In a new and bold move aimed at saving money, cellphone manufacturer Motorola said it will suspend its share on the 401(k) employee retirement benefit plan monthly contributions. This is to achieve its earlier announcement of saving $800 million. Freezing the pension plan is one of the steps needed by the company to boost its savings program.
Two points on this. First, suspending the pension contributions should not be an option. The employee benefits should not be made as sacrificial lamb in the company’s effort to save money. Second, if the firm really wants some savings, the managers’ and executives’ hefty pays should be reduced and not the benefits due to the ordinary employees. While it is true that Motorola is experiencing a slow down in its sales performance, it is not the employee’s fault but largely by the “strategists” in the company – the executives and managers. Therefore, the employee benefits should not be sacrificed.
Posted by Jones on January 11th, 2009 :: Filed under
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It appears that the world is so concerned about the impending collapse of GM and Chrysler and how the U.S. government will act on the matter. Last week, when officials of the federal government said the collapse of the Big 3 is investibale, a mixed reaction came up. Auto makers Toyota and Honda do not favor a Big 3 falldown. Several experts also agreed with Treasury Secretary Henry Paulson that bankruptcy might be the solution.
However, when the government announced that it will shell out some money ($17.4 billion) to save the GM and Chrysler, most of the stock markets today in Asia dipped. It seems that this bailout is not effective anyway in easing the already turbulent global situation. But what is apparent is that the auto industry bailout is not actually what makes the world worry. How the ongoing financial crisis will be solved is the most troubling issue. In fact, how will the U.S. economy recover is the main cause of concern among the businessmen.
Posted by Jones on January 5th, 2009 :: Filed under
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Fannie Mae and Freddie Mac have agreed with New York Attorney General Andrew Cuomo to let banks and lenders do their own appraisals on mortgaged homes. This move allows for private home appraisals to be done by the lenders themselves which was previously prohibited. The agreement came after the attorney general’s office opened an investigation on the mortgage sector, which has been experiencing internal bleeding due to the subprime crisis brought by an increase in foreclosures.
Well, the agreement might contribute in stopping the hemorrhage in the mortgage industry. Fannie Mae and Freddie Mac’s decision to let independent home appraisals would surely boost the confidence of lenders in issuing mortgages. This new system will then be used to determine the value of a property being mortgaged and repacked for securities investments.
Posted by Jones on January 3rd, 2009 :: Filed under
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As Wall Street executives tighten their belts due to the financial crisis, the State of New York is also experiencing a financial hemorrhage. The recent decision by Goldman Sachs not to pay bonuses to its executives could prove to be costly to the state government as well.New York Gov. David Paterson said the move by Goldman Sachs and other companies to forego its bonuses could cost $178 million in tax revenues for the state.
Well, that is a little money to spare if the benefit would be for the common good. The businesses’ decision to give up the executives’ bonuses for this year would certainly help their organizations, and alleviate the impact of the financial turmoil. That would be better than these companies would end up in bankruptcy. However, the governor even said that the state is already in fiscal trouble. If this crisis would last a little longer and the state would be bankrupt. That would be the challenge now for the governor; how to look for other sources of income besides tax generation.
Posted by Jones on January 2nd, 2009 :: Filed under
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The Federal Reserve’s latest interest rate cut, which effectively made interest rates to zero, is quite tricky. At the outset, the zero interest rate seems enticing to the borrowers. Getting a loan with very low interests is certainly appealing to the public. But the question is, who would want to loan now? And the more painful question is, can the banks afford to lend out money at this time? With the ongoing financial turmoil, the banks’ priority is to clean out their balance sheets first, that is to say they’ve got to collect the money they previously released to the borrowers. So, definitely, lending out money would be least on their priorities. That is the painful reality. Therefore, the Fed’s interest rate cut appears to be of no substantial effect at this time.
Posted by Jones on December 31st, 2008 :: Filed under
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The world’s second biggest economy is into deep trouble. Japan’s exports have plummetted to a record 27% from last year. This means that Japanese production slowed down significantly. Either that or demand for Japanese products really dropped. But one thing is for sure, Japan, which is in recession, is likely to experience more economic inactivity as production facilities are being closed and workers are being laid off. Sounds very familiar with the situation back in the United States. It then appears that the world’s largest economies are failing. However, there is a wide belief that after this crisis the economies of the industrialized countries will revive. That is, the current economic failures shall serve to fix the current complexities in the world market. After the dusts have settled, a new world economic order will definitely surface.
Posted by Jones on December 29th, 2008 :: Filed under
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It seems then the OPEC action to cut production boomeranged on its face. The oil production cut is obviously a ploy by the cartel to spur another wave of oil price increases. By reducing production, the supply will drop and hence demand will rise, which could then result to an increase in oil prices. However, with the way things are going, the OPEC move is not effective, which is also good for the consumers. Let’s just hope oil prices will be stable in a long run.
However, the drop in the oil prices took its toll on the utility companies. Shares of the utility companies dropped sharply in the stock market. The recent announcement by OPEC to slash oil production did not have any effect, as crude oil costs fell even lower. But analysts said the weakening electricity demand is the primary reason in the drop in the utilities’ shares.
Posted by Jones on December 27th, 2008 :: Filed under
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General Motors is to announce the release of tis redesigned Chevrolet Equinox. The 2010 Equinox will debut at the North American International Auto Show next month. Well, nothing is quite intriguing about this new product. It just means that GM is still in the business. However, this will certainly give rise to the question, is GM really troubled? The company has been asking for financial aid from the government. The automaker said its financial chest is drained out. But with the release of the new and redesigned Equuinox, GM seems to be still on the right track. So, would it really need financial help from the government? is it really worth to shell out taxpayers’ money to this company?
Posted by Jones on December 26th, 2008 :: Filed under
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The United States may slightly miss its target production of biofuels by 2022. According to government estimates, the country’s total biofuel production by 2022 may reach only 30 billion barrels, 6 billion barrels short of the mandated objective. Government officials said the the current technologies for biofuel production is not enough to meet the mandated target.
Not a great news. If such thing is true, that means the country will still rely on crude oil. The environment is already reeling on the effects of climate change brought by the use of oil and other pollutants. The government ought to speed up biofuel production and double its efforts towards innovating new technological advancements so that the environment-friendly biofuels can replace oil. The pressure will be on the government.
Posted by Jones on December 25th, 2008 :: Filed under
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After an almost untimely and stunning collapse, Morgan Stanley is finally showing signs of life. With fund infusions coming from the U.S. government through the bailout package and Japan’s Mitsubishi UFJ Financial Group, the American bank is able to buy back its own debts. Such anactivity shows that Morgan Stanley is ready to become an active player in the financial market.
It seems that the bailout plan worked, at least in the case of Morgan Stanley. However, the bailout package should be the last to be approved by the government. In the future, the government should not use the taxpayers’ money to rescue the ailing companies, whose failure were of their own doings. And the lesson that can be learned on this financial crisis is that banks should be more careful in introducing new products. Complex and risky financial products now proved to be unhealthy investments.
Posted by Jones on December 24th, 2008 :: Filed under
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