Ford Seeks to Eliminate $10.4 Billion of Its Debt

Again an update about the struggling car industry in the U.S. The second biggest car constructing company in the U.S. after G.M. namely Ford Motor Company said this week that it hoped to eliminate $10.4 billion in debt by giving cash and stock to debt holders as part of a revamping of its sheet balance.

This move of Ford is similar to what G.M. and Chrysler had to do to get new loans from the federal government, but the Ford spokesman said it has no plans to seek federal aid. Ford will reduce its overall borrowing by 40 percent and at this moment Ford is the healthiest of Detroit’s auto constructors. This is because of their debt initiatives and an earlier agreement they made with the U.A.W. (United Automobile Workers) union.

Ford won the concessions from the union because of a good debt restructuring plan.
AlL the offers Ford had to make, were necessary as part of its agreement with U.A.W. to restructure the payments and retire trust. Another part of the contract with the union was to make other cost-saving changes.

I think this is a good action of Ford because they actually try to do something about this situation and not only count on the loans of the government to save the company like G.M. and Chrysler do.

We can see the debt restructuring plan works and I think G.M. and Chrysler have to take an example on Ford and do the same things, or make decision that have the same impact. It’s also good that Ford don’t need government loans and tries to save the company on his own strength.

Source: http://www.nytimes.com/2009/03/05/business/economy/05ford.html?_r=1&ref=business

Obama: Save $40B by cutting waste

President Obama came up with a new plan to help America get out of the economical recession that reigns the country nowadays. He will unveil his plan at a White House ceremony at 10 a.m. EST. The plan has the intention to reform the broken system of government contracting.

Nine days after the summit where Obama discussed a total change in fiscal spending, he explains that with his new plan America can save up to 40 billion dollars a year. The plan contains a lot of measures that will reduce the spending on waste made by the U.S. government. A total new system of working with contractors will make sure that the government will stop wasting American people’s money.

The president said that if we let the government perform a lot of outsourcing services itself, make the contracting process accessible for small businesses, stop needless no-bid and cost-plus contracts and finally, make the oversight stronger to maximize accountability and transparency, we can make it possible to decrease the fiscal incomes by 40 billion dollars each year.

Obama finds it very important that the American people’s money is spent to make their lives better and not to fill the pockets of contractors or to maintain projects that don’t work. The president will also praise the Defense Secretary for the efforts he’s doing to reform the Pentagon spending policy but he will also tell him that he won’t accept him spending billions of dollars on waste expenditures.

Once again I am very pleased with the efforts Obama is doing for his country. He keeps on showing himself very motivated to help America out of this economical recession and according to me, he will definitely succeed.

He is doing a lot of research to find ways that would help solve the bad economical circumstances that rule the United States of America. Finding errors in the government contracting policy is something that according to me, a president like George Bush, would probably not have come up with.
Obama is definitely the man that will save America from this bad economical period.

Source: http://money.cnn.com/

House prices fall at record rate

Nowadays the financial crisis is a fact, not only Europe but also America, actually the whole world is scourged and suffers severely. This crisis has a gigantic impact on several sectors, for instance the banks, the companies,...and even it has an influence on the real estate.

In the US there is a remarkable trend for some time, a slumping sale and the foreclosures are rising. This cause the decrease in prices, so home prices in the US decreased at a record speed last year. More exactly a fall of 18.5 per cent in the Case-Shiller index, it was the biggest fall in December 2008 since the measure 21 years ago. Phoenix, Las Vegas and Minneapolis are the states who are confronted with the sharpest monthly declines. In the meantime consumer confidence sinks to a low level. These declines cause US households additional charges, $370 billion per month which is incredibly high.

The White House reached to a solution, namely a foreclosure prevention plan, because of the importance of the political issue concerning the housing market. The Republicans also desire that the government contribute his mite by subsiding mortgages to help homeowners.

The home price index has also fallen 26.7 per cent, since the peak of the housing market in July 2006. The situation of the prices is alarming for the US consumers, they are much worried because it is still continuing.

My opinion predicts that there will be a house price crash with profound effects on the economy. The house prices and the financial crisis are related, stable prices became a must. The government has to minimize and avoid the effects of fluctuations in prices, otherwise the consumers are again the victim.

Written by Marie Maes

Source: The Financial Times
Article: House price fall is biggest in 21 years – 25 February 2009
By Alan Rappeport

Obama sees $1.75 trillion deficit

President B. Obama has forecast a $1.75 trillion deficit in the budget of 2009. The main goals of that budget are overhauling the healthcare system and shoring up the U.S. economy. The budget reflects the delicate balance Obama has to make between making sure there is enough money to rebuild the economy and avoid excessive pressure on long-term finances. The first fundamental mission is to restore the health of the economy with public works spending, tax cuts and bail out the troubled financial industry.

The budget also includes money for healthcare reforms and for green energy to fight the global warming.

President Obama also said that he would halve the more than $1 trillion deficit president Bush left behind. Tax increases on wealthier Americans, eliminate subsidies for cotton storage and a troop drawdown from Iraq will help to bring the deficit down to $533 billion by 2013, this is also what Obama wants to reach.

It’s going to be a big challenge for Obama to sell this budget to the Congress because he also cuts in the farm subsidies and such programs are popular in the Congress.

I think it’s going to be really difficult for Obama to get this budget true the Congress because when he cuts into popular programs he can expect a lot of opposition. Although this is a good budget, first of all it’s meant to help the economy what I think is the most important issue at this moment and secondly; finally somebody wants to do something about the inefficient healthcare system in the U.S.

It’s also very good he wants to invest in green energy because it’s a great problem in the U.S. that the people consume a lot of energy.
Also the ways of saving money are good, this means the end of the war in Iraq and President Obama wants to do something about the very high incomes of some persons.

Source: http://money.cnn.com/2009/02/26/news/economy/Obama_budget.reut/index.htm