Category Archives: Business/Economics

Business/Economics, U.S.

Government Incompetence: U.S. taxpayers lose $1.3 billion to Chrysler

So what about all the noise about Chrysler supposedly paying off its bailout loan?  In the end the U.S. taxpayers lost $1.3 billion.

The pay off was in the form of stock buy back.  The United States government sold its remaining shares of Chrysler stock to Fiat.  The result was a net loss for U.S. taxpayers.  The U.S. Department of Treasury called it a “major accomplishment”!

Maybe if the federal government wasn’t so busy bailing out banks and corporations (along with its increasing war budget) it wouldn’t be in so much financial trouble right now.

 

Business/Economics, International, U.S.

No Economic Recovery for U.S.: Apple profits way up, it’s all about China, baby!

Apple Incorporated posted a huge 124% year to year profit, for the second quarter of 2011.  But most of those sales weren’t made in the United States.

Chinese consumers are going nuts for Apple products.  In fact, Apple’s 2011 sales in China are, so far, six times what they were in 2010.

Two reasons for Apple’s exploding sales in China: One is that scalpers were buying up everything in the stores, creating a shortage (and of course selling Apple products for much more).  The second reason is that Apple Inc is investing big time into China: “In the long run, Apple can likely increase its market share since it is gaining sales momentum by investing more resources into China, which it had not been doing previously.”-Kitty Fok, IDC Asia-Pacific.

Business/Economics, International, Opinion, U.S.

What Economic Recovery? U.S. corporations put the brakes on investing into China, no money to invest

“Under such circumstances, both private U.S. companies and governments in different levels are not capable of investing significantly in China. Somehow they are looking for the investment from China to help them boost their own economies and low-employment rate.”-Zhang Qizuo, economist Chengdu University

The Chinese Ministry of Commerce says investments coming from the United States are way down, compared to last year.  It’s a sign of how bad the U.S. economy is, and the growing discontentment with U.S. citizens in seeing U.S. jobs go to China.

“Large-scale U.S. companies are also under domestic pressure in ‘giving jobs to Chinese’, therefore, they have to consider the feelings of approximately 14 million Americans and deliberately delay or even cut some investment plans in China.”-Zhang Shiqing, economist Nankai University

Overall U.S. investments in China dropped from January of last year, to June of this year, by a big 22.32%.  That’s a big drop, but in dollar amounts, the U.S. still invested $1.68 billion.

European countries, and other Asian countries, are still on the plus side of investing into China.

Another factor in the drop in U.S. investments is inflation in China, which includes the cost of labor.  Labor cost are going up in China, and in the U.S. labor costs are going down, no thanks to Union busting and high unemployment.

I can’t think that this is helping cut unemployment in the United States, after all there has been no change in the overall unemployment situation, even though there’s been a 22.32% drop in investments into China.  Despite what Chinese economist think, I think the real reason is that U.S. corporations, and government, have put the brakes on investing into China, is because they’re out of money to invest.

Business/Economics, International

What Economic Recovery? Chinese Housing Bubble about to explode: Property Loans halted

“You’d better prepare to pay 40% of your home price as down payment, because commercial banks are going to ask more for a property loan.”-Gong Hang, bank official

First the Chinese government created a new income tax schedule that meant more people were excused from paying taxes, but left them potentially unable to buy a home (due to not having the required tax documents).  Then they ordered down payments to be increased, or mortgage interest rates must be increased (some banks did both).  Now, banks are just flat refusing to issue anymore property loans.

In what’s called 2nd and 3rd tier cities, in China, banks are refusing to issue anymore loans for property: “We will not accept property loan applications at present, even if it is from a first-time home buyer.”-unnamed bank official

If you think paying 40% down on a home is outrageous, wait ’till you read this: 40% down is for first time home buyers, if you’re buying a home for the second time Chinese banks now want 50-60% down.

Bank officials say it’s because the Chinese government ordered banks to hold onto their money, by not lending it out.  This is an attempt to control inflation, which Chinese officials are fearing could get out of control.

 

Business/Economics, International, U.S.

Rupert Murdoch scandal hits the stock market, Dow Jones boss quits, FBI investigating possible phone hacks in the United States

One reason why the mainstream media is so into reporting the stock market; Rupert Murdoch owns the stock reporting company Dow Jones.  Tonight, July 15 U.S. time, the CEO of the Dow Jones quit.

Les Hinton, the boss of Murdoch’s Dow Jones & Co stepped down, as the British phone hacking scandal surrounding Murdoch’s News Corp spread to the United States.  The Federal Bureau of Investigation is now looking into similar acts here in the U.S.

Already the CEO of Murdoch’s News International, Rebekah Brooks, resigned.  Brooks was also the editor of the News of the World, the newspaper implicated in the scandal.

More and more British media outlets, owned by Murdoch, are being implicated for the same thing; phone hacking and bribing police and politicians for confidential information.  Murdoch’s News Corp controls a multitude of media outlets around the world, and he controls the Dow Jones.

Why did Les Hinton, the boss of the Dow Jones, quit?  It could be because he used to be the chairman of Murdoch’s News International, when all the alleged criminal acts took place.

British media has reported that Rebekah Brooks made an unofficial statement to employees of the News of the World, that things are going to get only worse, as more information about the goings on inside Murdoch’s News Corp are revealed.

A U.S. corporate governance analysts said the same thing, only officially: “There is going to be a constant drip, drip, drip of more information coming out that is simply going to get worse and worse.”-Nell Minow, GovernanceMetrics

 

 

Business/Economics, International, Opinion, U.S.

What Economic Recovery? IMF says Greece needs a third bailout, and they’re still waiting for the second one

On July 13, the International Monetary Fund issued a report in which they said Greece needed to cut even more public spending, and that it needs a third bailout.  European officials are still hammering out the details of the second bailout.

