Friday, March 07, 2008

Job losses: Worst in 5 years

Is it just me or is it time to really worry?
Employers made their deepest cut in staffing in almost five years in February, the Labor Department reported Friday.

There was a net loss of 63,000 jobs, which is the biggest decline since March 2003 and weaker than the revised 22,000 jobs lost in January. Economists had forecast a gain of 25,000 jobs.

The weak report fueled already mounting recession fears and is likely to keep the Federal Reserve cutting interest rates further when it meets later this month.

"Based on today's Employment Report, if we are not in a recession, it is a darned good imitation of one," said Kevin Giddis, managing director of fixed income at Morgan Keegan. "We are in an unprecedented real estate and credit crisis that is whipping its way through the U.S. economy like a Midwestern tornado."

Job losses were widespread, reaching beyond the battered construction sector, which lost 39,000, and manufacturing, where job losses hit 52,000.

Retailers cut 34,000 jobs.

Temporary staffing firms cut nearly 28,000 from their payrolls, another warning sign of employers pulling back.

Hotels cut about 4,000 jobs, a sign that discretionary consumer spending could be on the wane.

Overall the private sector cut 101,000 jobs, with only a gain in government employment limiting losses.

"Job growth appears to have weakened across nearly every industry with the exception of health care and government," said Keith Hall, the commissioner of the Bureau of Labor Statistics, which prepares the jobs report, testified Friday before a congressional committee.
Our financial system is in tatters as a result of greed and lack of oversight. How can we continue in our current political financing scheme which amounts to Legalized BriberyHow can we expect our elected officials to look out for the little guy when it is the large corporations that are funding the re-election efforts. We have seen the greatest redistribution of wealth in our history from the poor and middle class to the most priveleged in our society. Does that seem just? This excessive greed has caused our current situation. In many palces in this country recession has been around for years. What is happening to them now is depression like economic conditions. Will those same conditions spread to the entire nation? Only time will tell how severe this downturn will be but one thing is clear, the road ahead will be very bumpy and the pain being felt by the middle and lower classes will only get worse.

3 CEOs Made $460 million On Subprime Scheme

These crooks laughed all the way to the bank while families were being turned into the streets.
Three chief executives with ties to the mortgage crisis were paid $460 million over five years, according to a congressional report issued Thursday.

On Friday, the House Committee on Oversight and Government Reform is set to examine CEO pay in light of huge losses in the financial sector stemming from the mortgage crisis.

The panel, chaired by Rep. Henry Waxman, D-Calif., will hear testimony from Charles Prince, former CEO of Citigroup Inc.; Stanley O'Neal, former CEO of Merrill Lynch & Co.; and Angelo Mozilo., chief executive of Countrywide Financial Corp., the nation's largest mortgage lender.

The committee asked each company for internal documents about executive pay. Committee staffers reviewed company email, board minutes and federal regulatory filings, according to the 23-page memo made public Thursday.

The memo states that the three companies combined lost more than $20 billion in the last two quarters of 2007, as investments related to subprime mortgages fell apart. Meanwhile, the stock of Citigroup, Merrill Lynch and Countrywide declined drastically.

"The hearing provides a lens through which to examine whether the executive compensation and severance arrangements at these companies provided appropriate incentives to protect shareholders from these losses," the committee said.

The committee is also expected to look at how the compensation and severance packages of Mozilo, O'Neal and Prince were set and approved by their respective boards.

"In many cases, the consultants hired to advise on executive pay were simultaneously receiving millions of dollars from the corporate executives whose compensation they were supposed to assess," according to the memo.

Also scheduled to testify are Richard Parsons, chair of Citigroup's compensation committee and former CEO of Time Warner, the parent company of The chairmen of the Countrywide and Merrill Lynch compensation committees are also set to address the committee.

Calls to Merrill Lynch and Countrywide were not immediately returned. A Citigroup spokesman declined to comment.

Damon Silvers, associate general counsel of the AFL-CIO, which is often critical of executive compensation, believes the hearing will have an important symbolic impact.

"We hope it will put pressure on folks to give some money back and send a signal to other execs that they can't get away with these perverse incentives," Silvers said.
Until the laws are changed and people are held accountable for their actions nothing will ever change. Who really thought it was a good idea to lend money to people who could not afford it and then bundle those bad loans into securities sold all over the world? It was the same executives that made millions while putting the US and other world economies on the verge of a worldwide recession.

Many argue that it was the deregulation of the banking industry that was the impetus for what is happening now. I could not agree more. Banks and brokerage houses should not be tied together. Our financial security is too important to allow this type of rogue investing. These CEO's rolled the dice and the American taxpayer lost. There should be an immediate call for the return of these ill gotten gains or a class action lawsuit that would cost them more in fees then they ever earned.

Thursday, March 06, 2008

Company With Ties To Daddy Bush Defaults on Margin Calls

The Bush family has failed Savings and Loans under their belt, they have risen our national debt to astounding numbers and now a company with strong ties to Daddy Bush is defaulting on margin calls.

What a surprise that the first family has ties to bad business.
A bond fund managed by private equity firm Carlyle Group, revealed on Thursday that it has received a note of default after failing to meet several payment demands.

Shares of Carlyle Capital Corp. Ltd. plummeted more than 50% on the news that it had missed four out of seven margin calls totaling around $37 million on Wednesday. A margin call is a payment to guarantee a much larger debt or investment.

Carlyle Capital said one creditor has issued a default notice and it expects to receive a second such notice, adding to market worries about forced liquidations of residential mortgage-backed securities.

Carlyle Capital's difficulties will have "no material impact on the Carlyle Group or its funds," Christopher Ullman, a spokesman for Washington-based Carlyle Group, said. Carlyle Group, one of the world's largest private-equity firms with $76 billion under management, manages 55 funds in 21 countries.

