- IBM Offers To Move Laid Off Workers To India
- President Obama to water down ‘Buy American’ plan after EU trade war threat
- California Pension Funds Close To Bankruptcy
- California issues IOUs instead of cheques
- Hundreds line up for days for Miami firefighter positions
- U.S. Property Owners Lost $3.3 Trillion in Home Value
- Ford US sales plunge 40 pct., Toyota down 32 pct.
- GM (GM) January Sales: Odds Of Chapter 11 Go Way Up
- Chart, Auto Sales
- Chart, US Vehicle Sales
- Chart, New Home Sales
- Pending Home Sales… Foreclosure Boom (Chart in article)
- Chart, Homeowner Vacancy Rate
- U.S. Home Ownership Rate Falls to 7-Year Low
- Funny Colbert Report Video
- U.S. Dollar
- Treasury to Outline Bank Plan Next Week
- The Economy and the Future of Health Care (Hat Tip Christopher Peters)
The climate is warm, there’s no shortage of exotic food, and the cost of living is rock bottom. That’s IBM (NYSE: IBM)’s pitch to the laid-off American workers it’s offering to place in India. The catch: Wages in the country are pennies-on-the-dollar compared to U.S. salaries.
Under a program called Project Match, IBM will help workers laid off from domestic sites obtain travel and visa assistance for countries in which Big Blue has openings. Mostly that’s developing markets like India, China, and Brazil.
Fritz Nelson spoke with Kent Kushar, the CIO of E&J Gallo Winery about what it takes to be the best and what qualities tomorrow’s CIO should possess.
"IBM has established Project Match to help you locate potential job opportunities in growth markets where your skills are in demand," IBM says in an internal notice on the initiative. "Should you accept a position in one of these countries, IBM offers financial assistance to offset moving costs, provides immigration support, such as visa assistance, and other support to help ease the transition of an international move."
In addition to India, China, and Brazil, IBM is offering to relocate redundant U.S. workers to a number of other developing markets, including Mexico, the Czech Republic, Russia, South Africa, Nigeria, and the United Arab Emirates, according to the notice, which was obtained Monday by InformationWeek.
The European Union warned the US yesterday against plunging the world into depression by adopting a planned "Buy American" policy, intensifying fears of a trade war.
The EU threatened to retaliate if the US Congress went ahead with sweeping measures in its $800 billion (£554 billion) stimulus plan to restrict spending to American goods and services.
Gordon Brown was caught in the crossfire as John Bruton, the EU Ambassador to Washington, said that "history has shown us" where the closing of markets leads – a clear reference to the Depression of the 1930s, triggered by US protectionist laws.
"I agree that we can’t send a protectionist message," he said in an interview with Fox TV. "I want to see what kind of language we can work on this issue. I think it would be a mistake, though, at a time when worldwide trade is declining, for us to start sending a message that somehow we’re just looking after ourselves and not concerned with world trade."
Mr Brown does not want to join criticism of President Obama’s stimulus proposals, which he sees as vindicating his own, but the Prime Minister remains strongly anti-protectionist, resisting calls yesterday for more safeguards for British workers.
The two largest pension funds in California, the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS), have lost billions of dollars in value. Hundreds of thousands of retiring state employees and teachers now face the stark choice of accepting much reduced pension checks or working past their retirement age.
CalPERS is the largest pension fund in the US and the fourth largest in the world. At its height in October 2007 it had $260 billion in assets, comparable to the GDP of Poland, Indonesia or Denmark. At the end of 2008 CalPERS was worth $186 billion, one of its worst annual declines since the fund’s inception in 1932. It is one of the latest casualties of the financial collapse on Wall Street.
After years of gambling in real estate investments, the state workers pension fund has lost more than 41 percent of its value, after peaking last fall. Its real estate holdings have dropped from $9 billion to $5.8 billion, according to the Sacramento Bee.
CalPERS manages pension and health benefits for more than 1.6 million retirees and their families. The pensions are guaranteed by law, but given the current economic malaise employers may be asked to contribute more from their payrolls. The average employer, a taxpayer-funded government agency, contributes 12.7 percent of their payroll to CalPERS, while workers must contribute 5 to 7 percent of their salaries.
For now, a "rainy day fund" is being used to offset the worst in losses. It is likely, however, that CalPERS will ask for additional funds starting in July 2010 from state employers and July 2011 from local employers. The increases could be from 2 to 5 percent. Since the employers are public entities, the money will have to come from taxpayers or from budget cuts to other social programs.
CalPERS’s losses are intimately tied with the collapse of the housing bubble and the economic downturn in general. The Dow Jones Industrial Average has dropped 39.8 percent during the same period that CalPERS fell 31 percent. Because of the fund’s aggressive purchasing of real estate during the property bubble, CalPERS is now the largest owner of undeveloped residential land in America, much of it purchased in Arizona, California and Florida, some of the states hardest hit by the real estate crash. Many of these properties were purchased when their prices were at their peak.
