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USA 2008: The Great Depression [Copy link] 中文

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Post time 2008-4-22 22:43:45 |Display all floors
Bank of America's profit shrinks 77%
(Agencies)
Updated: 2008-04-22 09:57



A Bank of America branch is shown in Charlotte, N.C., Monday, April 21, 2008. Bank of America says its profit fell 77 percent in the first quarter, hurt by write-downs and rising credit losses. [Agencies]


CHARLOTTE, N.C. - If the 77 percent drop in Bank of America's first-quarter earnings is any indication, the economy may have a long way to go before it works out the problems that began with the subprime mortgage crisis.

The nation's largest retail bank on Monday quintupled the money it set aside for loans that go sour, and hinted that consumer weakness and the housing slump means that things will not get better for it, or for the economy, for some time.

"I think first it would be too early to strike up the band and sing happy days are here again," Chief Executive Ken Lewis said on a conference call with analysts during which he said the situation in the capital markets was particularly tough in March.

Like many other banks, Charlotte-based Bank of America is besieged on two sides. Its bread-and-butter banking business is ailing because with home prices flagging, more people and real estate developers are failing to repay their loans.

The credit crisis is also hobbling the value of many bank investments.

Last week, crosstown rival Wachovia Corp. said it lost $393 million in the first quarter because of bad credit and tumultuous financial markets. Washington Mutual Inc. lost $1.1 billion.

Wells Fargo & Co.'s profit fell 11 percent, JPMorgan Chase & Co.'s profit slid 50 percent, and Citigroup Inc. posted a loss of $5.1 billion.

"It still remains unclear what ramifications the housing downturn, higher energy costs and subprime crisis will ultimately have and how long the downturn will persist," Chief Financial Officer Joe Price said on a conference call with analysts.

If the economy doesn't turn around -- and few expect it will -- more troubles could loom for Bank of America. It's set to acquire distressed subprime mortgage lender Countrywide Financial Corp. later this year, and it holds the nation's biggest credit card business and retail branch network.

"Earnings for the first half remain questionable and, at this stage, the focus must be on positioning the bank for the eventual recovery of the economy," said Walter O'Haire, senior analyst with Celent, a Boston-based financial research and consulting firm.

In January, Bank of America agreed to acquire Calabasas, Calif.-based Countrywide Financial in a deal valued at about $4 billion in stock when it was announced. Countrywide is among the dozens of mortgage lenders that have battled a spike in mortgage defaults and foreclosures.

Standard & Poor's analyst Stuart Plesser wrote in a research note this month that the proposed acquisition of Countrywide Financial and Bank of America's large exposure to consumer credit "increases (Bank of America's) risk profile in a weakened consumer credit market environment."

Financial stocks declined Monday after the bank's poor quarterly report, while equity markets broadly were mixed as some of the earnings optimism that carried stocks to strong gains last week dissipated.

Bank of America's shares dropped 95 cents, or about 2.5 percent, to $37.61.


Its write-downs, largely in part due to more and more people missing payments on their credit cards and home loans, led Bank of America to report a 77 percent decline in first-quarter profit of $1.21 billion, or 23 cents a share, on $17 billion in revenue. That compared with net income of $5.26 billion, or $1.16 a share, a year earlier on $18.16 billion in revenue.

Analysts on average expected a profit of 41 cents per share on revenue of $16.5 billion, according to Thomson Financial.

Lewis said he remained "concerned about the health of the consumer," given the state of our nation's economy.

"Consumer credit quality deteriorated substantially from the fourth quarter, particularly in home equity," Lewis said on the conference call. "Credit quality will continue to be an issue with charge-offs at least at first quarter levels but probably higher for the rest of the year."

Bank of America's results included $1.47 billion in write-downs of collateralized debt obligations, a security often backed by subprime mortgage loans, and $439 million for loans to fund leveraged buyouts.

But the real damage: Bank of America's provision for credit losses soared to $6.01 billion from $1.24 billion amid rising credit costs in the home-equity, small-business and homebuilder portfolios.

Net charge-offs, loans it doesn't think are collectable, jumped to $2.72 billion, up from $1.43 billion a year ago, reflecting housing market deterioration and slowing economic conditions, the company said.

In the bank's consumer unit, which includes the nation's biggest credit card business and retail branch network, revenue rose 17 percent, while earnings dropped 59 percent due to increased credit costs.

