Infinite Unknown

Sunny Yang, left, a masters degree student from Shanghai and employed banker in New York City, speaks with World Bank representative Roberto Amorosino about opportunities for unemployed friends of his during a career fair at Columbia Univeristy Friday, Nov. 7, 2008 in New York. The U.S. unemployment rate bolted to a 14-year high of 6.5 percent in October as another 240,000 jobs were cut, far worse than economists expected and stark proof the economy is deteriorating at an alarmingly rapid pace. (AP Photo/Julie Jacobson)

WASHINGTON (AP) — The nation’s jobless ranks zoomed past 10 million last month, the most in a quarter-century, as piles of pink slips shut factory gates and office doors to 240,000 more Americans with the holidays nearing. Politicians and economists agreed on a painful bottom line: It’s only going to get worse.

The unemployment rate soared to a 14-year high of 6.5 percent, the government said Friday, up from 6.1 percent just a month earlier. And there was more grim news from U.S. automakers: Ford Motor Co. and General Motors Corp., American giants struggling to survive, each reported big losses and figured to be announcing even more job cuts before long.

Regulators, meanwhile, shut down Houston-based Franklin Bank and Security Pacific Bank in Los Angeles on Friday, bringing the number of failures of federally insured banks this year to 19.

The Federal Deposit Insurance Corp. was appointed receiver of Franklin Bank, which had $5.1 billion in assets and $3.7 billion in deposits as of Sept. 30, and of Security Pacific Bank, with $561.1 million in assets and $450.1 million in deposits as of Oct. 17.

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Tags: bank failure, Banks, Barack Obama, Credit Crisis, credit crunch, Economy, FDIC, Ford, Foreclosures, General Motors, George Bush, GM, Government, housing market, Labor Department, mortgage crisis, Mortgages, Politics, Recession, Stock Market, U.S., Unemployment, Wall Street

The perilous state of the UK economy was exposed as the Bank of England’s Monetary Policy Committee made an unprecedented 1.5 percentage point cut in interest rates.

Winston Churchill meets the Queen in 1955. Photo: PA

The shock vote brought interest rates down to 3pc for the first time since January 1955, when Winston Churchill was prime minister. Economists forecast that the cut could pave the way for further reductions - with some claiming that rates could hit a historic low of 1pc.

Thursday’s move was interpreted as a desperate attempt to protect the UK economy from a severe recession.

“There has been a very marked deterioration in the outlook for economic activity at home and abroad,” said the MPC in an explanatory statement, adding that the threat of inflation was now receding.

It warned that after the most serious crisis in the global banking sector for almost a century, households and businesses were likely to find it difficult to obtain credit “for some time.” The MPC counted falling share prices, a sharp reduction in UK output, and a squeeze on household budgets among a nasty cocktail of circumstances that have combined to hit both businesses and consumers hard.

The MPC’s decision came amid a raft of gloomy news and data emerged. Figures from Halifax, the UK’s biggest mortgage lender, showed that house prices have fallen by 15pc over the past 12 months.

It was the sharpest drop since the survey began in 1983 and brought the average house price down to £168,176 in October, compared with almost £200,000 in the same month last year.

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Tags: Bank of England, Credit Crisis, credit crunch, ECB, Economy, financial crisis, housing market, IMF, Politics, Rate Cut, Recession, U.K.

Payrolls shrink by 240,000 in October, 10th straight month of cuts. Unemployment soars to 6.5%

NEW YORK (CNNMoney.com) — The government reported more grim news about the economy Friday, saying employers cut 240,000 jobs in October - bringing the year’s total job losses to nearly 1.2 million.

According to the Labor Department’s monthly jobs report, the unemployment rate rose to 6.5% from 6.1% in September and higher than economists’ forecast of 6.3%. It was the highest unemployment rate since March 1994.

“There is so much bad in this report that it is hard to find any silver lining,” said Morgan Keegan analyst Kevin Giddis.

Economists surveyed by Briefing.com had forecast a loss of 200,000 jobs in the month. October’s monthly job loss total was less than September’s revised loss of 284,000. Payroll cuts in August were revised up to 127,000, which means more than half of this year’s job losses have occurred in the last three months.

September had the largest monthly job loss total since November 2001, the last month of the previous recession and just two months after the Sept. 11 terrorist attacks.

With 1,179,000 cuts, the economy has lost more than a million jobs in a year for the first time since 2001 - the last time the economy was in a recession. With most economic indicators signaling even more difficult times ahead, job losses will likely deepen and continue through at least the first half of 2009.

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Tags: Credit Crisis, credit crunch, Economy, Fed, Federal Reserve, financial crisis, Government, Labor Department, Politics, Recession, U.S., Unemployment

Nov. 6 (Bloomberg) — Citigroup Inc. and Goldman Sachs Group Inc., faced with a weakening economy and the prospect of mounting losses, began firing workers as part of the firms’ plans to cut more than 12,000 jobs, people with knowledge of the matter said.

Goldman, which converted last month from the biggest U.S. securities firm into a commercial bank, yesterday began telling about 3,200 employees, or 10 percent of its workforce, they were out of a job, according to one of the people who declined to be identified because the decisions were confidential.

Citigroup has been notifying staff this week who are affected by the bank’s plan to discard 9,100 positions over the next 12 months, or about 2.6 percent of its headcount, another person said.

The ousted workers add to the swelling ranks of Wall Street’s unemployed, their lives upended by the credit crisis. Both New York-based firms have already cut staff, and are among the banks and brokerages worldwide that have shed almost 150,000 jobs since the subprime mortgage market collapsed last year. Led by Chief Executive Officer Lloyd Blankfein, Goldman said in April it would fire more after culling about 1,500 underperformers. Vikram Pandit, Citigroup’s CEO, shed 12,900 over the past year.

