburb of Tampa, Florida, says that ever since Mr Obama became a contender “the sales of assault rifles here have at least tripled; I can’t keep enough of them stocked. And ammunition is selling out so fast that I’m calling manufacturers to try to find some more to buy.”
Link:
http://feedproxy.google.com/~r/economist/full_print_edition/~3/UZbPM2YaGg8/displaystory.cfm
Comment:
In my point of view people should not be allowed to carry guns at all. It just raises the potential of crimes. Even though some might use their guns only for self-protection, there is most likely the risk that criminals have it easier to obtain guns as well.
President Obama is very contradictory in his statements and when he supports gun bans once again, that will hurt his credibility. He has to be more careful especially in his position as the president of the United States.
Oezguer (Oscar).
MANY sorts of Americans are happy that Barack Obama has been elected to be their 44th president: blacks, rich whites, Hispanics, women, the young. But no one seems happier, at the moment, than the owners of gun shops.
According to the National Instant Criminal Background Checks System (the FBI body that oversees applications for people who want to buy guns), the number of checks run between January and October this year rose by 9%, compared with the same period in 2007. Even more dramatically, the body reports that 15.4% more checks took place in October 2008 than in October 2007.
Gun enthusiasts reckon there is a simple reason: Barack Obama. “It’s clear from President-elect Obama’s voting record and statements that gun-control policies, including gun bans, will be back on the table. Law-abiding Americans are recognising this and acting accordingly,” says Ted Novin, director of public relations for the National Shooting Sports Foundation.
Mr Novin is perplexed by, and therefore wary of, the seemingly contradictory messages on guns that Mr Obama has put out during his time as an Illinois senator and as a presidential candidate. Back in the old days, Mr Obama used to sound supportive of the District of Columbia’s ban on handguns. But when this was overturned by the Supreme Court in June, Mr Obama welcomed the decision. Mr Novin says he does not understand what the president-elect means when he calls for “commonsense safety measures” for guns. To add to his perplexity, he notes that Mr Obama’s website stated that he “believes that the Second Amendment creates an individual right, and he respects the constitutional rights of Americans to bear arms.” What to believe?
The National Rifle Association (NRA) is equally unimpressed. “The President-elect’s campaign rhetoric did not match his voting record,” states Andrew Arulanandam, an NRA spokesman. The NRA thinks that next year the Democratic president and the incoming, more strongly Democratic, Congress will start by going for a ban on semi-automatic assault rifles, such as the Russian-made AK-47, or AR-15’s, which are a favourite with police departments. The association has sponsored a website, www.gunbanobama.com, whose title is self-explanatory.
Meanwhile, gun sales are going like gangbusters. Chuck Wiggins, manager of the Patriot Arms gun shop in a suburb of Tampa, Florida, says that ever since Mr Obama became a contender “the sales of assault rifles here have at least tripled; I can’t keep enough of them stocked. And ammunition is selling out so fast that I’m calling manufacturers to try to find some more to buy.”
Link:
http://feedproxy.google.com/~r/economist/full_print_edition/~3/UZbPM2YaGg8/displaystory.cfm
Comment:
In my point of view people should not be allowed to carry guns at all. It just raises the potential of crimes. Even though some might use their guns only for self-protection, there is most likely the risk that criminals have it easier to obtain guns as well.
President Obama is very contradictory in his statements and when he supports gun bans once again, that will hurt his credibility. He has to be more careful especially in his position as the president of the United States.
Oezguer (Oscar).
Thursday, November 20, 2008
Twenty Reasons Why We're Not Consuming
This week's news about October retail sales (-2.8% relative to the previous month and now down in real terms for five months in a row) confirm that the U.S. has entered its most severe consumer-led recession in decades. At this rate of free fall in consumption, real gross domestic product growth could be a whopping 5% negative or even worse in the fourth quarter of 2008. And this is not a temporary phenomenon: Almost all of the fundamentals driving consumption are heading south on a persistent and structural basis.
Consider the many severe negative factors affecting consumption. One can count at least 20 separate or complementary causes that will sharply reduce consumption in the next several years:
For the rest of the article click on this link:
http://www.forbes.com/2008/11/19/consumer-debt-savings-oped-cx_nr_1120roubini.html?feed=rss_news
Comment:
It is not surprising that the recession has been affecting retail. According to my earlier contributions in this blog there have been several indicators for the plummet in the overall economy. So the current retail situation is just another reflection of the fact that people who are affected by the recession have to cut costs in every aspect of their life.
Oezguer (Oscar).
Consider the many severe negative factors affecting consumption. One can count at least 20 separate or complementary causes that will sharply reduce consumption in the next several years:
For the rest of the article click on this link:
http://www.forbes.com/2008/11/19/consumer-debt-savings-oped-cx_nr_1120roubini.html?feed=rss_news
Comment:
It is not surprising that the recession has been affecting retail. According to my earlier contributions in this blog there have been several indicators for the plummet in the overall economy. So the current retail situation is just another reflection of the fact that people who are affected by the recession have to cut costs in every aspect of their life.
Oezguer (Oscar).
Monday, November 17, 2008
Investors Shrug Off Recession News
Japan - the world's second biggest economy - has become another victim of the global financial crisis.
For the first time in seven years, the Asian powerhouse slipped into recession emphasising the extent of the economic downturn in this volatile region.
Japan's GDP- the value of the nation's goods and services- shrank at an annual pace of 0.4% in the July -September quarter, joining the 15 nations of the Euro-zone in recession.
The Organisation of Economic Development and Cooperation Development -the so called club of rich nations - has said it expects the United States to slide into recession when its figures are released in January.
The Japanese market mostly shrugged off news of the recession.
Some analysts believe the bad news had already been priced into a market that has seen its growth halved in the last 12 months.
The benchmark Nikkei 225 stock average finished up 60.19 points, or 0.7%, at 8,522.58.
Among carmakers, Toyota dipped 0.3%, Mitsubishi Financial Group fell 1.7% while Honda rose 1.7%.
"It wasn't a surprise and people are expecting poor figures for the next quarter as well, but that's largely factored in already," Daiwa SB Investment portfolio manager Koichi Ogawa said.
And with many companies having already announced significant downgrades to earnings, the Japanese market took the second straight quarter of economic downturns in its stride.
News of Japan's recession came hours after a weekend meeting of world leaders in Washington to discuss reforms of the world's financial structure.
The highly-hyped gathering provided a display of unity between rich and emerging nations but little else.
Long-awaited concrete measures to deal with the crisis were postponed until their meeting in April.
"Basically it was nice that a lot of important people gathered together and set a direction but nothing concrete emerged," said Ogawa.
Link:
http://news.sky.com/skynews/Home/Business/Japan-Recession-First-One-Since-2001---Investors-Shrug-Off-News/Article/200811315152955?lpos=Business_First_Buisness_Article_Teaser_Region_5&lid=ARTICLE_15152955_Japan_Recession%3A_First_One_Since_2001_-_Investors_Shrug_Off_News
Comment:
After recession has hit the US and Europe, now the next victim is Japan and this recession is the first in the last seven years. This also affects Japanese car makers like Toyota or Honda. One of their biggest target markets is the US. Since the economy is bad in the US, people spend their money more carefully, which affects the car industry as a whole.
Less economical growth and less earnings in turn affect stock markets as a whole as well. All this happenings are comparable to a domino effect.
