ft.com
T he global economy is starting to bottom out from the worst recession and financial crisis since the Great Depression. In the fourth quarter of 2008 and first quarter of 2009 the rate at which most advanced economies were contracting was similar to the gross domestic product free-fall in the early stage of the Depression. Then, late last year, policymakers who had been behind the curve finally started to use most of the weapons in their arsenal. When will the global recession be over? What will be the shape of the economic recovery? Are there risks of a relapse?
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Showing posts with label US Economic Crisis. Show all posts
Showing posts with label US Economic Crisis. Show all posts
US second quarter GDP down 1%
The U.S Commerce Department reported Friday that the economy contracted by 1%, much smaller pace in the second quarter of the year, suggesting that the trough of the recession has been reached.
The rate of contraction for the first quarter was revised down to a 6.4% drop compared with the prior estimate of a 5.5% decline, this is the first time since the Great Depression that the economy contracted for four consecutive quarters.
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The rate of contraction for the first quarter was revised down to a 6.4% drop compared with the prior estimate of a 5.5% decline, this is the first time since the Great Depression that the economy contracted for four consecutive quarters.
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US Unemployment Rate at 9.5%
Employers cut 467,000 jobs in June, far more than expected, while the unemployment rate rose to 9.5 percent, the government said on Thursday in a report that showed a labor market continuing to struggle with a deep recession.
The June job losses were more than 100,000 greater than the 363,000 consensus of Wall Street economists polled by Reuters and broke a four-month trend of moderation in job losses.
First-time claims for state unemployment benefits declined in the latest week, almost completely reversing the gain from the prior week, the Labor Department reported Thursday. The number of initial claims in the week ending June 27 fell 16,000 to 614,000, quite close to the consensus of Wall Street economists. Claims in the previous week were revised to an increase of 18,000 to 630,000 compared with the initial estimate of a increase of 15,000 to 627,000. This increase had surprised analysts. The four-week average of initial claims fell 2,750 to 615,250
Nassim Taleb : Authorities 'Will Fail Us Again'
The Obama administration's attempts to fight the financial crisis with more cash is like treating a bad tooth with Novocain instead of a root canal, Nassim Taleb, author of "The Black Swan," told CNBC Wednesday.
The main problem is the level of debt, and Taleb compared the authorities' efforts with those of a not very skilled pilot who is trying to land a Concorde on a narrow strip, between an ocean of deflation and a mountain of hyperinflation."These people failed us, they're going to fail us again," Taleb told cnbc.
More at : http://www.cnbc.com/id/31203621
The main problem is the level of debt, and Taleb compared the authorities' efforts with those of a not very skilled pilot who is trying to land a Concorde on a narrow strip, between an ocean of deflation and a mountain of hyperinflation."These people failed us, they're going to fail us again," Taleb told cnbc.
More at : http://www.cnbc.com/id/31203621
U.S. Job Losses Slow Down, Unemployment rate hits 9.4%
Bloomberg : The U.S. lost fewer jobs than forecast in May, reinforcing signs that the deepest recession in half a century is starting to abate. 
Payrolls fell by 345,000, the least in eight months, after a revised 504,000 loss in April, the Labor Department said today in Washington. The jobless rate increased to 9.4 percent, the highest since 1983, in part as more people joined the labor force to look for work.
Treasury 10-year note yields rose to the highest since November as a report showed U.S. employers cut the least jobs in eight months during May, bolstering expectations that the worst of the recession may be over.
Biggest US Bankruptcies
Five out the the top ten biggest bankruptcies in US happened during this Economic crisis. General Motors the latest one to add in the list features at the 4th place, Another auto giant Chrysler filed Bankruptcy about a month ago and is the seventh biggest so far in the US history.
1. Lehman Brothers - investment banking (2008)
2. Washington Mutual - savings and loan holding (2008)
3.WorldCom - telecom (2002)
4. General Motors - auto (2009)
5. Enron- energy (2001)
6. Conseco - insurance and finance (2002)
7.Chrysler - auto (2009)
8.Thornburg Mortgage Inc - residential mortgage lender (2009)
9. Pacific Gas and Electric Company - electricity and natural gas (2001)
10.Texaco - petroleum major (1987)
1. Lehman Brothers - investment banking (2008)
2. Washington Mutual - savings and loan holding (2008)
3.WorldCom - telecom (2002)
4. General Motors - auto (2009)
5. Enron- energy (2001)
6. Conseco - insurance and finance (2002)
7.Chrysler - auto (2009)
8.Thornburg Mortgage Inc - residential mortgage lender (2009)
9. Pacific Gas and Electric Company - electricity and natural gas (2001)
10.Texaco - petroleum major (1987)
US Economy shrinks at 5.7% rate
The U.S. economy shrank at an annual pace of 5.7% in the first quarter, a less severe drop than initially reported but still the second-biggest quarterly decline in 27 years, the government said Friday.
Economists expect a drop in gross domestic product this quarter as well, although not as sharp as in the first three months of the year.
Last month, the government initially reported that gross domestic product -- the broadest measure of the nation's economic activity -- fell at an annual rate of 6.1%.
The revision fell short of economists' expectations of a 5.5% drop, according to a consensus estimate from Briefing.com.
The first quarter of 2009 marked the third quarter in a row that the economy has contracted. It was the second worst drop in the measure since the early 1980s -- behind only the fourth quarter of 2008, when GDP plunged at an annual pace of 6.3%.
more at : cnnmoney.com
Geithner says US banks are healing
U.S. Treasury Secretary Timothy Geithner said Wednesday the Obama administration's was making headway in settling financial markets and said a program to cleanse so-called toxic assets from banks' balance sheets will start operating over the next six weeks
Testifying to the Senate Banking Committee, Geithner said the U.S. financial system was "starting to heal" after a period of severe trauma, and he estimated that $123.7 billion was left in a financial bailout fund approved by Congress in October.