“We haven’t hit bottom yet,” said Henry Higdon, managing partner at Higdon Partners LLC, a New York-based search firm specializing in financial services. “They have to adjust the size of their businesses to the realities, not only today, but what it’s going to look like in the next two or three years.”

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Tags: Citigroup, Credit Crisis, credit crunch, Economy, Goldman Sachs, Recession, Stock Market, U.S., Unemployment, Wall Street

Traders work on the floor of the New York Stock Exchange in New York, Nov. 5, 2008. Photographer: Ramin Talaie/Bloomberg News

Nov. 5 (Bloomberg) — The stock market posted its biggest plunge following a presidential election as reports on jobs and service industries stoked concern the economy will worsen even as President-elect Barack Obama tries to stimulate growth.

Citigroup Inc. tumbled 14 percent and Bank of America Corp. lost 11 percent as the Standard & Poor’s 500 Index and Dow Jones Industrial Average sank more than 5 percent. Nucor Corp., the largest U.S.-based steel producer, slid 10 percent after bigger rival ArcelorMittal doubled production cuts amid slowing demand. Boeing Co., the world’s second-largest commercial planemaker, lost 6.9 percent after UBS AG forecast a 3 percent drop in global air traffic next year.

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Tags: Bank of America, Citigroup, Credit Crisis, credit crunch, Economy, financial crisis, mortgage crisis, Mortgages, Recession, S&P 500, Standard & Poor's, Stock Market, U.S., Unemployment, Wall Street

Nov. 6 (Bloomberg) — Airbus SAS and Boeing Co. may end up with as many as 200 new planes without buyers next year because airlines are unable to obtain funds to pay for them amid a global credit squeeze, a consultant said.

“There’s a funding gap and we don’t really know where the money is coming from,” Eddy Pieniazek, a director of aviation adviser Ascend, said at a conference in Hong Kong yesterday. “If the money doesn’t arrive, you can quite easily see 200 new aircraft, or whitetails, parked in a desert.”

Airbus and Boeing, the world’s two-biggest airplane makers, will probably deliver about $65 billion of large commercial aircraft next year, according to a report by JPMorgan Securities Inc. Leasing companies and banks, which will account for about 60 percent of the aircraft financing market in 2008, are likely to “pull back substantially,” creating a funding gap as wide as $20 billion, the report said.

“Nobody is getting out of this alive,” said Bill Cumberlidge, director of aviation asset finance at Allco Finance Group, which on Nov. 4 handed over operations to outside managers after warning it may default on its debt. “The debt market is dead.”

“Zero Liquidity”

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Tags: Airbus, Boeing, Credit Crisis, credit crunch, Economy, Liquidity

The French state has threatened to seize control of the country’s banks and fire top staff unless they do their part to stabilise the economy by stepping up lending to companies in need.

“The banks have got to open up credit to business: they have the means to do it,” said prime minister Francois Fillon, accusing lenders of hoarding cash. “We don’t think the banks are stepping up to task as necessary. We can withdraw the credit that we have extended to them under the state’s contract with the banks, and that will put them in difficulty. At that moment the question arises whether we should take an equity stake, change their managers, and assume control over their strategy.”

Speaking on French television, he warned: “Broadly speaking, we’ll be able to judge over the next 10 days whether they are playing the game as they should, or not.”

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Tags: Banks, Commerzbank, Credit Crisis, credit crunch, Economy, France, Government, Hypo Real Estate, IMF, mortgage crisis, Mortgages, Politics

South Korea on Monday unveiled an $11bn stimulus package to boost stagnant domestic demand in Asia’s fourth-largest economy as export growth slows amid the global downturn.

Data released on Monday showed that exports, the main growth driver, grew at the slowest pace in 13 months in October, hit by falling demand from China.

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Tags: Credit Crisis, credit crunch, Economy, financial crisis, Politics, South Korea

VeraSun Energy Corp., one of the nation’s largest ethanol producers announced late Friday that it is filing for Chapter 11 bankruptcy protection.

The South Dakota-based company says it expects to continue normal operations and pay its workers regular salaries while it reorganizes. According to a company news release “the filing was precipitated by a series of events that led to a contraction in VeraSun’s liquidity, impairing its ability to operate its business and invest in production facilities.”

VeraSun made bad bets on the corn market over the summer as grain prices reached record highs, resulting in significant losses for the company. That came just as the U.S. economy began deteriorating.

“Worsening capital market conditions and a tightening of trade credit resulted in severe constraints on the Company’s liquidity position,” the company said.

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Tags: bankruptcy, corn, Credit Crisis, credit crunch, Economy, ethanol, Grain prices, U.S.

Nov. 1 (Bloomberg) — Freedom Bank of Bradenton, Florida, became the 17th U.S. bank seized by regulators this year as the deepest housing slump since the Great Depression triggers record foreclosures and mounting losses.

Freedom, with $287 million in assets and $254 million in deposits, was shut yesterday by the Florida Office of Financial Regulation and the Federal Deposit Insurance Corp. was named receiver. Fifth Third Bancorp of Cincinnati will assume the deposits and buy $36 million of assets, the FIDC said. Freedom’s four offices will open Nov. 3 as Fifth Third branches.

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Tags: bank failure, Banks, Credit Crisis, credit crunch, Economy, FDIC, financial crisis, mortgage crisis, Mortgages, Politics, Treasury, U.S.