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The Rajon Blog » Blog Archive » Wrong time to borrow and support the declining world markets.

Wrong time to borrow and support the declining world markets.

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One of the best examples of a declining market economy is what is happening in the world now.

As those with loads of cash scramble to attempt to save whatever is left of their cash the markets continue to fall due to a number of unseen forces at work.

One major issue is the way certain governments are attempting to borrow cash in order to rectify a shortage of market stability. Thats a bit like closing the door after the horse has bolted out of the barn. It wont work and will only make matters worse later.

UK is a good example of scrambling to try to save a situation from getting worse old ploys in a changing time. Things are very different from the last time and as things change so to do market strategies and the way they move.

Best to let this find its own level and sort it out from there. Sure there will be those who scream and yell but this was not possible to stop even if you did know it was coming.

Greed breeds more greed and so the cycle goes those with it are never satisfied and want more. Trouble is the system only has so much on offer before it collapses in on itself.

Leave it all alone and soon it will leel off and so what if those who had the money end up not having it anymore they did not handle things very well when they had it and the present results pretty much say it all. Let it move to a new area and level and grow from there and maybe this next time it will build on ore secure ground and not a swampy one.

Excessive debt when it outgrows managable levels collapses as there is nothing to prop it up and greed is a disease that operates like that give it out easily and then watch it all fall.

This needs to find its own level or if it is propped up artificially again the next wave will only collapse in on itself greater than before and the situation can then only get worse as there will be less reserves of borrowing power later to climb out of it.

Patience and wait is the way to go.

8 Responses to “Wrong time to borrow and support the declining world markets.”

  1. moryah4 Says:

    I remember when Jonathan (Dr Jon) was referring to the US stockmarket about four years ago and he said prior to the ‘Black Monday’ stock market about 30% of American householders had money invested in it.
    Now (four years ago) 60% of American householders had money invested there.This he said would only lead to heartache for a lot of families and individuals who could ill afford the loss of these funds and hence he put the word on the street ,via his website, that they ought to think about pulling their assets out of there.As per usual who listened ?
    I’m a blue-collar worker myself who has over the past 22 years put a lot of energy/funds etc. into supporting Dr Jon’s research,precipitated by the incredible results he achieved with brain damaged children ,and after seeing the many patients who had serious afflictions across the scale bought back to balance.
    The other day I asked one of my work mates for a loan of $500 for one week ,as I needed to ship some of Dr Jon’s freight To the UK.
    Many of his household effects,computors,printers etc have been in storage here in Australia while he deliberated on his next country shift.We are always strategizing.
    Basically he wanted his young boys to have their toys ,computer games etc.before Christmas .After thirty or so international shifts to carry out his research we sometimes have to scrape and scrimp and borrow to create the necessary progress especially as the world is a little slow on the ‘up-take’ to realize what it is that DR Jon actually does.Anyway my friend from work had over a $80,000 sitting on the stock market,boats ,cars and took international holidays quite regularly ,so I did seem the harm in asking for his help .We are all interlinked and if you don’t ask you don’t get.
    Anywasy he turned to me and said no I don’t have the money.So I thought fine and decided to work it out on my own.
    Being the intuitive sod I am and speaking from many years experience I knew if he had of accepted the challenge and helped me help me with the cash to shift the freight which I would have paid him back in full out of my next pay he would have experienced cause and effect beyod his wildest dreams.
    Firstly if you help me to help Dr Jon you have a friend for life.That’s the value of respect I had/have for Dr Jon,plus the Doc would have imediately known and provided rewards, advice and assistance to my friend to build his life ,his assets etc.,
    Nobody ever helped Dr Jon Sherwood without AT LEAST getting double back in return from him.
    Well, needless to say my work mate lost his entire $80,000 dollars on the last major stock crash.His entire amount of investment erased.And now he has diddly-squat.
    Dr Jon always said money is energy and needs to be circulated,(but always have a back-up plan) too.
    I saw a lot of cash come and go through the Doc’s hands in his lifetimes, millions to be quite honest,but like the tides of the sea, he was continually putting it back into the system.
    The Doc had a child-like exhuberance for life ,and to keep his head above the fray of society he had to express his whims and desires and impulses to freely to be himself.He loved his Sci-Fi videos,like Star Trek,Star Gate,Dr Who, not metion James Bond,the Avengers etc,enjoying a good brew in nice surrounds,cars,houses,in fact he fully embraced all of the material things the world had to offer.
    All of us who knew him felt if he had millions or billions of dollars the world would be a better place becuase he knew how to handle wealth- i.e. how money worked as energy.
    The Doc always said that when you want to manifest something material in your life like say the latest Audi car don’t focus so much on the money to buy it.Focus instead on the car itself ,and who besides yourself will benefit from buying the car.For example visualize the satisfaction and comfort of driving your loved ones around.See the salesman benefiting going home to his wife happy with the bonus to his wife and kids,the happiness/satisfaction spreading around.
    An ultimate goal to create ultimate satisfaction in material succeess (gain) is to see or beleive that the whole world somehow gains in each of your gains.Whetere it is a a new suit of clothes or a house or a trip overseas by factoring the broadest spectrum the Doc (Zarlen) said (if it is meant to be) you will not only end up gaining your desired material asset but will feel satisfied with it as well.
    Jonathan (Zarlen) always said that if you acquire things for self-gain only you will never be satisfied .

