Time Inc. to cut US$100 m, and extensive layoffs expected

Signalling that worse times are ahead for magazines, Time Inc. is expected to announce next week that it will cut US$100 million (RM340 million) from costs, including another big round of layoffs.

Time Inc., the publisher of magazines like Time, Fortune, and People, has already cut costs drastically: a year ago, it announced it was dismissing 6 per cent of its work force, or about 600 people. The timing is coordinated with the third-quarter earnings announcement from its parent company, Time Warner, sources said. That is scheduled for Wednesday morning.

But that was apparently not enough to make up for revenue declines. The US$100 million in costs is expected to come largely from layoffs, said sources, who asked to remain anonymous as they were not authorised to discuss the matter.

Michael Nathanson, an analyst at Sanford C. Bernstein & Company, said that he expected third-quarter revenue at Time Inc. would fall about 19 per cent, to US$900 million.

“For the year, we’re at about US$3.7 billion, and this company had done almost US$5 billion as late as 2007,” Nathanson said.

Since 2004, Time Inc. has cut about US$800 million in costs, Nathanson said.

Over all, Nathanson said, he expects Time Warner to post earnings of 54 cents a share, well up from the 30 cents a share it posted in the third quarter of 2008.

Time Inc. has been cutting costs over the last several years. Since 2007, it has shut down magazines including Business 2.0, Cottage Living, Southern Accents and Life, which it had revived as a newspaper supplement. Last week, Fortune announced that it would no longer be published every other week, and would drop its frequency to 18 issues a year, from 25. A stricter expense-account policy has been in place for some time, and some magazines have decreased the weight of the paper they use.

A number of Time Inc. employees are covered by a union contract, which mandates severance in case of layoffs. Employees of Time, Sports Illustrated, People, Money, Fortune and Fortune Small Business are covered by agreements with the Newspaper Guild of America, said Bob Townsend, local representative for the guild.

Covered employees at those magazines are eligible for severance packages in a layoff, of two weeks’ pay for every year of employment, with a cap of 52 weeks’ pay. Longtime employees get a bonus, with 20-year veterans getting an additional eight weeks’ pay, and 25-year employees an additional 10.
Townsend said that the Guild was usually notified in advance of layoffs, but it had not heard anything yet. “We have not been told there are going to be any layoffs next week,” Townsend said.
Dawn Bridges, a Time Inc. spokeswoman, declined to comment.

The layoffs and cost-cutting follow moves at competitors. Forbes is in the midst of dismissing about 40 to 60 of its editorial staff, and most Condé Nast magazines are reducing their budgets by about 25 per cent, which has included handfuls of layoffs at many of its magazines.


Source : TMI
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

The Great Recession is Over

The worst US recession since the Great Depression has ended, but weak household spending as the labour market struggles to create jobs will slow the pace of the economy’s recovery, according to a survey released yesterday.

The survey of 44 professional forecasters released by the National Association for Business Economics, also known as the NABE, found that 80 per cent of the respondents believed the economy was growing again after four straight quarters of declines.

“The great recession is over,” NABE President-Elect Lynn Reaser said.

“The vast majority of business economists believe that the recession has ended, but that the economic recovery is likely to be more moderate than those typically experienced following steep declines.”

Recessions in the United States are dated by the National Bureau of Economic Research. The private-sector group, which does not define a recession as two consecutive quarters of decline in real gross domestic product, often takes months to make determinations.

The recession that started in December 2007 is the longest and deepest since the 1930s. It was triggered by the US housing market’s collapse and the ensuing global credit crisis.

While the economy is believed to have rebounded in the third quarter, analysts believe that ordinary Americans will probably not see much difference as unemployment will remain high well into 2010, restraining consumption.

“We don’t necessarily expect the US economy to fall into a double-dip recession. This time round, consumers will be reluctant to join the party,” said Paul Ashworth, senior US economist at Capital Economics in Toronto.

The NABE survey, conducted in September, predicted real GDP growth expanding at an annual pace of 2.9 per cent over the second half of this year. Output for all of 2009 is expected to contract 2.5 per cent and next year, rebound 2.6 per cent.

Much of the anticipated recovery was seen driven by businesses rebuilding their inventories after aggressively reducing unwanted stockpiles of unsold goods to match weak demand.

HOUSING PRICES TO HIT BOTTOM

Investment in the residential market would also add to growth, with the majority of the survey’s respondents convinced that the housing market downturn, which has lasted more than three years, was close to coming to an end.

About two-thirds of respondents believed house prices will reach a bottom this year. The survey found that high house prices would not pose a threat to the sector’s recovery.

The survey predicted that the unemployment rate will rise to 10 per cent in the first quarter of 2010 and edge down to 9.5 per cent by the end of that year. The labour market was not expected to regain most of the jobs destroyed in the recession until 2012 or beyond.

The weak labour market will continue to weigh on consumer spending, slowing the recovery. The jobless rate climbed to 9.8 per cent in September — a 26-year high — from August’s 9.7 per cent.

Labour market slack, combined with weak wage growth, meant inflation would not be an obstacle to the economic recovery and the Federal Reserve will not be under pressure to raise interest rates, the survey found.

“With improving credit markets, the US economy can return to solid growth next year without worry about rising inflation,” Reaser said.

The US central bank was seen leaving its overnight benchmark lending rate near zero until late next spring, followed by measured increases that would take the rate to 1 per cent by the end of 2010, the survey showed.

Despite signs of improvement in the financial markets, most respondents believed that it would take some time for them to return to normal. Only 29 per cent believed this would happen in the second half of next year.

Respondents also expected the US dollar to weaken further this year and into 2010, but did not see this contributing to a narrowing of the country’s trade deficit as the economic revival stimulates demand for imports.

The dollar has lost about 5.8 per cent of its value against a basket of currencies so far this year, largely because of worries over the government’s growing budget deficit and expectations that the Fed will keep interest rates at super-low levels for a while.

Source : TMI
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

US deficit US$1.58 trillion this year

The deficit this year is three times that of last year

WASHINGTON: The White House plans to announce the federal deficit is about $262 billion less than officials predicted early this year, in part because the Obama administration has provided less aid than expected to Wall Street.

The deficit still will be three times bigger than last year's.

The federal deficit this year will total $1.58 trillion, a senior White House official said late Wednesday.

The official spoke on condition of anonymity to discuss the report before its release Tuesday when President Barack Obama will be on vacation in Massachusetts.

The nonpartisan Congressional Budget Office is expected to release its midsession review the same day.

It estimated in June that it expected a deficit of $1.825 trillion.

The report for the budget year that ends Sept. 30 also would predict Washington to spend $3.653 trillion this year, the official said.

Revenue, however, would reach only $2.074 trillion.