Oezguer (Oscar).
For the first time in seven years, the Asian powerhouse slipped into recession emphasising the extent of the economic downturn in this volatile region.
Japan's GDP- the value of the nation's goods and services- shrank at an annual pace of 0.4% in the July -September quarter, joining the 15 nations of the Euro-zone in recession.
The Organisation of Economic Development and Cooperation Development -the so called club of rich nations - has said it expects the United States to slide into recession when its figures are released in January.
The Japanese market mostly shrugged off news of the recession.
Some analysts believe the bad news had already been priced into a market that has seen its growth halved in the last 12 months.
The benchmark Nikkei 225 stock average finished up 60.19 points, or 0.7%, at 8,522.58.
Among carmakers, Toyota dipped 0.3%, Mitsubishi Financial Group fell 1.7% while Honda rose 1.7%.
"It wasn't a surprise and people are expecting poor figures for the next quarter as well, but that's largely factored in already," Daiwa SB Investment portfolio manager Koichi Ogawa said.
And with many companies having already announced significant downgrades to earnings, the Japanese market took the second straight quarter of economic downturns in its stride.
News of Japan's recession came hours after a weekend meeting of world leaders in Washington to discuss reforms of the world's financial structure.
The highly-hyped gathering provided a display of unity between rich and emerging nations but little else.
Long-awaited concrete measures to deal with the crisis were postponed until their meeting in April.
"Basically it was nice that a lot of important people gathered together and set a direction but nothing concrete emerged," said Ogawa.
Link:
http://news.sky.com/skynews/Home/Business/Japan-Recession-First-One-Since-2001---Investors-Shrug-Off-News/Article/200811315152955?lpos=Business_First_Buisness_Article_Teaser_Region_5&lid=ARTICLE_15152955_Japan_Recession%3A_First_One_Since_2001_-_Investors_Shrug_Off_News
Comment:
After recession has hit the US and Europe, now the next victim is Japan and this recession is the first in the last seven years. This also affects Japanese car makers like Toyota or Honda. One of their biggest target markets is the US. Since the economy is bad in the US, people spend their money more carefully, which affects the car industry as a whole.
Less economical growth and less earnings in turn affect stock markets as a whole as well. All this happenings are comparable to a domino effect.
Oezguer (Oscar).
Bailout foe: Auto industry a 'dinosaur'
Republicans and Democrats spar over need for federal rescue of U.S. auto industry. Senate Democrats will introduce bill on Monday.
Hardline opponents of an auto industry bailout branded the industry a "dinosaur" whose "day of reckoning" is near, while Democrats pledged Sunday to do their best to get Detroit a slice of the $700 billion Wall Street rescue in this week's lame-duck session of Congress.
The companies are seeking $25 billion from the financial industry bailout for emergency loans, though supporters of the aid for General Motors Corp. (GM, Fortune 500), Ford Motor Co. (F, Fortune 500) and Chrysler LLC have offered to reduce the size of the rescue to win backing in Congress.
Senate Democrats intended to introduce legislation Monday attaching an auto bailout to a House-passed bill extending unemployment benefits; a vote was expected as early as Wednesday.
A White House alternative would let the car companies take $25 billion in loans previously approved to develop fuel-efficient vehicles and use the money for more immediate needs. Congressional Democrats oppose the White House plan as shortsighted.
Majority Democrats will need at least a dozen GOP votes in the Senate to prevent opponents from blocking their measure - assuming all Senate Democrats support it. Senate Republican Leader Mitch McConnell of Kentucky questioned whether there was sufficient Democratic support for an auto bailout in a statement released Sunday.
For the full article click on the link:
http://money.cnn.com/2008/11/16/news/companies/auto_bailout_sunday.ap/index.htm
See also:
http://money.cnn.com/2008/11/15/news/companies/automakers_bailout_congress.ap/index.htm
Comment:
Once again the government considers a bailout. This time it is the automobile industry.
Governmental subsidies might be one possible way to get US automakers back on track. But the governmental requirements should be strictly fulfilled. US automakers should not be allowed to use that money to produce their regular products. Instead, an even bigger focus should be placed on cars which run on alternative energy, thus on research and development, because sooner or later gas prices will not be affordable for consumers anymore. The sooner one company gets a bigger competitive advantage than other companies the bigger economical growth one company will accomplish and boost its profits.
Oezguer (Oscar).
Hardline opponents of an auto industry bailout branded the industry a "dinosaur" whose "day of reckoning" is near, while Democrats pledged Sunday to do their best to get Detroit a slice of the $700 billion Wall Street rescue in this week's lame-duck session of Congress.
The companies are seeking $25 billion from the financial industry bailout for emergency loans, though supporters of the aid for General Motors Corp. (GM, Fortune 500), Ford Motor Co. (F, Fortune 500) and Chrysler LLC have offered to reduce the size of the rescue to win backing in Congress.
Senate Democrats intended to introduce legislation Monday attaching an auto bailout to a House-passed bill extending unemployment benefits; a vote was expected as early as Wednesday.
A White House alternative would let the car companies take $25 billion in loans previously approved to develop fuel-efficient vehicles and use the money for more immediate needs. Congressional Democrats oppose the White House plan as shortsighted.
Majority Democrats will need at least a dozen GOP votes in the Senate to prevent opponents from blocking their measure - assuming all Senate Democrats support it. Senate Republican Leader Mitch McConnell of Kentucky questioned whether there was sufficient Democratic support for an auto bailout in a statement released Sunday.
For the full article click on the link:
http://money.cnn.com/2008/11/16/news/companies/auto_bailout_sunday.ap/index.htm
See also:
http://money.cnn.com/2008/11/15/news/companies/automakers_bailout_congress.ap/index.htm
Comment:
Once again the government considers a bailout. This time it is the automobile industry.
Governmental subsidies might be one possible way to get US automakers back on track. But the governmental requirements should be strictly fulfilled. US automakers should not be allowed to use that money to produce their regular products. Instead, an even bigger focus should be placed on cars which run on alternative energy, thus on research and development, because sooner or later gas prices will not be affordable for consumers anymore. The sooner one company gets a bigger competitive advantage than other companies the bigger economical growth one company will accomplish and boost its profits.
Oezguer (Oscar).
Sunday, November 16, 2008
Oil steady at $56
Crude falls as investors focus on a weak demand outlook. OPEC official says the cartel will hold another emergency meeting.
Oil prices fell Friday as investors took cues from from the selloff in stocks as an indicator of weak global demand for energy.
Light, sweet crude for December delivery fell $1.20 to settle at $57.04 a barrel in New York. The contract briefly fell below $56 to a session low of $55.69 a barrel.
Oil traders have been tracking global equity markets as a means of assessing the severity and duration of the economic downturn and its impact on energy demand. As a result, oil prices tend to rise and fall in tandem with world stock indexes.
For the full article click on the link:
http://money.cnn.com/2008/11/14/markets/oil/index.htm
Comment:
Consumers are probably very happy about the fact that gas prices has plummeted. Especially in a time where the economy is going bad, this seems like a little financial relief for many car owners who depend on a vehicle in their every day life.
But on the other hand, decreased gas prices may tempt many people to drive even more.
Since crude is becoming rare so fast, gas prices should not fall. They should stay high in order to put the automobile industry in even more pressure to build fuel efficient cars or cars with alternative energy. The decrease of the gas prices seem like a step in the wrong direction concerning our moral obligation to preserve a clean environment as a legacy to our next generations.
