Archive for the ‘Economics’ Category

It seems the storm is subsiding, even for just a bit.

Fewer U.S. workers filed new claims for jobless benefits for a third straight week last week and productivity rose at a stronger-than-expected pace in the first quarter, data showed on Thursday, supporting budding hope that the recession was losing force.

Initial claims for state unemployment insurance benefits fell 4,000 to 621,000 in the week ended May 30, the Labor Department said. The week covered the Memorial Day holiday, which could have had an impact on the data.

Oh how the mighty have fallen.

Citigroup Inc’s (C.N) run of ignominy has now come to this: losing its coveted spot in the Dow Jones industrial average (.DJI) to a former unit.Dow Jones Indexes on Monday said the property and casualty insurer Travelers Cos (TRV.N) will replace Citigroup in its flagship 30-stock index of blue-chip stocks, effective June 8.Citigroup shares have traded below $5 since mid-January, and bottomed at 97 cents on March 5, after huge losses led to a series of federal bailouts. Taxpayers could end up owning 34 percent of what was once the world’s largest bank by market value.

Imagine what these companies, and our economy, might look like if politicians like Harry Reid, Nancy Pelosi, George W. Bush, and Barack Obama didn’t start mortgaging our kids future to “rescue” everyone.

Ohhh. I didn’t realize Swine Flu would have such a positive impact…

Oil prices fell over 2 percent toward $50 a barrel on Monday, paring some of the previous session’s near 4 percent gain, on fears of a global flu pandemic after an outbreak of swine flu in Mexico.

The impending release of U.S. bank “stress test” results, a Federal Reserve meeting and a flood of earnings due later this week also heightened investor caution.

The ride keeps on going.

The ups.

AT&T Inc (T.N) posted a smaller-than-expected drop in quarterly profit due to strong growth in its nascent video and high-speed Internet service, sending shares up 2 percent.

And the downs.

Morgan Stanley (MS.N) posted its second straight quarterly loss on Wednesday and slashed its dividend as real estate investment losses and a debt-related charge wiped out gains from its trading businesses.

This sounds like the perfect setup for the government’s ultimate plan.

A surge in troubled loans overshadowed better-than-expected earnings at Bank of America Corp, and the largest U.S. bank expects the credit situation to worsen, driving its shares down 17 percent.

While first-quarter profit more than doubled, the results are unlikely to end calls by investors for Kenneth Lewis to step down as chief executive or give up the post of chairman. The bank’s purchase of Merrill Lynch & Co on January 1 led to an emergency federal bailout two weeks later.

And that plan is…

Obama administration officials have determined they can avoid asking Congress for more bank bailout funds by converting existing loans to the largest U.S. banks into common stock, The New York Times reported on Sunday.

President Barack Obama’s top economic advisers now say such a conversion would let them stretch what is left of the $700 billion financial bailout fund further than they had expected a few months ago, the paper said, citing administration officials it did not identify.

Converting the loans to the 19 biggest U.S. banks into common shares would turn the government aid into available capital and give the government a large equity stake in return, the newspaper said.

First it was baby steps, but now it seems were in a full out sprint toward nationalization.

Paul Volcker, senior economic adviser to President Barack Obama, said on Saturday that the U.S. economic recovery will be a “long slog” but that the rate of decline “is going to slow.”

The United States may not be in a Great Depression but it is “in a great recession for sure,” following the economy’s unprecedented tumble in late 2008, Volcker said at a financial markets conference at Vanderbilt University in Nashville, Tennessee.

It has been bad. People have lost their jobs, people have lost their homes, credit histories are trash, but what matters most is the label that people like Paul Volcker give the recession.

The Federal Reserve will not allow its unorthodox policies to trigger a surge in inflation, but may still need to do more to ease credit if the economy remains weak, the Fed’s No. 2 official said on Saturday.

Donald Kohn, vice chairman of the Federal Reserve, said that six quarters into the recession, the path of the U.S. economy was unclear and the Fed must be flexible.

They can’t even control the flow of credit from the banks, or the housing industry, or the stock market, but they want you to think they can control inflation.

Yeah, sure. I’ll take some beachfront property to go with my bridge, please.

A bankrupt General Motors Corp (GM.N) could be reorganized in as little as a month, a top bankruptcy attorney said on Thursday, and if the case lingered then a “tremendous sinkhole” could open in the U.S. economy, a Delaware bankruptcy judge said.

GM would have to reach agreement with most parties prior to filing and then move its healthy operations quickly to a new entity that is free of pre-bankruptcy liabilities, said Mark D. Collins, director of Richards, Layton & Finger in Wilmington, Delaware.

Meanwhile, all of the pre-bankruptcy debt would leave a tremendous sinkhole with the creditors who got left behind. Quick and painless, yeah, uh-huh.

The Obama administration is expected to name Fannie Mae (FNM.N) Chief Executive Herb Allison to head the U.S. government’s $700 billion financial rescue program, a source familiar with the matter said on Monday.

The announcement is expected “in coming days,” the source said, adding that Michael Williams, Fannie Mae’s chief operating officer, is expected to be named as Allison’s successor.

This makes a whole lot of sense. Put the guy who drove Fannie Mae into the ground in charge of the TARP funds. Smart move, if the only change you want is FAIL.

If the government would keep their hands out of it and their mouths closed, things like this wouldn’t happen.

Shares of General Motors Corp plunged 17 percent on Monday after a report that the U.S. Treasury is directing the automaker to lay the groundwork for a bankruptcy filing by June 1.

GM, which is operating under $13.4 billion of emergency government loans, has until June 1 to win sweeping concessions from bondholders and the United Auto Workers union. The Obama administration has warned that the alternative would be bankruptcy.

The Treasury department is directing GM to lay out the groundwork for bankruptcy. Wow. Bankruptcy is probably the best option for GM at this point, but I don’t think it’s the government’s call to decide the issue.