Showing posts with label money. Show all posts
Showing posts with label money. Show all posts
Dubai money woes augur a new phase in the economic crisis?
As if to remind the world of the fragile economy, Dubai, the Middle East country with an ambitious agenda to grow financially was spooked by its inability to meet debt obligations.
Dubai’s debt at $80 billion (£48 billion) is enough to worry the market in spite of assurances given to investors by several banks. Dubai World, the state-owned corporation asked a halt on its interest payments, a moratorium of 6 months, because it cannot meet its payments. Affected by the recession, the millionaire’s paradise has suffered a slump in real estate after its extravagant spending on fancy skyscrapers.
“Fears of a dangerous new phase in the economic crisis swept around the globe yesterday as traders responded to the shock announcement that a debt-laden Dubai state corporation was unable to meet its interest bill.
Shares plunged, weak currencies were battered and more than £14 billion was wiped from the value of British banks on fears that they would be left nursing new losses.”---TimesOnline (11/26/09, Hosking, P; Robertson, D.)
The desert kingdom's money problems mirror the economic meltdown still pestering the United States and the rest of the world. Optimistic investors trumpet the tanking of the economy is over, but a double dip recession in 2010 is a real possibility in the interconnected business world.
There is high uncertainty in the market. In spite of instruments available (i.e. Dubai help from the United Arab Emirates,) confidence in the economy is low, leading many to speculate on how many more vulnerable countries will be mired in the crisis. As much as the lesson USA now faces, no country in the planet can rationally buy its way to properity. By borrowing or printing paper money and spending beyond one's capacity people will end up poor in the long haul. (Photo Credit; MailOnline) =0=
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Money woes threaten the budget of at least 10 US states
It is not enough to know that New York State has its own money trouble. According to the Washington based Pew Center, California together with 9 other states are on the brink of budget disasters. The group’s analysis put lawmakers and governors in these financially troubled states on notice to the looming increase in taxes, employee lay-offs, and slowing of government services. The economy deteriorates in California, Arizona, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin.
According to the report, quick action is needed to mitigate a fiscal disaster. Double digit budget deficits are rising with poor business, massive unemployment, and uncontrolled housing slump and foreclosures. The 10 vulnerable states are home to a third of the American population---California, with a huge economy is mentioned as having the highest risk
“California leads the most vulnerable states identified by Pew, which describes it as having poor money-management practices. According to the Legislative Analyst's Office, California has made nearly $60 billion in budget adjustments — in the form of cuts to education and social service programs, temporary tax hikes, one-time gimmicks and stimulus spending — since February as tax revenues plunged.
Many of those fixes aren't expected to last. The state's temporary tax hikes will begin to expire at the end of 2010, while federal stimulus spending will begin to run out a year after that.”--- AP (11/11/09, Lin, J.)
By estimates California will incur a huge deficit hovering at $12.4 billion and $14.4 billion next year. This may be about 17 percent of the state's $84.6 billion general fund budget that is used for daily operation. Governor Arnold Schwarzenegger predicts more budget cuts are in the offing as a corrective measure.
The poor economy is creating undue stress of many Americans. They are learning the hard way to live within their means. The public is realizing that USA can’t buy its way to prosperity (i.e. by extravagant stimulus packages, unbridled borrowing and spending) as what the current government is doing. The country under Pres. Barack Obama may go through extreme financial hardship if his economic planners don’t go slow in their flamboyance and cocky spending. In this financial crisis, the government should have little room for gimmickry and naive manipulation of the economy. (Photo Credit: library.thinkquest.org) =0=
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Bernie Madoff’s pal dies in pool
Jeffry Picower, the friend of Ponzi scam artist Bernie Madoff was found lifeless in his private pool in 1410 Ocean Blvd. in Palm Beach, Florida. The 67-year old man suffered Parkinson’s Disease and had heart probllems. His wife Barbara called 911 to report the incident. Fished out from the swimming pool, he was rushed to a nearby hospital, but was pronounced dead on arrival.
Picower, a philanthropist who donated to the Massachusetts Institute of Technology, New York Public Library and Harvard Medical School had been accused by disgruntled Madoff clients as the largest beneficiary of money fraud.
“In 1999, the Picowers received a 950-percent profit from the Ponzi-scheme investments, according to a $5 billion lawsuit by the trustee overseeing liquidation of Madoff’s companies, Irving Picard. Picard is seeking $6.7 billion back from the Pickowers to help repay Madoff victims.”-----New York Post (10/25/09, Kay, J.)
Police officers cut off access of the Picower home as they investigate the cause of the death. (Photo Credit: Zadrian) =0=
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Severe shortage of calamity fund in RP
Just as the overspending of Pres. Gloria Arroyo on non-essential trips abroad recedes from the headlines, the reports of suffering from typhoons, ship wrecks, floods, and other natural disasters escape the attention of public servants.