The new deficit numbers are record-shattering, but would give the administration the opportunity to say that its policies have avoided a more extreme financial crisis and eliminated the need for further bank infusions.

Still, the deficit amount is a tremendous obstacle for an administration trying to undertake massive policy overhauls in health care and the environment.

"Whether it's $1.6 trillion or $1.8 trillion, it's pretty bad," said Robert Bixby, executive director of the bipartisan fiscal watchdog The Concord Coalition.

"I hope no one tries to spin that as good news."

But Stan Collender, a former congressional budget staffer, said the White House's new deficit numbers cannot be blamed on Obama.

Collender, now with Qorvis Communications, a Washington consulting firm, noted that the deficit estimate when President George W. Bush left office was $1.2 trillion and that did not include a tax adjustment and additional spending for operations in Iraq and Afghanistan, approved this year, that Bush also would have sought.

The midsummer report was supposed to have been released by mid-July but was delayed, which led to speculation the White House was delaying the bad news until Congress left on its August recess.

Other administrations delayed releasing similar reports during their first year in office.

Obama's budget had included a $250 billion placeholder for a second bailout of the nation's troubled banks but did not ask Congress for it because of the fear that the administration was spending too heavily.

The administration also had anticipated failures of more banks, but the survival of most banks saved billions for Washington.

The report comes during a rough patch for Obama's presidency.

The rancor surrounding the Democrats' proposed health care overhaul also provides a distraction during a monthlong break when much of Washington is in a lull.

The administration predicted this year that unemployment would peak at about 9 percent without a big stimulus package and 8 percent with one.

Congress passed a $787 billion two-year stimulus measure, yet unemployment soared to 9.4 percent in July and appears headed for double digits.

The nation's debt, the total of accumulated annual budget deficits, now stands at $11.7 trillion.

In the scheme of things, that is more important than talking about the "deficit," which only looks at a one-year slice of bookkeeping and ignores previous indebtedness that is still outstanding.

Even so, the administration has projected that the annual deficit for the current budget year will hit the $1.58 trillion figure, more than three times the size of last year's deficit of $455 billion.

Economists predict that an improved economic climate could help reduce the deficit in the 2010 fiscal year to $1.3 trillion.

Obama has promised to reduce the budget to $533 billion in the 2013 fiscal year.

"The deficit is obviously very large and a problem," said economist Mark Zandi of Moody's Economy.com.

"But it's not quite as bad as what expectations were a few months ago."

Earlier this year, Zandi, whose observations are frequently cited by administration and congressional officials, had predicted that the administration would have to get congressional approval for additional rescue funds for financial institutions.

"It's working out better than I anticipated," he said.

Source : STAR
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

Billionaire Buffet urges US to stop 'printing' money and halt debt rise

Now that the worst of the economic crisis is past and recovery is slowly under way, Congress must halt the mounting increase in U.S. debt to avoid damage to long-term growth and destruction of the dollar, Warren Buffett is urging.

The plainspoken billionaire weighed in with his view in an Op-Ed piece published in The New York Times Wednesday, saying that once recovery is solidified, lawmakers need to exercise "extraordinary political will" and slow the printing of money to finance the spike in debt.

That huge spending for financial bailout and economic stimulus was sorely needed to rescue the economy in its greatest peril since the 1930s, Buffett said, but now "unchecked emissions" of dollars "will certainly cause the purchasing power of currency to melt" the way runaway carbon emissions will likely melt icebergs.

With government spending now nearly double what it is taking in, "truly major changes in both taxes and outlays will be required," Buffett wrote.

"A revived economy can't come close to bridging that sort of gap."

Buffett, one of the world's wealthiest men, enjoys opining on issues of the day.

And as the "Oracle of Omaha" and head of a successful investment firm, his views carry weight in the public arena.

He has gained a sharper political profile in recent years and has spoken out, for example, on the obligation of the privileged to help the poor.

Buffett was a top economic adviser to Republican Arnold Schwarzenegger's first campaign for California governor and advised Democrat John Kerry's presidential campaign in 2004.

Last September at the height of the financial turmoil, Buffett's firm, Berkshire Hathway Inc., rushed in with a $5 billion in investment in Wall Street powerhouse Goldman Sachs Group Inc., a move viewed as a vote of confidence for a survivor of a crisis that felled two of its investment banking peers.

The economy "is now out of the emergency room and appears to be on a slow path to recovery," Buffett wrote in the Op-Ed.

"But enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects. For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself."

Because of the deficit, the amount of U.S. debt that is publicly held likely will rise to around 56 percent of Gross Domestic Product this fiscal year ending Oct. 1, from 41 percent last year, Buffett noted.

The three ways of financing the rising debt - borrowing from other countries, borrowing from Americans or printing money - all carry problems, he said.

"The United States is spewing a potentially damaging substance into our economy - greenback emissions," Buffett wrote.

Source : STAR
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

Numbers of poor in US projected to increase to 38.8mil

The numbers of poor and uninsured Americans are likely rising - with more than 38.8 million believed to be in poverty.

Rebecca Blank, the Commerce Department's undersecretary of economic affairs, spoke to The Associated Press in advance of next month's closely watched release of 2008 census data.

Noting the figures are not yet final, Blank said the numbers will likely show a "statistically significant" increase in the poverty rate, to at least 12.7 percent.

That would represent a jump of more than 1.5 million poor people last year.

"There's no question that 2008 economically was a much worse year than 2007," she said Wednesday.

"The question is how much and how bad."

The number of Americans without medical insurance is also expected to notably increase due largely to rising unemployment and the erosion of private coverage paid for by employers and individuals, but Blank declined to say by how much.

In 2007, the number of uninsured fell by more than 1 million mostly because government programs such as Medicaid for the poor picked up the slack.

The census figures, set to be released Sept. 10, could have important ramifications as Congress returns from its August recess to debate health reform, its cost, and the ways to pay for it.

Republicans also have traditionally pointed to the intractable poverty rate as a sign that government programs do not work, a claim likely to be repeated often in light of the federal economic stimulus package.

In a 30-minute interview, Blank said the census figures released next month could possibly understate the actual number of poor people, since the poverty rate is a lagging indicator that tends to accelerate over time.

As a result, the 2008 data could prove to be the tip of the iceberg, with more significant declines reflected in 2009 figures released next year.

Blank, a former co-director of the National Poverty Center at the University of Michigan, estimated this year that poverty could eventually hit 14.8 percent or more in the United States should unemployment reach 10 percent as some analysts have predicted.

That would be almost one of every seven Americans.

Based on 2007 figures, the poverty rate currently stands at 12.5 percent, or 37.3 million, largely unchanged from recent years.