    Anyone who spent time with Jonathan was on a high because he knew how to have fun and that fortune favours the brave.
    Unfortunately as he gave to the world the energy did not seem to flow back at the same rate.

  2. moryah4 Says:

    Why a legacy of greed does not pay.

    (From “Time to get angry” By Mike Bruce.

    Listening to ‘BBC World’ at the weekend-as you do-I heard investment banker William Hopper stating that corporate culture has been in decline since the 1970’s,when irrational greed and lack of vigilence took over…and had effectively continued until this day.
    Mr Hopper is the author of “The Puritan Gift”,which about three years ago predicted the latest crash.He provided some interesting statistics to support his view.
    About 50 years ago,Hopper explained,the average chief executive of a lerge US corporation was paid 20 times the average wage in their compnay,a figure that remained more or less constant from the 1890’s right up to 1970.
    Hopper said using the same equation today,CEO’s are paid 400 times the average wage in their compnay.Compare that with,say,Japan,where its 12 times the average company wage,or Germany where it’s an average of 11 times.
    “And this has been accompanied by a deterioration in the performance,ending up in ridiculous situation we have today,” said Mr Hopper.
    “We have a generation of professional managers who lack what the chief executive of ‘General Electric’ called the domain of their subject’.”
    I know he’s talking about a country where since early 2002 Merrill Lynch,Bear stearns,Lehman Brothers,Moragn Stanley and Goldman Sachs have paid the laughable total of $472 billion in compensation and benefits to its executives.But research by the Australian Council of Super Investors paints a similar picture of uber-capitalism right here in Australia.
    It found the median fixed pay of chief executives of the top 100 Australian listed companies had risen by 96.4 per per cent between 2001 and 2007-triple the 32.3 per cent rise in average adult weekly earnings over the same six years.

  3. moryah4 Says:

    (Quote: Dr Jon/Zarlen)

    “One of the best examples of a declining market economy is what is happening in the world now.

    As those with loads of cash scramble to attempt to save whatever is left of their cash the markets continue to fall due to a number of unseen forces at work.

    One major issue is the way certain governments are attempting to borrow cash in order to rectify a shortage of market stability. Thats a bit like closing the door after the horse has bolted out of the barn. It wont work and will only make matters worse later.

    UK is a good example of scrambling to try to save a situation from getting worse old ploys in a changing time. Things are very different from the last time and as things change so to do market strategies and the way they move.

    Best to let this find its own level and sort it out from there. Sure there will be those who scream and yell but this was not possible to stop even if you did know it was coming.

    Greed breeds more greed and so the cycle goes those with it are never satisfied and want more. Trouble is the system only has so much on offer before it collapses in on itself.

    Leave it all alone and soon it will leel off and so what if those who had the money end up not having it anymore they did not handle things very well when they had it and the present results pretty much say it all. Let it move to a new area and level and grow from there and maybe this next time it will build on ore secure ground and not a swampy one.

    Excessive debt when it outgrows managable levels collapses as there is nothing to prop it up and greed is a disease that operates like that give it out easily and then watch it all fall.

    This needs to find its own level or if it is propped up artificially again the next wave will only collapse in on itself greater than before and the situation can then only get worse as there will be less reserves of borrowing power later to climb out of it.