Oezguer (Oscar).
Oil prices fell Friday as investors took cues from from the selloff in stocks as an indicator of weak global demand for energy.
Light, sweet crude for December delivery fell $1.20 to settle at $57.04 a barrel in New York. The contract briefly fell below $56 to a session low of $55.69 a barrel.
Oil traders have been tracking global equity markets as a means of assessing the severity and duration of the economic downturn and its impact on energy demand. As a result, oil prices tend to rise and fall in tandem with world stock indexes.
For the full article click on the link:
http://money.cnn.com/2008/11/14/markets/oil/index.htm
Comment:
Consumers are probably very happy about the fact that gas prices has plummeted. Especially in a time where the economy is going bad, this seems like a little financial relief for many car owners who depend on a vehicle in their every day life.
But on the other hand, decreased gas prices may tempt many people to drive even more.
Since crude is becoming rare so fast, gas prices should not fall. They should stay high in order to put the automobile industry in even more pressure to build fuel efficient cars or cars with alternative energy. The decrease of the gas prices seem like a step in the wrong direction concerning our moral obligation to preserve a clean environment as a legacy to our next generations.
Oezguer (Oscar).
Friday, November 14, 2008
Jobless Rate at 14-Year High After October Losses
The American economy lost another 240,000 jobs in October, the government reported Friday, as cash-strapped consumers pulled back and businesses hunkered down, intensifying the distress gripping much of the country.
The unemployment rate spiked to 6.5 percent from 6.1 percent, the highest level since 1994. Many analysts now expect unemployment will reach 8 percent by the middle of next year.
Coupled with revisions to September’s data — which now show a loss of 284,000 jobs, down from an initial estimate of 159,000 — the economy has shed 1.2 million jobs since the beginning of the year. More than half the job losses have been in the last three months.
“The economy is slipping deeper into a recessionary sinkhole that is getting broader,” said Stuart G. Hoffman, chief economist at PNC Financial Services Group in Pittsburgh. “The layoffs are getting larger, and coming faster. We’re likely to see at least another six months of more jobs reports like this.”
The latest evidence of widening economic pain seemed certain to inject more urgency into the debate over another round of government spending aimed at stimulating growth. It amplified the sense that President-elect Barack Obama will inherit an unenviable list of challenges.
Mr. Obama has in recent months called for another package of so-called stimulus spending initiatives. Democratic leaders in the House said this week that they would seek swift passage of $60 billion to $100 billion worth of measures that would extend unemployment benefits and food stamps, while aiding states whose tax revenues have plummeted. They would then pursue a broader package of measures that could reach $200 billion after Mr. Obama takes office in January.
The Bush administration has criticized Democratic proposals for immediate aid, raising the specter of a veto.
On Friday, President Bush, in a written statement, acknowledged the latest jobs report as a sign of “difficult challenges confronting our economy.” But he added that a series of “aggressive and decisive measures to address this situation” already unleashed by the government will eventually provide relief.
“It will take time for these measures to have their full impact on an economy in which many Americans are struggling,” Mr. Bush said.
The number of unemployed Americans increased by 603,000 in October to 10.1 million — the largest number since 1983. More than 22 percent of all unemployed people have been out of work for six months or longer — another level not reached in a quarter-century.
Only 32 percent of all unemployed people were drawing state benefit checks in October because of restrictions on eligibility for part-time workers and those who were not in their jobs long enough to qualify. More than half of all unemployed people drew benefits in the 1950s, and about 45 percent received state checks during the last recession in 2001.
“It’s a national shame, the state of our safety net,” said Andrew Stettner, deputy director of the National Employment Law Project in New York. “We need to be helping these families avert financial disaster, and help make up for the loss of consumer demand, and the best way we can do that is to get people unemployment checks.”
In South Plainfield, N.J., Ken Stelma, 49, has been out of work since January, when he lost his job as a customer care representative for a company that installs kitchens. Since then, he has been living mostly on a $562 weekly unemployment check, in place of his old roughly $1,200 paycheck.
Despite dozens of applications — from sales positions at Lowe’s and Home Depot to a cooking job at a home for the elderly — Mr. Stelma, remains without work.
Last month, Mr. Stelma’s unemployment benefits ran out. Now, he is relying on his girlfriend to pay his rent. This month, his provisional health coverage — a carryover from his best job — will end, because he can no longer afford the $250 a month. That will leave him with a tumor in his foot and no insurance. Next, he figures he will have to stop paying his auto insurance.
“What am I going to, drive illegally just to go out and look for a job?” Mr. Stelma said.
The latest monthly snapshot of the jobs market reinforced how the economy remains gripped by a potent combination of troubles — plunging housing prices, tight credit and shrinking paychecks — with all three in a downward spiral.
Companies have been hiring tepidly and laying off workers throughout the year, as business has slowed, while cutting working hours for those on the payroll. That trend continued in October: The so-called underemployment rate — which includes people working part-time for lack of full-time positions and those who have given up looking for work — rose to 11.8 percent, up from 8.4 percent a year earlier.
“What you see now is this cascading of unemployment moving from hours cut to hiring freezes to layoffs,” said Jared Bernstein, senior economist at the labor-oriented Economic Policy Institute in Washington. “At this point, we have a very toxic combination of all of the above. There’s almost no economic activity out there that’s going to generate jobs right now. This is the front edge of the deeper trough of the recession. It’s going to get worse before it gets better.”
Wages have effectively shrunk for most workers, as rising costs for food and fuel have more than absorbed meager increases in pay. In October, weekly wages for rank-and-file workers — those not in supervisory or managerial positions — grew 2.9 percent from October 2007, almost certainly below the rate of inflation.
The health care industry and public schools were the only sectors that showed more than modest growth last month. Otherwise, losses were deep and broad. Some 90,000 manufacturing jobs disappeared. So did 49,000 construction jobs. Retail lost 38,000 jobs lost in October. The financial industry shed 24,000.
All of this came on the heels of the revised September data showing that 284,000 jobs were lost that month — the worst toll since November 2001, in the aftermath of the terrorist attacks in New York and Washington.
Fewer people working translates into less spending power: Consumer spending dropped between July and September — the first quarterly decline in 17 years — further eroding the motivation for businesses to hire.
Recent days have offered fresh indications of trouble. On Thursday, major retailers reported a sharp pullback in sales in October, presaging what is likely to be the weakest holiday spending in many years.
The annual pace of auto sales fell off in October, down 15 percent compared to September, according to analysis from Goldman Sachs.
The widely watched Institute for Supply Management survey fell in October to depths last seen 26 years ago, reflecting shrinking industrial activity and suggesting weakening demand for goods as the economy slows.
Banks continued to tighten their purse strings in October, according to a survey of senior loan officers conducted by the Federal Reserve. Economists construed the survey as an indication that even healthy companies and many households were having difficulty securing capital, further braking the economy and making prospects more difficult for American workers.
Many economists expect this picture to worsen. Though a $700 billion taxpayer-financed bailout has staved off fears of an imminent collapse and restored some order to the financial system, it has not persuaded banks to lend freely. Credit remains tight for businesses and homeowners.
“To the extent we’re going to have a significantly tighter credit regime,” said Alan D. Levenson, chief economist at T. Rowe Price Associates in Baltimore. “it’s going to take us longer to come out of this.”