Known for natural calamities, the country needs adequate allotment for disaster preparedness. Money to be used in emergencies must be a priority. But in the Philippines, the national disaster fund is only P2 billion pesos--- a meager 10% of the expected annual expenses (P20 billion) for misfortunes. With severe lack of budget, the people can barely cope during storms, floods, earthquakes, tornadoes and volcanic eruptions.
Deputy presidential spokesman Anthony Golez says the government has set aside P2 billion to cover for natural catastrophes, but the money spent so far in 2009 is already more than P20 billion. The entire budget has been spent in the first three months of the year.
This week, the sinking of three ships namely Super Ferry 9, MV Hera and MB Minham hasn’t elicited enough action except for grounding of the sea vessels and a knee-jerk reaction to quickly bury the dead, rescue survivors and bring them home. More is expected from government agencies to tackle the problems related to the disaster. The chance that anyting substatial to improve maritime travel and safety is slim.
The flaws in disaster planning are ignored by government officials who are now focused with the coming presidential election. Countless citizens are left on their own without help from social services when calamities strike. Perennial deficiencies and apathy still dominate the entire nation. (Photo Credit: Jeasm) =0=
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New world currency to replace the US dollar?
Yes! This is the proposal being pushed by the United Nations to revamp the world’s monetary system. Officials of the UN Conference on Trade and Development (UNCTAD said the money arrangement right now is not working well and there is a need for change to help correct the worldwide financial downturn.
The proposal comes at a time with China, worried about USA’s increased printing of cash has suggested with Russia that the US dollar, the current global currency must be replaced to avoid inflation.
"Replacing the dollar with an artificial currency would solve some of the problems related to the potential of countries running large deficits and would help stability," said Detlef Kotte, one of the report's authors. "But you will also need a system of managed exchange rates. Countries should keep real exchange rates [adjusted for inflation] stable. Central banks would have to intervene and if not they would have to be told to do so by a multilateral institution such as the International Monetary Fund." ----Telegraph.co.uk (09/0007/09, Conway, Edmund)
As predicted by economists, hyperinflation is a risk for the United States as the Obama Administration tries to implement its plan of excessive spending. Worrying the public of the present money crunch, the US budget deficit has worsened and risig fast. With Obama's watch, the US economy is expected to saddle a staggering 9 trillion deficit in the next 10 years putting a huge burden to taxpayers.
In the recent poll of the a Geneva-based World Economic Forum, the US dropped down only second to Switzerland as the most competitive economy in a poll conducted to greater than 10,000 business leaders. Singapore and Sweden came third and fourth respectively. (Photo Credit: =0=
Yes! This is the proposal being pushed by the United Nations to revamp the world’s monetary system. Officials of the UN Conference on Trade and Development (UNCTAD said the money arrangement right now is not working well and there is a need for change to help correct the worldwide financial downturn.
The proposal comes at a time with China, worried about USA’s increased printing of cash to buy bonds has suggested with Russia that the US dollar, the current global currency must be replaced to avoid inflation.
"Replacing the dollar with an artificial currency would solve some of the problems related to the potential of countries running large deficits and would help stability," said Detlef Kotte, one of the report's authors. "But you will also need a system of managed exchange rates. Countries should keep real exchange rates [adjusted for inflation] stable. Central banks would have to intervene and if not they would have to be told to do so by a multilateral institution such as the International Monetary Fund." ----Telegraph.co.uk (09/0007/09, Conway, Edmund)
As predicted by economists, hyperinflation is a risk for the United States as the Obama Administration tries to implement its plan of excessive spending. Worrying the public of the present monetary plans, the US budget deficit has further jumped and is expected to reach 9 trillion in the next 10 years.
In the recent poll of the Geneva-based World Economic Forum, the US dropped down second to Switzerland as the most competitive economy in a poll conducted to greater than 10,000 business leaders. Singapore and Sweden came third and fourth respectively. (Photo Credit: AP; Mary Altffer) =0=
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Transparency for RP, but not for GMA’s unexplained wealth?
After splurging in lavish dinners with her entourage abroad that had price tags close to $15,000 to $20,000(P750,000-1,000,000,) Pres. Gloria Arroyo’s assets an liabilities have been under close scrutiny.
The Philippine Center of Investigative Journalism (PCIJ) say since her assumption of office, the president has accumulated properties 2000x than their original value. In spite of the over-hyped call for honesty and transparency by the administration, the lawyers of GMA and her husband, Jose Miguel Arroyo, don’t see the need to explain how the couple amassed such wealth. But obviously, the people want to know.
Corruption is the centerpiece of why the Philippines is mired in poverty, but even the president fails to follow the leads to know the extent government corruption! The public sees a collusion by the leadership to keep the status quo of defrauding the country. The “scratch my back, and I’ll scratch your back culture” is at work here----so almost no one gets caught; the few who are proven thieves are pardoned.