As of last month, Carlyle Capital had a $21.7 billion investment portfolio of AAA-rated floating-rate capped U.S. mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac.

Yields on some of those securities have plunged to their lowest levels in two decades after credit markets dried up.

Carlyle Capital Chief Executive John Stomber attempted to play down the situation, saying the past few days had created a market environment that did not fairly value the fund's assets.

"Unfortunately, this disconnect has created instability and variability in our repo financing arrangements," Stomber said in a statement. "Management is actively working with the company's repo counter-parties to develop more stable financing terms."

But the stock, which listed on the Euronext Amsterdam in July, dropped 58% to $5, giving the company a market capitalization of $255.4 million.

The fund originally sold shares at $19 each.

The company said that seven banks that help finance its portfolio of Freddie Mac and Fannie Mae securities through short-term repurchase agreements, known as repos, had asked for an additional $37 million on Wednesday to keep funding in place.

It met the requirements of three of those, who it said had indicated "a willingness to work with the company during these tumultuous times."

It gave no detail on the banks in question or which one had issued the default notice.

Carlyle Capital as recently as Monday had reassured investors on its funding lines, saying it had $2.4 billion in undrawn repo lines and that it had increased a credit facility provided by the parent by 50%, to $150 million.
Do you think the ties to the Bush family will get media attention? I doubt it.

US Household Worth Falls For The First Time Since 2002

The Good news just keeps on coming.
U.S. household wealth fell in the fourth quarter for the first time in five years and borrowing slowed as home values plunged and lenders restricted credit, Federal Reserve figures show.

Net worth for households decreased by $532.9 billion from the previous three months, the first decline since the third quarter of 2002, according to the Fed's quarterly Flow of Funds report today. Housing-related net worth dropped by $176.4 billion.

Lower home and stock prices and reduced access to loans are prompting Americans to spend less and are driving up foreclosures. A slowdown in consumer spending, which accounts for two-thirds of the economy, threatens to push the U.S. into a recession.
How can the American consumer not cut back on spending? We are in a period of rising inflation, lower home values, job insecurity and a national debt that is the largest in the world. It amazes me how they still say we are the richest nation on earth. Its like that beautiful girl in high school who has let herself go but can't seem to see it for herself. It is time to face reality and prepare for a future not as an empire but as a benevolent nation whose goal is to better the world for all its citizens.

Foreclosures Hit An All Time High

Over 900,000 borrowers are losing their homes, up 71% from a year ago, and a record number of home owners are behind on payments.
More home owners than ever are losing the battle to make their monthly mortgage payments.

Over 900,000 households are in the foreclosure process, up 71% from a year ago, according to a survey by the Mortgage Bankers Association. That figure represents 2.04% of all mortgages, the highest rate in the report's quarterly, 36-year history.

Another 381,000 households, or 0.83% of borrowers, saw the foreclosure process started during the quarter, which was also a record.

Additionally, the number of mortgage borrowers who were over 30 days late on a payment in the last three months of 2007 is at its highest rate since 1985.

"Boy, that was ugly," said Jared Bernstein, an Economic Policy Institute economist of the data.

"It's another reminder that anyone who thought we had hit bottom was wrong. This was a huge bubble, and when a bubble of this magnitude breaks, it creates a huge mess," he said." It could take a lot longer for the correction to work through the system."
Our economy is a mess due this subprime mortgage mess and who is being held to account? No one!!. The heads of these financial firms raked in the millions while knowing that the shit would eventually hit the fan. Now it has hit and its all over the entire population. The financial suffering is being unduly felt by the middle and lower classes while the rich have laughed all the way to the bank. It is time for a serious discussion of stricter regulations and stronger laws against this type of bubble creation. The heads of Citigroup, Merrill Lynch and the others that helped this debacle develop should be in jail not lounging around counting their ill gotten gains.

Monday, March 03, 2008

Manufacturing Lowest in 5 Years

The bad economic news just keeps coming.
A key index of manufacturing activity registered a decline in February and its weakest reading in nearly five years, according to a survey of purchasing managers in that sector released Monday.

The Institute for Supply Management's (ISM) manufacturing index fell to 48.3 from 50.7 in January. Economists were expecting a reading of 48, according to a consensus compiled by

The tipping point for the index is 50, with a reading above that reflecting growth in the sector. A reading below 50 represents a decline in manufacturing.

The overall reading of the index is the weakest since April 2003, and it also marks the seventh of the past eight months that the index has registered a decline from the previous month.

"This was largely expected, but still not a good sign for the manufacturing sector," said Wachovia economist Adam York.

"It's just one more sign that there's economic weakness in the economy," added York, who believes that this report will give the Federal Reserve further incentive to cut rates at a meeting later this month.

Surveyed managers said production, new orders and inventories were relatively stable last month. The ISM index showed seasonally-adjusted production fell 4.5% in the month but is still just barely registering growth. New orders continue to decline and inventories contracted faster than the previous month, according to the index.

Though fewer managers said they expect employment to be lower in February, only 10% said they expected employment to be higher in the month.

York said the report should translate into a reading of about 2.3% growth in gross domestic product when compared to similar historical numbers.

"The report indicates that there is some overall economic growth, but it's still very slow," he noted.

Last week, the Commerce Department said its revised reading on GDP in the fourth quarter showed no change from the previously reported 0.6% annual growth rate. The nation's anemic economic expansion has economists worried that the country could easily fall into a recession.
We hardly manufacture anything in the United States as it is. To have it fall off even more indicates that the once high paying manufacturing jobs that build the American middle class are gone and may not return without a serious reversal of our current economic policies.