The official poverty level is now $21,203 for a family of four, $13,540 for a family of two, based on a calculation that includes only cash income before deductions for taxes.

It excludes capital gains and it does not take into account accumulated wealth or assets, such as a home.

On Wednesday, Blank said she was working with the Census Bureau to provide better measures of poverty.

Such alternative measures, which will be released sometime after Sept. 10, will seek to better incorporate added costs of health care, child care, housing and transportation, but also noncash income from the stimulus and other government programs, such as tax credits and food stamps.

Source : STAR
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

FACTBOX-Banks, funds, insurers cut 382,880 jobs in crisis

Banks, insurers and asset managers worldwide have
announced 382,880 job cuts since August 2007 when the credit crisis began to
intensify. Following is a list of the deepest job cuts at major companies:

 Company                     Jobs       Headcount       Latest

                             cut        before Aug 07*  headcount**

----------------------------------------------------------------------------

 American Express (AXP.N)    11,000     Unavailable     Unavailable

 Bank of America (BAC.N)     45,500     195,675         284,802 (March 31)

   (Includes 30,000-35,000 jobs to be slashed over three years after the

   purchase of Merrill Lynch and 7,500 jobs to be cut over the next two years

   after the acquisition of Countrywide Financial Corp)

 Barclays (BARC.L)           9,050      127,700         156,300 (Dec. 31)

   (Includes 3,000 cuts after the acquisition of Lehman Brothers businesses)

 Citigroup (C.N)             75,000     361,000         309,000 (March 31)

 Commerzbank (CBKG.DE)       9,500      35,384          64,707 (March 31)

   (All layoffs announced after the acquisition of Dresdner Bank)

 Credit Suisse (CSGN.VX)     7,320      45,600          46,700 (March 31)

 Deutsche Bank (DBKGn.DE)    1,380      75,140          80,277 (March 31)

 Fidelity Investments        4,000      Unavailable     40,000 (April 15)

 Fidelity National

 Financial Inc (FNF.N)       4,100      Unavailable     13,680 (March 31)

   (Includes 1,500 cuts after purchase of three title insurers in December)

 First American (FAF.N)      5,460      38,000          32,700 (Dec. 31)***

 Goldman Sachs (GS.N)        4,800      29,905          27,898 (March 27)

 HSBC (HSBA.L)               16,350     312,577         312,866 (Dec. 31)

 ING (ING.AS)           over 7,000      119,097         114,035 (March 31)

 J.P.Morgan (JPM.N)          23,700     179,664         219,569 (March 31)+

   (Includes 7,600 cuts announced after the purchase of Bear Stearns and up

   to 14,000 layoffs announced in 2009)

 Lehman Brothers             12,570     N/A             N/A

   (Number made up of about 6,000 job cuts made before the bank collapsed in

    September and an estimated 10,500 left jobless after the bank collapsed

    -- about 8,000 others were transferred to Nomura and 10,000 to Barclays)

 Lloyds (LLOY.L)             3,595      66,000          58,756

   (Includes nearly 3,000 cuts since takeover of HBOS in early 2009)

 Merrill Lynch               3,300      61,900          N/A

   (Layoffs before takeover by Bank of America closed on Jan. 1)

 Morgan Stanley (MS.N)       8,680      45,845          44,616 (March 31)

 National City Corp          7,400      32,445          N/A

   (Layoffs before National City Corp merged with PNC on Dec. 31)

 Nomura (8604.T)             1,530      16,854          25,626 (March 31)

   (Includes 1,000 jobs cut after the acquisition of Lehman Brothers units)

 PNC Financial

 Services (PNC.N)            5,800      28,054          59,000 (April 23)

   (Job cuts at the combined group are due to be completed by 2011)

 RBS (RBS.L)                 15,250     135,400         174,000 (Dec. 31)++

 Santander (SAN.MC)          2,600      135,922         181,166 (March 31)

 State Street (STT.N)        1,800      24,500          27,500 (March 31)

 UBS (UBSN.VX)               19,700     81,557          76,200 (March 31)

 UniCredit (CRDI.MI)         9,000      135,880         170,732 (March 31)+++

 * Estimate based on earnings reports and management statements

 ** Headcount effective on the date in brackets

 *** Estimate

 + Includes 38,211 staff from the acquisition of Washington Mutual

 ++ Includes employees from ABN AMRO acquired in October 2007

 +++ Includes staff from Ukrsotsbank acquired in January

Source : Reuters
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

Airlines 'to lose $9bn' as they fight to survive recession

Airlines will lose $9bn (£5.7bn) this year, nearly double previous forecasts, as carriers fight to stay afloat in the "most difficult" trading conditions they have ever faced, the industry's leading body has warned.

Buffeted by a collapse in business traffic, falling fares and the threat of resurgent fuel costs, the industry is expected to come close to matching last year's losses of $10.4bn, said the International Air Transport Association (Iata). Revenues are expected to fall by 15% this year, a decline of $80bn, as passenger numbers fall and airlines slash fares to entice a dwindling amount of potential customers. As a result, the forecast industry loss this year has nearly doubled from $4.7bn to $9bn.

Giovanni Bisignani, Iata chief executive, said the industry's future depended on a "drastic" reshaping by governments, through lower taxation and fewer ownership guidelines, and by mergers between airlines.

"There is no modern precedent for today's economic meltdown. The ground has shifted. Our industry has been shaken. This is the most difficult situation that the industry has faced," said Bisignani.

The Iata boss is renowned within the industry for his apocalyptic outlooks, prompting a gentle rebuke from the chief operating officer of Airbus, John Leahy, who said the long-term outlook for aircraft manufacturers remained strong.

However, Bisignani's comments were backed by leading airline executives this morning at the Iata annual general meeting in Kuala Lumpur. Willie Walsh, British Airways chief executive, said "every" airline was in a fight for survival.

"Everyone is fighting for survival, if you look at their financial performances," said the BA boss, whose airline lost a record £401m last year. Asked if he agreed with the assessment of arch-rival and Virgin Atlantic co-owner Sir Richard Branson, who said two major carriers could go bust this year, Walsh joked that he was unlikely to reach an accord with the tycoon on anything. "If he said two I am going to disagree with him." He added: "It is quite possible that you could see a number of airlines fail, with oil prices rising and no sign of the economic environment improving. There are a lot of airlines that could fail."

Pointing to Ryanair's first full-year loss in 20 years, announced last week, Walsh said "all airlines" were encountering difficulties. Last year more than 30 airlines collapsed, including Silverjet and XL Airways in the UK, following a spike in fuel costs that saw the price of oil nearly breach $150 a barrel.

