Obama plans high-speed rail in US

President Obama is planing on building a high-speed rail system in America. The implementation of this plan would create many jobs . One question that comes into my mind is which Americans are willing to do these type of blue collar jobs however unemployment will cause many people to evalute their situation and will have to make do with what ever job they can get.

America in comparison to other developed countries is behind in transportation. For example Spain and Japan has trains that travel from city to city with speeds of 240km/h. In my opinion the long term benefits will be far greater than the short term. The long term benfits will enable America to cut down on congested traffic which according President Obama, "Our highways are clogged with traffic, costing us $80 billion a year in lost productivity and wasted fuel." If these numbers are accurate I believe the government should invest in building a railway system. The Railway system will provide many jobs in the short term and in the long term the railway system will provide efficiency.

http://news.bbc.co.uk/2/hi/americas/8003077.stm

Carmaker Ford cuts debt by $9.9bn

One of the three major automobile manufacturers, Ford, has not requested or has received any bailout money. The company has decided to weather out the current economic times by managing themselves more efficiently. They have reduced there debt by $9.9 billion dollars from their $25.8 billion dollars causing their share price to increase by 16%. I believe that Ford is taking the right steps by reducing their debt so that they can look at the long term growth. The consumer would also be happier if they saw Ford survive without the assistance of the government whereas the other two American automobile makers were not able to manage themselves efficiently. Shareholders main concern is to make sure the company survives and that the share value increases. As the company is waiting for the economy to turn around the company is getting rid of debt which would reduce interest risk. Clearly, Ford is taking necessary steps to please the shareholders and consumers.

http://news.bbc.co.uk/2/hi/business/7986272.stm

Interview betwwen John Stewart and Jim Cramer

I was watching the interview between John Stewart from the daily show and Jim Cramer from the show on MSNBC called Fast Money. Normally the daily show is funny but this interview was serious and to the point. The point John Stewart was trying to get across was that as a financial channel like MSNBC should be trying to find out the truth and have credible evidence shown to the American public. After watching this episode, John Stewart talked about not messing with the peoples 401K's which would be invested in the markets. On Jim Cramer's show, he gives financial advice to the people. Most people should do their own research but most people probably that watch the show are influenced by it. As a wealty financial manger it could be easy to tell some to spend money on one stock and sell another. I believe that it should be a reponsibility for a finacial channel to find and research information before publishing it on television.

Obama anger at AIG bonus payouts

AIG came into criticism by President Barack Obama when they disclosed their information on paying bonuses to their executives. The government has provided AIG with a bailout to help the current economy, not to provide thier executives with a hefty bonus. As a taxpayer I am happy to see the government looking into cases where top executives are getting these fancy bonuses. Currently in this economic state I feel there is no reason for any executives to get texpayers money to meet there contractul demands. If the current executives are at fault they definately should not be paid any bonuses. I feel it is AIG's responsibility to know in this current economic state that taxpayers money should be going in the right places and not into high paying executives. I believe the government should only intervene if they feel AIG is not being responsible with their bailout package.

http://news.bbc.co.uk/2/hi/business/7945774.stm

Who is to blame for the current economic state?

The current economic state stems from mistakes made by different sectors of the business world. I believe it started off with people wanting to live the American dream by owning their own house. Banks were quite happy in gibing out loans to people that they knew that could not afford them. All these mortgages were then bundled up as CDOs. These were then sold to investors that were looking to make an investment. These CDOs were sold to many people that did not even know what they were. Selling these CDOs brought in revenue and as long as the housing market increased in value the banks were happy.

This is just an overview on some areas at fault for the current economic state. The people, banks, government and even analysts that could of seen potential of this happening are at fault. There has been careless mistakes made by different areas where someone should be held accountable.

Airlines Slash Fares to Fill Up Empty Seats

Another industry hit by the current economy is the airline industry. In 2008 when gas prices were at record high prices the airline industry cut down several thousand jobs. The airline industry was hoping that with lower oil prices the airline industry would turnaround however with the current economic state, people are not traveling causing airline industries to cut their airline fares. I believe that the airline industry has to cut fares to get people to fly. People are choosing to drive to their locations instead of flying. The American public are just more conservative. I believe their will be some good deals this summer which several people will enjoy but the airline industry will suffer.

http://finance.yahoo.com/family-home/article/106694/Airlines-Slash-Fares-to-Fill-Up-Empty-Seats

US car sales plunge in February

Their is more bad news for the automobile industry. The current recession has caused the American people from spending money on automobiles. The sales for "GM's sales plummeted 53% in February from a year earlier, Ford's fell 48%, Toyota's dropped 40% and Nissan's declined 37%"(bbc). From these statistics it is obvious that it is not just American companies that are suffering but the whole industry in general. The current job security in America has caused Americans to fear spending money. The American people would rather hold onto their money until they feel safer to spend. Now all the companies are looking for funding of some type to combat the current economic crisis.


http://news.bbc.co.uk/2/hi/business/7920379.stm

BlockBuster/Virgin MegaStore

The media retails stores are struggling in today's economy. BlockBuster could go into bankruptcy and Virgin MegaStore are shutting down their stores. One of the reasons for the failure of theior businesses are that they have outdated business models. The internet has added a new dimension into buying or renting media products. People are finding it convenient to buy products online with a cheaper price. For instance CDs cost around 20 dollars in the stores whereas people can buy them for half the price on i-tunes. In the near future both these companies will be shutting down their stores. In my opinion my reason to why both theses companies are failing is the fact they did not adapt quickly enough to technological advances and the current economy does not help.