Link: http://www.nytimes.com/2008/11/08/business/economy/08econ.html?partner=rssnyt&emc=rss
Comment:
America is facing a tough time and it seems that there is no way out. If one crisis seemed to get taking care of, the U.S. hits a new rock bottom. The government tries to get out of the recession with governmental spendings once again in order to stimulate growth. This also is supposed to help unemployed people to get back on track. But will this really help? Especially the newly elected president Barak Obama will face a difficult time facing this ongoing issue of bad economy. The media will definitely have a close look at him and follow his decisions carefully.
Oezguer (Oscar).
The unemployment rate spiked to 6.5 percent from 6.1 percent, the highest level since 1994. Many analysts now expect unemployment will reach 8 percent by the middle of next year.
Coupled with revisions to September’s data — which now show a loss of 284,000 jobs, down from an initial estimate of 159,000 — the economy has shed 1.2 million jobs since the beginning of the year. More than half the job losses have been in the last three months.
“The economy is slipping deeper into a recessionary sinkhole that is getting broader,” said Stuart G. Hoffman, chief economist at PNC Financial Services Group in Pittsburgh. “The layoffs are getting larger, and coming faster. We’re likely to see at least another six months of more jobs reports like this.”
The latest evidence of widening economic pain seemed certain to inject more urgency into the debate over another round of government spending aimed at stimulating growth. It amplified the sense that President-elect Barack Obama will inherit an unenviable list of challenges.
Mr. Obama has in recent months called for another package of so-called stimulus spending initiatives. Democratic leaders in the House said this week that they would seek swift passage of $60 billion to $100 billion worth of measures that would extend unemployment benefits and food stamps, while aiding states whose tax revenues have plummeted. They would then pursue a broader package of measures that could reach $200 billion after Mr. Obama takes office in January.
The Bush administration has criticized Democratic proposals for immediate aid, raising the specter of a veto.
On Friday, President Bush, in a written statement, acknowledged the latest jobs report as a sign of “difficult challenges confronting our economy.” But he added that a series of “aggressive and decisive measures to address this situation” already unleashed by the government will eventually provide relief.
“It will take time for these measures to have their full impact on an economy in which many Americans are struggling,” Mr. Bush said.
The number of unemployed Americans increased by 603,000 in October to 10.1 million — the largest number since 1983. More than 22 percent of all unemployed people have been out of work for six months or longer — another level not reached in a quarter-century.
Only 32 percent of all unemployed people were drawing state benefit checks in October because of restrictions on eligibility for part-time workers and those who were not in their jobs long enough to qualify. More than half of all unemployed people drew benefits in the 1950s, and about 45 percent received state checks during the last recession in 2001.
“It’s a national shame, the state of our safety net,” said Andrew Stettner, deputy director of the National Employment Law Project in New York. “We need to be helping these families avert financial disaster, and help make up for the loss of consumer demand, and the best way we can do that is to get people unemployment checks.”
In South Plainfield, N.J., Ken Stelma, 49, has been out of work since January, when he lost his job as a customer care representative for a company that installs kitchens. Since then, he has been living mostly on a $562 weekly unemployment check, in place of his old roughly $1,200 paycheck.
Despite dozens of applications — from sales positions at Lowe’s and Home Depot to a cooking job at a home for the elderly — Mr. Stelma, remains without work.
Last month, Mr. Stelma’s unemployment benefits ran out. Now, he is relying on his girlfriend to pay his rent. This month, his provisional health coverage — a carryover from his best job — will end, because he can no longer afford the $250 a month. That will leave him with a tumor in his foot and no insurance. Next, he figures he will have to stop paying his auto insurance.
“What am I going to, drive illegally just to go out and look for a job?” Mr. Stelma said.
The latest monthly snapshot of the jobs market reinforced how the economy remains gripped by a potent combination of troubles — plunging housing prices, tight credit and shrinking paychecks — with all three in a downward spiral.
Companies have been hiring tepidly and laying off workers throughout the year, as business has slowed, while cutting working hours for those on the payroll. That trend continued in October: The so-called underemployment rate — which includes people working part-time for lack of full-time positions and those who have given up looking for work — rose to 11.8 percent, up from 8.4 percent a year earlier.
“What you see now is this cascading of unemployment moving from hours cut to hiring freezes to layoffs,” said Jared Bernstein, senior economist at the labor-oriented Economic Policy Institute in Washington. “At this point, we have a very toxic combination of all of the above. There’s almost no economic activity out there that’s going to generate jobs right now. This is the front edge of the deeper trough of the recession. It’s going to get worse before it gets better.”
Wages have effectively shrunk for most workers, as rising costs for food and fuel have more than absorbed meager increases in pay. In October, weekly wages for rank-and-file workers — those not in supervisory or managerial positions — grew 2.9 percent from October 2007, almost certainly below the rate of inflation.
The health care industry and public schools were the only sectors that showed more than modest growth last month. Otherwise, losses were deep and broad. Some 90,000 manufacturing jobs disappeared. So did 49,000 construction jobs. Retail lost 38,000 jobs lost in October. The financial industry shed 24,000.
All of this came on the heels of the revised September data showing that 284,000 jobs were lost that month — the worst toll since November 2001, in the aftermath of the terrorist attacks in New York and Washington.
Fewer people working translates into less spending power: Consumer spending dropped between July and September — the first quarterly decline in 17 years — further eroding the motivation for businesses to hire.
Recent days have offered fresh indications of trouble. On Thursday, major retailers reported a sharp pullback in sales in October, presaging what is likely to be the weakest holiday spending in many years.
The annual pace of auto sales fell off in October, down 15 percent compared to September, according to analysis from Goldman Sachs.
The widely watched Institute for Supply Management survey fell in October to depths last seen 26 years ago, reflecting shrinking industrial activity and suggesting weakening demand for goods as the economy slows.
Banks continued to tighten their purse strings in October, according to a survey of senior loan officers conducted by the Federal Reserve. Economists construed the survey as an indication that even healthy companies and many households were having difficulty securing capital, further braking the economy and making prospects more difficult for American workers.
Many economists expect this picture to worsen. Though a $700 billion taxpayer-financed bailout has staved off fears of an imminent collapse and restored some order to the financial system, it has not persuaded banks to lend freely. Credit remains tight for businesses and homeowners.
“To the extent we’re going to have a significantly tighter credit regime,” said Alan D. Levenson, chief economist at T. Rowe Price Associates in Baltimore. “it’s going to take us longer to come out of this.”
Link: http://www.nytimes.com/2008/11/08/business/economy/08econ.html?partner=rssnyt&emc=rss
Comment:
America is facing a tough time and it seems that there is no way out. If one crisis seemed to get taking care of, the U.S. hits a new rock bottom. The government tries to get out of the recession with governmental spendings once again in order to stimulate growth. This also is supposed to help unemployed people to get back on track. But will this really help? Especially the newly elected president Barak Obama will face a difficult time facing this ongoing issue of bad economy. The media will definitely have a close look at him and follow his decisions carefully.
Oezguer (Oscar).
Monday, October 20, 2008
New Intelligence?
WASHINGTON (CNN) -- The United Kingdom has MI-5, which roots out spies and terrorists in the British Isles.
The RAND Corporation said one option would be for domestic intelligence to operate under the FBI.
Canada has CSIS -- the Canadian Security Intelligence Service.