    Patience and wait is the way to go.”

    Seems like no one is listening to this advice!

    It would seem the Bush administration is implementing the icing on the cake for its devastation of the US economy in its dying days…

    UPDATE: Citigroup Soars As U.S. Agrees To Sweeping Rescue Package

    (November 24, 2008)

    NEW YORK (Dow Jones) — Citigroup shares rocketed more than 60% higher Monday after federal officials agreed to a $326 billion rescue of the company that was once the largest U.S. bank as it pioneered the one-stop-shop model combining business and consumer financial services.

    The government intends to invest $20 billion in Citigroup (C) and to guarantee as much as $306 billion of the company’s troubled assets in a deal reached late Sunday evening. The agreement also gives the government control of executive bonuses, and it places limits on dividend payments.

    The deal would likely make the government the largest Citi shareholder. The U.S. will end up with a 7.8% stake in Citigroup, Chief Financial Officer Gary Crittenden said on CNBC television Monday.

    That would surpass the roughly 4.9% stake that the government of Abu Dhabi took in the company last year, and it also tops the 5% stake unveiled last week by Saudi Prince Alwaleed bin Talal.

    “The U.S. government’s creative ring fencing of Citi’s $306 billion in troubled assets is a strong positive for the system and for Citi shareholders,” Betsey Graseck, a Morgan Stanley analyst, wrote in an early morning research note.

    The deal marks the latest of several government moves to support the financial sector and buoy investor confidence in it.

    The Treasury’s initial plan to buy up the industry’s troubled assets gave way to direct investment in banks to bolster their balance sheets, and Citi has already received a previous $25 billion federal investment.

    But, as Citi’s shares fell more than 60% in the last week alone, the government decided to try yet another approach to avoid a collapse in Citi and a further loss of faith in the entire U.S. banking system.

    It’s unclear if the move will be successful, but “the U.S. government is lowering risk while not significantly diluting shareholders, keeping them engaged in the sector,” Graseck told clients.

    The rescue plan came together after a weekend of intensive negotiations involving the Treasury, the Federal Reserve and the Federal Deposit Insurance Corp., according to published reports.

    Federal officials and company management desperately were seeking to avoid a replay of the disastrous failure, and subsequent bankruptcy, of Lehman Bros. earlier this year as stabilization efforts fizzled. Many observers have identified that event as the tipping point between dangerous market and economic conditions into a market crash with potential for a depression.
    NEW YORK (Dow Jones) — Citigroup shares rocketed more than 60% higher Monday after federal officials agreed to a $326 billion rescue of the company that was once the largest U.S. bank as it pioneered the one-stop-shop model combining business and consumer financial services.

    The government intends to invest $20 billion in Citigroup (C) and to guarantee as much as $306 billion of the company’s troubled assets in a deal reached late Sunday evening. The agreement also gives the government control of executive bonuses, and it places limits on dividend payments.

    The deal would likely make the government the largest Citi shareholder. The U.S. will end up with a 7.8% stake in Citigroup, Chief Financial Officer Gary Crittenden said on CNBC television Monday.

    That would surpass the roughly 4.9% stake that the government of Abu Dhabi took in the company last year, and it also tops the 5% stake unveiled last week by Saudi Prince Alwaleed bin Talal.

    “The U.S. government’s creative ring fencing of Citi’s $306 billion in troubled assets is a strong positive for the system and for Citi shareholders,” Betsey Graseck, a Morgan Stanley analyst, wrote in an early morning research note.

    The deal marks the latest of several government moves to support the financial sector and buoy investor confidence in it.

    The Treasury’s initial plan to buy up the industry’s troubled assets gave way to direct investment in banks to bolster their balance sheets, and Citi has already received a previous $25 billion federal investment.

    But, as Citi’s shares fell more than 60% in the last week alone, the government decided to try yet another approach to avoid a collapse in Citi and a further loss of faith in the entire U.S. banking system.

    It’s unclear if the move will be successful, but “the U.S. government is lowering risk while not significantly diluting shareholders, keeping them engaged in the sector,” Graseck told clients.

    The rescue plan came together after a weekend of intensive negotiations involving the Treasury, the Federal Reserve and the Federal Deposit Insurance Corp., according to published reports.