US Airways reverses soda stance: won't charge

US Airway is planning on canceling extra charges for drinks on domestic flights. US Airways remained the only airline to charge prices for drinks therefore the company felt at a disadvantage. Service is always the most important part of any business. I believe US Airways decided to cancel the extra charges because they have provide good services for passengers especially in this economic recession. Even though oil prices have dropped, the current economic state that we are in means that the airline industry has to be passenger friendly. The airline industry has taken a dip as people are choosing to fly less therefore US Airways has to market and serve passengers efficiently.

http://news.yahoo.com/s/ap/20090223/ap_on_bi_ge/us_airways_soda_reversal;_ylt=Amzdzax1WBJoxVDF93qvQMyyBhIF

Obama to Treasury: Start cutting taxes

President Obama will try to stimulate the economy by implementing tax cuts for 95% of the American people. I believe by handing money back to the American people is a hope that they will spend. I believe it is the right move to give the American people money however it still is difficult to change the current mindset of the people. People are choosing to be reserved and save their money. Their are so many problems with the economy right now with the mortgages and job security amongst others. I believe the governments main goal should be to install confidence in the American people. They have to feel secure for them to spend money. Hopefully the tax relief will help but i beleive it will only help in the short term. Their has to be long term plans that will make the American people feel more secure.

Dragging GM and Chrysler to the altar

There are rumors that the government will try to merge GM and Chrysler together however both companies claim that they will be better off separate. Both these companies are trying to prove that the money the government gave them is worthwhile. There have been previous talks for companies to merge together. The two auto companies believed the cost of shutting down excess factories would be far more than they can bear. Both the auto manufacturers are asking another 26 billion dollars from the government. I believe that it is going to be worse fro the economy this year with both these companies laying of workers. Chrysler plans on cutting 3000 workers and GM plans on cutting 20000 workers. If the government continues to fund these companies then the government will try to choose the best solution.

http://money.cnn.com/2009/02/20/news/companies/auto_panel/index.htm?postversion=2009022015

Stimulus bill restricts executive compensation

After the government passed the $700 Billion financial bailout, on Friday the 13th Congress voted to restrict big bonuses that were given to managers and CEO's. Any company that received money from the bailout will be required to restrict payments and bonuses. In my opinion, the current economic crisis we are currently having requires government intervention of large bonuses and payments that some of the CEO's are giving themselves. The government has to make sure taxpayers money is being used in the right way. There is a need for the people to see an improvement in the economy after all the taxpayers money being spent.



http://money.cnn.com/2009/02/14/news/economy/stimulus_executive_pay.reut/index.htm?postversion=2009021409

Toyota triples year loss forecast

It is not just the American auto companies suffering, it is the whole auto industry. Toyota reported three times its expected operating cost. The article tells us that by the increasing value of the Yen, it has hurt Toyota by sales in oversea companies. This brings out the question whether it could of been worthwhile to hedge against exchange rate risks so that they could make a steady profit. In the current economic state there will be a lot of what-if questions asked by different companies.


http://news.bbc.co.uk/2/hi/business/7873731.stm

JQ: How does the risk premium reflect Beta?

The Beta is the measure of risk that the company has. The risk premium will be correlated with the beta. If the beta is high meaning that there is more risk then the risk premium will be higher and for a lower beta the risk premium will be lower.

JQ Why does it make sense for a company to purchase insurance or hedge its risk?

It makes sense for companies to purchase insurance or/and hedge against its risks because it lowers the cost of the risk occurring. There is a possibility that cash flows could increase indirectly. The company will find it much easier having insurance than to raise capital for future investments. If the company has to worry about lawsuits or even bankruptcy, the company would make bad decisions which could make matters worse therefore insurance would be a wise move for companies. By hedging companies can eliminate any volatile commodity prices that are required for the companies purposes. It could be a benefit if they control manage prices such as gold or oil for example. For example the airline industry could hedge in oil prices so that the company does not have to charge according to oil prices. Overall I believe that it is in the companies best interest to maximize its value to the firm.

AIG ends Man Utd sponsorship deal

To cut cost, AIG is not renewing its sponsorship for British soccer team Manchester United. AIG was currently paying around 25 million dollars per year to sponsor the team. After receiving the 150 billion bailout from the U.S government, it is not surprising that the company is reducing costs. AIG has already cancelled its sponsorship for the U.S Davis Cup tennis team. I am sure AIG will continue to reduce costs as they try to get back on track. Soccer teams get paid huge amounts of money from there sponsors. There is no doubt companies see potential in sponsorship as millions of people follow soccer around the world and so many buy the soccer kit. This puts there name out to millions of people however, in my opinion there will many more companies that will be more hesitant to sponsor professional sports as they will also look to reduce costs.

http://news.bbc.co.uk/2/hi/business/7841748.stm