Now Congress is asking: Should the U.S. have its own domestic intelligence agency?
On Monday, at the request of Congress, the RAND Corporation outlined the pros and cons of establishing a domestic intelligence agency. It also discussed different ways to organize a new entity, either as part of an existing department or as a new agency.
But there's one thing you won't find in the report -- a recommendation on what to do.
"We were not asked to make a recommendation, and this assessment does not do so," the report says.
Instead, says RAND's Gregory Treverton, the report provides a "framework" for policymakers to use when deciding whether and how to reorganize counter-intelligence efforts at home.
RAND is a nonprofit think tank seeking to help improve policy and decision making through objective research and analysis.
Collecting intelligence domestically always has been a sensitive issue, at least partially because of episodic abuses by the government, notably against civil rights leaders, unions, antiwar organizations or even communists and hate groups.
But the September 11, 2001, terrorist attacks renewed calls for increased domestic intelligence to prevent future attacks. Critics said that in the lead-up to the attacks, the FBI devalued counterterrorism agents and failed to heed signs that an attack was imminent.
"If you didn't carry a gun, you didn't count so much," Treverton said.
After the attacks, the FBI moved to transform its primary mission from law enforcement to counterterrorism intelligence and prevention. It now focuses on terrorism through its National Security Branch and the National Counterterrorism Center.
....
http://www.cnn.com/2008/POLITICS/10/20/domestic.intelligence.agency/index.html
Comments: As the government breaches more and more boundaries and stimulate more hype with civil rights leaders, it begs the question: when is enough, enough? I am all for the government knowing as much as it can, even if it trespasses certain human rights given to us by the constitution, but since 9/11, the government hasn't stopped. Years after the incident, the government relentlessly calls back to it using the "but what if something like 9/11..." to enforce greater and greater 'intelligence' efforts. Where are the boundaries?
The RAND Corporation said one option would be for domestic intelligence to operate under the FBI.
Canada has CSIS -- the Canadian Security Intelligence Service.
Now Congress is asking: Should the U.S. have its own domestic intelligence agency?
On Monday, at the request of Congress, the RAND Corporation outlined the pros and cons of establishing a domestic intelligence agency. It also discussed different ways to organize a new entity, either as part of an existing department or as a new agency.
But there's one thing you won't find in the report -- a recommendation on what to do.
"We were not asked to make a recommendation, and this assessment does not do so," the report says.
Instead, says RAND's Gregory Treverton, the report provides a "framework" for policymakers to use when deciding whether and how to reorganize counter-intelligence efforts at home.
RAND is a nonprofit think tank seeking to help improve policy and decision making through objective research and analysis.
Collecting intelligence domestically always has been a sensitive issue, at least partially because of episodic abuses by the government, notably against civil rights leaders, unions, antiwar organizations or even communists and hate groups.
But the September 11, 2001, terrorist attacks renewed calls for increased domestic intelligence to prevent future attacks. Critics said that in the lead-up to the attacks, the FBI devalued counterterrorism agents and failed to heed signs that an attack was imminent.
"If you didn't carry a gun, you didn't count so much," Treverton said.
After the attacks, the FBI moved to transform its primary mission from law enforcement to counterterrorism intelligence and prevention. It now focuses on terrorism through its National Security Branch and the National Counterterrorism Center.
....
http://www.cnn.com/2008/POLITICS/10/20/domestic.intelligence.agency/index.html
Comments: As the government breaches more and more boundaries and stimulate more hype with civil rights leaders, it begs the question: when is enough, enough? I am all for the government knowing as much as it can, even if it trespasses certain human rights given to us by the constitution, but since 9/11, the government hasn't stopped. Years after the incident, the government relentlessly calls back to it using the "but what if something like 9/11..." to enforce greater and greater 'intelligence' efforts. Where are the boundaries?
Tuesday, October 14, 2008
WASHINGTON (Reuters) - The United States pledged on Tuesday to pump $250 billion into its banks, following similar action in Europe, but data showed the threat of recession has not been banished even if a financial sector meltdown has.
In Europe, major economies showed signs of flagging output and falling business confidence, but smaller countries also suffered acutely. Iceland sought to save its economy at loan talks in Moscow, while its stock market plunged 76 percent.
Under the U.S. Treasury plan, the government will buy preferred shares in qualifying financial institutions, with stakes in each limited to $25 billion.
U.S. Treasury Secretary Henry Paulson said 9 banks described as "healthy institutions" had agreed to accept government stakes for the good of the U.S. economy -- a state intervention unthinkable before a crisis widely compared to the great crash of the 1930s.
"Government owning a stake in any private U.S. company is objectionable to most Americans, me included.," he said. "Yet the alternative of leaving businesses and consumers without access to financing is to tally unacceptable."
President George W. Bush called it an essential step to ensure the viability of America's banking system,"
Federal Reserve Chairman Ben Bernanke promised continued action to stabilize financial markets.
"We will not stand down until we have achieved our goals of repairing and reforming our financial system and thereby restoring prosperity to our economy," he said in a statement.
http://www.reuters.com/article/newsOne/idUSTRE49A36O20081014
Comments: Look! The invisible hand isn't invisible anymore! In times of crisis though, isn't this what we want? Capitalism is always in full stride on a daily basis here in America, but even our "free" market needs a hand at times. In 1929 we were bailed out, post WWII we were bailed out, and again we're in the mix of yet another bailout. In all cases up until today, a bailout was necessary and effective. We'll soon see if the invisible hand yet again has an effective slight of hand.
In Europe, major economies showed signs of flagging output and falling business confidence, but smaller countries also suffered acutely. Iceland sought to save its economy at loan talks in Moscow, while its stock market plunged 76 percent.
Under the U.S. Treasury plan, the government will buy preferred shares in qualifying financial institutions, with stakes in each limited to $25 billion.
U.S. Treasury Secretary Henry Paulson said 9 banks described as "healthy institutions" had agreed to accept government stakes for the good of the U.S. economy -- a state intervention unthinkable before a crisis widely compared to the great crash of the 1930s.
"Government owning a stake in any private U.S. company is objectionable to most Americans, me included.," he said. "Yet the alternative of leaving businesses and consumers without access to financing is to tally unacceptable."
President George W. Bush called it an essential step to ensure the viability of America's banking system,"
Federal Reserve Chairman Ben Bernanke promised continued action to stabilize financial markets.
"We will not stand down until we have achieved our goals of repairing and reforming our financial system and thereby restoring prosperity to our economy," he said in a statement.
http://www.reuters.com/article/newsOne/idUSTRE49A36O20081014
Comments: Look! The invisible hand isn't invisible anymore! In times of crisis though, isn't this what we want? Capitalism is always in full stride on a daily basis here in America, but even our "free" market needs a hand at times. In 1929 we were bailed out, post WWII we were bailed out, and again we're in the mix of yet another bailout. In all cases up until today, a bailout was necessary and effective. We'll soon see if the invisible hand yet again has an effective slight of hand.
Wednesday, October 8, 2008
Some more equal than others
Income inequality around the world
NOT everyone agrees that income inequality is a problem to be solved. America and Britain are reckoned to have among the greatest inequality, among rich countries, as measured by the Gini coefficient. Such inequality may be associated with certain problems, for example a study produced last year by Unicef, the UN children's agency, suggested that the two countries have particularly low levels of child wellbeing. For many ordinary Americans and Britons, however, social mobility and getting opportunities to prosper may be more important. Nordic countries, which are the most equal, regularly do well in happiness surveys. The highest levels of inequality are in poor countries, especially in South America and Africa.