    Federal officials and company management desperately were seeking to avoid a replay of the disastrous failure, and subsequent bankruptcy, of Lehman Bros. earlier this year as stabilization efforts fizzled. Many observers have identified that event as the tipping point between dangerous market and economic conditions into a market crash with potential for a depression. The lifeline being thrown to the bank represents the first time the government has absorbed bad assets rather than inject money directly into financials. Switzerland’s government recently crafted a similar agreement with UBS (UBS).

    “At some point the handouts have to stop and institutions have to start to take some accountability for what happened. Nobody wants to see Citi go into Chapter 11, but some type of sale or merger would likely have been the scenario preferred by the market,” Aite Group analyst Christine Barry said.

    The key provisions of the Citi bailout include:

    * The Treasury will inject $20 billion of capital, on top of a $25 billion federal infusion that was already dispatched.

    * The government will guarantee a roughly $306 billion pool of Citi’s troubled assets, including mortgage-backed securities. Citigroup must absorb the first $29 billion in losses and 10% of anything beyond that. Treasury will absorb the next $5 billion in losses, followed by the FDIC taking on the next $ 10 billion in losses.

    * Any losses on bad assets beyond that level would be taken by the Fed. The guarantees will be for 10 years for residential assets and five years for nonresidential assets.
    In addition to $2 trillion in assets it has on its balance sheet, Citi has another $1.23 trillion in entities that aren’t reflected there, according to reports. Some of those assets are tied to mortgages, and investors have worried they could cause heavy losses if they are brought back on the company’s books, The Wall Street Journal reported.

    Fear of collapse

    Up until last week, the financial markets had shown signs of recovering some confidence and stability as the shock of Lehman’s September bankruptcy began to ease.

    On Sept. 15, Lehman filed for Chapter 11 bankruptcy protection, ending the 158-year-old Wall Street firm’s run and rattling the foundation of the global financial system.

    Lehman’s tentacles ran deep across global markets, and investors panicked as debt defaults sparked misery around the world, forcing selling by institutions and hedge funds and triggering the catastrophic “breaking of the buck” at one of the nation’s most important money-market funds.

    While Citi’s difficulties are different from Lehman’s, analysts said any disorderly breakdown at Citi would surely have sparked further chaos.

    Citi’s crisis came in spurts, as the bank has reported about $20 billion of losses over the last year amid huge writedowns for soured investments.

    At this time a year ago, the stock market valued the company at about $180 billion. As of Friday morning, its market capitalization stood at $20 billion - - and its once-proud share price had shriveled to $3.75, a 16-year low.

    Last week, short sellers focused on the perfect storm surrounding Citigroup. Its shares were sold in unprecedented volume as the concern about the scale of recently unveiled job cuts added to fresh fears about a quickly deteriorating commercial real estate market, as well as a surprise decision by the Treasury earlier this month to forgo purchasing troubled assets from firms like Citigroup.

    That latter move by the Treasury likely prompted Citi’s decision to bring about $17 billion of bad assets from a subsidiary onto its own balance sheet, sparking a probable charge of up to about $1 billion.

    No one knows for sure how many assets like that Citi may have to haul onboard its balance sheet, and what kind of losses it could spark.

    Should the company absorb many bad assets and take write-downs, that would eat into profits and, if it goes on long enough, eat away at core capital.

    Even before the mortgage-fueled credit crunch, Citi and other banks faced calls to reorganize the company and even split it up.

    Citi was created, under the guidance of Sandy Weill, by an acquisition binge in the 1990s that culminated in the merger between insurer Travelers and Citicorp. But the vision of a financial supermarket eventually came apart and Travelers was sold to MetLife (MET).

  4. moryah4 Says:

    …The above report came from :http://money.cnn.com/news/newsfeeds/articles/djf500/200811241203DOWJONESDJONLINE000400_FORTUNE5.htm

    Then it makes you wonder which way the Obama ‘Rescue Package’ will be spent too ?

    Article from: “The Australian” newspaper.

    (Geoff Elliott, Washington correspondent | November 25, 2008 )

    “US president-elect Barack Obama is planning a $US700 billion ($1.1trillion) economic stimulus package, one far more aggressive than anything he outlined on the campaign trail and equivalent to the financial markets bailout announced in late September.
    Reports of the spending and tax cuts program said it would amount to more than the US had spent over the past six years in Iraq and would represent one of the biggest public spending programs aimed at jolting the economy since Franklin D. Roosevelt’s New Deal.