The IMF says Greece needs a third bailout, consisting of at least 71 billion Euros from the European Union, and 33 billion Euros from private creditors.

Enough! Just let the dominoes start falling!

Business/Economics, Opinion, U.S.

Voting for local levies and bonds only puts your local community deeper in the debt hole

“They [banks] didn’t vote for the bond issue, they didn’t support the bond issue.  They’re simply trying to underwrite some of them.”-Paul Sheldon Foote, California State University Fullerton

Professor Foote is explaining that, what he calls “…stupid idea…” bonds/levies, are forms of debt voted on by taxpayers, but funded by investment bankers.  

You don’t want local government and school district employees to lose their jobs.  You don’t want to see kids lose out on education programs that might be cut.  But voting for a levy, or bond issue, means you’re supporting those jobs and education programs purely on debt.

“Local governments draft levy bonds to sell at current market rates to raise capital for work projects.”-eHow money

Local bond levies, are forms of debt sold by your local officials to investors.  Those investors expect a return on their investment, that’s where the increases to your property tax/fees come in.  Investors pay the up front costs by buying local bonds, and you the taxpayer pay back the investor.
“The voters typically saddle the cost of funding such projects through increased tax levies.”-eHow money

If your local officials were truly conservative in their fiscal and monetary policies, there would be no need for most of the bond levies that you’re tricked into voting for.

In fact, it becomes a downward spiral, many bond levies are actually being used to pay off previous bond issues.  It has to stop, before there’s no one left who’s willing to invest in the next bond/levy issue.

In fact the debt crisis in California is due in part to investors not wanting to back up any more bond issues: “The state treasurer can not possibly issue every single one of them [bond issues] because, fortunately, the ratings agencies and investors see through it and would not possibly finance every single stupid idea that comes out of politicians!”–-Paul Sheldon Foote, California State University Fullerton

So what’s the answer?  An economics professor in the United Kingdom likes what North Dakota has done with its own State Bank: “The answer is, is to use the state bank mechanism for all your capital projects… And [North] Dakota is in fact, in practice, in a way a public bank giving a lead in that respect.”-Rodney Shakespeare

Shakespeare says the public bank in North Dakota charges interest on loans, but the revenue from that interest stays in North Dakota, and does not go out of state to corporate controlled banks.

Business/Economics, International, U.S.

What Economic Recovery? Chinese industries continue to cut back on imports, blames lack of demand

“The slowdown in import growth will last two to three months or even longer due to both falling demand and possible commodity price drops.”-Li Wei, Standard Chartered Shanghai

While China’s industry activity looks great, compared to other countries, the fact is that it’s slowing down.  The latest import numbers are the lowest ‘increase’ since November 2009.  This means that Chinese industries are buying less materials from other countries.

Imports are at 19.3%, compared to the previous year.  But export numbers are down as well.

China’s June export numbers are 17.9%, compared to May’s 19.4%.  Export numbers to the U.S. and EU dropped to 16.9%.

“The slow recovery of the global economy and the European debt crisis have added uncertainties to export growth.”-Zheng Yuesheng, GAC statistics

While some Chinese industry analysts remain optimistic, some Chinese officials are not so positive: “Exporters in Zhejiang have experienced a disappointing first half, and the second half will not be better.”-Han Jie, Zhejiang Department of Commerce


 

 

Business/Economics, International

What Economic Recovery? European Union stumbling on second Greek bailout, as debt Emergency in Italy has EU officials scrambling

“We can’t go on for many more days like Friday. We’re very worried about Italy.”-European Central Bank official

July 11, European Union officials are in emergency mode, after it became clear that the second bailout loan for Greece will arrive too late to stop default, and now Italy is on the verge of financial collapse.

EU officials are scrambling to figure out how to get the bailout money to the Greek government faster, because it is now clear Greece is in much worse shape than thought, and will officially default soon.

“We need to move on this in the next couple of weeks.  It’s not a case of waiting until late August or early September as Germany is saying.  That’s too late and markets will make us pay for it.”-European Union official

EU officials are also scrambling to plan a possible bailout of Italy’s collapsing economy.  On Friday, July 8, there was an unexpected sell off of Italian government assets.  Italy is considered the EU’s third largest economy.

Both EU officials, and Italian officials say the bond markets are actually making things worse.  That’s because a lot of the money for the Greek bailout, and now a possible Italian bailout, is coming from private sources (like investors).  Now many of those private bailout sources are having second thoughts because it’s very possible they won’t get their money back.

It’s not helping that Germany is pushing for a rethink of the second Greek bailout.  They say the problem in Greece could take 15 years to fix: “It [second Greek bailout] can’t be something that will suffice for a three-month period but rather has to offer solutions to the problem that will cover the next 10 to 15 years.”-Christian Wulff, President of Germany

Germany has a lot of power in the EU, because they seem to be the only member country who’s economy is booming, thanks to their deals with China.

 

Business/Economics, International

Another reason the housing market bubble in China could burst: New Income Tax Laws

Recently the Chinese government changed income tax laws, to help low income workers keep more of their money.  The new law increased the number of workers who don’t have to file income tax.

The Chinese real estate industry is now warning that could reduce property sales.

In China you must have official papers declaring you a permanent resident of the area you want to buy property in.  If you don’t have such paperwork, you can use your income tax filing to show that you work in that area.  The problem with the new tax law is that it will reduce the number of migrant workers who would’ve had those tax records to use to buy a home with.

A Beijing realtor says the new tax law will reduce the number of qualified migrants, in his area, by more than 90%.

This comes after the Chinese government ordered banks to tighten mortgage lending by either increasing down payments, or increasing mortgage interest rates.