The world’s eighth largest economy started issuing IOU (I-owe-you) vouchers instead of cheques on Monday as an ongoing budget battle and a $42-billion deficit left the state without enough cash to meet its commitments.
Governor Arnold Schwarzenegger was meeting with legislators in a bid to resolve the standoff that has prevented the state from passing a budget.
State comptroller John Ching has warned that the state could completely run out of cash by the end of this month if a solution is not found.
On Friday, tens of thousands of state workers will begin taking two days a month of forced leave without pay.
A representative for the state’s Department of Finance said checks were not being issued for Cal Grant college scholarships, county social services and the California Highway Patrol.
No state tax rebates will be issued until a plan is adopted to deal with the state’s huge deficit, the Department of Finance said.
Schwarzenegger has declared a fiscal emergency as California faces a $42-billion deficit through June 2010. The massive US state has been hard hit by the recession which has seen housing prices plunge and revenues dry up.
Issuing state bonds is also tough given the paralysis in the credit markets and a credit downgrade because of the lack of a budget. Attempts to bridge the gap through a combination of spending cuts and tax hikes have been stymied by Republican legislators who reject any new taxes.
MIAMI (WSVN) — With the unemployment rate in South Florida rising, Miami Fire Rescue was inundated with hundreds of applications for only a few positions.
Hector Mirabile, the director of employee relations at the City of Miami offered a harsh reality of the job application process. "There are 35 openings that we have," he said. "We will accept 750 qualified applications who will compete for those 35 positions."
The City of Miami accepted the applications on Monday morning from hundreds of job seekers, some of whom had waited outside since Saturday to apply. By noon, there were still people in line with no guarantee to be hired.
The unemployment rate in Florida is the highest it’s been in 16 years. In Miami-Dade, the unemployment rate is at seven percent, and in Broward County just under seven percent. Both are up almost three percent since December 2007.
(Bloomberg) — The U.S. housing market lost $3.3 trillion in value last year and almost one in six owners with mortgages owed more than their homes were worth as the economy went into recession, Zillow.com said.
The median estimated home price declined 11.6 percent in 2008 to $192,119 and homeowners lost $1.4 trillion in value in the fourth quarter alone, the Seattle-based real estate data service said in a report today.
"It’s like a runaway train gaining momentum," Stan Humphries, Zillow’s vice president of data and analytics, said in an interview. "It’s difficult to say when we’ll see a bottom to the housing market."
The U.S. economy shrank the most in the fourth quarter since 1982, contracting at a 3.8 percent annual pace, the Commerce Department said Jan. 30. Record foreclosures have pushed down prices as unemployment rose. More than 2.3 million properties got a default or auction notice or were seized by lenders last year, according to RealtyTrac Inc., a seller of data on defaults.
About $6.1 trillion of value has been lost since the housing market peaked in the second quarter of 2006 and last year’s decline was almost triple the $1.3 trillion lost in 2007, Zillow said.
DETROIT (AP) – Ford Motor Co. said Tuesday its U.S. vehicle sales fell 40 percent in January, setting an abysmal start to 2009 for the automaker and the industry overall as sales to fleet buyers like rental car companies weighed down the results.
Japanese rival Toyota Motor Corp. posted a 32 percent drop for the month but managed to outsell Ford.
Ford sold 93,060 light vehicles in January, compared with 155,832 in the same month of 2008. Toyota sold 117,287 vehicles, down from 171,849. Light vehicle sales exclude heavy trucks.
Other automakers also are expected to report lower sales when they release their figures later Tuesday. The industry has reported at least a 30 percent decline in U.S. sales every month since October.
Chrysler LLC sales chief Steven Landry said Tuesday that U.S. industry sales could drop as much as 35 percent in January. After meeting with Chrysler dealers at a suburban Detroit hotel, he said the annualized sales rate for the month could drop below 10 million for the first time in more than 26 years.
According to Ward’s AutoInfoBank, the last month in which the seasonally adjusted annual sales rate dropped below 10 million was August 1982, when it hit 9.9 million as the nation was mired in a recession.
Turning around GM (GM) and getting additional money from the federal government to support the company after the end of March depends on two things.
The first is that GM has to get its costs of doing business under control. That will be difficult because the UAW, creditors, and suppliers will all have to make significant concessions. Each group is going to put up some resistance.
The second part of GM’s restructuring depends on something over which is has only the most modest control–sales.
