I Don’t Like Monday News !
On Monday news, December 1, The National Bureau of Economic Research confirms what many private economists, lawmakers and members of the general public already have assumed and puts an official date on it: A U.S. recession started in December 2007.
The same month employment peaked, and the economy started shrinking in a downturn that has been exacerbated by the financial crisis that took hold of markets beginning in September.
In other department, Federal Reserve Chairman Ben Bernanke said that further interest-rate cuts are “certainly feasible,” but he warned there are limits to how much such action would revive an economy likely to stay weak well into next year.
The Fed’s key interest rate now stands at 1 percent, a level seen only once before in the last half-century. To help lift the country out of a recession that started in December of last year, many economists predict Bernanke and his colleagues will drop the rate again at their next meeting on Dec. 15-16.
Bernanke spoke just hours after the National Bureau of Economic Research announced that the U.S. economy has been in a recession since December 2007.
While in Detroit, The Huge 3 Auto CEOs prepare for a return trip to Washington this week seeking $25 billion in government loans to help them survive a worldwide economic slump, their debt likely will be scrutinized as Congress decides if they can once again become viable with help from the government.
GM alone spent $847 million on debt payments in the first nine months of the year.
Automakers argue that bankruptcy isn’t an option, maintaining that no one will buy a car from a company that may not be around for the life of the vehicle. With sales at their lowest point in 25 years and no other options to borrow more cash, GM and Chrysler say government help is essential.
Cash stockpiles at GM and Chrysler are dangerously close to the minimum amount required to run the company, meaning they could have distress paying all their bills by the end of the year. Ford, although burning cash at an alarming rate, borrowed more than $20 billion last year and says it can last at least through 2010. Ford would evaluate options for its Volvo unit, including a possible sale, as it tries to improve its balance sheet amid a crisis for the auto industry.
In New York, The reality that the nation is in recession and that the downturn may well be prolonged sent Wall Street plunging Monday, hurtling the Dow Jones industrials down nearly 680 points and wiping out more than half of last week’s huge gains. All the major indicators fell more than 7 percent, with the Standard & Poor’s 500 index down nearly 9 percent.
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