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If you need an iron clad guarantee stronger than Maytag Corporation’s guarantee on their washers, you won’t find a better one than the promise of a new depression and economic collapse due to the enormous amount of evidence being poured out by analysts and economic indicators.
Indeed, consumers are out of jobs; subsequently not able to pay their debts, and corporations continually ship domestic industries offshore in attempts to gain profits. The question is, if people do not have jobs to buy products, how will the corporations sell their wares? Simple: they will not because they are biting the hand that feeds them.
What are some of the bright solutions our politicians have cooking on the books? Well, for one, they keep pandering the same line that offshoring jobs is good for America, and that more credit and spending is the answer. Try asking retirees if these words are any solace to their fixed income situations.
“Local governments throughout California are facing severe financial challenges due to the worst economic downturn since the Great Depression. As a consequence, many agencies are laying off and furloughing employees resulting in decreased public services and employee hardship. Complicating the economic picture is the 23% loss on CalPERS investments in 2008 (this has been hiked to 28 percent), which will result in increased retirement costs for local agencies beginning in Fiscal Year 2010-11. This will further distress agencies and lead to more reductions in jobs and services (Teri Sforza, Register staff writer, 2009).
World heading into “Full blown depression”
Is Spain in a Depression?
The “Great Recession” seems horrible enough for those of us who live in North America.
However, for a number of countries across the world, the economic situation is much more dire.
One of those countries, according to Telegraph.co.uk, is Spain.
By any metric, Spain is currently living through a painful economic depression. Unemployment rates are already around 20% and expected to go higher (as high as 25% according to multiple forecasts).
In addition: A rapidly shrinking construction sector. Uncompetitive wages when compared to nearby countries. A massive overhang of unsold real estate properties. Massive credit debt, both for corporations and the Spanish government (Dave Manuel.com, 2009).
Bank of America loses $2.24B as loan losses rise
By IEVA M. AUGSTUMS
CHARLOTTE, N.C. (AP) – Bank of America Corp. said Friday it lost more than $2 billion in the third quarter as loan losses kept rising, providing further evidence that consumers are still struggling to pay their bills.
The nation’s second-largest bank, which lost $2.24 billion after accounting for preferred dividends, said its losses for failed loans came to almost $10 billion during the July-September period, up almost $1 billion from the second quarter. The bank also added $2.1 billion to its reserves to cover bad loans, bringing its provision for credit losses to $11.7 billion. The bank’s total allowance for loan and lease losses sits at $35.83 billion.
Bank of America said it lost $2.24 billion, or 26 cents per share, after accounting for the preferred dividends of $1.24 billion. That compared with earnings of $704 million, or 15 cents per share, a year earlier.
Revenue in the quarter increased 33 percent to $26.04 billion.
The loss was 5 cents more per share than the 21 cents forecast by analysts surveyed by Thomson Reuters Inc. Investors sent Bank of America shares down 97 cents, or 5.4 percent, to $17.13 in premarket trading. Shares closed Wednesday at $18.10.
“Obviously, credit costs remain high, and that is our major financial challenge going forward,” CEO Ken Lewis said in a statement accompanying the earnings report. “However, we are heartened by early positive signs, such as the leveling of delinquencies among our credit card numbers.”
Bank of America is considered particularly vulnerable to unemployment, which climbed last month to 9.8 percent in the U.S. Economists predict the jobless rate will pass 10 percent in the coming months.
The bank’s massive portfolio of credit-card loans could help investors determine where the economy is headed and how well the industry at large will fare, said Doug Dannemiller, senior analyst at Boston-based research firm Aite Group.
“As unemployment rates are in the 10 percent range, the results on consumer lending aren’t going to improve until that number gets lower,” Dannemiller said.
Recession Will Be ‘Full-Blown Depression’: Strategist
This global recession will turn into a “full-blown depression,” Nicu Harajchi, CEO of N1 Asset Management, said Friday, adding that global stimulus hasn’t come down to Main Street.
Wall Street is making money, while consumers aren’t, Harajchi told CNBC.
“We have seen the G20 coming out with cross border capital injections of $5 trillion this year… But a lot of this money hasn’t really come down to Main Street,” he said.
“When it comes down to corporate America, corporate Europe or even in Asia, in Japan, we are not seeing Main Street making any money,” he said. “Consumers are losing their jobs. They are struggling with their mortgages, with their credit. And we are just seeing this continuing.”
The $5 trillion injection is “monetary expansion,” according to Harajchi. “At some point, which we believe to be 2010/11, some of the central banks are going to recall some of that money and that will turn from monetary expansion to monetary contraction.”
He also said he doesn’t see the corporates or the public “being able to pay back that debt.”
Full article available at CNBC.com
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