Bloggy Business Today

Many were expecting an interest rate cut of 0.5% but actually got something better from the Federal Reserve led by chairman Ben Bernanke. The Federal Reserve actually cut the rates in the vicinity of 0 to 0.25% just to avert this crisis and hopefully limit the length or recession that is upon us now.

We have seen the effects of recession. Companies going bankrupt, people losing their jobs and severe budget cuts made by people themselves. We cannot avert the impending crisis but we can manage and manage hard. Extreme sacrifices are sure to be needed as all sectors of the world from business to real estate are experiencing the hard effects of the credit crunch.

“The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability,” the Fed said.

Brace yourselves for the worst economic catastrophe since the 1930s. It is not going to be pretty.

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As expected, the government is exhausting all means to extend financial aid towards the embattled car manufacturing giants of Detroit, General Motors and Chrysler. While the first auto bailout plan did not pass the grade for refusal of the labor unions to take a significant salary adjustment that can be compared with the salary structure of Japan’s own line of car manufacturers, the new auto bailout plan hopes to put all these to rest and save the two car manufacturing giants from officially filing chapter 11 or bankruptcy

The alternative? The Troubled Asset Relief Program or TARP. The TARP is actually the $700 billion bailout approved by Congress in October.

The Bush administration said Friday it might use taxpayer dollars set aside to bail out banks and Wall Street firms to keep troubled U.S. automakers out of bankruptcy.

The move could provide an 11th-hour short-term lifeline to General Motors and Chrysler LLC, which have warned they are within weeks of running out of the cash they need to continue to operate.

With this development, the government is reversing the initial round of talks where the Senate all but killed the initial funding for the auto bailout plan which has amounted to $14 billion. Will this resolve the problem the U.S. economy is facing? Everyone is hoping that it does while some sectors are holding out other opinions.

Republican critics of a bailout have argued that the automakers should use bankruptcy to shed debt and onerous labor obligations. They point to the success of companies in other troubled industries, such as airlines and steelmaking, to use bankruptcy to reorganize.

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In what was deemed as the last saving grace to save Detroit’s auto industry, the auto bailout is history as talks for dramatic salary increases to be in line with Japan’s auto industry had the United Auto Makers refuse the deal. So with that part of the auto bailout play layout unaccounted for, the Senate rejected the bailout plan, failing to acquire the 60 required votes to approve the financial aid to Chrysler and General Motors.

So with this development, the future of these two giant car manufacturers of Detroit are looking grimmer. They have declared that they could be weeks from closing shop, leaving Ford which did not request for financial assistance at this time but may soon follow their footsteps if business does not pick up.

In the end, the doom of the U.S. auto industry may be pointed towards the greedy and selfish desires of their labor and manpower resources, something that will surely be monumental. But they are not entirely to blame. They have to work to survive and the drastic cuts in wages seem to be too much for them as the cost of living for these people needs to be satisfied.

But don’t close the door just yet. We saw the same scenario before when the financial bailout was being made. Expect a new round of auto bailout talks since the U.S. is surely not going to allow their auto industry to just drop dead.

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The latter part of 2008 is not the best times we will remember. Global recession issues started to crop up months back and while many were bracing themselves on the effects of these factors, it seems that figures are now the best thing to justify that the world is truly in recession. Without significant numbers in the export side, you can just imagine how much the impact would be and why there is a trade deficit at this point.

With less imports resulting from poor markets and declining confidence in the economies, the United States had reported a trade deficit which is sending a lot of shivers to people who are following the potential outcome of these recession problems. Job layoffs have also risen and put them altogether and you have a world that is scrambling to make ends meet and try to survive this debacle that is here.

The Commerce Department reported Thursday that the trade deficit rose to $57.2 billion October, 1.1 percent higher than the September imbalance of $56.6 billion. Analysts expected the deficit to decline to $53.5 billion on lower oil prices.

So with these fact evident, it looks like we should be prepared for worst things ahead. No one wants to be in this situation but apparently we don’t have much of a choice but to go with the flow.

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It was announced that the U.S. government is in its final stages of perhaps providing a $15 billion proposal to save Detroit’s car industry and avoid the collapse of these three automakers. General Motors and Chrysler are the ones in dire need of financial assistance to avoid bankruptcy while Ford just has not yet pushed the panic button and just wants some assistance just in case business does not pick up.

As far as the financial assistance that is being given, it shall be taken out of the taxpayers’ money. But hold on. Isn’t that fund the same as what the laid off employees were being deducted off when they were connected with some of these companies? The big three have cut off thousands of workers and while that did not draw much attention it looks ironic that they will be the ones who technically rescue these automakers and allow the millionaires survive for another day.

Prioritizing the economy’s state and the businesses that evolve around it is understandable. But what has the government have in store for the laid off workers who are now facing problems as far as surviving in the financial part of their lives?

The scenario does indeed look weird. A lot of people are in need of help. But as of now, it seems that the millionaires are getting the aid over the not so fortunate ones. Are we sure the owners of these large auto companies are really in need of help or just don’t want to infuse money to their companies so that they can invest it somewhere else.

These are some things you should ponder on folks. Business is still a dirty game and the wealthy know how to play it wisely.

The bailout is designed to allow GM and Chrysler to avert threatened bankruptcy through March with short-term loans. Ford Motor Co is not requesting immediate help but would like a line of credit in case its finances worsen.

Lawmakers fear if automakers collapse, it would deepen the U.S. recession. But many say market forces, not a government saddled with a record deficit, should determine their fate.

There also is reluctance to provide another federal rescue in the wake of the voter backlash against Congress for its passage of a $700 billion bailout for Wall Street in October.

At the same time, many argue that if Congress provided relief for millionaires in the U.S. financial industry, it should also help blue-collar autoworkers facing unemployment.

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