Tuesday, March 2, 2010
Toyota Problems Don't Lead to Big Auto Sales Lift for Rivals
For the past couple of weeks we continue to hear the mass recall of many of Toyota's models, which has led to a 9% drop in U.S. sales in February. However, many of Toyota's competitors didn't gain as much from Toyota's problems as expected. Nonetheless, Ford Motor recorded a 43% increase in U.S. sales in February, which is positive news for the domestic automaker. GM, on the other hand, continue to suffer from post-bankruptcy syndrome with sales only increasing 12%. Many of Toyota's competitors believe many traditional Toyota customers sat on the sidelines instead of switching over and buying one of their models.
Deal Near on Banking Rules Senators Outline Plan to Create New Consumer-Protection Unit Within the Fed
Deal Near on Banking Rules
Senators Outline Plan to Create New Consumer-Protection Unit Within the Fed
By DAMIAN PALETTA
WASHINGTON–Key senators were close to a deal on legislation to overhaul financial regulations, people familiar with the matter said, bringing the U.S. a step closer to sweeping changes to the way banks interact with consumers and the markets alike.
Top senators from each party were near a breakthrough agreement to create a new consumer-protection division within the Federal Reserve. This has been a contentious point due to heavy criticism of the Fed's past handling of its consumer-protection powers.
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Bloomberg News
Senator Christopher Dodd, a Democrat from Connecticut and chairman of the Senate Banking Committee listens to Ben S. Bernanke, chairman of the U.S. Federal Reserve, speak during his semiannual monetary report in Washington, D.C. on Thursday, Feb. 25, 2010.
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Senators Christopher Dodd (D., Conn.) and Bob Corker (R. Tenn.) were conferring with other members of their parties last night in an effort to sell that agreement to them, Senate aides said.
The two senators have also reached a deal that would let the federal government break up large, failing financial companies.
That plan tackles one of the most politically thorny flashpoints of the economic crisis: What powers should the government have to break up firms so it doesn't have to resort to taxpayer-funded bailouts?
Agreements on these details are expected to shape a bill that Sen. Dodd, chairman of the Banking Committee, plans to introduce in the Senate. The House of Representatives passed a bill overhauling financial-market rules in December. Differences between the two packages would have to be reconciled before any final agreement could be signed into law by President Barack Obama.
It is unclear whether White House officials would accept the idea to create a new consumer-regulation unit within the Fed. "The president remains strongly committed to an independent agency whose singular focus is advocacy for consumers," an administration official said.
The deals are the closest the bitterly divided Senate has come to an agreement on new financial rules. Mr. Dodd will likely have to make a hard sell on any plan to give the Fed new powers to police the way mortgages and other products are offered to consumers. He has been one of the Fed's biggest critics and routinely blasted the central bank for failing to enforce the consumer-protection powers it already has.
"Senator Dodd is keeping members informed on how things are progressing as he has throughout this process," his spokeswoman said. "We do not have an agreement yet. He hopes to have a consensus bill in the coming days."
If lawmakers feel they have enough agreement, Mr. Dodd could introduce his bill later this week and potentially hold a vote in his committee later in the month. If other lawmakers balk at agreements between Messrs. Dodd and Corker, it could make it tougher for them to pass legislation this year.
Democrats and Republicans have remained bitterly divided over how best to rework consumer-protection rules.
President Obama has called for the creation of an independent Consumer Financial Protection Agency, which would write and enforce rules for any financial product, from mortgages to credit cards to payday loans.
Many Republicans criticized that idea, saying it would freeze up access to credit and create an unwieldy bureaucracy. Many Republicans said new consumer rules would be best placed within the regulator that oversees nationally chartered banks.
Mr. Dodd, in an effort to get a deal, last week suggested the creation of a new division within the Treasury Department, but Mr. Corker rejected that.
Instead, he proposed creating a new division within the Fed. The division would be led by a White House appointee, have the ability to write and enforce rules, and have a separate budget. It would also give the Fed a more direct mandate to focus on consumer-protection issues.
This could dramatically reshape the focus of the Federal Reserve. For years, it has primarily been focused on monetary policy over bank supervision and often made consumer protection an afterthought.
Republicans might be more supportive of the Fed option because they might see having Fed officials involved could lead to more bank-friendly policies than an independent regulator.
But it could also reignite an anti-Fed sentiment that has rocked the central bank in the past year, at one point threatening the reconfirmation of Fed Chairman Ben Bernanke.
While the consumer-protection piece has been the most divisive for Senate lawmakers, creating powers within the government to take over and break up failing firms is seen as a vital piece to White House and Treasury officials.
They have complained that the government was handcuffed during the 2008 bankruptcy of Lehman Brothers and the near-collapse of American International Group Inc. Existing law lets the Federal Deposit Insurance Corp. take over failing banks, but its powers don't extend to other types of financial companies.
Sen. Mark Warner (D., Va.) and Sen. Corker agreed to details of that arrangement on Feb. 23 after months of meetings, but details of the deal hadn't been announced.