    Mr Obama’s top advisers fronted the Sunday talk shows yesterday to declare the economic scenario was getting far worse since the promises made during the presidential campaign and stating more needed to be done.

    The advisers hinted the new fiscal stimulus package from the Obama administration would be extraordinarily large. Speculation has centred on a total up to $US700 billion.

    Austan Goolsbee, a senior Obama economic adviser, declined to offer numbers but said “the problem is very, very serious” and said the package would be big. He noted on US network CBS that Mr Obama had spoken during his campaign of a $US175 billion package, then added, “and the economy has gotten substantially worse since then”.

    He charged that the Bush administration had dithered on the crisis. When the Obama administration took over on January 21, he said: “We’re out with the dithering, we’re in with a bang,” and added it was the biggest financial crisis the US had faced in 75 years.

    Asked several times whether the price tag of Mr Obama’s economic stimulus plan would be in the range of $US500 billion to $US700 billion, another top Obama adviser David Axelrod said he was “not going to throw a figure out there” but added: “I think he’s going to do what’s necessary.”

    Harvard economist Lawrence Summers, whom Mr Obama has chosen to lead his White House economic team, last week raised the possibility of $US700 billion in new spending.

    The Washington Post reported yesterday that Obama adviser and former Clinton administration Labor secretary Robert Reich and Democrat senator Charles Schumer had also called for spending in the range of $US500billion to $US700 billion.

    Democratic leaders in Congress are preparing to have the stimulus bill ready for Mr Obama to sign once he is inaugurated on January 20.

    News of the package came as the US Government announced yet another emergency rescue plan, this one for banking giant Citigroup after its stock fell 60 per cent during the past week.

    Citigroup’s fall underscored the fragile state of markets and the economy during Washington’s long transition of power.

    The Obama administration will throw its weight behind the rescue of the US banking giant, as his top advisers declared a “whatever it takes” philosophy to try to break the downward spiral in confidence that has driven the US banking system and economy into a ditch.

    Aides to Mr Obama are working with the Bush administration to shore up financial markets and prevent a policy vacuum from further harming the economy during the transition.

    Mr Obama was due to roll out his new economic team overnight at a press conference in Chicago, as Wall Street remained on a knife edge.

    Mr Bush’s outgoing Treasury secretary, Henry Paulson, is now considering a more activist stance in his final weeks in office than he had signalled as recently as last week. He is considering tapping the second half of the government’s $US700 billion financial-industry rescue fund, and rolling out new programs in response to worsening market conditions, according to people familiar with the matter.

    Citigroup is one of the world’s best-known banking brands. It has more than 200 million customer accounts in 106 countries. Its plunging stock price threatened to spook customers and imperil the bank.

    Robert Rubin, a former Treasury secretary in the Clinton administration, is an influential director and adviser at Citibank and also an adviser to Mr Obama’s transition team.

    If the Government devises a successful rescue plan, it could help bring stability to the entire financial system. If it doesn’t, even deeper doubts about the industry’s future could spread.

    The plan would essentially put the Government in the position of insuring a slice of Citigroup’s balance sheet.

    Additional reporting: The Wall Street Journal

    http://www.theaustralian.news.com.au/story/0,25197,24699818-5013948,00.html

  5. moryah4 Says:

    Dr Jon (Zarlen) warned to leave these comapany collapses alone and to let the markets sort themselves out,to find it’s own level so to speak.
    But it does seem to be going that way does it.

    I remember one prediction that Zarelen gave a year or two back whereby he said Jeb Bush the younger brother of George W.was being groomed as a future president of the United States and that Jeb would in in effect be “the last president of the United States”.
    and that “..He is regrded as having the brains in the Bush family and that he will be left the task of dealing with the mess left of the U.S. economy.”

