Unfortunately, Ireland is being hit particularly hard in the 2008 global economic meltdown.  The Irish are facing their worst economic recession in the last 25 years. The global credit meltdown has put a halt to massive Dublin construction projects and EU rules may force the country to take steps which will dig them further into the hole.

Upon joining the European Union, Ireland agreed to abide by the monetary policy of the European Central Bank and also agreed to meet certain budget targets, limiting its ability to carry deficits. Because of these strict rules, It is predicted that EU states, especially Ireland, will suffer even greater economic woes than the United States. While non-EU countries have the freedom to respond to the growing financial disaster using all tools at their disposal, Ireland has found itself in the unfortunate position of actually having to make the situation worse. While Ireland now needs low interest rates to stimulate the economy, the European Central Bak has raised them to protect other EU countries, such as France. EU leaders are demanding that Ireland cut public spending to meet the budget goals. In order to comply, Ireland may be forced to actually increase taxes on its citizens.

Raising taxes is not the only unpopular plan the Irish have. Huge cuts in education and the public sector are on the horizon, as is scrapping the plan to offer the HPV vaccine to young girls. A plan to force seniors to pay for the healthcare has already been defeated.

When Ireland does attempt to staunch the flow of red, EU has responded unfavorably. In October, Ireland moved to guarantee all bank deposits; the EU scolded Ireland for acting alone.

The rising conflict between Ireland’s needs and the needs of other EU members may be coming to a head. The Irish have already rejected the Lisbon Treaty, which would have given EU leaders in Brussels more power.

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American Express has hit troubled times recently because its business model relied heavily on selling packages of credit card debt to investors; nobody wants to buy these packages now. Further, consumers are spending less and missing their monthly payments; losses are a full 50% higher than last year.

The government financing would be in the form of preferred stock, which is not quite the “equity stake” touted by those who pushed the $700 billion bailout on the American taxpayer.  Preferred stock usually does not come with voting rights - usually it is simply a debt instrument.  Thus, $3.5 billion would get us virtually no say in what Amex does with the money.

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The plan is to target loans made prior to Jan 1, 2008 that are 90 days or more past due and bring the ration of payment to income to 38% by reducing the interest rate or even forgiving part of the mortgage. The homeowner will have to attest that they have suffered some hardship that has made them unable to pay the mortgage on their primary residence.

Mortgage service companies will make out like bandits, of course, being paid $800 for each modification.

There is already a program in place to help those who have suffered a hardship. It’s called bankruptcy. Why should homeowners get special treatment? Whatever…

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Print is dead, people. Stop killing trees…read only material that is exclusively online.

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]]> http://greatbigbailout.com/2008/11/11/time-inc-to-layofftaking-volunteers/feed/ http://greatbigbailout.com/2008/11/11/california-budget-about-to-implode/ http://greatbigbailout.com/2008/11/11/california-budget-about-to-implode/#comments Tue, 11 Nov 2008 23:29:35 +0000 http://greatbigbailout.com/?p=185 Unless drastic action is taken, California will be close to 30 billion in the whole by June 2010.  California’s deficit has been a tremendous problem for years now, but it has become dire in the face of the current national economic meltdown.  To make matters worse, it is now predicted that California’s tax revenue will be lower than what the administration had been banking on.

Unpopular measures to fix the situation are likely on the table such as an increase in sales tax, income tax, and auto registration fees.

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While my first instinct is to mock this story, it is never good for the obscenely wealthy to tighten their belts and stop throwing money into the economy on unnecessary luxuries. So, Harry the Hedge Fund Manager, keep skiing!!

Nancy Pelosi indicates that Congress will likely pass an emergency bill next week for the auto industry. Barney Frank is said to be drafting it as part of the Troubled Asset Relief Program.  Supposedly, conditions will be placed on executive pay, but I’ll believe that when I see it implemented. And will it be enough to save the industry? And will the Bush Administration back her?  Right now, Bush is more concerned with another job killing free trade agreement, this time with Colombia. I’m glad that his priorities are in order.

GM has lost 40 percent of its share value in the past two days. Last week it announced dismal earnings and made dire predictions about its future, and the future of the American auto industry as a whole. GM will likely run out of money early in 2009 without a bailout.

The Los Angeles Auto Show will be affected by the downturn in the auto market, for sure. GM is no longer planning to unveil the new Cadillac CTS coup or the Buick La Crosse sedan.  It was also rumored that GM would announce additional details on the electric Volt car. It is unlikely that this will happen now.

The dire situtation in Detroit is problematic indeed. On the one hand, you have private, publically traded companies that have run themselves in the ground by failing to deal effectively with UAW (United Auto Workers union), failing to engage in proactive development of alternative fuel vehicles and by perpetuating the corporate culture of executive greed. I feel that foreign cars, especially Japanese, are an overall better product so the loss of the “big three” US automakers would not be the end of the world.

However, given that we are entering a tumultuous economic downturn, this is not the time for all of those blue collar workers to be on the unemployment line. Yes, their own greed in allowing the UAW union to strong arm the auto makers into obscenely high compensation and benefits packages has helped put Detroit where it is.  But, still. Can we really afford to have all of these people out of work?

So, the American taxpaper will have to come to the rescue so that the executives can get their bonuses and the workers can keep raking it in. Wonderful.

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“We know the economy is in a complete recession … we’ve got to be prepared for a weak economy and weaker demand, which I think is destined to happen,” said CEO of Southwest Airlines Gary Kelly.

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