Investment-banking profit plunged 92 percent on the write-downs as revenue fell 41 percent.

Monday's news led Moody's Investors Service to cut its rating on Bank of America by one notch, saying the company's capital position has been hurt by the credit market crisis and its high dividend.

Moody's outlook on the rating is negative, reflecting integration challenges of the bank's pending acquisition of Countrywide, the bank's still-big home equity and mortgage exposure, and the prospect of further capital market write-downs.

Bank of America's key Tier 1 capital ratio, essentially a measure of a company's cash versus its debt, fell to 7.51 percent from 8.57 percent a year ago, even as the bank raised $13 billion in fresh capital by selling preferred stock in January. However, capital generation has slowed because of the credit crisis and management's commitment to maintain high dividends, Moody's said.

Despite the difficult business climate for his company, Lewis said Bank of America plans to maintain its dividend -- which is currently paid at a quarterly rate of 64 cents a share -- unless the nation's economy drastically worsens.

"If things got noticeably worse and our view of things was they'd continue to be worse, for a period of time, then of course we'd look at the dividend," Lewis said, adding that the bank's board might consider approving an offering of preferred stock before cutting its payout to stakeholders.

Lewis told analysts that for now, the bank's dividend is staying put and that he wasn't interested in seeking additional capital.

In recent weeks, other national banks, including National City Corp., Washington Mutual Inc., and Wachovia, have slashed dividends, raised billions in capital through share sales or from investment groups as a means of trying to survive the home mortgage crisis.

http://www.chinadaily.com.cn/wor ... ntent_6635059_2.htm
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Post time 2008-4-22 22:45:58 |Display all floors
Here is a comment from unitedasians 2008-04-22 14:50

  this bank, espesly HSBC in america very greedy, scam and trick customers a lot. now I know why twintowers get bombdive, too bad they missed the dirty whitehouse, pentagon and wallstreets and many american banks along many coporations and law firms which house many bad greedy sly super dirty filthy rich of america milking sweats and blood of many hard working honest americans, customers to the bones. most americans are just bunch of junkees, dependents and addicts who doing nothing but living off other people and arround the world from emptying exploiting american rich resources, writing bad checks and credit money leaving nothing for future generations of americans but a big IOU notes and inflation, which very dishonor thing to do for your own children. the world can't believe what america says but believe what america does, which very corrupted abusive governmt in the world, same time america like to stick its nose and hands to everybody else business which america says due to how bad they are. that's why we say the west does turn everything upside down, wrong to right, bad to good.

http://comment.chinadaily.com.cn ... rofit+shrinks+77%25
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Post time 2008-4-25 19:01:20 |Display all floors
Many states in US appear to be in recession
(Agencies)
Updated: 2008-04-25 15:24


The finances of many states have deteriorated so badly that they appear to be in a recession, regardless of whether that's true for the nation as a whole, a survey of all 50 state fiscal directors concludes.

The situation looks even worse for the fiscal year that begins July 1 in most states.

"Whether or not the national economy is in recession -- a subject of ongoing debate -- is almost beside the point for some states," said the report to be released Friday by the National Conference of State Legislatures.

The weakening economy is hitting tax revenue in a number of ways: People's discretionary income is being gobbled up by higher food and fuel costs, while the tanking housing market means people are spending less on furniture and appliances associated with buying a house.

The situation is grim in Delaware, with a $69 million gap this year, and bleak in California, with a projected $16 billion budget shortfall over the next two years, the report said. Florida does not expect a rapid turnaround in revenue because of the prolonged real estate slump there.

By mid-April, 16 states and Puerto Rico were reporting shortfalls in their current budgets as the revenue those budgets were built on -- typically, taxes -- fell short of estimates. That's double the number of states reporting a deficit six months ago.

The NCSL said the news is even worse for the upcoming fiscal year, with 23 states and Puerto Rico already reporting budget shortfalls totaling $26 billion. More than two-thirds of states said they are concerned about next year's budgets.

The results are consistent with a drumbeat of bad economic news for states that several budget groups have produced in the past few months.

Last week, the Washington-based Center on Budget and Policy Priorities said 27 states are reporting projected budget shortfalls next year totaling at least $39 billion.

