Credit Crisis Solutions

1 man action: making a difference in a battered economy

Making a difference in a down economy

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When is the Economy Recovering?

Also: Is this really such a good time to buy stocks for the long run?

The latest news on job losses, house prices and the stock market has a lot of readers asking some very hard questions. Like when is the economy going to recover? And when will the stock market start going back up? We have no idea. But here are some things to keep an eye on as we keep slogging through the roughest economy in at least a generation.

While we are in the midst of a very slow economy, what do past recessions tell us about the recovery? When it does rebound, does it take off quickly? Come back slowly? Does the stock market react first? Or real estate? Do companies start to hire again soon? Do banks start to lend money again fairly quickly? What will be signs to economy is turning around?
— Dave, Youngstown, Ohio

If you want to pick one set of economic statistics to watch, keep an eye on the job numbers — both the monthly employment report and the weekly numbers showing how many people sign up for unemployment insurance for the first time. At the moment, these are the most worrisome because they seem to be accelerating downward. The next monthly reading comes this Friday. Some economists are talking about job losses of as many as 750,000 in February,  up from 598,000 in January. Last week, 667,000 signed up for unemployment benefits, the most in one week in a quarter century, bringing the total to about 6.5 million.

y John W. Schoen

Bad economy or no economy?

Relativating this all: are we in abad economy? or no economy? globalisation makes us show all. We also see all that is not relevant to us. Its like seeing all the crime things in the world. This doesnt make you happy either. So, important now is to get out of there! Because, there is an economy! It just has to be rediscovered. Cristmas is coming and soon afterthat springtime. We are not in a dark corner, we are on the downside of a spiral. Almost would like to say

Forbes: Financial Crisis Will Spawn “Next Great Mega-Litigation”

The current market turmoil will lead to the “next great mega-litigation,” a Forbes article predicts, “likely to rival the more than 12 billion dollars spent cleaning up the Enron and WorldCom debacles.”

“This is certainly a major litigation event,” Samuel Rudman of Coughlin, Stoia, Geller, Rudman & Robbins told Forbes. “There has already been a lot of lawsuits brought in connection with subprime mortgages, and there are going to be a lot more. If you’re a litigator, you’re busy and probably will be for a while.” Coughlin Stoia was lead counsel in the securities class action lawsuit against Enron that settled for a record $7.2 billion.

Jesse Finkelstein, a partner at law firm Richards, Layton & Finger agrees that significant litigation is inevitable but adds that “It gets much more complicated when the government is involved.  Ultimately, the involvement of the government as an investor and guarantor in an institution could make it much harder for plaintiffs to collect and could reduce the amount they win, which will likely act as a disincentive for some of the plaintiffs’ firms.”

Credit crisis UK: Cash-strapped consumers now start mending their toasters

Rather than incur up to £100 call out charges and employing expensive professionals, consumers have started mending their own toasters, ovens and lawnmowers.

The online auction site eBay, has also reported a boom in customers looking to buy spare parts for their cars, in an attempt to save on garage costs.

Grill elements in ovens frequently wear out before the oven itself does, but most spare elements cost less than £40.

“It can be surprisingly easy to mend some of your kit,” said Mr Henton, “And I think it’s rather good that people are starting to be less wasteful and mend their appliances, rather than throwing them away.”

Honda in Swindon (United Kingdom) closing for 50 days

Honda has announced plans to cut production at its plant in Swindon, which will close for 50 days next year.

Honda said it plans to make 61,000 fewer vehicles in Japan and Europe as it struggles to cope with slowing global demand.

The 50-day shutdown will mean the Swindon plant will close for the whole of February and March 2009.

“This is unexpected bad news,” said Jim D’Avilia, labour union Unite’s regional officer.

“We will not be renewing contracts for 3,000 of our temporary workers at the end of March 2009,” the company said.

Mazda, another of Japan’s largest car markers, announced on Thursday that it would cut 1,300 jobs and cut production for the current year by 48,000 units.

Tough economic conditions and banks’ unwillingness to lend money mean global demand for cars is slowing dramatically.

In the US, General Motors, Ford and Chrysler are seeking a cash injection from the government after a collapse in sales.

UK: Economy boost may mean more pain later

The government is preparing to confirm that a huge and unplanned rise in government borrowing will have to be paid back in the years to come.

“The chancellor has to tell the country how far we’ve gone into the red,”

Speaking earlier Gordon Brown said: “If you don’t act now and fiscal action is what we are talking about - whether it’s public investment or whether it’s in taxation - we will pay for it later. You’ve got to act now so we avoid a worse problem.”

Citigroup Banks plunges on uncertainties

Shares in Citigroup, one of the biggest US banks, on Friday plunged amid uncertainty about the firm’s future.

The firm’s stock rose in early trading but later tumbled to end the day 20% lower at $3.77 as investors awaited the outcome of a meeting of board members.

Earlier in the week the firm announced 52,000 job losses worldwide.

“Its fear and panic at this point, ” said Gerard Cassidy, a banking analyst at RBC Capital.

Citigroup is one of nine financial institutions receiving funds from the US government’s bail-out programme.

Hard-up GM to sell Suzuki stake

General Motors is selling its 3% stake in the Japanese carmaker Suzuki for $230m (£156m) to raise cash.

Suzuki said it would buy back the stake, adding that it understood GM faced a need to secure funding.

Suzuki, which specialises in small cars, said the two companies would continue to cooperate in a number of joint projects, including developing new technologies. Their partnership started in 1981.

“We understand full well that GM faces a need to sell its shareholdings to secure funding,” Suzuki said.

GM has said it would cut jobs and costs and has also suspended merger talks with Chrysler to focus on current issues.