US House passes Obama's economic stimulus bill

House votes 246-183 to pass Obama $787bn (£547bn) plan to resuscitate the economy

The US House of Representatives has passed a $787bn (£547bn) plan to resuscitate the economy, handing President Barack Obama a big victory.

The measure passed 246-183, with no Republican votes. It will now go to the Senate, where a vote is expected later today.

The eight-inch-thick stimulus bill combines tax cuts for individuals and businesses with half a trillion dollars in government spending for infrastructure, health care and help for cash-starved state governments. Older Americans would get a $250 bonus social security check.

Seven Democrats voted against the bill.

Obama claims that the plan will save or create 3.5m jobs. But Republicans said it will not work because it has too little in tax cuts and spreads too much money around to everyday projects like computer upgrades for federal agencies.

Sourced from The Guardian

Brown under siege as Congress caps bankers' bonuses

A dramatic vote on Capitol Hill is set to bring major change to Wall Street's risk culture as cash incentives for executives, brokers and traders are limited to a third of their salaries. Gaby Hinsliff, Zoe Wood and Paul Harris report on the implications for Britain.

Gordon Brown was under rising pressure to clamp down on the City's bonus culture last night after the US Congress agreed to drastic curbs capping senior bankers' bonuses at a third of their salary.

The measures, which are expected to be signed into law by President Barack Obama (Barack Obama page on the Guardin website) this week, would apply to dozens of staff at American banks bailed out by the taxpayer and could cost Wall Street's wealthiest millions. Cash bonuses would be banned in favour of long-term share options, with the restrictions extending beyond a handful of top executives to senior brokers and traders.

read full article from The Gardian

Wall Street bankers nervous in face of tough congressional grilling

The heads of Wall Street's biggest banks struggled nervously to defend the financial industry's culture of multi-million-dollar bonus payments as they faced a showdown with lawmakers on Capitol Hill today.

At a tense and closely watched hearing, the House financial services committee questioned the chief executives of eight top banks – Goldman Sachs, JP Morgan, Bank of New York Mellon, Bank of America, State Street, Morgan Stanley, Citigroup and Wells Fargo.

Barney Frank, the Democratic chairman of the committee, demanded to know why the chiefs needed bonuses to motivate them to work: "Why do you need to be bribed to have your interests aligned with shareholders?" He wondered whether the eight chief executives would work shorter hours – or take longer lunches – without the payments.

Morgan Stanley's boss, John Mack, replied: "We love what we do. If you gave me no bonus in the best of years, I'd still be here."

A New York congresswoman, Carolyn Maloney, asked why Merrill Lynch staff shared nearly $4bn of bonuses just before the firm was taken over by Bank of America in a rescue deal which required government aid. "How can you justify paying bonuses to managers who were running the company into the ground to the point where it was forced into a merger?" she asked. "Could this reasonably be described as looting the company prior to the merger?"

Bank of America's chief executive, Ken Lewis, said his firm had urged Merrill to reduce the bonuses but that the brokerage was an independent public company until the takeover was complete: "We had no authority to tell them what to do – just to urge them what to do."

In opening statements before the committee, several of the bank bosses offered a degree of contrition over the industry's role in the financial crisis.

Citigroup's chief executive, Vikram Pandit, apologised for trying to buy a $50m corporate jet after receiving $45bn of taxpayers' money. "We did not act quickly enough to adjust to the new world," he said. "I take personal responsibility for that mistake."

In a rare collective appearance, the eight rival bank chiefs were warned that they face much greater public scrutiny because of their receipt of public funds.

Paul Kanjorski, a Democratic congressman from Pennsylvania, told them: "As executives of large corporations, you once lived in a one-way mirror unaccountable to the public at large and often sheltered from scrutiny. When you took taxpayers money, you moved into a fishbowl."

Under questioning from the committee, the banking chiefs agreed that credit cards could pose the next major problem in the financial crisis. As unemployment rises, millions of jobless Americans are expected to default on credit card debt.

"Clearly this is going to be an awful year for the credit card industry," said Bank of America's chief executive Ken Lewis, who warned that unemployment of between 8% and 8.5% would cause "very high loss rates" on cards.

In written evidence prior to the hearing, Goldman Sachs's chief executive, Lloyd Blankfein, conceded that his industry had a serious image problem: "In my 26 years at Goldman Sachs, I have never seen a wider gulf between the financial services industry and the public."

He accepted that there were grounds for criticism: "Many people believe – and, in many cases, justifiably so – that Wall Street lost sight of its larger public obligations and allowed certain trends and practices to undermine the financial system's stability."

But the bankers shrugged off accusations that they are refusing to lend, offering statistics to show their firms' willingness to extend credit. JP Morgan's chief executive, Jamie Dimon, told lawmakers that his bank made $150bn in new loans during the final quarter of 2008, including $50bn to consumers, $20bn to small businesses and $90bn to corporate clients.

sourced from The Guardian

Downturn in the USA

Retail sales fell in December by 2.7 percent, a worse-than-expected number that shows how rising unemployment, stagnant wages and an ongoing housing crisis have undermined one of the basic props of the U.S. economy.

Consumer spending accounts for about two-thirds of U.S. economic activity but has headed down every month since June -- the longest period of decline since the current method of reporting the statistic was adopted in the early 1990s.

U.S. stock indexes dropped on the news, with the Dow Jones industrial average and other major exchanges losing about 1.5 percent in the opening minutes of trading. Losses had reached roughly 3 percent before noon.

read full article sourced from The Washington Post

What are you giving up in the downturn?

It has been a tough December for retailers, and grocers have not been spared in the downturn.

But it is not just that overall sales are falling.

Canny consumers have been trying to make their money go further and that has meant changing the way they shop.









any of the lost sales suffered by retailers will not be from people who were considering buying something and then decided not to.

They are just as likely be from customers considering buying one product and then instead, buying a different one.

read full article soured from the BBC

Q&A: What is a recession?

The dreaded R-word - recession - is in the air as every day seems to bring more gloomy economic news.

Many commentators are now openly talking about the current slowdown turning into a recession.

But how do economists define a recession and when will we know if the UK is going through one?

What is the definition of a recession?

This is a thorny question on which experts still disagree.

However, technically speaking, the UK economy would slide into recession when it experiences two successive quarters of what is known as "negative growth".

For this to happen, the total amount of goods and services produced by the UK - known as gross domestic product (GDP) - would have to contract on a quarter by quarter basis for a total period of six months.

read full article at The BBC

Carrier bags and Re-usable bags

“Plastic shopping bags, or carrier bags or plastic grocery bags, are a common type of shopping bag in several countries. Most often these bags are intended for a single use to carry items from a store to a home: reuse for storage or trash is common. Heavier duty plastic shopping bags are suitable for multiple uses as shopping or storage bags.” sourced from Wikipedia

I use a re-usable bag for my shopping (onya bags), I looked in a couple of kitchen cupboards and found lots of carrier bags - we accumulate them without knowing it. In the last year Sainsbury’s has re-moved it carrier bags from the check outs (still available if you ask for one) and M & S are charging. I remember when we had to pay for carrier bags in all supermarkets.

• Every year, an estimated 13 billion plastic carrier bags are given away by Supermarkets; this is the equivalent to over 290 bags to every person in the UK.

• We produce and use 20 times more carrier bags then we did 50 years ago.

Read the full article . . . more