President Bush said Tuesday that the economy was not in a recession but a period of slower growth. However, some economists have pointed to the string of declines in manufacturing orders to argue that the economy has fallen into a recession.

Bolstering their position, the Commerce Department reported Thursday that sales of new homes plunged in March to the lowest level in 16 1/2 years. The government also reported that orders to factories for big-ticket goods fell for a third straight month in March, the longest string of declines since the 2001 recession.

Some states "have declined so much that they appear to be in a recession," the NCSL report said.

It also noted the silver lining for states where the economy is based on energy, such as North Dakota and Wyoming. Alaska is making so much money from oil that it announced an estimated surplus next year of $8 billion, almost twice the state's annual budget.

In North Dakota, revenue is above legislative predictions by 13 percent, and in Louisiana, the oil and gas sector is robust.

"For energy-producing states, the fiscal situation is strong and the outlook is good," the report said.

Among other findings:

- More than half the 16 states reporting deficits this year have cut spending, including $1 billion by Florida lawmakers last year and across-the-board cuts in Nevada. At least eight states are debating raising taxes or fees, including a proposed $1-per-pack cigarette tax increase in Massachusetts to raise $175 million.

- Twelve states, including Georgia, Idaho and Illinois, reported that personal income tax collections were failing to meet estimates, and in eight of these, collections were even below a reduced forecast.

- Many states, including Alabama, Arizona, Massachusetts, Minnesota, Nevada and Wisconsin, plan to tap their rainy day funds, which contain money set aside for fiscal emergencies. Nevada may use its entire rainy day balance.

http://www.chinadaily.com.cn/world/2008-04/25/content_6644629.htm

Graphic shows projected state budget gaps for fiscal year 2009. [Agencies]
graphic.jpg

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Post time 2008-4-26 05:43:54 |Display all floors
There is a very big lie going through the United States about its unemployment level.

Some of the leading economists of the United States have said the realistic number is around 20% unemployment!

Listen everyone, you cannot believe the popular media or politicians in the US as they are trained to mislead the general public.

The US is in the worst financial shape since the 1929 Depression, all the leading indicators are showing that it is going from a recession to a total DEPRESSION, in the third quarter of 2008.

Once the ball start rolling, nothing can stop it!
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Post time 2008-4-26 06:13:53 |Display all floors

One Good Turn Deserves Another

Since the Yanks have so selflessly pushed the Tibet button, it is time for China to start that 15% surcharge on all exports to the U.S., with the funds to be used for quality control inspections.  In another 12 months, China's exports will be the safest in human history in all of the world.

I'd say 27% is actually better, but there should be some reserve there to shut the jerks up when they run that silly flag up the pole again in Congress.

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Post time 2008-4-26 10:39:37 |Display all floors
I'd hesitate to use the word, or term, "recession". Maybe we should call it a readjustment to more realistic levels. Remember that the US has proven that it has remarkable resilience.
tong, slapping a tariff on US goods works 2 ways. The US could just as easily withdraw MFN status and that wouldn't help China at all! I'm sure that there are those here, and elsewhere, who're rubbing their hands and cackling with glee about the USs financial problems. Might pay to think what the world stands to lose if it truly does go into recession.

[ Last edited by exportedkiwi at 2008-4-26 10:40 AM ]

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Post time 2008-5-21 08:17:37 |Display all floors
28 million US citizens need food aid

Washington, May 20: Nearly 28 million US citizens depend on coupons to eat, a situation constantly increasing because of unemployment and the high price of food, said Virginia, US newspaper- USA Today Monday.

USA Today said difficulties to subsist are so many, that even people with a high cultural level cannot escape from then. "It is inconceivable to see myself in such a condition, especially when you have a pride," said Ohio resident Philomena gist, a woman with a master degree in psychology.

The newspaper said no one of the millions of people needing help to eat, should be placed in such a category, and the number of needed people goes over the record established in 1994.

While these US citizens are fighting for taking their homes something to eat, politicians are discussing other topics and economists debate if they are on a recession or not, said the US influential newspaper.

The costs of food and fuel are increasing since 2006, and now these phenomena are combined with loss of jobs, and the standstill of salaries, which rocketed the number of US citizens urged on a support.

US citizens depending on coupons to eat, represent nearly 10 percent of the US total population.

http://www.zeenews.com/articles. ... sid=BUS&ssid=51

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