General Motors reported a 48.9% drop in January U.S. light vehicle sales to 128,198 cars and trucks from 250,926 in January last year. According to MarketWatch, " Sales of cars fell 57.9% to 43,943 while truck sales declined 42.5% to 84,255. The automaker also forecasted its North American production to total 380,000 vehicles in the first quarter–118,000 cars and 262,000 trucks, down 57% from the same quarter last year."
With it stock trading under $3, GM’s commons shareholders have almost been wiped out. The company would probably be better off going into Chapter 11 with the government provided funds for it to operation through a restructuring period. The court could cut labor and credit costs without drawn out negotiation which might not yield enough to bring GM’s costs down to where it can survive in the worst car market in decades.
The Big Picture reports Foreclosure Sales in the West Drive PHSI
A surge in foreclosure sales and distressed properties was the primary driver behind a notable improvement in the Pending Home Sales Index. In December, the PHSI rose 6.3% from an upwardly revised reading in November. The more important year-over-year reading was a more modest 2.1% increase versus December 2007.
The number of Americans who own their own home fell to a seven-year low in the fourth quarter of 2008 compared to a year ago, the Census Bureau reported Wednesday.
The rate of home ownership fell to 67.5% in the fourth quarter, down from 67.8% during the same quarter a year ago. The report also said 2.9% of homes, excluding rental properties, were vacant and on the market, up slightly from 2.8% a year ago.
Home ownership in the U.S. peaked at a rate of 69.2% in 2004, at the height of the real estate boom.
Uncle Buck, please go into that little room, get undressed and climb up on the table. It is time for an examination. This is just a routine check up as we will check your pulse rate, blood pressure, breathing and of course poke and probe around a little bit. Don’t worry, we will be gentle.
The weekly USD chart shows the sharp uptrend that was broken down impulsively in December has been re surmounted. But this occurs along with down triggered MACD and TRIX (from very over bought) and a pathetic looking ROC divergence. Still, the dollar caught many off guard and while I had targeted mid-80’s for a rebound, it is pressing higher still. For our intermediate term dollar bearish scenario to play out, 88 needs to hold on the re-test.
Contrary to the fear of a strong dollar however, I once again note the ‘gold ratios’, two of which are represented on this chart in the 1st two lower panels. Isn’t it beautiful how gold in relation to positively correlated things keeps protecting peoples’ value while at the same time ramping gold mining companies’ fundamentals? Strong USD = lots of misperceptions and fear, but it should not make gold stock holders fearful in and of itself. Of course, markets being the sum of the Investoriat’s greed, fear and actions, that is not what generally happens and the miners will likely remain under pressure until the dollar tops and their fundamentals actually take a down tick.
Okay Uncle Buck, you can step down off the table and get dressed. Everything looks fine with the exception of one minor detail; your pulse rate indicates you are dead.
WASHINGTON — Treasury Secretary Timothy Geithner will give a speech next week in which he will outline the Obama administration’s financial-rescue plans, according to a Treasury official.
The plan will include an effort to help homeowners in danger of foreclosure, as well as additional steps to shore up the financial sector.
Wall Street has been anticipating the new administration’s plans, including expecting President Barack Obama to ask Congress for more money. Many economists no longer expect the second half of the $700 billion, which Congress recently approved, to be enough to fix the ailing financial sector.
The administration hasn’t finalized …
Editorial for January 2009
The Economy and the Future of Health Care
Watching the evening news , the latest reports on the economy are pretty bleak. Massive layoffs, homeowner foreclosures, business closings, the downward trend in the stock market, disputes over how federal bailout funds should be allocated, proposals for a massive economic stimulus – all these stories create a mixture of confusion, foreboding, and faint hope in the minds of many TV viewers.
Readers of this publication are likely to wonder: "How has the economic downturn affected the health care industry?" And "How might the floundering economy affect my job?"
For years, it was thought that the health care profession was virtually immune to major fluctuations in the U.S.economy. After all, no matter how the economy vacillates, people still get sick and need medical care. So we thought. The reality we’re experiencing defies conventional wisdom, however, as our special report discusses.
"Health Care and the Economy-Can Hospitals Afford a Recession?" points out the direct impact the current economic downturn has had on hospitals across the country. Not a gloom-and-doom assessment, the report discusses cost-cutting measures, revamped construction plans, and other innovative approaches for fiscal belt-tightening proposed by hospital executives and administrators.
Looking at the economy and health care more broadly, this month’s Jackson & Coker Industry Report includes information gathered by Deloitte’s worldwide health care consultants. By special permission, we’ve provided a link to the portion of Deloitte’s website that discusses "forces that are shaping the global health economy."
A number of feature articles in this issue provide additional perspective on how the economy has impacted certain physician specialties. It remains to be seen how the health care landscape will look months or years from now. For the present, any glimmer of hope is much appreciated.