“A report by the PCIJ said Mrs. Arroyo’s declared net worth more than doubled from P66.8 million in 2001 to P143.54 million in 2008. The increase of P76.74 million represents a growth rate of 114 percent. If her SALNs were plotted from the time she was still senator 17 years ago, the rise in her wealth would have been 2,000 percent, according to PCIJ.”-----Philstar (08/13/09)
This questionable rise in assets of a politician in power is not uncommon. The accusations of theft, corruption, fraud, and abuse in government are pervasive even if there are laws that can be used to get into the bottom of the truth. It dates back since Marcos time whose descendants are inching for a come-back, hiding under the rug the outrageous graft and corruption of their parents.
In spite of calls for President Arroyo to comply on the Republic Act 6713 or the Code of Conduct and Ethical Standards for Public Officials and Employees which when violated is punishable by imprisonment, fines, dismissal or suspension, just like any slicky politician, GMA allows the foul odor in her record to pester. It’s a common reaction of corrupt politicians to pretend nothing odiously bad is going on.
Arroyo’s discordant lifestyle and wealth are incompatible to her salary as president. She receives a measly Php 60,000.00 (about USD 1,333.33 at Php 45.00 to 1 USD exchange rate) monthly. The US president’s salary at about $400,000/year is about 3,000% higher. Therefore, there is always a good reason to compute and recompute how GMA came up with her assets in so short a time. Obviously, this goes true with other politicians who dodge showing the money trail of their wealth.
GMA's business interests, if laid bare are not hard audit. If there is any, let investigators see where the conflict of interest lies, which transactions she did in accord with the law or where fraud occurre which may explain why she and her friends have become so rich.
The stonewalling by the president and her husband to conceal the truth has caused despair and loss of credibility; it makes her a pariah of the people. At the waning days of her presidency come along, her job approval is poor---among the lowest a president ever received in tenure.
The furor resulting from her extravagance abroad and clever machinations is deplorable and very much compatible with corruption. It's contemptible. There is obvious failure of the checks and balances in the system. It’s time that Arroyo comes clean from the disgusting accusations which plague her leadership. (Photo Credit: sunnexfo) =0=
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King Ponzi schemer Bernard Madoff gets max of 150 years in jail
After irate testimonies from his victims, the financial whiz Bernard Madoff who defrauded his clients of some $65 billion in a Ponzi scheme, the largest in recorded history, was sentenced to 150 years in prison. It was the maximum that could be handed for a crime of such magnitude. The sentence was far more than the 12 years his lawyer asked for the reviled deceitful defendant. He stole huge money from trusting investors all across the globe right under the noses of government regulators.
US District Judge Denny Chin of the Manhattan Federal Court in New York handed the verdict to the cheers of a crowd that included his disgruntled clients from all across the social economic spectrum----investors from all races--- rich and poor, young and old, known and incognito who have lost their life savings and humiliated in a spurious money operandi masterminded by Madoff.
"Here, the message must be sent that Mr. Madoff's crimes were extraordinarily evil," Chin said. "This kind of manipulation of the system is not just a bloodless crime that takes place on paper, but one instead that takes a staggering toll."---Judge Denny Chin (06/29/09, New York Daily News (06/29/09, Zambito, T, Martinez;Siemaszko, C.)
Some of Madoff’s Victims
------------------------------------------Description---------------------Amount
Fairfield Greenwich Advisors-----investment firm--------------$7,500,000,000
Banco Santander------------------Spanish bank-----------------$2,870,000,000
Bank Medici-------------------------Austrian bank----------------$2,100,000,000
HSBC--------------------------------- British bank-------------------$1,000,000,000
BNP------------------------------------French bank-------------------$431,170,000
New York University------------------University--------------------$24,000,000
Korea Teachers Pension----------Korean Pension Fund---------$9,100,000
Marc Rich------------------------------fugitive financier--------------Not available
Yeshiva University---------------------NY private university--------$14,500,000
Int’l Olympic Committee--------------Olympic organizer----------$4,800,000
Zsa Zsa Gabor-------------------------actress------------------------$10,000,000
Diocese of St. Thomas--------------Cath. Church (Virgin Is)-----$2,000,000
Source: http://s.wsj.net/public/resources/documents/st_madoff_victims_20081215.html
In a statement Madoff’s wife Ruth who was not charged of a crime spoke of her shame and embarrassment, saying she too was betrayed. Most of those who followed the case, including the victims believe, Madoff who lived an extravagant life, got what he deserved.
His clients had been hurting since the discovery of the fraud. The 71 year-old former Nasdaq chairman apologized for his wrongdoing which ruined the finances of many. After a 6-minute statement of regret, the king of Ponzi was led by gurards to a solitary maximum security seclusion at the Manhattan Federal jail. More investigation had to be done to uncover the money trail in the confusing gargantuan scam. (Photo Credit: GiganticPanda) =0=
RELATED BLOGS: "Bernard Madoff, accused top Ponzi scheme artist is allowed bail" Posted by mesiamd at 1/13/2009; "Ponzi wiz Bernard Madoff sent to prison" Posted by mesiamd at 3/13/2009
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California inches close to bankruptcy
Affected by the biggest recession gripping the country, the state of California has failed to come up with a budget, bringing the golden state near financial insolvency. The state is spending like crazy more than it can generate income. Government revenue is down by 27%. Business has been slow forcing companies to down-size or stop operation.
