Ben Finance Loans Blog

http://news.yahoo.com/s/ap/20090401/ap_on_bi_ge/auto_bailout;_ylt=Avwjvc29_TIGeaUNCKMZL6WyBhIF

I do not know whether Fritz Henderson, the new CEO of General Motors is inclined towards poetry or even has the time to think of such things. But the lines which come to my mind when I think of the situation he is in today are, I quote, “… but I have promises to keep, and miles to go before I sleep, and miles to go before I sleep” – Robert Frost, Stopping by Woods on a Snowy Evening.

June 1st is the deadline given to him by the Obama administration to clean up his balance sheet. It is a hard task, entailing large scale cost cuts and restructuring, but one, which needs to be done and I am sure the new CEO knows that there is no alternative. It is either fall in line or die.

Nobody wants the US auto industry to fail; the big three have been icons of America. We wish the new CEO good luck!

http://www.msnbc.msn.com/id/29653771/

With more than 10,000 employees getting the pink slip from their companies every day and without any other opportunities available, there is no surprise in the steep rise of the jobless benefit rolls.

Just within a matter of a week, the number of people receiving benefits increased by 193,000 to 5.3 million. Some economists have even predicted a 10% rise in the unemployment rate by the end of this year.

The situation is worsening as the laid off workers are unable to find any other jobs. Where are we heading? Why don’t companies retain the employees and adopt other cost cutting measures such as no bonuses hikes, trimming the salaries and the like? Bigger companies can even cut down a lot on their advertisings and other money spending activities.

http://www.nytimes.com/2009/02/27/business/27deal.html?hp

The Treasury Department has decided to have a stake of 36% in Citigroup. This is a part of the third bailout for the bank. The Treasury Department has plans to convert up to $25 billion stock investment of Citigroup into common stock. The government will also help the Citigroup get foreign investment. Besides, it also wants the bank to change some of its directors, although Vikram S. Pandit will remain where he is at eh helm of affairs as the chief executive. Lucky him, after all, it doesn’t seem he has done much to get the bank out of controversy and the ‘bankrupt situation’ the bank is currently in.

This is the first blow to privatization of banks. We can expect to more intervention from the government in the running of banks in the country.

UBS is being pressed to reveal the 50,000 names of clients who are being suspected of tax evasion. Just a day after UBS agreed to pay $780 million to settle defraud claims, it has landed into soup again. In fact now all of UBS’s activities are being scrutinized as authorities believe that the list of suspected clients turned over by USB is much smaller than the actual figures.

Several USB memos and email messages were disclosed in a court document on Thursday. The document has sought to compel USB to divulge the identities of 52,000 Americans who have secret offshore accounts. These accounts are being used to dodge taxes back home.

Really, who doesn’t want to save money. But shame on those people who defraud the Internal Revenue Service of their own country by dodging taxes. They should themselves come forward now and accept their mistakes.

Exporters who were finding it difficult to access foreign currency loans can heave a sigh of relief. The Reserve Bank has increased the interest rate ceiling at which banks can raise export credit in the world market. It now allows banks to raise export credit in foreign currency at 350 basis points. The cost of acquistion of credit in international market had gone up considerably in the past months.

Exporters said that banks were able to give them foreign currency debt at LIBOR-plus 100 basis points before the economic crisis. The finance in the international market is now available at 200-250 basis point above the usual benchmark. The central bank has also asked the banks not to attach any charges like service tax on the credit.  These new rules will apply where EURO-LIBOR, which is used as a standard.