Posts Tagged ‘economy’

The State Of Advertising

Saturday, February 28th, 2009

If you search for “NASCAR sponsorship problems” at Google, there are over half-a-million results. NASCAR has seen a huge decline in advertisers. So much so, that entire race teams have been laid-off. It’s not just racing that is being hurt in this economic downturn. Most professional sports, such as the PGA, are feeling the crunch.

Print advertising is also under pressure. Newspapers have been failing at a rapid rate including some of the nations biggest and oldest. (See the Philadelphia Inquirer and Philadelphia Daily News)

Don’t Throw the Baby Out with the Bathwater
Yes, it is important for companies to examine the effectiveness of their marketing. Perhaps sports sponsorships and print advertising are not wise places to place your advertising budget. However, the current economic crisis calls for companies to do a better job of advertising than ever before. During the great depression, President Franklin D. Roosevelt said if he could do it all over again he’d “go into the advertising business in preference to almost any other. The general raising of the standards of modern civilization among all groups of people during the past half century would have been impossible without the spreading of the knowledge of higher standards by means of advertising.”

Internet advertising is one of the best returns on investment. For instance, there is a huge readership for employment opportunities and help wanted advertising. It’s a great time for a company to find the best qualified workers. It’s also a good way for a publisher to reach a wider audience.

Some of the other industries that are discovering the benefits of advertising during this economic downturn include:
Real Estate Foreclosures, Builders and Contractors for Energy Conservation, Doctors, Practitioners, Health & Wellness, Lawyers, Attorneys and Law Offices and Credit Repair Agencies.

Related Articles
Who Is Advertising?
Billboards Along The Information Superhighway
The Beauty of the Internet

The Ever Shrinking Economy

Friday, February 27th, 2009

Washington, DC — The Commerce Department released its report on the 4th Quarter GDP. Though it was expected to be bad, it came in even worse — down 6.2 percent on an annual rate.

FDIC Changes Charges

Friday, February 27th, 2009

In 2007, there were 3 bank failures. In 2008, there were 25 bank failures. So far in 2009, there have been 13 bank failures.

The Federal Deposit Insurance Corporation expects bank failures will cost the insurance fund $65 billion through 2013.

In response, the FDIC is raising fees on banks, as well as, adding emergency fee to help collect 27 billion dollars this year.

Insured Banks and Thrifts Lost $26.2 Billion in the Fourth Quarter

Friday, February 27th, 2009

from the FDIC

Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported a net loss of $26.2 billion in the fourth quarter of 2008, a decline of $27.8 billion from the $575 million that the industry earned in the fourth quarter of 2007 and the first quarterly loss since 1990. Rising loan-loss provisions, losses from trading activities and goodwill write-downs all contributed to the quarterly net loss as banks continue to repair their balance sheets in order to return to profitability in future periods.

More than two-thirds of all insured institutions were profitable in the fourth quarter, but their earnings were outweighed by large losses at a number of big banks. Total deposits increased by $307.9 billion (3.5 percent), the largest percentage increase in 10 years, with deposits in domestic offices registering a $274.1 billion (3.8 percent) increase. And at year-end, nearly 98 percent of all insured institutions, representing almost 99 percent of industry assets, met or exceeded the highest regulatory capital standards.

“Public confidence in the banking system and deposit insurance is demonstrated by the increase in domestic deposits during the fourth quarter,” FDIC Chairman Sheila Bair said. “Clearly, people see an FDIC-insured account as a safe haven for their money in difficult times.”

For all of 2008, insured institutions earned $16.1 billion, a decline of 83.9 percent from 2007 and the lowest annual total since 1990. Twelve FDIC-insured institutions failed during the fourth quarter and one banking organization received assistance. During the year, a total of 25 insured institutions failed. The FDIC’s “Problem List” grew during the quarter from 171 to 252 institutions, the largest number since the middle of 1995. Total assets of problem institutions increased from $115.6 billion to $159 billion.

In its latest release, the FDIC cited deteriorating asset quality as the primary reason for the drop in industry profits. Loan-loss provisions totaled $69.3 billion in the fourth quarter, a 115.7 percent increase from the same quarter in 2007. In addition, the industry reported $15.8 billion in expenses for write-downs of goodwill (which do not affect regulatory capital levels), $9.2 billion in trading losses and $8.1 billion in realized losses on securities and other assets.

The FDIC provided data on industry use of the Temporary Liquidity Guarantee Program (TLGP), which was established in mid-October to address credit market disruptions and improve access to liquidity for insured financial institutions and their holding companies. The TLGP, which is entirely funded by industry fees that totaled $3.4 billion as of year-end, has two components. One provides a 100 percent guarantee of all deposits in noninterest-bearing transaction accounts, such as business payroll accounts, at participating institutions. The other provides a guarantee to newly issued senior unsecured debt at participating institutions. At the end of December, more than half a million deposit accounts received over $680 billion in additional FDIC coverage through the transaction account guarantee, and $224 billion in FDIC-guaranteed debt was outstanding.

