Archive for the ‘World Finance’ Category
GM, Ford, Chrysler Face Bankruptcy Risk on Crisis
By Jeff Green and Greg Bensinger
Oct. 10 (Bloomberg) — General Motors Corp., Ford Motor Co. and Chrysler LLC, the three biggest U.S. automakers, may be forced into bankruptcy as the global credit freeze damps U.S. sales, Standard & Poor’s analyst Robert Schulz said.
“Macro factors could overwhelm them at some point” even as GM, Ford and Chrysler vow to stick with their turnaround plans, Schulz, S&P’s lead automotive credit analyst, said today in a Bloomberg Television interview in New York. The companies said they have no plans to seek bankruptcy protection.
His assessment underscored the pressure on the industry as the worsening credit crisis makes it harder for buyers to get loans and dealers to finance their operations. S&P said yesterday it may further trim credit ratings for GM and Ford on forecasts for 2009 auto demand to fall to its lowest since 1992.
With all three companies working to boost cash, any bankruptcy filing would be a last resort, not a “strategic” decision, Schulz said.
“We don’t see that as something they would choose,” he said. Schulz said the “trigger” for a forced restructuring under bankruptcy protection would be based on the automakers’ ability to preserve liquidity as Read the rest of this entry »
US debt clock runs out of digits
http://news.bbc.co.uk/2/hi/business/7660409.stm
The US government’s debts have ballooned so badly the National Debt Clock in New York has run out of digits to record the spiralling figure.
The digital counter marks the national debt level, but when that passed the $10 trillion point last month, the sign could not display the full amount.
The board was erected to highlight the $2.7 trillion level of debt in 1989.
The clock’s owners say two more zeros will be added, allowing the clock to record a quadrillion dollars of debt.
Douglas Durst, son of the late Seymour Durst – the clock’s inventor – hopes to replace the Manhattan clock with its lengthier replacement early next year.
For the time being, the Times Square counter’s electronic dollar sign has been replaced with the extra digit required.
For its part, the digital dollar symbol has been supplanted by a cheaper version – perhaps a sign of the times for the American economy.
Some economists believe the $700bn bail-out plan for ailing US financial institutions could send the national debt level to $11 trillion.
Banking crash hits Europe as ECB loses traction
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3104666/Banking-crash-hits-Europe-as-ECB-loses-traction.html
The global credit crisis has slammed into Europe with stunning violence over the last two days, triggering five major bank rescues and a near total shut-down of the region’s credit markets.
The Dutch-Belgian bank Fortis, Britain’s Bradford and Bingley, and Iceland’s Glitnir, were all partially or fully nationalized after failing to roll-over debts in the short-term money markets, while the French state pledged support for the Franco-Belgian lender Dexia after the share price collapsed on reports of a capital shortage.
“The European financial sector is on trial: we have to support our banks.” said French President Nicolas Sarkozy. He has reportedly ordered the state investment arm Caisse Des Depots to shore up Dexia, even though the bank is based in Belgium.
Germany’s Hypo Real Estate, a commercial property lender, was rescued with a €35bn lifeline from a consortium of local banks. The lender has $560bn in liabilities, almost as much as Lehman Brothers.
Hypo Real’s share price crashed 74pc, setting off a masse exodus from financial stocks in Frankfurt. Commerzbank fell 23pc and Aareal Bank was off 43pc. Read the rest of this entry »
US Economy: Even Hank Paulson’s bail-out plan cannot detox global banking
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3088685/US-Economy-Even-Hank-Paulsons-bail-out-plan-cannot-detox-global-banking.html
Even if Congress backs the Paulson bail-out, the $700 billion blast cannot save the US, Britain or the world from the deepest economic slump since the Thirties. If Congress balks, God help us. The credit system is suffering a heart attack. Inter-bank lending is paralysed. Funds are accepting zero interest on US Treasury notes for the first time since Pearl Harbour, because no bank account is safe.