If no budget is agreed upon, the state is expected to run out of money by the end of July.
“It will run out of cash within weeks if it does not balance its books, leaving it little option but to postpone a variety of payments, according to State Controller John Chiang, who estimated last week that California was "less than 50 days away from a meltdown of state government."---Reuters (06/15/09, Christie, J; Gevirtz, L.)
California's income has dwindled with rising joblessness rate of 11% and unchecked housing crisis making it hard to close the budget gap of about $24 billion. One option is to cut spending --- the curtailment of entitlements and welfare programs including health insurance.
Budget cuts may be needed by putting teachers, firefighters and police officers out of work and stopping medical-care services. More taxes could be levelled on the residents to generate income. Unlike in the past, Californians are learning to live within their means just lilke Americans across the country. (Photo Credit: Jose Antonio Galloso) =0=
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US Debt: runaway spending in Obama’s ambitious recovery plan worries Americans
“President Obama's ambitious plans to cut middle-class taxes, overhaul health care and expand access to college would require massive borrowing over the next decade, leaving the nation mired far deeper in debt than the White House previously estimated...
Tax collections, meanwhile, would lag well behind spending, producing huge annual budget deficits that would force the nation to borrow nearly $9.3 trillion over the next decade -- $2.3 trillion more than the president predicted when he unveiled his budget request just one month ago.” ----Washington Post (05/21/09, Montgomery, L)
To give the public a picture of what is to come, among high-profile company failures, on Monday, June 1, 2009, General Motors (GM,) the world’s largest automaker is poised to file bankruptcy (Chapter 11) in a US court in spite of the earlier bail-out extended by the government.
By placing the governmment stakes on the faltering giant car manufacturing company, the Obama administration is putting huge burden on the tax-payers. There are $20 billion dollars in federal assistance so far given by the Treasury in exchange for about 60% controlling stakes of the company. In addition to the $20 billion dollars, Obama plans to tell the Americans that an additional $30 billion is needed to see GM go through bankruptcy reorganization.
American taxpayers don't know if their money is being used wisely by their leaders. No one knows how the automaker can bring back the business to its old glory. Customers are uncertain, worried, and mad---something that corporate America haven't seen before. There will be more than 1,000 dealerships and plants that will be closed. About 20,000 workers in the car industry will be laid off as a result of the bankruptcy.
According to the U.S. National Debt Clock, the outstanding outstanding public debt as of June 1, 2009 is: $ 11,323,565,316,132.15. With the estimated population of the United States to be 306,284,942, each citizen's debt burden is pegged at about $36,970.69. How can Americans pay these?
The average US citizen may not fully realize that excessive borrowing and spending will likely mortgage the future of the children of the next generation. As cautious citizens have warned, the richest nation on earth may end up dirt poor earlier than predicted. The alarm is met with avoidance and silent dread by those who hear about it, especially those who think that Obama is the answer to their money problems..(Photo credit: Debtfree:Danilov) =0
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Ponzi wiz Bernard Madoff sent to prison
"It's a little bit like seeing the devil," said Burt Ross, a lawyer from Englewood, NJ who lost $5 million in Madoff’s swindle. Feeling betrayed, DeWitt Baker, an investor who lost more than $1 million angrily fumed "I'd stone him to death." ----AP (03.12/09, Neusmeister, L; Hays, T)
Bernard Madoff, the personification of Wall Street greed and reckless extravagance has admitted guilt of pulling the biggest Ponzi scam in history. In the Federal Court of Manhattan, in New York, US district judge Denny Chin revoked Madoff’s $10 million bail and ordered the disgraced swindler's confinement to a windowless room at the Metropolitan Correction Center instead of being comfortably holed in his lavish $7 million home at 133 E, 64th Street.
For defrauding his clients of $65 billion, at sentencing date in June this year, the former chairman of Nasdaq could get a life sentence---a maximum of 150 years in jail for perjury and financial fraud.
Without implicating anyone except himself, the apologetic Madoff who gave no comfort to his victims, pleaded guilty in all counts of fraud. In doing so, many believed his acceptance of full responsibility was a way to protect his wife Ruth, his family, and friends. His victims were fuming mad. Wall Street regulators ignored the flags of deception which allowed the once respected investment guru to operate without being caught for decades.
Thousands of defrauded clients in the United States and abroad include banks, charities, financial institutions, pension funds, retirees, and private individuals whose life savings and investments have been damaged. In their ranks are those who have suffered irreparable financial ruin with no chance to recover. At least one victim has been driven into committing suicide.