    After we see what has happenend in Mumbai this week(the major financial sector of India) and the chaos ,fear and financial instability this unforeseen crisis has caused picture the same type of scenario happening in the United States(even on a much smaller scale) again and especially when the country is so vulnerable financially at the moment and you’ll where Zarlen is going with his advice.
    My country,Australia is in a similar boat as we are linked to the U.S. economically and after enjoying a healthy national surplus for some years we are now heading into deficit to rebuild our economy.
    As mentioned dr Jon predicted terrorist attacks for the U.S.,U.K. and unexpectedly Australia’s tourism sector would be targeted.
    The UK have the most resilliance as the people work together and are as Dr jon said some of the most balanced in the world but the recent foray into financial chaos has proved no one is immune from the imperfections of the world monetary system caused by a long history of greed and selfishness.
    Zareln said taht once upon a time the world did not have money instead humans used a bartering system which exchanging commodities and services in a more equal and just way.
    But unfortunately the Greeks invented ‘money’ that crerated imbalances everywhere.
    Things could be manipulated according to the use of currencies and then ultimately the creation of the Stock Market which meant whole countries could be impoverished for the sake of the gaining of wealth for only a small percentage of the population.
    So the Greeks historically have a lot to answer for for the state of this world …so said Zarlen.

  6. moryah4 Says:

    BUSH PUTS ICING ON HIS GOVERMENTS RUIN OF THE AMERICAN THE AMERICAN ECONOMY

    (Quote Zarlen):

    October 27th, 2008

    “One of the best examples of a declining market economy is what is happening in the world now.

    As those with loads of cash scramble to attempt to save whatever is left of their cash the markets continue to fall due to a number of unseen forces at work.

    One major issue is the way certain governments are attempting to borrow cash in order to rectify a shortage of market stability. Thats a bit like closing the door after the horse has bolted out of the barn. It wont work and will only make matters worse later…”

    BUSH UNVEILS $20BN US AUTO RESCUE

    December 20, 2008

    General Motors and Chrysler will get $US13.4 billion ($20 billion) in emergency government loans in exchange for substantially restructuring their businesses, President George W. Bush announced.

    Another $US4 billion will be available to GM in February provided Congress releases the second half of the $US700 billion Troubled Asset Relief Program fund originally set up to bail out financial institutions. The automakers have until March 31 to meet the conditions of the loans, including demonstrating they have a plan to become profitable, or be forced to repay.

    Winning the assistance is a reprieve for GM, the biggest US automaker, and No. 3 Chrysler after they said they would run out of operating funds as soon as this month.

    http://www.brisbanetimes.com.au/news/business/bush-unveils-20bn-us-auto-rescue-plan/2008/12/20/1229189922464.html

  7. moryah4 Says:

    (Quote: DR Jon Sherwood/Zarlen):Wrong time to borrow and support the declining world markets.

    “One of the best examples of a declining market economy is what is happening in the world now.

    As those with loads of cash scramble to attempt to save whatever is left of their cash the markets continue to fall due to a number of unseen forces at work.

    One major issue is the way certain governments are attempting to borrow cash in order to rectify a shortage of market stability. Thats a bit like closing the door after the horse has bolted out of the barn. It wont work and will only make matters worse later.

    UK is a good example of scrambling to try to save a situation from getting worse old ploys in a changing time. Things are very different from the last time and as things change so to do market strategies and the way they move.

    Best to let this find its own level and sort it out from there. Sure there will be those who scream and yell but this was not possible to stop even if you did know it was coming.

    Greed breeds more greed and so the cycle goes those with it are never satisfied and want more. Trouble is the system only has so much on offer before it collapses in on itself.

    Leave it all alone and soon it will leel off and so what if those who had the money end up not having it anymore they did not handle things very well when they had it and the present results pretty much say it all. Let it move to a new area and level and grow from there and maybe this next time it will build on ore secure ground and not a swampy one.

    Excessive debt when it outgrows managable levels collapses as there is nothing to prop it up and greed is a disease that operates like that give it out easily and then watch it all fall.

    This needs to find its own level or if it is propped up artificially again the next wave will only collapse in on itself greater than before and the situation can then only get worse as there will be less reserves of borrowing power later to climb out of it.

    Patience and wait is the way to go.”

    “US BUDGET DEFICIT HITS NEW RECORD IN FIRST QUARTER OF 2009 FISCAL YEAR.