AFP
Link: http://www.economist.com/daily/chartgallery/displaystory.cfm?story_id=12331632&fsrc=rss
Comment
Inequality is an ongoing issue, not only among Third World and First World nations. The gap between rich and poor within First World nations such as the U.S. is getting bigger and bigger as well.
What kind of appropriate actions should be taken to confront this issue? In rich countries tax progression might be one approach, but this does not work for Third World countries because of the lack of wealth. Would it be one option to use tax money of richer countries to contribute against poverty in the Third World? What is the World Trade Organization doing to address this issue?
Oezguer (Oscar).
NOT everyone agrees that income inequality is a problem to be solved. America and Britain are reckoned to have among the greatest inequality, among rich countries, as measured by the Gini coefficient. Such inequality may be associated with certain problems, for example a study produced last year by Unicef, the UN children's agency, suggested that the two countries have particularly low levels of child wellbeing. For many ordinary Americans and Britons, however, social mobility and getting opportunities to prosper may be more important. Nordic countries, which are the most equal, regularly do well in happiness surveys. The highest levels of inequality are in poor countries, especially in South America and Africa.
AFP
Link: http://www.economist.com/daily/chartgallery/displaystory.cfm?story_id=12331632&fsrc=rss
Comment
Inequality is an ongoing issue, not only among Third World and First World nations. The gap between rich and poor within First World nations such as the U.S. is getting bigger and bigger as well.
What kind of appropriate actions should be taken to confront this issue? In rich countries tax progression might be one approach, but this does not work for Third World countries because of the lack of wealth. Would it be one option to use tax money of richer countries to contribute against poverty in the Third World? What is the World Trade Organization doing to address this issue?
Oezguer (Oscar).
Tuesday, October 7, 2008
Government Spells out Exercise Goals
WASHINGTON (AP) -- Get moving: The nation's new exercise guidelines set a minimum sweat allotment for good health. For most adults, that's 2½ hours a week. How much physical activity you need depends largely on age and level of fitness.
Moderate exercise adds up for sluggish adults. Rake leaves, take a quick walk around the block or suit up for the neighborhood softball game. More fit adults could pack in their week's requirement in 75 minutes with vigorous exercise, such as jogging, hiking uphill, a bike race or speedy laps in the pool.
Children and teens need more -- pretty brisk activities for at least an hour a day, say the government guidelines being released Tuesday.
Consider it the exercise version of the food pyramid. The guidelines, from the Health and Human Services Department, aim to end years of confusion about how much physical activity is enough, while making clear that there are lots of ways to achieve it.
"The easy message is get active, whatever your way is. Get active your way," HHS Secretary Michael Leavitt told The Associated Press.
It's OK to start slowly. Someone who's done no exercising will start seeing benefits with as little as 10 minutes of moderately intense exercise a day, which is an incentive to work up to the recommended amounts, said Rear Adm. Penelope Royall, deputy assistant secretary for disease prevention.
Response:
I could not agree with this article anymore, I feel that it is time people get off their lazy bums and get active. Ten minutes a day is very little when you have twenty four. With fast food so convenient and work slowing people down, I feel it is good for the mind and body to at least get ten minutes of exercise everyday. Maybe ten minutes is not enough, twenty minutes is even better and gets your metabolism going faster to burn more calories. It is very good that the government want people to start being more active and have a more positive outlook on life and their day. It is proven that working out sets off endorphins in the brain escalating your sense of achievement. Very good atricle.
David Caldwell
Moderate exercise adds up for sluggish adults. Rake leaves, take a quick walk around the block or suit up for the neighborhood softball game. More fit adults could pack in their week's requirement in 75 minutes with vigorous exercise, such as jogging, hiking uphill, a bike race or speedy laps in the pool.
Children and teens need more -- pretty brisk activities for at least an hour a day, say the government guidelines being released Tuesday.
Consider it the exercise version of the food pyramid. The guidelines, from the Health and Human Services Department, aim to end years of confusion about how much physical activity is enough, while making clear that there are lots of ways to achieve it.
"The easy message is get active, whatever your way is. Get active your way," HHS Secretary Michael Leavitt told The Associated Press.
It's OK to start slowly. Someone who's done no exercising will start seeing benefits with as little as 10 minutes of moderately intense exercise a day, which is an incentive to work up to the recommended amounts, said Rear Adm. Penelope Royall, deputy assistant secretary for disease prevention.
Response:
I could not agree with this article anymore, I feel that it is time people get off their lazy bums and get active. Ten minutes a day is very little when you have twenty four. With fast food so convenient and work slowing people down, I feel it is good for the mind and body to at least get ten minutes of exercise everyday. Maybe ten minutes is not enough, twenty minutes is even better and gets your metabolism going faster to burn more calories. It is very good that the government want people to start being more active and have a more positive outlook on life and their day. It is proven that working out sets off endorphins in the brain escalating your sense of achievement. Very good atricle.
David Caldwell
Wednesday, September 10, 2008
William Henry Gates III: In The Beginning
On October 28, 1955, shortly after 9:00 p.m., William Henry Gates III was born. He was born into a family with a rich history in business, politics, and community service. His great-grandfather had been a state legislator and mayor, his grandfather was the vice president of a national bank, and his father was a prominent lawyer. [Wallace, 1992, p. 8-9] Early on in life, it was apparent that Bill Gates inherited the ambition, intelligence, and competitive spirit that had helped his progenitors rise to the top in their chosen professions. In elementary school he quickly surpassed all of his peer's abilities in nearly all subjects, especially math and science. His parents recognized his intelligence and decided to enroll him in Lakeside, a private school known for its intense academic environment. This decision had far reaching effects on Bill Gates's life. For at Lakeside, Bill Gates was first introduced to computers.
...
In December of 1974, Allen was on his way to visit Gates when along the way he stopped to browse the current magazines. What he saw changed his and Bill Gates's lives forever. On the cover of Popular Electronics was a picture of the Altair 8080 and the headline "World's First Microcomputer Kit to Rival Commercial Models." He bought the issue and rushed over to Gates's dorm room. They both recognized this as their big opportunity. The two knew that the home computer market was about to explode and that someone would need to make software for the new machines. Within a few days, Gates had called MITS (Micro Instrumentation and Telemetry Systems), the makers of the Altair. He told the company that he and Allen had developed a BASIC that could be used on the Altair [Teamgates.com, 9/29/96]. This was a lie. They had not even written a line of code. They had neither an Altair nor the chip that ran the computer. The MITS company did not know this and was very interested in seeing their BASIC. So, Gates and Allen began working feverishly on the BASIC they had promised. The code for the program was left mostly up to Bill Gates while Paul Allen began working on a way to simulate the Altair with the schools PDP-10. Eight weeks later, the two felt their program was ready. Allen was to fly to MITS and show off their creation. The day after Allen arrived at MITS, it was time to test their BASIC. Entering the program into the company's Altair was the first time Allen had ever touched one. If the Altair simulation he designed or any of Gates's code was faulty, the demonstration would most likely have ended in failure. This was not the case, and the program worked perfectly the first time [Wallace, 1992, p. 80]. MITS arranged a deal with Gates and Allen to buy the rights to their BASIC.[Teamgates.com, 9/29/96] Gates was convinced that the software market had been born. Within a year, Bill Gates had dropped out of Harvard and Microsoft was formed.