Virgin Atlantic, one of BA's biggest rivals on the transatlantic route, said summer bookings would be lower than in recent years. Steve Ridgway, Virgin Atlantic chief executive, said the carrier's premium economy cabin - a halfway house between economy and business class - was proving to be a "recession buster". However, he said bookings for the upper class cabins were being hit.

"We have maintained load factors [the proportion of seats sold per flight] in premium economy and economy. But upper class load factors are down," he said. Ridgway added that he did not expect a large number of airline bankruptcies this year following the demise of more than 30 carriers in 2008.

"I think it's a fight for survival but the airlines that were most vulnerable have gone."

Tony Tyler, chief executive of Hong Kong-based Cathay Pacific, said the industry was facing "the most difficult trading conditions any of us can remember."

The biggest blow to long-haul carriers is the slump in profitable first and business class bookings, which have fallen by around 20% since the start of the year and pitched many carriers into loss-making territory. BA, for instance, relies on business passengers for more than 50% of its revenues. "Demand for first and business class has reduced significantly," said Tyler.

Bisignani said businesses were slashing travel budgets in response to the downturn: "Our customers don't have confidence. They need to reduce debt and that means less cash to spend. Business habits are changing and corporate travel budgets have been slashed. Video conferencing is now a stronger competitor."

Alan Joyce, the chief executive of Australian carrier Qantas, took a more optimistic view, saying that business and first class bookings would stage a recovery. "These businesses go through cycles. We have seen some premium markets in the past go through decline. But it does come back." Cautioning against the gloomiest predictions for the industry, he added: "If you put 10 economists in the room you would have 10 different opinions about what is going to happen." Asked if Qantas was still considering a merger with BA, after talks were aborted last year, Joyce said the airline was not mulling a deal: "We are focused on our core business." Walsh also ruled out re-starting talks.

In his annual address to the industry, Bisignani also accused the British government of using air passenger duty to pay off MPs' expenses, in the latest indication that the scandal has acquired global fame. "It is unacceptable that money collected from our responsible industry in the name of the environment is being used by an irresponsible government to pay inflated MP expense claims or bail out banks."

Source : Guardian
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

Recession getting worse

Survey at private-sector companies forecasts greater job losses and worsening economic conditions in the months to come.

Economists expect an already deep recession to get even worse in 2009, according to a survey released Monday.

Companies will lay off more workers and hoard more cash during the next 12 months, according to the National Association for Business Economics survey, a quarterly take from a panel of economists at private-sector companies in various industries. A vast majority of the 105 economists polled believe the country's gross domestic product will continue to sink in 2009.

If business conditions indeed worsen during the year, they will be sinking from already historic lows. The survey's measures of consumer demand, profit margins and capital expenditures all hit their lowest-ever levels in January's edition of the 27-year old survey.

"NABE's January 2009 Industry Survey depicts the worst business conditions since the survey began in 1982, confirming that the U.S. recession deepened in the fourth quarter of 2008," said Sara Johnson, a NABE economist.

Nearly half - 47% - of surveyed economists said overall industry demand was falling, compared with 35% who said so in the October survey. Just 10% of respondents said profit margins were rising, compared with 52% who believe they are falling. And 38% of economists said capital expenses are falling, up from just 15% in October.

Credit conditions hurt businesses, according to the economists, as customers had less leverage to buy discretionary products. 78% of respondents said tightening credit conditions affected customers, and 52% said the credit crunch directly hurt businesses in their industries.

Pessimistic outlook on weak environment

With business conditions souring, the outlook for jobs has grown increasingly negative. 39% of economists believe their industries will lay off employees in the next six months, compared with 32% in October.

The forecast was particularly poor for the goods-producing sector, in which 69% of economists saw layoffs in the future, and no one believed the industry would be adding jobs. Service-sector economists were the most optimistic, with only 9% seeing layoffs and 29% saying their industry would be hiring in the next six months.

Companies will likely curtail spending in the coming months as well, according to the survey. 44% of the economists believed capital spending in their industries would fall off in the coming year, compared with just 16% who believed their businesses would increase spending.

Rising unemployment, tightening credit conditions and a difficult lending environment led economists to give a more pessimistic outlook on growth for 2009.

Just 22% believed the U.S. economy would expand this year, down from 62% who thought so in October. Although 26% now believe the economy will shrink less than 1% this year, 52% now think the economy will shrink by more than 1%, which no one predicted in October.

Source : CNN
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

Britons watching more TV than ever due to recession

Britons are watching more television than ever due to the increasing choice offered by digital channels and the recession, which has encouraged people to stay in more often.

The average person watched nearly four hours of television a day in 2008 or 26 hours and 18 minutes per week - 48 minutes longer per week than in 2007, according to the Broadcasters' Audience Research Board (BARB).

This matches the previous highest broadcast viewing figure on record, reached in 2003.

The growth – seen across all age groups – has been driven by commercial television channels, which now account for 63 per cent of all broadcast television viewing, according to analysis of the data by Thinkbox, the television marketing body for the main UK commercial broadcasters.

Family game shows like Strictly Come Dancing and X Factor are also responsible for increasing numbers of people staying in.

"Big entertainment shows like X Factor are getting bigger and bringing people together in the living room" according to research by Thinkbox.

Bad weather, including a very wet summer last year, has encouraged people to stay indoors and the economic downturn has led to people taking advantage of the free entertainment, according to the report.

Thinkbox also says people are watching more television because there is greater take-up of digital TV services and Sky+.

However, the figures do not include on-demand TV viewing and the explosion in viewing via web services, such as BBC iPlayer, ITV Player, 4OD, Demand Five and Sky Player, and IPTV platforms, such as Virgin Media and BT Vision.

Tess Alps, Thinkbox's Chief Executive: "TV remains people's favourite form of entertainment, whatever technology delivers it. These figures show that people rely on channels and schedules to help them find the TV they want to watch. At a time when we are lucky to have more excellent TV to choose from than ever, trusted channels remain crucial to guide people through the choice. Watching live is driven by human need not by technological limitation."

Source : Telegraph
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

US houses sink at fastest rate on record

America's economy is spiralling rapidly into deep recession, according to a respected survey of residential property values

The world's biggest economy is spiralling rapidly into deep recession after house prices across America sank at their fastest rate on record, according to a survey widely perceived as the most authoritative measure of US residential property values.

The S&P Case-Shiller house price index indicated that the average value of a residential property in the United States has fallen by a quarter since the peak of the housing market in 2006, with every homeowner losing about $370 (£260) a week from the value of their home.

Property prices throughout the US fell by 18.2 per cent in November, compared with the same month the year before - indeed, home prices fell by 2 per cent in November alone. Wall Street had been expecting the numbers to be slightly worse, forecasting an 18.4 per cent drop.