    Editor: Mu Xuequan

    WASHINGTON, Jan. 13 (Xinhua) — The U.S. federal budget deficit totaled 485.2 billion dollars in the first three months of the current fiscal year, the highest on record for a first quarter, the Treasury Department reported on Tuesday.
    While the imbalance from October through December 2008 was larger than the record for a full fiscal year of 454.8 billion dollars set last year, the deficit is on track to surpass one trillion for all of fiscal 2009, which began on Oct. 1, 2008.
    In the first three months, the government’s revenues totaled 547.4 billion dollars, down by 9.7 percent from the year-ago period. Spending over that period rose 44.8 percent from a year ago to 1.03 trillion dollars.
    For December alone, the budget deficit totaled 83.6 billion dollars, in contrast to a surplus of 48.3 billion dollars a year ago. Economists had been expecting a lower imbalance of 83 billion dollars.
    All the red ink is occurring because of the massive spending on the 700-billion-dollar financial rescue program and a prolonged recession which has depressed tax revenues.
    The Congressional Budget Office projected last week that the federal budget deficit will hit an all-time high of 1.2 trillion dollars in the 2009 fiscal year.
    The estimate doesn’t include the cost of a huge economic stimulus bill that U.S. President-elect Barack Obama is seeking approval from Congress. The bill is expected to be around 800 billion dollars over next two years.
    In the 2007 fiscal year, the federal deficit dropped by 34.4 percent to 162 billion dollars, a five-year low since an imbalance of 159 billion dollars in 2002, reflecting faster growth in government revenues than spending.
    The 2002 performance marked the first budget deficit after four consecutive years of budget surpluses.

    http://news.xinhuanet.com/english/2009-01/14/content_10653276.htm

  8. moryah4 Says:

    LLOYD’S BANKING UNVEILS $12 BILLION HBOS LOSS

    (REUTERS)

    14 Feb 2009,

    LONDON: Part-nationalized Lloyds Banking Group said its HBOS unit made a hefty loss last year due to a bigger-than-expected rise in bad loans,
    wiping a third off its value and raising fears more state help will be needed.

    HBOS had a pretax loss of 8.5 billion pounds ($12.3 billion) for 2008, Lloyds said in a statement on Friday, driven by 7 billion pounds in bad corporate loans and a 4 billion pounds in asset writedowns.

    In December, HBOS had estimated its corporate bad loans for the 11 months to November 30 at just 3.3 billion pounds.

    Lloyds shares closed 32.5 percent lower at 61.4 pence, having earlier fallen as low as 54.9 pence.

    “Obviously we need to digest the detail, but it looks increasingly as if Lloyds HBOS will now go into majority public ownership, followed inevitably by nationalization,” said Vince Cable, finance spokesman for the opposition Liberal Democrats.

    The government owns a 43 percent stake, after supplying 17 billion pounds to the enlarged group.

    Lloyds said the big rise in bad loans and writedowns was driven by falling asset values as credit markets continued to deteriorate.

    “The market doesn’t like the fact that in a period of a month, the corporate losses (at HBOS) are twice what they had announced,” said Mamoun Tazi, analyst at MF Global.

    It said the increase also reflected the application of Lloyds’ own more conservative accounting methods at HBOS since the two banks completed their tie up in January.

    Analysts expect UK banks to suffer a sharp rise in bad debts this year as a recession that began in 2008 gathers pace.

    The British economy contracted by 1.5 percent in the final quarter of 2008, official figures showed last month, and surveys have shown a steep falling-off of business activity.

    “Cleary there was a big deterioration at the end of last year. If you extrapolate that run rate, then this is a business that’s owned by the taxpayer in about 18 months,” said Fox-Pitt, Kelton analyst Leigh Goodwin.

    Speaking to British lawmakers, Lloyds Chief Executive Eric Daniels warned earlier this week that the next year or two “will be incredibly tough for our shareholders as well as our customers” but said he had found no nasty shocks since acquiring HBOS.

    Lloyds said its Lloyds TSB unit made a profit of about 1.3 billion pounds, including write-downs of 1.3 billion pounds.

    The company also said the combined group had a core tier 1 capital ratio — a key measure of capital strength — of between 6 percent and 6.5 percent, “significantly ahead” of the regulatory minimum.

    HBOS, seen as vulnerable to the global credit crisis because it depended on wholesale borrowing for much of its funding, agreed to be bought by Lloyds TSB in

    http://economictimes.indiatimes.com/News/International_Business/Lloyds_Banking_unveils_12_billion_HBOS_loss/articleshow/4127214.cms

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