Source: http://ei.cs.vt.edu/~history/Gates.Mirick.html
Commentary: Remember the old phrase, "It takes money to make money?" William "Bill" Gates is a great tribute to this phrase, as well as a model of business ethics for us to think about. Bill Gates was born into a wealthy family, so his early education advancement was far easier than other students with the same aptitude potential as him. Because he was able to go to a private education center for better learning as a young man, this created the possibility for him that set his lifelong path into motion. He first found interest in computers at his private school, was able to excel and enter Harvard; both schools required a higher cost which the Gates family could easily afford. But what if Bill Gates was unable to afford better learning centers from a young age to young adult? Would Microsoft have ever been founded? Even so, does there lie a possibility another young man with as much, if not more, aptitude than Bill went under the radar because his family couldn't afford the same schools as Gates? We may never know, but in considering the alternatives, a good financial start clearly helped Gates get a step ahead. This is the very financial dispersion in our country that allows us to prosper, as Gates did as an individual, and as America has because of his individual accomplishments.
...
In December of 1974, Allen was on his way to visit Gates when along the way he stopped to browse the current magazines. What he saw changed his and Bill Gates's lives forever. On the cover of Popular Electronics was a picture of the Altair 8080 and the headline "World's First Microcomputer Kit to Rival Commercial Models." He bought the issue and rushed over to Gates's dorm room. They both recognized this as their big opportunity. The two knew that the home computer market was about to explode and that someone would need to make software for the new machines. Within a few days, Gates had called MITS (Micro Instrumentation and Telemetry Systems), the makers of the Altair. He told the company that he and Allen had developed a BASIC that could be used on the Altair [Teamgates.com, 9/29/96]. This was a lie. They had not even written a line of code. They had neither an Altair nor the chip that ran the computer. The MITS company did not know this and was very interested in seeing their BASIC. So, Gates and Allen began working feverishly on the BASIC they had promised. The code for the program was left mostly up to Bill Gates while Paul Allen began working on a way to simulate the Altair with the schools PDP-10. Eight weeks later, the two felt their program was ready. Allen was to fly to MITS and show off their creation. The day after Allen arrived at MITS, it was time to test their BASIC. Entering the program into the company's Altair was the first time Allen had ever touched one. If the Altair simulation he designed or any of Gates's code was faulty, the demonstration would most likely have ended in failure. This was not the case, and the program worked perfectly the first time [Wallace, 1992, p. 80]. MITS arranged a deal with Gates and Allen to buy the rights to their BASIC.[Teamgates.com, 9/29/96] Gates was convinced that the software market had been born. Within a year, Bill Gates had dropped out of Harvard and Microsoft was formed.
Source: http://ei.cs.vt.edu/~history/Gates.Mirick.html
Commentary: Remember the old phrase, "It takes money to make money?" William "Bill" Gates is a great tribute to this phrase, as well as a model of business ethics for us to think about. Bill Gates was born into a wealthy family, so his early education advancement was far easier than other students with the same aptitude potential as him. Because he was able to go to a private education center for better learning as a young man, this created the possibility for him that set his lifelong path into motion. He first found interest in computers at his private school, was able to excel and enter Harvard; both schools required a higher cost which the Gates family could easily afford. But what if Bill Gates was unable to afford better learning centers from a young age to young adult? Would Microsoft have ever been founded? Even so, does there lie a possibility another young man with as much, if not more, aptitude than Bill went under the radar because his family couldn't afford the same schools as Gates? We may never know, but in considering the alternatives, a good financial start clearly helped Gates get a step ahead. This is the very financial dispersion in our country that allows us to prosper, as Gates did as an individual, and as America has because of his individual accomplishments.
Monday, September 1, 2008
Hundreds of thousands lose power as Gustav pounds coast
NEW ORLEANS, Louisiana (CNN) -- Hurricane Gustav swirled violently ashore Monday, turning lights out across the Gulf Coast and sending water over the tops of New Orleans' levees, officials said.
Water from the Industrial Canal floods a road in New Orleans after Hurricane Gustav made landfall Monday.
The storm's eastern bands, which generally pack the most powerful winds, also hammered Mississippi as Gustav moved to the west of New Orleans. Officials in Bay St. Louis, Pass Christian, Long Beach and Biloxi reported that Gustav was flooding U.S. Highway 90, making it impassable in parts.
In Pass Christian, Gustav blew vinyl siding off homes and damaged the recently repaired small-boat harbor. At least four boats docked there were swept onto the harbor access road, police Chief John Dubuisson said.
In Biloxi, iReporter Kevin Wise, who lives two blocks from the beach, said Gustav had pushed the Gulf waters into a highway about 100 yards from the normal shoreline.
"On the beach, it was blowing hard enough that you had to squat down to take a picture, it could pretty much throw you around," he told CNN. Wise said he and his wife ignored mandatory evacuation orders for his area.
At noon CT, the storm's eye was about 10 miles (16 kilometers) southeast of Morgan City, Louisiana, and 65 miles west-southwest of New Orleans, forecasters said. The Category 2 storm had winds of about 105 mph (169 kph), according to the National Weather Service.
Winds were sending whitecaps over levees in New Orleans, but the U.S. Army Corps of Engineers reported no major problems.
There were reports of water going over the Industrial Canal levee near a railroad bridge, said Chris Macaluso, a spokesman for the Louisiana Office of Coastal Protection and Restoration. The Port of New Orleans will raise the bridge to ease pressure on the system, he said.
The Industrial Canal levee failed during Hurricane Katrina in 2005, devastating the Lower Ninth Ward and neighboring St. Bernard Parish.
response:
Please do not let these levees break! The residents of Louisiana took a huge toll from Katrina and a big hit from Gustav could devistate the southern part of LA. I was watching CNN last night and this morning and the hurricane went from a category 3 hurricane to a category 2 which is lower windspeed which could significantly reduce the amount of damage done to the hurricane area. The levees in the industrial canal look to be holding at the current time and it seems the worst winds are being felt currently with the levees still holding. Water going over the levees as opposed to through the levees are completely different. Water going over the tops still means the levees are holding.
A huge effect all of the United States could feel are rising gas prices because of Gustav. It was interesting to see the number of oil platforms that Gustav was in route of going over. The amount of barrels of oil coming from these platforms is huge to all of the United States. So any delays in producing oil could drastically rise gas prices. I guess we will all see as a nation the effect of these oil platforms being involved in Gustavs path.
David Caldwell
Water from the Industrial Canal floods a road in New Orleans after Hurricane Gustav made landfall Monday.
The storm's eastern bands, which generally pack the most powerful winds, also hammered Mississippi as Gustav moved to the west of New Orleans. Officials in Bay St. Louis, Pass Christian, Long Beach and Biloxi reported that Gustav was flooding U.S. Highway 90, making it impassable in parts.
In Pass Christian, Gustav blew vinyl siding off homes and damaged the recently repaired small-boat harbor. At least four boats docked there were swept onto the harbor access road, police Chief John Dubuisson said.
In Biloxi, iReporter Kevin Wise, who lives two blocks from the beach, said Gustav had pushed the Gulf waters into a highway about 100 yards from the normal shoreline.