Some of Madoff’s Victims
------------------------------------------Description---------------------Amount
Fairfield Greenwich Advisors-----investment firm--------------$7,500,000,000
Banco Santander------------------Spanish bank-----------------$2,870,000,000
Bank Medici-------------------------Austrian bank----------------$2,100,000,000
HSBC--------------------------------- British bank-------------------$1,000,000,000
BNP------------------------------------French bank-------------------$431,170,000
New York University------------------University--------------------$24,000,000
Korea Teachers Pension----------Korean Pension Fund---------$9,100,000
Marc Rich------------------------------fugitive financier--------------Not available
Yeshiva University---------------------NY private university--------$14,500,000
Int’l Olympic Committee--------------Olympic organizer----------$4,800,000
Zsa Zsa Gabor-------------------------actress------------------------$10,000,000
Diocese of St. Thomas---------------Cath. Church (Virgin Is)-----$2,000,000
Source: http://s.wsj.net/public/resources/documents/st_madoff_victims_20081215.html
The imprisonment of Madoff is just the tip of the iceberg to the massive scandal that rocks Wall Street. Trust in the financial institutions is at an all time low. Many Americans adversely affected by the economic meltdown are demanding for accountability and prosecution of those responsible in the betrayal of trust. (Photo Credits: Acteon; Jason Smith) =0=
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Tardy war compensation comes at the sunset of WWII Philippine heroes
The $787 billion spending package signed by US Pres. Barack Obama on February 17, 2009 has a special goody for the Filipino World War II veterans. After a long-drawn campaign to get compensation for fighting in the American-Japanese war, an estimated 15,000 war heroes will have a part of the $198 million earmarked by the US government.
“Only 15,000 surviving Filipino and Filipino-American WWII veterans whose names are in the Revised Reconstructed Guerrilla Roster (RRGR) of 1948 are qualified to receive the tax-free lump sum payment. The RRGR is kept in the state of Missouri although certified true copies are available in other official sites."---Malaya (02/16/09, Ilustre, J)
The US Embassy in Manila is preparing to process applications next week that will give $15,000 for each elderly survivor (average age: 85 years) who is a US citizen and $9,000 for the non-US citizen. The cash reward doesn’t include the widows, children and dependents of veterans.
Of the 250,000 who fought with the US forces, about 6% (15,000) lived long enough be eligible for benefits. This opens the heart-breaking memories of the suffering Filipinos went through during the war and the injustice caused by the delay in the granting of compensation for the veterans.
Though the tardy award seems a victory of justice, one can sadly recall the thousands who valiantly fought, offered their lives, and died without seeing the liberation of the country. The horror of Bataan March must be an indelible reminder for all Filipinos. Let us pause and remember the heroism of those who died without seeing the fruits of the war effort. For them, we must pay respects and be eternally grateful. (Photo Credit: wtop) =0=
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Getting to know Charles Ponzi
Charles Ponzi (1882-1949) was a US immigrant from Lugo, Italy who swindled thousands of New Englanders in a postage-stamp scam in the 1920s. He popularized an investment which paid returns to investors out of the money paid by those who followed them rather than from profit. This illegal money operation was named after him. The Ponzi scheme as it is known today, evolved with many variations. Disregarding some differences in the swindling method, Ponzi had been sometimes referred to as the "pyramid scam."Promising 40% investment return against that which was offered by savings banks with only 5% yield, Ponzi convinced thousands of investors that he could make astounding profits on a buy and sell of international mail coupons. His scheme worked for sometime on the principle of “rob Peter to pay Paul.” Basically, it was a set-up of cash pay-off and distribution without real investment---http://www.sec.gov/answers/ponzi.htm
Ponzi’s fast money and high rate of return was too good to resist and many were snared into the fake investment operation. He became an instant millionaire who diverted the money of new investor-recruits to pay for those who invested earlier until the operation collapsed.
At the end of his financial fraud, only a third of the duped investors’ money was returned. Investors’ losses amounted to about $3 million to $7 million (about $75 million today)in those days. Ponzi was convicted for mail fraud and embezzlement, put to jail, and later deported. (Photo Credit: Wikipedia) =0=
Bernard Madoff, accused top Ponzi scheme artist is allowed bail
Ponzi scheme artist Bernard Madoff who was accused of swindling the business world of a staggering $50 billion had been granted bail against the assertion of prosecutors that he is a flight risk and an economic threat to the community. During the holidays while waiting for indictment, the former Nasdaq chairman sent friends and relatives diamond bracelets, jewelries, and gifts amounting to about $1 million in violation of a court-ordered freeze.
But Federal Magistrate Judge Ronald Ellis of Manhattan ruled that Madoff (who did not have prior convictions,) could stay in his luxurious $7 million Eastside Manhattan apartment with some additional restrictions--- instead of being locked in jail.