“The debt guarantee program has been effective in reducing borrowing spreads and improving access to short- and intermediate-term funding for banking organizations,” Chairman Bair noted. “In recent weeks, banks have been able to issue debt without guarantees and other corporate borrowers have issued debt more frequently and in larger amounts. These are positive signs.”

Financial results for the fourth quarter and full year are contained in the FDIC’s latest Quarterly Banking Profile, which was released today. Among the major findings:

Provisions for loan losses continued to weigh on earnings. Rising levels of charge-offs and noncurrent loans have required insured institutions to step up their efforts to increase their reserves for loan losses. The $69.3 billion in provisions that the industry added to reserves in the fourth quarter represented over half (50.2 percent) of its net operating revenue (net interest income plus total noninterest income), the highest proportion in any quarter in more than 21 years.

The rising trend in troubled loans persisted in the fourth quarter. Insured institutions charged off $37.9 billion of troubled loans, more than twice the $16.3 billion that was charged-off in the fourth quarter of 2007. The annualized net charge-off rate of 1.91 percent equaled the previous quarterly high set in the fourth quarter of 1989. The amount of loans and leases that were noncurrent (90 days or more past due or in nonaccrual status) increased by $44.1 billion (23.7 percent) during the fourth quarter. At the end of 2008, a total of 2.93 percent of all loans and leases were noncurrent, the highest level for the industry since the end of 1992.

The FDIC’s Deposit Insurance Fund reserve ratio fell. A higher level of losses for actual and anticipated failures caused the insurance fund balance to decline during the fourth quarter by $16 billion, to $19 billion (unaudited) at December 31. In addition to having $19 billion available in the fund, $22 billion has been set aside for estimated losses on failures anticipated in 2009. The fund reserve ratio declined from 0.76 percent at September 30 to 0.40 percent at year end. The FDIC Board will meet tomorrow to set deposit insurance assessment rates beginning in the second quarter of 2009 and to consider adopting enhancements to the risk-based premium system.

The complete Quarterly Banking Profile is available at on the FDIC Web site.

# # #

Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation’s banking system. The FDIC insures deposits at the nation’s 8,305 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

FDIC press releases and other information are available on the Internet at, by subscription electronically (go to and may also be obtained through the FDIC’s Public Information Center (877-275-3342 or 703-562-2200). PR-27-2009

Bank Failures Increase Worldwide

Monday, February 16th, 2009


Bank failures continue to escalate over the face of the globe. Four more US banks were closed by regulators in Nebraska, Florida, Illinois and Oregon.

In the UK, Lloyds is already 43.5% government owned after having to seek assistance last fall. Now, they face $14.2 billion loss. At the same time, they still wish to pay multi-million dollar bonuses to employees. It is unlikely the government stakeholders will approve such bonuses. On the other hand, the government may be forced to nationalize the bank.

GlaxoSmithKline Going Opensource? A Good World Citizen?

Monday, February 16th, 2009


The head of drug giant Glaxo SmithKline, Andrew Witty, announced the company plans a couple major policy changes. One change will be to slash prices of drugs to developing countries by 75%. With the remaining profits from these countries, they would help develop the healthcare infrastructure.

The other major change will be to open up some of their patents to a “patent pool.” Initially, this would include patents for drugs that treat malaria and cholera. However, to the dismay of many, they do not plan on sharing patents for HIV Aids. Nevertheless, this is an important step for the pharmaceutical industry in making drug improvements more like opensource computer software. When patents are shared with other experts and not treated as industrial secrets, the best scientist in the world can all contribute to improvements.

Spokesmen for GSK are quoted as saying:
“We work like crazy to come up with the next great medicine, knowing that it’s likely to get used an awful lot in developed countries, but we could do something for developing countries.

“Are we working as hard on that? I want to be able to say yes we are, and that’s what this is all about - trying to make sure we are even-handed in terms of our efforts to find solutions not just for developed but for developing countries.”

“Slashing drug prices is good. But without the necessary health infrastructure many won’t be able to access those drugs. Therefore, investment by GSK, along with the knowledge pooling, make this a landmark announcement.

“This is a gutsy move in a commercial world. Witty has demonstrated a willingness to make saving lives a business goal along with making money.”

Another Great Depression?

Wednesday, February 11th, 2009


Could the current economic crisis lead to another great depression? The Minneapolis Federal Reserve Bank has released a study that suggests the government needs to be careful in order to avoid such a problem. Massive public intervention to maintain employment and investment, if they distort incentives enough, can lead to a great depression.

