Thursday February 26, 2009, 6:44 pm EST
Obama budget: Mammoth deficits but headed lower
WASHINGTON (AP) -- President Barack Obama laid out his first
budget plan Thursday predicting a stunning federal deficit of $1.75 trillion
this year -- nearly four times last year's record -- and asking Congress to
raise taxes on the wealthy to stem that flood of red ink while still moving the
country toward guaranteed health care for all.
Denouncing what he called the "dishonest accounting" of
recent federal budgets, Obama unveiled his own $3.6 trillion blueprint for next
year, a bold proposal that would transfer wealth from rich taxpayers to the
middle class and the poor.
Congressional approval without major change is anything but sure.
The plan is filled with political land mines including an initiative to combat
global warming that would hit consumers with considerably higher utility bills.
Other proposals would take on entrenched interests such as big farming,
insurance companies and drug makers.
Obama budget has new $750B bank rescue contingency
WASHINGTON (AP) -- President Barack Obama is budgeting for a new
$750 billion bank bailout this year, raising the prospect of a dramatic
increase in the stake taxpayers already hold in the beleaguered financial
sector.
The White House's 2010 budget released Thursday includes a $250
billion contingency fund for 2009, the projected cost to the government of
purchasing $750 billion in assets from banks in need of capital infusions.
In essence, taxpayers would foot the entire $750 billion up
front. Administration budget writers predict the value of the assets that the
government purchases would result in a loss of 33 cents for every $1 spent,
hence the $250 billion net expenditure.
The inclusion of the money is the clearest sign yet that Obama's
economic team is not certain that the $700 billion Troubled Asset Relief
Program that Congress approved last fall has done enough to unlock the capital
markets and make credit more available.
Weak health care stocks drag Wall Street lower
The Obama administration's $3.55 trillion budget plan for 2010
includes cuts to Medicare and Medicaid. Private insurance plans serving
Medicare seniors would take the biggest hit, but hospitals, drug manufacturers
and home health agencies also face cuts.
As investors became aware of the impact that the budget, if
enacted, could have on the companies, they turned against what had been one of
the strongest industries in the stock market recently. Market watchers had been
looking to health care to help lead the market's recovery along with other
recession-resistant industries like consumer staples.
Americans receiving unemployment top 5 million
WASHINGTON (AP) -- The number of Americans seeking unemployment
benefits topped 5 million for the first time since record-keeping began in
1967, the Labor Department said Thursday. And the number of first-time claims
hit 667,000, the highest level in more than a quarter-century. Both figures
were worse than experts expected.
Orders for cars, computers, machinery and other durable goods
plunged a larger-than-expected 5.2 percent in January as global economic
troubles reduced demand from customers at home and abroad.
The government reports offered more evidence that consumers are
scaling back purchases as jobs vanish, home prices drop and stock portfolios shrink.
Those factors fuel more job and spending cuts by profit-starved businesses.
GM posts $9.6B 4Q loss, burns through $6.2B cash
DETROIT (AP) -- General Motors Corp. posted a $9.6 billion
fourth-quarter loss and said it burned through $6.2 billion of cash in the last
three months of 2008 as it fought the worst U.S. auto sales climate since 1982
and sought government loans to keep the century-old company running.
The nation's biggest domestic automaker said Thursday it lost
$30.9 billion for the full year and expects to state in its upcoming annual
report whether its auditors believe the company remains a "going
concern." GM and its auditors must determine whether there is substantial
doubt about the automaker's ability to continue it operations.
Chief Financial Officer Ray Young said the determination will
depend a lot on whether GM gets further government loans and whether it can
accomplish its restructuring goals.
HUD secretary, Congress debate foreclosure plans
WASHINGTON (AP) -- Against a backdrop of record-low new home
sales and ballooning losses from foreclosures, Housing Secretary Shaun Donovan
told lawmakers Thursday that the lending industry is set to launch the Obama
administration's $75 billion foreclosure prevention program next week.
Final details will be released Wednesday, but Donovan said the
plan will allow borrowers with big debts from car loans, credit cards and
unaffordable mortgages to have their home loans modified to lower the monthly
payment, even if they are not in default.