“The anxiously awaited bail decision does put additional restrictions on Madoff, including forcing him to come up with a list of items at his apartment and allowing a security firm to check on the items. The security company will also be allowed to search all outgoing mail from Madoff to ensure that no property has been transferred”.---AP (01/12/09, Neumeister, L)
The judge’s decision disappointed and infuriated many who were victimized by the fraud, supposedly the largest ever in financial history. They believed the accused swindler who was reportedly fitted with an electronic surveillance tag on his ankle got a “different brand of justice than the guy in the street.”
Madoff’s decades-long fraudulent business activity operated similar to a pyramid scam under the guise of a legitimate trading powerhouse which promised high investment yields with low fees. His company which started in 1960 attracted high profile banks, industry leaders, well-connected individuals, loyal friends, and rich celebrities. R. Thierry Magon de la Villehuchet, a prominent hedge fund manager-client who lost $1.4 billion committed suicide in his office in Madison Avenue last month.
In spite of the gravity of the accusations and the public clamor that Madoff be confined in prison, the judge’s decision to put him on house arrest shows how the legal system operates. Following the course of a criminal proceeding, it will take some time before a conviction, if apt for this case, will be decided.
Of course this isn’t consolation. The erosion of trust is astounding. At the back of this monumental fraud, the government regulators appear negligent for the red flags of fraud has been there for years. They have not done a good job in protecting American citizens---especially those ordinary investors on the street. (Photo Credit: Adam Crowe) =0=
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Mr. Fix & the tall challenge to keep USA & the world to believe that we can quickly come out of the financial mess
It is said that when a new president gets elected in the United States, Wall Street gets exuberant and the market becomes cocky. Renewed confidence and optimism bring an upward trend in stocks trading in America and the rest of the world. The upward trend hasn’t happened in President-elect Barack Obama, the Mr. Fix expected by many to deliver the world from this troubling economic mess.
Since the Great Depression (1930’s to the 1940’s,) America suffers from the worst financial downturn. On Friday, November 21, 2008, on midday trading, the Dow Jones Industrials (DJI) tumbled 67.47 points further, or 0.89 percent, to 7,484.82. The Standard & Poor's 500 Index (.SPX) lost 8.85 points, or 1.18 percent, to 743.59. The Nasdaq Composite Index (.IXIC) was down 17.82 points, or 1.35 percent, at 1,298.30.
In spite of the $700 billion bailout, the market continues to slide. With the public confused of what is going on, economic planners need more money for bailouts to keep the economy on track and stable. There are those who seriously doubt whether this will work as instability and business losses continue. Financial leaders like Ben Shalom Bernanke of the Federal Reserve and Henry Paulson of the Treasury have a short window period to work on before the full blown effects of the crisis appear early next year.
Joblessness at 6.5%, the highest since 1994, is expected to top 8.5% in 2009. It feeds the fire of uncertainty, raising doubts on the usefulness of helping the floundering US auto and banking industry.
More business close-downs are feared. The housing market has almost screeched into a halt leaving many homes in foreclosures. American auto manufacturers brace for bankrupcies. The public is spooked by advisories of store closings. Americans are angered and worried. The usual honeymoon period given to an incoming administration may not last long as the impatient public can’t wait for the magical fruition of Obama’s promise during the campaign. A scramble to form a government cabinet to help the new president shows signs of old hands from the Clinton administration which make people to ask if it’s the same traditional politics that will be at play. Without guarantee of success, there is palpable anxiety over leaders with checkered past trying to reprogram the nation’s socio-economic direction.
Obama is in a bind. There is a growing belief that the recession will last longer than what has been experienced in recent history. Some are thinking that it can grow worse to precipitate the hapless conditions of the Great Depression. Though not much can be done by individual US citizens to prevent the worse, sensible measures like focusing on one’s job, belt-tightening in personal finance, and deciding wisely on investment strategies are recommended.
Global economies are suffering. The American sniffle has worsened and spread into a global pneumonia whose end result is basically unknown. A protracted economic malady is likely to bring instability and stagnation. It makes civil unrest and chaos more likely particularly in the poor countries where hunger is common.
Meanwhile, the public overwhelmingly craves that Obama comes victorious in reversing the ugly course of business. How best he can do it is subject to debate and entails vigilant waiting. While he prepares for his inauguration in January, Americans gripped with worry need to give him time and the benefit of the doubt. (Photo Credits: JSDart)=0=
RELATED BLOG: "Dr. Doom’s economic crystal ball & the need to say the truth" Posted by mesiamd at 10/30/2008
Layaway comes back
As a sign of difficult times brought about by the financial crisis, stores in America like K Mart, Marshalls, T J Maxx etc. are going back to the payment practice of layaway, a departure from the convenient credit card that modern-day Americans are used to. Lending institutions are tightening their borrower’s rules and store customers may use layaway to buy their favorite gifts for this coming Christmas. “Layaway plans aren't free -- most stores charge a fee for setting aside the merchandise, and ask for a down payment. Kmart requires customers to pay a $5 service fee and a $10 cancellation fee upfront, or put down 10% of the item's cost, whichever is greater. Customers must make biweekly payments over eight weeks to pay the balance. In case of default, the item goes back into stock and the customer receives a refund, minus the $15.” Wall Street; Yahoo Finance (10/22/08, Bustillo, M.)