Wherever you look – dollar, euro, sterling Libor (the rate at which banks lend to each other), or spreads on credit derivatives – the stress has reached breaking point. If borrowers cannot roll over the three-month loans that are the lifeblood of business, they will default en masse. Read the rest of this entry »
Cartoon of the Month
US dollar set to be major casualty of Hank Paulson’s bailout
http://www.telegraph.co.uk/finance/economics/3062121/US-dollar-set-to-be-major-casualty-of-Hank-Paulsons-bailout.html
By Edmund Conway
Last Updated: 10:47PM BST 22 Sep 2008
Whether or not tomorrow’s accounts of today’s turmoil prove David Owen of Dresdner Kleinwort right; whether or not this is the beginning of the end of the dollar’s pre-eminence in the world’s central banks and foreign exchanges, the economic landscape has undoubtedly changed forever.
The US taxpayer bail-out of America’s banking sector is an event whose significance will reverberate for many years. What it means for free markets, for the way Western economies are run, for the prosperity of the world economy, must remain to be seen.
But as investors scrambled to make sense of last week’s events, already one conclusion was all but irrefutable – the US dollar will have to take another major fall. Read the rest of this entry »
Ron Paul Discusses Financial Turmoil and the Fed 9/18/08
China paper urges new currency order after “financial tsunami”
http://news.yahoo.com/s/nm/20080917/bs_nm/financial_china_usa_dc
Tue Sep 16, 11:12 PM ET
Threatened by a “financial tsunami,” the world must consider building a financial order no longer dependent on the United States, a leading Chinese state newspaper said on Wednesday.
The commentary in the overseas edition of the People’s Daily said the collapse of Lehman Brothers Holdings Inc (LEH.P) “may augur an even larger impending global ‘financial tsunami’.”
The People’s Daily is the official newspaper of China’s ruling Communist Party, and the overseas edition is a smaller circulation offshoot of the main paper.
Its pronouncements do not necessarily directly reflect leadership views, but this commentary by a professor at Shanghai’s Tongji University suggested considerable official alarm at the strains buckling world financial markets. Read the rest of this entry »
Jim Rogers – ‘The US dollar is in trouble’
http://www.business-standard.com/india/storypage.php?autono=334370
| SMART TALK: Jim Rogers |
| Jitendra Kumar Gupta / Mumbai September 15, 2008, 0:04 IST |
Legendary investor Jim Rogers is probably the last word when it comes to investments in commodities. Along with George Soros, he co-founded the Quantum Fund in 1970. The fund went on to deliver absolute returns of 4,200 per cent in the decade that followed, while the S&P 500 delivered only 50 per cent during that period.
Rogers correctly predicted China’s resurgence as an economic superpower way back in the 80’s and that crude oil will touch the $100 mark. His last two books, ‘A Bull in China: Investing Profitably in the World’s Greatest Market’ and ‘Hot Commodities: How Anyone Can Invest Profitably in the World’s Best Market’ have been well received.
Rogers was in Mumbai on the occasion of the launch of the Birla Sun Life Commodity Equities Fund. At the conference and in an interview with Jitendra Kumar Gupta, he shared his outlook on commodities and the world economy. Excerpts:
How can one identify the start of an upward or downward cycle in any commodity?
In the late nineties, when I came with the conclusion that the commodity bear market is ending, I could see that no body has build offshore drilling rigs and tugs since 1981, with drilling declining for 15-20 years. I could also see that the inventories of food, which were very high in the mid-eighties, had gone down to nothing.
There was no production or capacities added for decades. I travelled around Asia, enough to know that Asia was booming, so could see that this was all coming together. And, if this is all coming to an end over the next 10-15 years, I will also be able to see the upturn in the commodity cycle. I tried and looked at the big picture for the demand and supply, and some time I get it right. Read the rest of this entry »
The Ticking Credit Card Time Bomb
by Peter Schiff, Euro Pacific Capital | May 9, 2008
For those holding out hope that the American economy can miraculously avoid a long and deep recession consumer credit is often viewed as the wonder drug that can cure all manner of economic ills. As such, this week’s report showing $15 billion growth in consumer credit was widely heralded as proof of America’s economic strength and resilience. However, we are now suffering the after effects of too much debt, and our salvation cannot be found in more of the same.