At the same time, the US Conference Board's consumer confidence index fell well below expectations in January, after Americans failed to take heart from falling petrol prices and a more stable US equity market. The index measures the level of optimism that Americans express about their own finances. It is scrutinised by Wall Street because it is used to try to determine future consumption levels, a key driver for the US economy, with consumption accounting for about two thirds of America's economic growth.

Ian Shepherdson, chief US economist at High Frequency Economics, estimates that the consumer confidence index reading spells a “catastrophic” rate of decline in overall consumption, down 3 per cent over this year compared with last. Consumer spending, which includes expenditure on services and on items such as food and clothing, accounts for about two thirds of US economic growth.

The grim housing data showed that the rate of decline of property values is accelerating. November's 2 per cent fall in prices compared with 1 per cent monthly declines during the summer.

While Wall Street is banking on low interest rates and sliding home prices to entice new buyers into the property market, the losses raise questions about the valuation of the mortgage-backed securities on their balance sheets, which may need to be entirely written off in the short term. Such doubts further undermine confidence in global equity markets.

David Blitzer, chairman of the S&P Index Committee, which compiles the house price index by monitoring 20 cities across the US every month, said: “Since August 2006, the 20-city composite has declined every month - a total of 28 consecutive months.” In November, the average house price across America fell to similar levels as the first quarter of 2004. Phoenix, Arizona, and Las Vegas, Nevada were hit worst. The slump in property values also threatens to affect employment, with 7.2 per cent of the American workforce out of a job. The construction industry and retail are closely allied with the housing market.

Source : TimesOnline
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

CEOs grim about 2009

COMPANY heads think business won't pick up for three years and have shifted their focus from growth to survival, according to a CEO survey that indicated how badly the global financial crisis has eroded confidence among industry leaders worldwide.

Less than a quarter of CEOs questioned in an annual PricewaterhouseCoopers survey for the World Economic Forum had hope for revenue growth over the next 12 months - a plunge from 50 percent a year ago, a time when fears of a downturn were already undercutting expectations.

The survey of 1,124 CEOs in 50 countries, conducted mostly by telephone, was released on Wednesday ahead of the forum's annual meeting in Davos, Switzerland, where business and government leaders were gathering to take stock of a catastrophic year for world finances and talk about a 'post-crisis world'.

'CEOs are most concerned about the immediate survival of their companies,' said Samuel DiPiazza, global CEO of New York-based consulting firm PricewaterhouseCoopers.

Even once rapidly growing emerging economies are struggling to get credit and facing collapsing demand, the survey found.

The CEOs are not just worried about 2009. Just 34 per cent expressed confidence that they would see any revenue growth over the next three years, the survey said.

Chief executives are most worried about the impact of the recession on major economies, the survey found. They are also unsettled by volatile capital markets - and afraid of over-regulation.

The question of how much governments should be doing to stabilise markets is central to this year's World Economic Forum. The survey found a majority of CEOs favouring more collaboration between businesses and government.

Despite the somber outlook, most said they planned to keep staffing levels or continue hiring, with 26 per cent saying they planned to reduce their work forces in the coming year.

The survey found pessimism across 'all geographic regions, business sectors and levels of economic development.' Confidence was somewhat lower in North America and Western Europe than in Asia.

Indian CEOs were the exceptions, with 70 per cent predicting growth in the next 12 months. Russia and China showed dramatic drops in confidence from a year ago, when both saw 73 per cent of CEOs forecasting growth in the coming year. This time, just 30 per cent of Russian CEOs and 29 per cent of Chinese chief executives expect such growth.

As the survey was being conducted, over the last quarter of 2008, questioners found confidence worsening amid snowballing bad news.

'The speed and intensity of the recession has rocked the psyches of CEOs and created a global crisis of confidence,' DiPiazza said.

Almost 70 per cent expect to suffer from the credit crisis, including higher financing costs and delays to planned investment.

They predict more joint ventures and fewer mergers and acquisitions, which the surveyors attributed to lower cost and risks of joint ventures. Merger and acquisition activity was down last year, with only 20 percent saying they had completed one last year - below the 31 per cent that CEOs had predicted a year ago.

Source : StraitTimes
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

EU: Recession will be deep and long-lasting

The European Union said Monday it is facing a ''deep and protracted recession'' and slashed growth forecasts, while Britain announced its second massive bank bailout in just over three months in another wave of bad economic news in Europe.

The economy in the 16 nations that use the euro will shrink by 1.9 percent in 2009, with the entire EU contracting 1.8 percent, the European Commission said, drastically cutting earlier forecasts of 0.1 percent for the euro zone and 0.2 percent for the EU.

The 27-member bloc said 3.5 million jobs will disappear in the EU in the year ahead as business and household spending falls and banks tighten lending.

Government demand and investment will be the only source of growth - but that carries a heavy price tag.

Government deficits will hit the highest level in 15 years as they borrow heavily to stoke growth in order to combat the world economic crisis that began with bank losses on securities backed by shaky U.S. mortgages.

The EU executive raised warning flags about credit conditions, saying European states may need to inject more than the euro300 billion (US$398 billion) they have already put into banks ''to avoid a sustained drag on bank lending.''

It says the economy would be faring much worse without current EU nations' plans to boost growth by spending 1 percent of gross domestic product this year, which should bring an additional 0.75 percent growth.

Britain - an EU member which has not joined the euro - said it would launch its second bank bailout in just over three months by offering banks a chance to guarantee shaky securities for a fee in return for a requirment to increase lending to businesses and consumers.

It also set aside 50 billion pound (US$74 billion) for the Bank of England to buy troubled assets from banks.

Banks stocks plunged, and Royal Bank of Scotland shares fell 70 percent to only 10 pence after it announced massive losses and the government raised the 58 percent stake it took as part of the first bailout to around 70 percent.

The EU said the downswing will be particularly marked in Britain and more protracted in Spain.

It warned that the outlook was still exceptionally uncertain, describing the economic crisis as the worst faced by the world since the second world war.

The EU predicted a moderate recovery in 2010 when the EU could grow 0.5 percent.

The first green shoots could come in the second half of 2009 when the global economy may pick up.

European Central Bank President Jean-Claude Trichet was more gloomy saying this year would be ''very difficult'' and a rebound might only come in 2010.

In a speech in Paris, he said officials had underestimated the risks facing the economy in the last two years and growth this year would be substantially lower than the ECB's last forecast that the euro area would contract by up to 1 percent this year.

The EU warned that ''the main issue is whether the recovery will be a lasting one.''

In Europe, it warned that it could not rule out that ''very weak economic sentiment may continue for some time as concerns about a long and deep recession spread, particularly with unemployment now on the rise.''