The new arrangement, if adopted into law, would create a type of bankruptcy process for failing financial companies that aren't banks, such as bank-holding companies or bank subsidiaries that don't have insured deposits. Regulators would have the option to force any financial company into an FDIC-controlled dissolution if they believed market chaos required such an extreme step.
Under the proposal, this step could take place only after the agreement of the Federal Reserve's board, a council of regulators, and the Treasury secretary, in consultation with the president.
Messrs. Warner and Corker have said they wanted to create a process that was so painful for investors and management that no one would intentionally steer their company toward such a break-up and the government wouldn't be seen as a fail-safe for reckless behavior.
The new deal would wipe out shareholders and give the FDIC the power to remove management. Creditors would be guaranteed only the liquidation value of their claims in bankruptcy, though they could receive more under some circumstances.
Lawmakers debated for months how to pay for such a system. Treasury officials argued the government should be able to provide a bridge loan to unwind the company. Critics of that arrangement said it equated to a taxpayer-funded bailout.
Senators Outline Plan to Create New Consumer-Protection Unit Within the Fed
By DAMIAN PALETTA
WASHINGTON–Key senators were close to a deal on legislation to overhaul financial regulations, people familiar with the matter said, bringing the U.S. a step closer to sweeping changes to the way banks interact with consumers and the markets alike.
Top senators from each party were near a breakthrough agreement to create a new consumer-protection division within the Federal Reserve. This has been a contentious point due to heavy criticism of the Fed's past handling of its consumer-protection powers.
View Full Image
winddown
Bloomberg News
Senator Christopher Dodd, a Democrat from Connecticut and chairman of the Senate Banking Committee listens to Ben S. Bernanke, chairman of the U.S. Federal Reserve, speak during his semiannual monetary report in Washington, D.C. on Thursday, Feb. 25, 2010.
winddown
winddown
Senators Christopher Dodd (D., Conn.) and Bob Corker (R. Tenn.) were conferring with other members of their parties last night in an effort to sell that agreement to them, Senate aides said.
The two senators have also reached a deal that would let the federal government break up large, failing financial companies.
That plan tackles one of the most politically thorny flashpoints of the economic crisis: What powers should the government have to break up firms so it doesn't have to resort to taxpayer-funded bailouts?
Agreements on these details are expected to shape a bill that Sen. Dodd, chairman of the Banking Committee, plans to introduce in the Senate. The House of Representatives passed a bill overhauling financial-market rules in December. Differences between the two packages would have to be reconciled before any final agreement could be signed into law by President Barack Obama.
It is unclear whether White House officials would accept the idea to create a new consumer-regulation unit within the Fed. "The president remains strongly committed to an independent agency whose singular focus is advocacy for consumers," an administration official said.
The deals are the closest the bitterly divided Senate has come to an agreement on new financial rules. Mr. Dodd will likely have to make a hard sell on any plan to give the Fed new powers to police the way mortgages and other products are offered to consumers. He has been one of the Fed's biggest critics and routinely blasted the central bank for failing to enforce the consumer-protection powers it already has.
"Senator Dodd is keeping members informed on how things are progressing as he has throughout this process," his spokeswoman said. "We do not have an agreement yet. He hopes to have a consensus bill in the coming days."
If lawmakers feel they have enough agreement, Mr. Dodd could introduce his bill later this week and potentially hold a vote in his committee later in the month. If other lawmakers balk at agreements between Messrs. Dodd and Corker, it could make it tougher for them to pass legislation this year.
Democrats and Republicans have remained bitterly divided over how best to rework consumer-protection rules.
President Obama has called for the creation of an independent Consumer Financial Protection Agency, which would write and enforce rules for any financial product, from mortgages to credit cards to payday loans.
Many Republicans criticized that idea, saying it would freeze up access to credit and create an unwieldy bureaucracy. Many Republicans said new consumer rules would be best placed within the regulator that oversees nationally chartered banks.
Mr. Dodd, in an effort to get a deal, last week suggested the creation of a new division within the Treasury Department, but Mr. Corker rejected that.
Instead, he proposed creating a new division within the Fed. The division would be led by a White House appointee, have the ability to write and enforce rules, and have a separate budget. It would also give the Fed a more direct mandate to focus on consumer-protection issues.
This could dramatically reshape the focus of the Federal Reserve. For years, it has primarily been focused on monetary policy over bank supervision and often made consumer protection an afterthought.
Republicans might be more supportive of the Fed option because they might see having Fed officials involved could lead to more bank-friendly policies than an independent regulator.
But it could also reignite an anti-Fed sentiment that has rocked the central bank in the past year, at one point threatening the reconfirmation of Fed Chairman Ben Bernanke.
While the consumer-protection piece has been the most divisive for Senate lawmakers, creating powers within the government to take over and break up failing firms is seen as a vital piece to White House and Treasury officials.
They have complained that the government was handcuffed during the 2008 bankruptcy of Lehman Brothers and the near-collapse of American International Group Inc. Existing law lets the Federal Deposit Insurance Corp. take over failing banks, but its powers don't extend to other types of financial companies.
Sen. Mark Warner (D., Va.) and Sen. Corker agreed to details of that arrangement on Feb. 23 after months of meetings, but details of the deal hadn't been announced.