Layaway was popular in the Great Depression when credit crunch drove Americans to pay installments for merchandise to buy. It is again an option now that affordability and money have suddenly become scarce. Certainly, USA isn’t as different as different as Philippines when economic bad times strike. (Photo Credits: Crocidillicus.com; USCredit)=0=
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Truth, not only travel briefing, is the answer versus money laundering
With the deterioration of the economy, we have learned to be frugal---- traveling abroad simply. The clothes we wear and the money we bring are scaled in terms of affordability and status. Yet there are Filipinos who insist to be flashy like the "ritzy" PNP officer who carried a “bayong” of cash to an Interpol conference in Russia.
Eliseo de la Paz, a former director and comptroller of the Philippine National Police (PNP,) traveled in style with a group of Filipino law enforcement officers in the 77th General Interpol Assemby in St. Petersburg, Russia. We didn’t know if he dressed appropriately, but he was caught bringing P6.9 million of “contingency” funds, a shameful violation of smuggling and the international money laundering law.
It was disgusting that the senior PNP law enforcer and his defenders take the incident lightly. PNP Chief Supt Nicanor Bartolome, perhaps in an attempt to dampen the corruption implications of de la Paz’ action, announced all police officers traveling abroad must undergo mandatory briefing. Did Bartolome mean de la Paz and his group didn’t have one? Wouldn’t it be routine to have pre-departure orientations for Filipinos representing the Philippines abroad?
If Bartolome’s travel orientation’s goal is to educate us about the money laundering law which allows less than $10,000 of undeclared cash during travel, his plan is practically useless. It is a duplication of what is routinely done in international airports, airplanes, and customs offices.
Everybody knows, before reaching the port of entry, flight attendants bring in forms to make sure passengers don’t commit the error of breaking the law. In the customs, passports and money declaration documents are rechecked. There is absolutely no chance that de la Paz wouldn’t know this simple travel procedure, especially if it regards to concealing huge sums of money.
De la Paz brought P6.9 million in cash way beyond what was legally allowed. A retiree from PNP service, he and his wife must not even be part of the Interpol meeting in the first place. But they were there for a reason the public must know, held by Russian authorities that their counterparts in Manila wanted to pass like a fart.
If Bartolome wants to conceal this ignominious incident under the rug as most military men do for their comrades, why doesn’t he dig into the truth about de la Paz’ P4.5 million. The PNP officer claims he brings “personal” money in a conference. What will he do with that mind-boggling sum and how did he acquire it?
Bartolome asks why the Russian authorities didn’t catch de la Paz early on. But aren’t foreign delegates of meetings accorded respect and nothing like this is imagined to happen in St. Petersburg?
There goes the rub. Another Filipino official has disgraced himself and put the name of the nation in the sewers. Alibis, cheating, and corruption have been so entrenched among our officials. Who then will believe us if we are like this? (Photo Credits: Christian Science Monitor/Bennett; Banyuhay)=0=
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Parallels in the US and Philippine Presidential Elections
"If some think we have reached the pits in our standard for electing national leaders, they better observe what is happening in the US elections. We may be "shallow" and immature as an electorate but the current US electoral pool won't have the right to sneer at us come 2010 (if ever elections are held at all)."---MyTy (10/17/08) (Photo Credit: MarkBerry)
With market still bleeding, corporate greed blamed for financial woes in Wall Street
With last week’s unprecedented government bail out of Fannie Mae and Freddie Mac to the bankruptcy of Lehman Brothers, the United States and the financial world are finding ways to avoid further meltdown in Wall Street. Spooked by financial uncertainties, money institutions are finding ways to avert market collapse.
American International Group Inc. (AIG,) the largest insurance company of the world, suffered losses as its shares fell down 92% after fool-heartedly insuring risky bonds. The Federal Reserve had to loan $85 billion to save the company from financial ruin which could disrupt markets and put the economy in jeopardy if its losses aren't contained. This is in addition to the Treasury Department’s commitment to infuse up to about $100 billion in funds to the Fannies, America's top mortgage lenders to keep them from going insolvent. Merrill Lynch, Bear Stearns, and Washington Mutual suffer money problems too, feeding uncertainty, confusion, fear and distrust in the banking system. At this point it is unclear whether these measures will reverse the on-going bleeding in the market.
To where this economic woes will end is anybody’s guess. For ordinary citizens, the uncertainties that shake the market bring new realities and offer opportunities to reassess where their investments will go. In spite of their efforts to improve their finances, people have been gripped with scary concerns about jobs, higher taxes, social security, healthcare, retirement and the future in
The financial crisis had been predicted since the Clinton administration. When the stock market slumped in 2000, the housing market boom that followed built unrealistic expectations and over-taxed the lending system. After a long run of profitable home buying and selling, prices slumped in 2006 and continued to the fall thereafter. In the midst of mounting mortgage debts, many borrowers were unable to pay their loans, forcing them to default. The accrued losses quickly mounted, triggering the current financial crisis.