Meanwhile, Fannie Mae reported a loss of $25.2 billion for the
fourth quarter and said it is asking the government for $15.2 billion in aid as
the
The two mortgage finance companies, which were seized by the
government last September, own or back about half of the nation's mortgage
loans.
US banks post first quarterly loss since 1990
WASHINGTON (AP) -- The nation's banks lost $26.2 billion in the
last three months of 2008, the first quarterly deficit in 18 years, as the
housing and credit crises escalated.
The Federal Deposit Insurance Corp. said Thursday that
Rising losses on loans and eroding values of assets
"overwhelmed" banks' revenues in the fourth quarter, the FDIC said.
More than two-thirds of all banks and thrifts turned a profit in that period
but their earnings were outstripped by large losses at a number of major banks.
Regulators said there were 252 banks in trouble at the end of
2008, up from 171 in the third quarter.
New Yahoo CEO ushers out CFO in executive shake-up
SAN FRANCISCO (AP) -- After spending six
weeks diagnosing Yahoo Inc.'s troubles, new Chief Executive Carol Bartz started to prescribe a cure Thursday with a
management shake-up that will usher out the Internet company's chief financial
officer.
Besides pushing CFO Blake Jorgensen out the door, the overhaul
will expand the responsibilities of Yahoo's chief technology officer, Ari Balogh, and the company's top advertising executive in the
Bartz
also created two jobs: a chief marketing officer and her own chief of staff.
Elisa Steele, who has been working at NetApp
Inc., will join Yahoo as chief marketing officer on March 23, while Joel Jones,
a former McKinsey consultant who has been Yahoo's corporate strategist, becomes
Bartz's chief of staff as of Thursday.
JPMorgan sees savings of $2B related to WaMu
deal
NEW YORK (AP) -- JPMorgan Chase & Co. said Thursday it
expects to realize about $2 billion in savings related to its acquisition of
Washington Mutual Inc., the failed Seattle thrift the bank acquired at the end
of September.
The majority of the savings will be realized by the end of this
year, according to slides on the company's Web site from an investor day
presentation. This includes about $1.35 billion related to job cuts, the bank
said. JPMorgan said about 12,000 jobs will be eliminated related to the
acquisition. In December, the bank said it would cut a total of 9,200 jobs
related to the WaMu deal. The 12,000 figure includes
2,800 jobs expected to be lost through attrition. At the end of December, the
bank had a total of 224,000 employees worldwide.
Dell 4Q profit dives, recession stunts tech spend
Dell Inc. said Thursday its profit dove 48 percent during the
fiscal fourth quarter as the recession forced consumers and businesses to spend
less on technology. The company also said it expects to make further cuts to
its work force.
Earnings for the quarter that ended Jan. 30 sank to $351 million,
or 18 cents per share, from $679 million, or 31 cents per share.
Excluding one-time charges, Dell would have earned 29 cents per
share in the quarter, just above the 26 cents per share expected by analysts
polled by Thomson Reuters.
DENVER (AP) -- The Rocky Mountain News,
Colorado's oldest newspaper and a Denver fixture since 1859, will publish its
last edition Friday.
Owner E.W. Scripps Co. said Thursday the newspaper lost $16
million last year and the company was unable to find a buyer.
Financial problems are widespread in the newspaper industry as
the economy has deteriorated, ad revenue has tumbled, readers have gravitated
toward the Internet and advertisers have followed them.
By The Associated Press
The Dow Jones industrial average fell 88.81, or 1.2 percent, to
7,182.08, pulled down by stocks including drug maker Merck & Co., down
$1.87, or 6.7 percent, at $26.04 and health products company Johnson &
Johnson, off $1.52, or 2.8 percent, at $52.44.
The Standard & Poor's 500 index fell 12.07, or 1.6 percent,
to 752.83 and the Nasdaq
composite index fell 33.96, or 2.4 percent, to 1,391.47.
Light, sweet crude for April delivery jumped 6.4 percent, or
$2.72 to settle at $45.22 a barrel on the
Gasoline futures rose 13.37 cents to settle at $1.3004 a gallon.
Heating oil increased 5.64 cents to settle at $1.2941 a gallon, while natural
gas for March delivery gained 4.8 cents to settle at $4.077 per 1,000 cubic
feet.
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