Falling exports will hit Germany hard. Europe's largest economy is also the world's biggest exporter and will likely shrink 2.3 percent this year, it said.

It says the British economy will shrink 2.8 percent this year as the financial sector shrinks and a housing bubble deflates, while France will contract by 1.8 percent.

Spain and Ireland will also suffer sharply as recent booms go bust and jobless queues lengthen - with nearly one in five Spanish workers without a job by 2010.

But the EU's top economy official, EU Economic and Monetary Affairs Commissioner Joaquin Almunia, dismissed speculation that either nation's soaring public debt would force them to quit the euro currency - which limits the power governments have over fiscal policy.

Ratings agency Standard & Poors put euro nations Spain, Ireland and Portugal on negative watch last week and downgraded Greece as they see more risk that governments could default on borrowings as revenues slide.

''In the case of the euro area members, I don't think at all that the risks are high or are significant,'' Almunia told reporters.

He was more critical of Italy and Britain which missed the chance to pay off debt during good times.

For Italy, this means high interest payments and little room for economy and banking bailouts.

Governments will see debt and deficits soar as they spend billions of euros (dollars) to speed up the economy and save banks while unemployment benefits increase and tax revenues fall.

For euro nations, efforts to balance the books will be swept away as Ireland, Greece, Spain, France, Italy, Portugal and Slovenia will this year break a key EU budget rule to keep their deficits under 3 percent.

Germany, Belgium, Austria and Slovakia could join them in 2010.

Outside the euro area, Britain's deficit will climb sharply to 8.75 percent this year - and its debt will swell to nearly 72 percent by fiscal year 2010-2011, well above a 'golden rule' to keep debt under 40 percent.

Romania, Latvia, Estonia and Poland will also see deficits go above 3 percent.

The EU forecast sees bank lending falling further this year, saying that tighter conditions seem to be hurting large companies more than small businesses or households.

It was supportive of banking bailouts, highlighting the key role banks play in economic growth and warning that banks may need help because downsizing their balance sheets could shrink lending and short-term growth.

It did not have kind words for some governments' actions to stoke growth. Temporary cuts in corporate profit taxes had ''a negligible impact on growth'' and nations would be better off giving investment subsidies, it said.

Britain's move to boost consumption by slashing sales tax for a year was merely storing up problems for the future, it said, as shoppers were likely to spend now and keep their purses shut when the tax goes back up in 2010.

Source : TheStar
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

New Zealand Recession Deepens

New Zealand's economy contracted by its biggest amount in eight years as the recession deepened in the third quarter, backing the case for more central bank rate cuts to cushion the impact of the global slowdown.

Gross domestic product fell a seasonally adjusted 0.4 percent in the three months to Sept 30, as consumers spent less, businesses cut investment and weak global markets and prices hit exports, data showed on Tuesday.

The drop was the biggest quarterly decline in GDP since the June quarter 2000, and followed a 0.2 percent fall in the previous quarter, backing market views that the Reserve Bank of New Zealand (RBNZ) will keep cutting rates.

"This means interest rates still have to come down," said JP Morgan chief economist Stephen Walters. "We suspect the recession will last for another one or two more quarters to come."

The New Zealand dollar was unmoved by the data, last trading steady around $0.5720/30. The yield on the March bank bill contract NBBH9 was unchanged at 4.41 percent compared with the official cash rate of 5 percent.

A Reuters poll had expected GDP to contract 0.5 percent. The RBNZ had forecast a 0.3 percent drop.

New Zealand is in its first recession since 1997-98, which followed the Asian financial crisis. However, economists and the central bank are divided on whether the current downturn will continue.

Private forecasters expect a continuation into the middle of 2009, but the central bank governor said earlier this month the economy will probably emerge from a "shallow" recession in the fourth quarter into a period of "shallow" growth.

The third quarter's decline was led by a fall in household consumption, manufacturing, export volumes, and business and housing investment, which were partly offset by higher agriculture production and government spending.

The central bank has cut rates four times since July by a total of 325 basis points to a five year low of 5 percent, and said further small cuts are likely.

Most analysts see rates falling to 3.5 percent by the middle of 2009. The next rate review is on Jan 29.

Average annual growth slowed to 1.7 percent in the year to the third quarter, in line with expectations, from 2.5 percent in the previous quarter.

The economy in the third quarter was 0.1 percent smaller than the same quarter a year earlier, compared with 1 percent growth in the previous quarter. It was the first contraction on an annual basis since the third quarter 1998.

Source : Reuters
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

Hotel industry risk of recession at 99.9%

This morning economic research firm e-forecasting.com in conjunction with Smith Travel Research announced that following a decline of 1.9 percent in October, HIP fell by 3.2 percent in November. HIP, the Hotel Industry's Pulse Index, is a composite indicator that gauges business activity in the U.S. hotel industry in real-time. This decline brought the index to a reading of 92.4. The index was set to equal 100 in 2000.

Looking at HIP's six-month growth rate, which historically has signaled turning points in U.S. hotel business activity, HIP went down by an annual rate of 13.5 percent in November, further worsening its decline of 9.2 percent in October. This compares to a long-term annual growth rate of 3.2 percent, the same as the 38-year average annual growth rate of the industry's gross domestic product.

Looking at the results, Chief Economist Evangelos Simos of e-forecasting.com said, “Using the NBER methodology to identify the peaks and troughs of the business cycle, the peak was in November of 2007 for the industry. Since then, the index has been declining and so far the recession is 13 months old. Looking further at the six month growth rate, at this time, the recession appears to be similar to what the industry felt in late 1979 through early 1980, but not yet quite as bad as 2001.”

The probability of a recession in the hotel industry, which is detected in real-time from HIP with the help of sophisticated statistical techniques, registered 99.9 percent in November, up from 95.7 percent reported in October. Historically, when this recession-warning gauge passes the threshold probability of 35 percent for a few months, the U.S. hotel industry has entered a recession. As a result, the odds of business expansion in the hotel industry were at the 0.1 percent mark in November, becoming even more dismal than October’s reading of 4.3 percent.

The Hotel Industry Pulse, or HIP for short, was created to fill the void of a real-time monthly indicator for the hotel industry that captures current conditions. What the indicator does is provide useful information about the timing and degree of the industry’s linking with the US business cycle, or simply put it tracks monthly overall business conditions in the industry, like an industry GDP, and points in a timely way the changes in direction from growth to recession or vice versa. The composite indicator is made with the following components: revenues from consumer’s staying at hotels and motels adjusted for inflation, room occupancy rate and hotel employment, along with other key economic factors which influence hotel business activity.

Source : HotelNewsNow
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

1500 Yahoo Employees Layoff

Today, some 1,500 Yahoo employees will get their layoff notices, even as one of the company's major investors urges selling its search business to Microsoft.