Business cycles can lead to an ordinary downturn in the economy. However, overreaction by the government can prolong and deepen the downturn leading to depression.

The Whitehouse Says “Compromise”

Saturday, February 7th, 2009

There was bad news and then there was good news.

Yesterday we learned that in January, the country suffered its largest one-month job loss in 34 years.

But last night, the Senate struck a compromise on the economic recovery plan and put us on our way to giving the economy the short-term jolt and long-term investments it needs.

“Americans across this country are struggling, and they are watching to see if we’re equal to the task before us,” the President says in this morning’s Weekly Address. “Let’s show them that we are.”

The White House
Saturday, February 7, 2009

Yesterday began with some devastating news with regard to our economic crisis. But I’m pleased to say it ended on a more positive note.

In the morning, we received yet another round of alarming employment figures – the worst in more than 30 years. Another 600,000 jobs were lost in January. We’ve now lost more than 3.6 million jobs since this recession began.

But by the evening, Democrats and Republicans came together in the Senate and responded appropriately to the urgency this moment demands.

In the midst of our greatest economic crisis since the Great Depression, the American people were hoping that Congress would begin to confront the great challenges we face. That was, after all, what last November’s election was all about.

Legislation of such magnitude deserves the scrutiny that it’s received over the last month, and it will receive more in the days to come. But we can’t afford to make perfect the enemy of the absolutely necessary. The scale and scope of this plan is right. And the time for action is now.

Because if we don’t move swiftly to put this plan in motion, our economic crisis could become a national catastrophe. Millions of Americans will lose their jobs, their homes, and their health care. Millions more will have to put their dreams on hold.

Let’s be clear: We can’t expect relief from the tired old theories that, in eight short years, doubled the national debt, threw our economy into a tailspin, and led us into this mess in the first place. We can’t rely on a losing formula that offers only tax cuts as the answer to all our problems while ignoring our fundamental economic challenges – the crushing cost of health care or the inadequate state of so many schools; our addiction to foreign oil or our crumbling roads, bridges, and levees.

The American people know that our challenges are great. They don’t expect Democratic solutions or Republican solutions – they expect American solutions.

From the beginning, this recovery plan has had at its core a simple idea: Let’s put Americans to work doing the work America needs done. It will save or create more than 3 million jobs over the next two years, all across the country – 16,000 in Maine, nearly 80,000 in Indiana – almost all of them in the private sector, and all of them jobs that help us recover today, and prosper tomorrow.

Jobs that upgrade classrooms and laboratories in 10,000 schools nationwide – at least 485 in Florida alone – and train an army of teachers in math and science.

Jobs that modernize our health care system, not only saving us billions of dollars, but countless lives.

Jobs that construct a smart electric grid, connect every corner of the country to the information superhighway, double our capacity to generate renewable energy, and grow the economy of tomorrow.

Jobs that rebuild our crumbling roads, bridges and levees and dams, so that the tragedies of New Orleans and Minneapolis never happen again.

It includes immediate tax relief for our struggling middle class in places like Ohio, where 4.5 million workers will receive a tax cut of up to $1,000. It protects health insurance and provides unemployment insurance for those who’ve lost their jobs. And it helps our states and communities avoid painful tax hikes or layoffs for our teachers, nurses, and first responders.

That’s what is at stake with this plan: putting Americans back to work, creating transformative economic change, and making a down payment on the American Dream that serves our children and our children’s children for generations to come.

Americans across this country are struggling, and they are watching to see if we’re equal to the task before us. Let’s show them that we are. And let’s do whatever it takes to keep the promise of America alive in our time.

Thank you.