The crisis caused by multifactorial reasons didn’t happen overnight and the blame is shared in many fronts. Corporate greed of Wall Street is partly responsible. CEO’s and money managers, pandering on their interests, rake astronomical profits in overseeing stocks and investment funds to the disadvantage of regular shareholders. Government regulators were remiss in protecting the public when they did little to restrict flagrant money lending schemes and shady business deals of corrupt opportunists.
The Congress on the other hand had been slow in updating the laws that regulate the business of Wall Street. Loans in banks were approved by mortgage lenders in spite of the borrower’s questionable ability to pay. The bullish optimism among house-buyers had caught them ill-prepared for the ups and downs of the market. Investigation and prosecution of corporate malfeasance and abuses had been inadequate.
To promote stability, the government has little choice but to bail-out the floundering companies at the expense of tax payers. To clean up the mess, it has to recognize the weaknesses and failures of the system that lacks oversight. With a huge trade deficit, America needs a correction and tougher regulations in the financial markets to avoid further damage to the economy.
The adverse effects of this economic downturn have serious repercussions on the economies abroad. There is volatility of stocks traded abroad. There is worry across Europe, Asia and Russia. If the confidence to USA’s financial institutions weakens or altogether lost, economies worldwide will suffer affecting the most, the poorest nations.
Taxpayers, shareholders of investments and portfolio owners have to foot the bills to keep the economy going. They scramble for solutions to counter depreciation of homes and restore confidence in doing business. They need to bring back the profits in the stock market, lower the cost of borrowing, and stimulate the growth of businesses.
Yet new policies instituted by the emergence of global economy stand on the way. Saddled with debts and the on-going war on terrorism, the US finds itself in weaker economic footing now than in the past. If the American economy suffers further and reversal of the financial turmoil comes late, a possible worldwide recession can result to social and political instability.
The lessons learned from past hardships---the great depression and the world wars however make Americans resilient and hopeful. As they watch the events unfold, they try to find a wiggle room to solve their problems to escape the worst. The Bush administration is doing unprecedented measures to do just that, though its choices for solution are pretty limited. Photo Credits: Gingerbugjones; BeebsandChi; Steely.scott)=0=
Like Filipinos, Americans Have Money Troubles Too!
In an article by Glen Curtis (Investopedia.com,) an interesting graph from US Bureau of Economic Analysis caught my attention. It’s a telling illustration of our floundering savings rate when the cost of living around us is skyrocketing. Waking up to a world threatened by economic uncertainty and global recession, Americans are unable to save enough for the future. They have pressure from poor countries who ask them (plus their rich counterparts in the developed world) to share and redistribute wealth worldwide to stave off scarcity and famine.
But like Filipinos, Americans are aching in their pockets too. They don’t save as much money as before.
Burdened by impulse buying, house mortgages, and rising costs of credit card debts, the average personal savings rate of Americans is negative 0.5% in 2005, a time when they dug deep into their savings and spent all their incomes. This was close the worst savings rate in 1933 at the height of the Great Depression when savings rate plunged to negative 0.7%.
Today, the US income savings rate is about 0.5%, far short of the recommended 10%, to protect from unexpected money troubles in the future. According to experts, a savings below 5% of income brings serious possibility of financial ruin. They advise an allowance of at least 6 months of salary savings to cushion for any unforeseen change in our cash needs---unemployment, loss in natural disasters, illness, divorce, death in the family to name a few.
More belt-tightening is required of us to avoid becoming a bankruptcy casualty. We need to work harder and longer. It’s important to know where we are in our finances so we can make the needed corrections before our money situation worsens.=0=
When Money Rains From The Sky
About 23.5 million Filipinos --- a quarter of the population -- earn 67 pesos or less a day (Gov’t Readies P500 Subsidies to 4 Million Filipinos, ABS-CBN NewsOnline, AP 06/02/08). They’re unlike their southern neighbors, the Indonesians. Millions of them also live on the same measly budget (less than $2 per day.) With rising fuel prices, they struggle with worsening poverty.
On a bright sunny day, motivational speaker and author Tung Desem Waringin dropped $10,700 worth of Indonesian paper bills in a soccer field, 40 miles from Jakarta. He avoided doing it in the capital city for fear of chaos and mayhem that could arise from the crowds. The people dashed like crazy snatching the money from the wind. The give-away cash was a stunt to promote Mr. Warigin's book entitled Marketing Revolution.
The frenzied excitement of the poor caught in the picture taken by Associated Press (06/02/08, Alangkara, D) could well be the same in the Philippines if the much-needed currency was dropped there. In fact, it may be the same anywhere each time money unexpectedly rains from the sky. =0=
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