Testifying to the Senate Banking Committee, Geithner said the U.S. financial system was "starting to heal" after a period of severe trauma, and he estimated that $123.7 billion was left in a financial bailout fund approved by Congress in October.
But in opening remarks, the top Republican on the panel, Sen. Richard Shelby of Alabama, said there had been "a massive waste of taxpayer dollars" because there was no clear strategy for deploying hundreds of billions of dollars in rescue funds.
Geithner said financial companies were adjusting their operations in ways that will make them less vulnerable to shocks like the one they have gone through
"Leverage has declined, the most vulnerable parts of the non-bank financial system no longer pose the same risk, and banks are funding themselves more conservatively," he said.
More at : cnbc.com
Jim Rogers : Market to make a new bottom
The stock market may hit new lows this year or the next as the current rally has been largely caused by the money printed by central banks and fundamental problems remain unsolved, legendary investor Jim Rogers told CNBC Wednesday.
His views echo those of renowned bear Marc Faber, who told CNBC last week that the rises in share prices did not mean the world was embarking on a path of sustainable economic growth.
His views echo those of renowned bear Marc Faber, who told CNBC last week that the rises in share prices did not mean the world was embarking on a path of sustainable economic growth.
"I'm not buying shares if that's what you mean. Not at all," Rogers told "Squawk Box Asia.""The bottom will probably come later this year, next year, who knows when," he added.
Governments have not solved the essential problems that caused the crisis but instead they "flooded the world with money," according to Rogers.
Trying to solve the problem of too much consumption and too much debt with more consumption "defies belief" and will not work, he said.
U.S Jobless rate jumps to 8.9%
MarketWatch -The unemployment rate jumped to a 26-year high of 8.9% in April as the U.S. economy shed 539,000 more jobs, the Department of Labor reported Friday.
April's loss of 539,000 jobs was the smallest decline since October's 380,000. However, job losses in February and March were revised higher by a total of 66,000.
The nonfarm payrolls report was largely as expected, reflecting a slight easing in the pace of massive job destruction that had averaged 680,000 over the previous five months. Since the recession began in December 2007, payrolls have fallen by 5.7 million, or 4.1% of payrolls, the largest percentage decline since the 1958 recession.
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April's loss of 539,000 jobs was the smallest decline since October's 380,000. However, job losses in February and March were revised higher by a total of 66,000.
"It is a sobering toll," said President Barack Obama. "We're still in the midst of a recession that was years in the making and will be months or even years in the unmaking; and we should expect further job losses in the months to come."
Job losses were widespread across industries in April. The only sectors adding jobs were health care and government, which was boosted by the hiring of temporary workers to prepare for the census next year. Private-sector employment fell by 611,000.
Nassim Taleb - current global crisis worse than 1930
Bloomberg -- The current global crisis is “vastly worse” than the 1930s because financial systems and economies worldwide have become more interdependent, “Black Swan” author Nassim Nicholas Taleb said.
“This is the most difficult period of humanity that we’re going through today because governments have no control,” Taleb, 49, told a conference in Singapore today. “Navigating the world is much harder than in the 1930s.”
Full article : Bloomberg.com
Thomas Friedman: This Isn't Your Grandma's Recession
Thomas Friedman explains the complexity of the economic crisis, and why the bottom is not in sight
5 Dire predictions from Market watchers
Meredith Whitney:
Banking Analyst , Oppenheimer & Co
Prediction:
The Treasury's rescue plan won't work. "We do not believe a 'bad bank' structure addresses the root problem of contracting system capital."
Barry Knapp:
U.S. Portfolio Strategist, Barclays
Prediction:
Government policy is masking the true economic picture. "Since December, we have been expecting a retest of the November low. We believe that the policy euphoria associated with the 'bad bank' plan will prove to be short lived.
Niall Ferguson:
Professor of History, Harvard University
Prediction:
We'll look back on this year and realize "every forecast had to be revised – usually downwards – at least three times.”
David Rosenberg:
Chief North American Economist , Bank of America Merrill Lynch
Prediction:
Households lose $20 trillion once the dust settles on the downturn and any government action won't minimize that amount.
Albert Edwards:
Cross Asset Strategist, Societe Generale
Prediction
"A subsequent trade war could see a re-run of the Great Depression."
source : www.smartmoney.com
Banking Analyst , Oppenheimer & Co
Prediction:
The Treasury's rescue plan won't work. "We do not believe a 'bad bank' structure addresses the root problem of contracting system capital."
Barry Knapp:
U.S. Portfolio Strategist, Barclays
Prediction:
Government policy is masking the true economic picture. "Since December, we have been expecting a retest of the November low. We believe that the policy euphoria associated with the 'bad bank' plan will prove to be short lived.
Niall Ferguson:
Professor of History, Harvard University
Prediction:
We'll look back on this year and realize "every forecast had to be revised – usually downwards – at least three times.”
David Rosenberg:
Chief North American Economist , Bank of America Merrill Lynch
Prediction:
Households lose $20 trillion once the dust settles on the downturn and any government action won't minimize that amount.
Albert Edwards:
Cross Asset Strategist, Societe Generale
Prediction
"A subsequent trade war could see a re-run of the Great Depression."
source : www.smartmoney.com