The new arrangement, if adopted into law, would create a type of bankruptcy process for failing financial companies that aren't banks, such as bank-holding companies or bank subsidiaries that don't have insured deposits. Regulators would have the option to force any financial company into an FDIC-controlled dissolution if they believed market chaos required such an extreme step.
Under the proposal, this step could take place only after the agreement of the Federal Reserve's board, a council of regulators, and the Treasury secretary, in consultation with the president.
Messrs. Warner and Corker have said they wanted to create a process that was so painful for investors and management that no one would intentionally steer their company toward such a break-up and the government wouldn't be seen as a fail-safe for reckless behavior.
The new deal would wipe out shareholders and give the FDIC the power to remove management. Creditors would be guaranteed only the liquidation value of their claims in bankruptcy, though they could receive more under some circumstances.
Lawmakers debated for months how to pay for such a system. Treasury officials argued the government should be able to provide a bridge loan to unwind the company. Critics of that arrangement said it equated to a taxpayer-funded bailout.
Still Burning?
Who doesn't love a little spice in their food? Who doesn't recognize Tabasco as an essential ingredient to any important meal? I certainly do and I couldn't be any happier that Tabasco might own 25-30% of the hot sauce market and this will certainly secure the future Tabasco especially when they produce 750,000 bottles a day! As well as selling 120 countries, no wonder they have been able to survive this long! I'm sure the flame for this company will last a long time.
Monday, March 1, 2010
Spending more, saving less. Uh-oh.
So people are spending more and saving less. But is this a bad thing? The increase in spending is a good indicator that consumer confidence is up. And the new rise in consumption could lead us into a self-sustaining recovery. Maybe not so bad after all.
~Cassie
~Cassie
Chilean Stocks Post World's Biggest Drop as Quake Closes Roads
In response to the devastating 8.8 magnitude earthquake that struck Chile over the weekend, Chile stocks fell the most in almost a month, the biggest drop among the world's 50 largest markets. Due to the severe damage to Chile's infrastructure, especially power lines, it has halted many of Chile's manufacturing sectors. For example mining operations of Copper (Chile is the world's largest producer) were completely halted. The total economic impact may be as much as $30 billion, or about 15% of the South American country's GDP. However, Chile's $11.3 billion saving funds should provide the nation with some stability as it attempts to rebuild and recover from this earthquake, which was the world's fifth strongest since 1900.
Sunday, February 28, 2010
Greece Bailout Plan Takes Shape
Germany and France plan to spend as much as 60 billion euros, equivalent to $41 billion, to bailout Greece. The deal should be finalized by Friday. Germany wants to ensure that Greece fully is able to handle their deficit before giving up any leverage. During this whole process, the United States continues to support the European Union.
Jobless claims up 12% in past 2 weeks
The number of unemployed Americans climbed more than 12% over the last two weeks. This may be contributed to the adverse weather conditions in the eastern part of the country. On Wednesday the Senate passed a 15 billion bill to spur job creation, and give businesses tax breaks fro hiring unemployed, but it does not extend unemployment benefits. If the application deadline is not extended more than 1 million people will run out of unemployment benefits by February 28th. Richard dye believes that with the improvement of weather in March, however, the rate of joblessness will improve (decrease).
Discouraged College Graduates Dropping Out of Workforce 'In Droves,' Says Study
This article says that young people looking for jobs face about 19 percent unemployment. College graduates are facing a time where there is just no room for them in the job market. College graduates are faced with doing odd jobs and babysitting to keep up with bills. This is causing great discouragement among these young workers: "Since the recession began 25 months ago, EPI says 1.3 million young workers have dropped out of the job hunt." This will cause problems in these individuals wages and occupational paths.
Jobless benefits start ending on Sunday
by Tami Luhby
The senate failed to push back the Feb. 28 deadline for application for unemployment benefits, so more than one million people will be without benefits and many more will be affected. The senate chose not to push back the deadline because they do not have the money to do so, and would just be building more debt. This is a big deal because nearly 11.5 million people are currently depend on jobless benefits. All of this is due to Congress' inefficiency and a gridlock between the two parties, while millions of people are out there waiting for a bill to be passed.
The senate failed to push back the Feb. 28 deadline for application for unemployment benefits, so more than one million people will be without benefits and many more will be affected. The senate chose not to push back the deadline because they do not have the money to do so, and would just be building more debt. This is a big deal because nearly 11.5 million people are currently depend on jobless benefits. All of this is due to Congress' inefficiency and a gridlock between the two parties, while millions of people are out there waiting for a bill to be passed.
Europe Union Moves Toward a Bailout of Greece
The European Union is moving toward the first bailout in the history of its common currency. It is expected to involve loan guarantees from the German and French governments to encourage their banks to buy Greek debt. With no structure in place for dealing with a threatened default within the 16-nation euro zone, officials are making up the rules as they go along. This would be the worst crisis that involves the Euro which was established a decade ago. Since Germany knows that they will be covering most of the costs, they are reluctant to go along with the bailout plan. The Greeks have agreed to freeze wages, cut bonus, crackdown on tax evasion and raise the official retirement age.
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