ACORN Saves Homes While Feds Flounder

Thursday, February 5th, 2009

Oakland “Miracle” Shows Better Path Than “Hope For Homeowners’” Utter Failure

OAKLAND, Calif. – At 6:00 in the morning on Wednesday, February 4, more than 30 members of ACORN gathered at the home of Eddie and Martha Daniels in West Oakland, armed with prayers, cell phones, and the hope that Wednesday would not be a day in which yet another family who had done no wrong was claimed as a victim of the raging foreclosure crisis. Since 2006, the Daniels had paid their rent each month to their landlord, who had not told them that he was not in turn paying the mortgage on time. The landlord’s lender had foreclosed on the property and terminated the lease, and on Wednesday the Sheriff was scheduled to come to their home and evict the Daniels, a family on the verge becoming another statistic in the national economic catastrophe.
ACORN members rallied their neighbors, spoke with local media, including one radio station that broadcast live from the home, and flooded the Sheriff’s office with calls urging compassion and forbearance of the scheduled eviction. At the same time, ACORN Housing Corporation was working furiously behind the scenes with the lender to negotiate a stay on the eviction, which successfully came through. This remedy alone would put the Daniels among the fortunate few who are able to get reasonable solutions from lenders, but what happened next was truly unique: ACORN Housing Corporation was able to counsel the Daniels and determine their eligibility to apply for a VA loan that would enable them to purchase the very property from which they were almost evicted earlier that day, and the foreclosing lender has agreed to sell.
“This shows the power of communities coming together to fight back against the foreclosures that are taking our homes and ruining our neighborhoods,” said Maude Hurd, ACORN President. “Oakland is showing the nation a new way forward, one in which community-based civil disobedience combined with savvy counseling and advocacy can take a family on the verge of eviction and help them become homeowners. While this kind of same-day miracle is rare today, ACORN believes that hundreds of thousands of families across the country just like the Daniels, innocent renters and predatory lending victims who are losing their homes at a record pace, can fight back by getting organized and defending their homes through old-fashioned community organizing. This system is broken and it’s time we throw a wrench in it.”
The Daniels hope to close on the sale in the coming weeks, and are relieved and thankful to be able to stay in their home. “Yesterday morning, I was so scared to be losing my home,” said Eddie Daniels. “Tonight, I am still sleeping in my own bed under my own roof, and that is no small miracle. I am so grateful and fortunate that my neighbors and ACORN came to defend our home. Millions more families need this kind of help.” Families facing eviction or foreclosure can call ACORN for help at 1-866-67-ACORN or visit
As ACORN members celebrate this miraculous victory in Oakland, they mourn the ongoing federal inaction and failure in the face of the foreclosure crisis. Bloomberg News is reporting today that only twenty-five (25) loans have been refinanced through the much-touted Hope for Homeowners program, which was originally expected to help between 300,000 and 400,000 families avoid foreclosure. Hope for Homeowners is the only federal program designed to fight foreclosures created in the year and a half since foreclosures reached record levels.
“Even as the federal government works to correct serious flaws in the program, Hope for Homeowners will still rely on voluntary industry participation, and therefore remain doomed to failure,” said Hurd. “We desperately need changes in federal policy that will force mortgage lenders and servicers to stop unnecessary foreclosures, both by lifting the ban on judicial modifications for primary residences and by requiring bailout recipients to modify loans in an economically rational way, as Citigroup has agreed to do. As even Republicans have recently taken to arguing, no successful economic recovery will be possible without directly targeting the mortgage mess that lies at the heart of our economy’s failure. Across the country, ACORN is working with families to save homes and fight foreclosures, and it sure would be nice to have a federal government doing the same.”

Fed Extends Liquidity Programs

Wednesday, February 4th, 2009

The Federal Reserve on Tuesday announced the extension through October 30, 2009, of its existing liquidity programs that were scheduled to expire on April 30, 2009. The Board of Governors and the Federal Open Market Committee (FOMC) took these actions in light of continuing substantial strains in many financial markets.

The Board of Governors approved the extension through October 30 of the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF), the Commercial Paper Funding Facility (CPFF), the Money Market Investor Funding Facility (MMIFF), the Primary Dealer Credit Facility (PDCF), and the Term Securities Lending Facility (TSLF). The FOMC also took action to extend the TSLF, which is established under the joint authority of the Board and the FOMC.

In addition, to address continued pressures in global U.S. dollar funding markets, the temporary reciprocal currency arrangements (swap lines) between the Federal Reserve and other central banks have been extended to October 30. This extension currently applies to the swap lines between the Federal Reserve and each of the following central banks: the Reserve Bank of Australia, the Banco Central do Brasil, the Bank of Canada, Danmarks Nationalbank, the Bank of England, the European Central Bank, the Bank of Korea, the Banco de Mexico, the Reserve Bank of New Zealand, the Norges Bank, the Monetary Authority of Singapore, the Sveriges Riksbank, and the Swiss National Bank. The Bank of Japan will consider the extension at its next Monetary Policy Meeting. The Federal Reserve action to extend the swap lines was taken by the Federal Open Market Committee.

The current expiration date for the Term Asset-Backed Securities Loan Facility (TALF) remains December 31, 2009. Other Federal Reserve liquidity facilities, such as the Term Auction Facility (TAF), do not have a fixed expiration date.

The AMLF provides loans to depository institutions to purchase asset-backed commercial paper from money market mutual funds. The CPFF provides a liquidity backstop to U.S. issuers of commercial paper. The MMIFF supports a private-sector initiative to provide liquidity to U.S. money market investors. The PDCF provides discount window loans to primary dealers. Under the TSLF, the Federal Reserve Bank of New York auctions term loans of Treasury securities to primary dealers. The TALF will support the issuance of asset-backed securities collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration. Under the TAF, Reserve Banks auction term discount window loans to depository institutions.