Back in October, Yahoo announced it would be laying off about 1,500 employees; today, the company is expected to detail those layoffs, with the bulk of the job cuts expected to land in the company's human resources and finance divisions. The 1,500 job cuts represent about 10 percent of the company's total work force.

In October, Yahoo CFO Blake Jorgensen indicated the company would consider additional job cuts in 2009 if the economic situation continued to worsen. Yahoo had also indicated it planned to jettison jobs in markets with high costs of living—like the United States—and hire aggressively in markets like India, southeast Asia, and Eastern Europe, where the cost of bringing employees on board is considerably lower.

In the meantime, Jerry Yang has announced he will be stepping down from his position as Yahoo's CEO; the company has not yet named a replacement.

Adding to the ongoing turmoil at Yahoo, one of the company's major investors is urging the company to sell its Internet search business at Microsoft's feet. In early 2008, Microsoft made an unsolicited bid to take over Yahoo; after many months of maneuvering, the companies were unable to reach a deal, and Yahoo angered its investors by walking away from a takeover offer worth over $45 billion. Now Ivory Investment Management LP, one of Yahoo's largest single shareholders, is pushing the company to sell its search business to Microsoft. In a letter to the Yahoo board of directors, Ivory says Yahoo could get about $15 billion out of Microsoft for the search operations, and stipulate that Yahoo still receive 80 percent of the revenue from search queries on Yahoo sites. Ivory argues that revenue alone would be worth about $1.6 billion a year.

Ivory controls about 1.5 percent of Yahoo's shares.

Microsoft CEO Steve Ballmer has indicated Microsoft is no longer interested in taking over Yahoo, but might be interested in the company's search operations. Yahoo is currently the second-largest Internet search engine with roughly a 20 percent share of the online search market. Search shares of AOL, Microsoft, and Ask.com are all soundly in the single-digits, with Google dominating the market.

Source : Digital Trends
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

Tyco Electronics to Cut 2,500 Jobs Amid Restructuring

Tyco Electronics Ltd., the world’s largest maker of electronic connectors, said it will cut about 2,500 jobs worldwide, or about 2.6 percent of its workforce, as part of previously announced efforts to speed $100 million in cost reductions.

The Hamilton, Bermuda-based company isn’t detailing where the job cuts will take place until workers are notified, spokeswoman Sheri Woodruff said in an interview. Some employees in North America were told of the reductions this week. The company, run from Berwyn, Pennsylvania, has about 96,000 employees globally.

Demand for connectors used in cars, desktop computers and cell phones has slowed, prompting the company to say this month that fiscal first-quarter profit will be near the low end of its previous forecast range. The job cuts will take place by the end of second quarter in March, Woodruff said.

Separately, the company said it is temporarily shutting a plant in Portugal for two weeks as orders in Europe slow. Production will cease Dec. 19 and resume after the holidays, Woodruff said. The Wall Street Journal previously reported the shutdown.

Tyco Electronics declined 8 cents to $16.88 at 4:15 p.m. in New York Stock Exchange composite trading. They have declined 55 percent this year.

Source : Bloomberg
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

Citigroup to cut 1,000 jobs at Japan unit

Citigroup Inc. will slash some 1,000 jobs at its Japanese brokerage unit as part of the ailing U.S. banking giant's efforts to survive the financial meltdown, a report said Wednesday.

Nikko Cordial Securities Inc. will cut its work force through early retirement, and some 1,000 employees, mostly those aged above 40, have accepted severance offers, Kyodo News agency said, citing no sources.

The Japanese brokerage employs about 7,000 workers, and the job cuts will amount to 14 percent of its total work force.

A spokesman for Nikko Cordial's parent company, Nikko Citi Holdings, a subsidiary of Citigroup., declined to confirm the report.

Citigroup plans to slash 53,000 jobs worldwide, the second-largest job cuts by a U.S. company on record, as the once-mighty banking giant is saddled with heavy losses and a shriveled stock price.

The U.S. government has agreed to guarantee risky Citigroup debt valued at $306 billion and also pump another $20 billion in cash into the ailing bank, on top of an earlier $25 billion injection that was part of the government's initial round of investments in troubled financial institutions.

Nikko's Japanese rival, Nomura Holdings Inc., announced last week that it will cut up to 1,000 jobs in London.

The move comes less than three months after Japan's top brokerage took over the global business of failed U.S. investment bank Lehman Brothers Holdings Inc.

Source : AP
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

Sony to cut 8,000 jobs

Japan’s Sony Corp is planning to cut 8,000 jobs very soon. A report saying, due to global slow down the company is planning to retrench so it could fight back to the bad economy.

But experts say that the cut won’t be enough for the tech giant and in near future it may play another strategy to stay in the race.

According to the reports, the company is aiming to cut $1.1 billion in costs out of its struggling electronics operations.

The 8,000 job cut comes to about 5 percent of its global electronics workforce of 160,000.

An expert say, “The number sounds big, but this staff reduction won’t be enough. Sony doesn’t have any core businesses that generate stable profits.”

Source : FreshNews
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

Rio Tinto to cut 14,000 jobs in the face of $40bn de

Rio Tinto is cutting 14,000 jobs and slicing more than $5bn (£3.4bn) out of its capital expenditure plans for next year as plunging commodities prices and a collapsing share price raise rumours of a rights issue.

The measures announced yesterday, which include a commitment to reduce operating costs by $2.5bn and hold capex at sustainable levels in 2010, found favour in the City and sent the Anglo-Australian group's shares up by more than 20 per cent.

Rio is to lose some 8,500 contractors, or half of its temporary workforce, and 5,500, or around 6 per cent, of its permanent staff. It is also looking at previously unconsidered asset sales to help pay down its $40bn-worth of debt. Tom Albanese, the Rio chief executive, said: "By taking these tough decisions now we will be well positioned when the recovery comes."

Rio has been on analyst watch lists since rival BHP Billiton dropped its takeover bid last month, sending its share price down by a whopping 37 per cent in a day. BHP blamed the economic climate and Rio's debts. Not only does the deal now look expensive, in the light of collapsing demand for commodities, but proposed divestments are proving hard to execute.

As Rio's share price tanked, the market has been rife with rumours that it will require a rights issue to fund the $9bn tranche of debt that comes up for re-financing in October. Yesterday's programme aims to allay such fears. Net debt has already been reduced by $3.2bn, from June to October this year, and Rio is committed to cutting another $10bn in 2009. It is also to keep the dividend flat at $1.36.

Mr Albanese said: "Given the difficult and uncertain economic conditions, and the unprecedented rate of deterioration of our markets, our imperative is to maximise cash generation and pay down debt."