"On the beach, it was blowing hard enough that you had to squat down to take a picture, it could pretty much throw you around," he told CNN. Wise said he and his wife ignored mandatory evacuation orders for his area.
At noon CT, the storm's eye was about 10 miles (16 kilometers) southeast of Morgan City, Louisiana, and 65 miles west-southwest of New Orleans, forecasters said. The Category 2 storm had winds of about 105 mph (169 kph), according to the National Weather Service.
Winds were sending whitecaps over levees in New Orleans, but the U.S. Army Corps of Engineers reported no major problems.
There were reports of water going over the Industrial Canal levee near a railroad bridge, said Chris Macaluso, a spokesman for the Louisiana Office of Coastal Protection and Restoration. The Port of New Orleans will raise the bridge to ease pressure on the system, he said.
The Industrial Canal levee failed during Hurricane Katrina in 2005, devastating the Lower Ninth Ward and neighboring St. Bernard Parish.
response:
Please do not let these levees break! The residents of Louisiana took a huge toll from Katrina and a big hit from Gustav could devistate the southern part of LA. I was watching CNN last night and this morning and the hurricane went from a category 3 hurricane to a category 2 which is lower windspeed which could significantly reduce the amount of damage done to the hurricane area. The levees in the industrial canal look to be holding at the current time and it seems the worst winds are being felt currently with the levees still holding. Water going over the levees as opposed to through the levees are completely different. Water going over the tops still means the levees are holding.
A huge effect all of the United States could feel are rising gas prices because of Gustav. It was interesting to see the number of oil platforms that Gustav was in route of going over. The amount of barrels of oil coming from these platforms is huge to all of the United States. So any delays in producing oil could drastically rise gas prices. I guess we will all see as a nation the effect of these oil platforms being involved in Gustavs path.
David Caldwell
Friday, August 29, 2008
General Motors recalls 944,000 vehicles
Due to a glitch in the wiper fluid system that could cause a fire, the auto maker recalls a number of cars, trucks and SUVs.
WASHINGTON (AP) -- General Motors Corp. said Friday it was recalling 944,000 vehicles because of a problem with a windshield wiper fluid system that could lead to a fire.
More than 850,000 sport utility vehicles, trucks and passenger cars in the United States and nearly 100,000 vehicles in Canada, Mexico and the Middle East are involved in the recall, the company said.
GM (GM, Fortune 500) said the recall includes the 2008 Buick Enclave; 2006-2008 Buick Lucerne; 2006-2008 Cadillac DTS; 2007-2008 Cadillac Escalade; 2007-2008 Cadillac Escalade ESV; 2007-2008 Cadillac Escalade EXT; 2007-2008 Chevrolet Avalanche, Silverado, Tahoe and Suburban; 2007-2008 GMC Acadia, Sierra, Yukon and Yukon XL; 2006-2008 Hummer H2 and 2007-2008 Saturn Outlook.
The recall involves vehicles with a heated washer fluid system. A short circuit in the system could cause electrical features to malfunction, which could lead to an odor, smoke or potentially a fire.
GM spokeswoman Carolyn Markey said there have been nine reports of fires, with three of them linked to the system. There have been no accidents or injuries connected to the defect, she said.
The National Highway Traffic Safety Administration opened an investigation last February into potential engine compartment fires in 2007 Yukon and Tahoe vehicles. In June, the highway safety agency expanded its investigation into about 2.7 million 2007-2008 GM trucks and SUVs and reported allegations of 41 engine fires.
Dealers will install a wire harness with an in-line fuse to fix the problem free of charge, GM said.
For more information, owners may contact Buick at (866) 608-8080, Cadillac at (800) 982-2339, Chevrolet at (800) 630-2438, Saturn at (800) 972-8876, GMC at (866) 996-9436 or Hummer at (800) 732-5493.
Link: http://money.cnn.com/2008/08/29/autos/general_motors.ap/index.htm
Comment
The most important question about this article is whether GM was aware about this malfunction before releasing those affected cars or after. Did they maybe have a tight time schedule which didn't allow them to fix the problem with the wiper fluid system in the first place?
In case, GM was trying to hide it in order to achieve its own interests regardless what could happen to their customers, that would have been highly immoral. In the short term, they might benefit in terms of profit, but unfortunately not in the long term.
You may ask why? Because, as soon as the customer finds out about the malfunction and realizes that he or she didn't buy a flawless car, they would lose their confidence in the company which will lead to refusing their products. So, GM would not only lose customers, but profit, as well.
If GM wasn't aware about this issue, they would remain moral. Even if it might lose customers, it won't lose as much as customers as it would when telling not the truth in order to protect their customers from being harmed aside from the fact getting involved in legal actions they would get confronted with.
Oezguer (Oscar).
WASHINGTON (AP) -- General Motors Corp. said Friday it was recalling 944,000 vehicles because of a problem with a windshield wiper fluid system that could lead to a fire.
More than 850,000 sport utility vehicles, trucks and passenger cars in the United States and nearly 100,000 vehicles in Canada, Mexico and the Middle East are involved in the recall, the company said.
GM (GM, Fortune 500) said the recall includes the 2008 Buick Enclave; 2006-2008 Buick Lucerne; 2006-2008 Cadillac DTS; 2007-2008 Cadillac Escalade; 2007-2008 Cadillac Escalade ESV; 2007-2008 Cadillac Escalade EXT; 2007-2008 Chevrolet Avalanche, Silverado, Tahoe and Suburban; 2007-2008 GMC Acadia, Sierra, Yukon and Yukon XL; 2006-2008 Hummer H2 and 2007-2008 Saturn Outlook.
The recall involves vehicles with a heated washer fluid system. A short circuit in the system could cause electrical features to malfunction, which could lead to an odor, smoke or potentially a fire.
GM spokeswoman Carolyn Markey said there have been nine reports of fires, with three of them linked to the system. There have been no accidents or injuries connected to the defect, she said.
The National Highway Traffic Safety Administration opened an investigation last February into potential engine compartment fires in 2007 Yukon and Tahoe vehicles. In June, the highway safety agency expanded its investigation into about 2.7 million 2007-2008 GM trucks and SUVs and reported allegations of 41 engine fires.
Dealers will install a wire harness with an in-line fuse to fix the problem free of charge, GM said.
For more information, owners may contact Buick at (866) 608-8080, Cadillac at (800) 982-2339, Chevrolet at (800) 630-2438, Saturn at (800) 972-8876, GMC at (866) 996-9436 or Hummer at (800) 732-5493.
Link: http://money.cnn.com/2008/08/29/autos/general_motors.ap/index.htm
Comment
The most important question about this article is whether GM was aware about this malfunction before releasing those affected cars or after. Did they maybe have a tight time schedule which didn't allow them to fix the problem with the wiper fluid system in the first place?
In case, GM was trying to hide it in order to achieve its own interests regardless what could happen to their customers, that would have been highly immoral. In the short term, they might benefit in terms of profit, but unfortunately not in the long term.
You may ask why? Because, as soon as the customer finds out about the malfunction and realizes that he or she didn't buy a flawless car, they would lose their confidence in the company which will lead to refusing their products. So, GM would not only lose customers, but profit, as well.
If GM wasn't aware about this issue, they would remain moral. Even if it might lose customers, it won't lose as much as customers as it would when telling not the truth in order to protect their customers from being harmed aside from the fact getting involved in legal actions they would get confronted with.
Oezguer (Oscar).
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