Some experts remain cautious. "Rio has allayed fears in the short term," one City analyst said. "But they have given very few details – which mines will be affected, for example."

Source : Independent
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

The Recession Is Made Official — and Stocks Take a Dive

The reality that the U.S. is indeed in recession and that the downturn may well be prolonged sent Wall Street plunging Monday, hurtling the Dow Jones industrials down nearly 700 points and wiping out more than half of last week's big gains. All the major indicators fell more than 7 percent, with the Standard & Poor's 500 index down nearly 9 percent.

The market spent the day absorbing a litany of bad news that convinced investors that the optimism that fed a 1,276-point gain over five sessions was premature. Stocks first slid on initial reports that the first weekend of the holiday shopping season, while better than some retailers and analysts feared, saw only modest gains. That had Wall Street worried that the rest of the season would be disastrous, a troubling possibility not only for retailers but for an economy that is dependent on consumer spending for its growth.

According to figures released by ShopperTrak RCT, a research firm that tracks total retail sales at more than 50,000 outlets, sales over Friday and Saturday rose just 1.9 percent.

Meanwhile, downbeat economic reports on the manufacturing sector and construction spending only added to investors' concerns. Speeches from Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson also did little to assuage investors about the downturn.

The day's news reminded investors, who last week were buying on a burst of optimism, that the U.S. economy is still in serious trouble. Then, at midday, Wall Street got confirmation of what everyone has suspected for months, that the nation is indeed in a recession. The National Bureau of Economic Research, considered the arbiter of when the economy is in recession or expanding, said the U.S. recession had begun a year ago, in December 2007.

That assessment made the retail sales figures all the more unnerving.

"Unfortunately, two-thirds of the American economy is based on the spending of the American consumer," said Mike Stanfield, chief executive of VSR Financial Services. "When the consumer pulls back, it's very hard for the economy to gain much traction."

Investors had been hopeful that last week's rally — when the major indexes shot up by double digit percentages — was a sign that some stability had returned to a market badly shaken by months of discouraging economic data. But analysts expect economic concerns to weigh on the market for some time to come.

"Everyone knows the recession is on us, the question is now will it be short and shallow or long and severe," Stanfield said.

Chuck Widger, chief executive of investment management firm Brinker Capital, expects the volatility to continue until investors have better visibility on the future.

"Investors are looking for better data on the economy," he said. "We've got baked in pretty nasty assumptions for the economy this quarter. The markets are looking ahead to the first quarter for data that will confirm or deny the bad news."

The Dow Jones industrial average fell 679.95, or 7.70 percent, to 8,149.09. The Standard & Poor's 500 index dropped 80.03, or 8.93 percent, to 816.21, while the Nasdaq composite index fell 137.50, or 8.95 percent, to 1,398.07.

Only 218 stocks were in positive territory on the New York Stock Exchange with 2,693 declining. Volume came to 1.62 billion shares.

The Russell 2000 index of smaller companies fell 56.07, or 11.85 percent, to 417.07.

Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.76 percent from 2.92 percent Friday. The yield on the three-month T-bill, considered one of the safest investments and an indicator of investor sentiment, slipped to 0.02 percent from 0.05 percent Friday. The lower the yield, the more anxious investors tend to be.

The market received no relief after a pair of speeches from Paulson and Bernanke about the economy.

Paulson said the administration is looking for more ways to tap a $700 billion financial rescue program and will consult with Congress and the incoming Obama administration. The program has distributed $150 billion out of the $250 billion earmarked to buy stock in banks as a way to boost their resources so they can lend more.

He said the administration is looking at other ways to utilize the rescue package, including alternatives for providing capital to financial institutions.

Meanwhile, Bernanke said in another speech Monday that further interest rate cuts are "certainly feasible," but he warned there are limits to how much such action would revive the economy. The central bank's key interest rate now stands at 1 percent, a level seen only once before in the last half-century.

---

On the day a recession was formally declared, investors cast their vote that economic recovery was nowhere in sight. All broad stock market indexes dropped sharply, with the steepest thrusts coming at the end of the trading day. The Dow ended Monday's session down 679.95 points or 7.7%, one of its worst days in recent months. Other broad market gauges took even steeper dives, with the Standard & Poor's 500, which includes financial stocks, falling 9.93%. The S&P 500 is now down 44% for 2008.

Financials were among the worst performing sectors of the day, with bank stocks dropping more than 17% on average. Shares of Citigroup, Merrill Lynch, Bank of America and Wachovia all fell more than 20%, largely erasing last week's financial-stock rally. Shares of oil companies fell sharply as well on Monday, as the price of crude sank to $49.28 per barrel, a decline of more than 9%. (See the Top 10 Wall Street Meltdowns)

Monday's market drop was accompanied by a mad rush to the safety of Treasury securities, where yields fell yet again. The yield on the 10-year note dropped to 2.748%. Ironically, many on Wall Street believe Treasury securities are no bargain, particularly after November's strong showing, when Treasuries delivered their best performance in more than 25 years. Merrill Lynch even issued a market report Monday morning noting that "Treasuries have moved into overvalued territory," yet added that it did not think the bull market in these securities would end anytime soon.

Moves across all markets on Monday traced back to the economic news, highlighting the belated announcement by the semi-official arbiter of recessions in the U.S. that the country is in fact in a recession. The only real news in the announcement from the Business Cycle Dating Committee of the National Bureau of Economic Research was the starting date that the seven economists on the panel assigned to the recession — last December.





There was also more timely evidence that the economy is in trouble. A much-watched real-time indicator of manufacturing activity, the Institute for Supply Management's monthly purchasing managers index, fell to a 26-year low. The JPMorgan global purchasing managers index, a measure that's only been around since 1998, hit an all-time low, with exporting nations such as China and Korea especially hard hit.





Meanwhile, a National Retail Federation survey showing a 7.2% increase in Thanksgiving-weekend retail spending vs. the year before failed to convince skeptics on Wall Street who still expect a dismal holiday shopping season overall. Even though Thanksgiving sales were stronger than many expected, the steep price markdowns did not augur well for retailer profitability.

But it's not just discrete events like economic releases weighing on the market. There's also the downward pressure — at times dull, at other times sharp — of institutional investors selling out of their stock positions. Part of October's swoon came from hedge funds raising cash to pay investors demanding their money back. While mutual fund redemptions have been a growing part of the story since then, we could still see more forced selling from hedgies.

In a Nov. 28 research note, analysts at Morgan Stanley pointed to growing redemptions from university endowments that have found their portfolio allocations out of whack, thanks to plunging stock prices — a point reinforced today when Paul Tudor Jones's Tudor Investment Corp announced that it had suspended redemptions on one of its hedge funds.

Source : IHT Time
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]