Archive for the ‘Business News’ Category
This spring bear market rally in United States seems to have ended. Accelerating upward from the minimum in March this year (minimum 13 years for the S & P500), barely responded to moving up a misleading without solid evidence, and very characteristic of the market declining. The U.S. financial system needs a genuine revival, rather than an injection of funds. It is a healthy deleveraging (reduction of debt levels) and not the generation of stimulus packages. The banks have been massively subsidized by the U.S. government. It inevitably leads to the impression of excessive currency is higher inflation, a weakening currency and higher interest rates. The financial system is falling down the drain and the U.S. government should react and convert debt into equity (cash value) to produce a more stable environment, said yesterday on CNBC Nassim Taleb, an economist author of “The Black Swan” is a classic of literature describing the financial impact of catastrophic events improbable. “If banks are going to go to mortgage borrowers with a smile, and they pose a lower monthly payments in exchange for taking the 60/70% of the property, would facilitate the orderly process of deleveraging. That each sector has a significant amount of the debt into equity. “Taleb added that this has been done, but requests that a systematic and massive scale to improve the system. Read the rest of this entry »
Credit is the engine of economies. And in an economy such as the U.S. economy, more so still. That is why the speed and strength to take the economic recovery in the U.S. is largely linked to the ability to recover funding. For now, already beginning to receive the first rays of light reflecting the recovering economy, but these rays are not powered by the U.S. financial system. An analysis by the Wall Street Journal shows that the credit value of the stock of the 15 major U.S. banks have fallen by 2.8% during the second quarter. The importance of this analysis is not reduced because these 15 entities account for 47% of total deposits at the national level and have received $ 182,500 million in aid through the Voluntary Capital Purchase (Asset Relief Program – TARP) . In the search for explanations, all appear as valid, given the destructive effect it has had the subprime crisis on the entire U.S. economy (though unevenly among different economic sectors and segments of the population). An initial investigation seems to throw the bankers and the private sector have agreed. Banks unwilling to lend and businesses and families do not want to borrow. This overlap creates a bad deal for both parties and particularly the prospects for economic recovery.
Why U.S. banks do not want to borrow? In reality what is happening as raise David Enrich and Dan Fitzpatrick wrote in the article for the Wall Street Journal, is that it is limiting the credit to maintain a level of capital sufficient to complete the clean up bank balance sheets for losses caused by the crisis. The need to load additional losses in the deteriorating financial situation of the capital of banks that, if found to limit their capital requirements, which would force them to seek greater funding. It is certainly not a good time yet to go on the market to find capital. Beyond scarcity of it, this could represent a bad signal about the health of the financial institution to opt for such action. Claim from the banking sector, the drop in the supply of credit is not generating a restriction of credit and that since there is no demand too enthusiastically. The companies have closed their plans to expand and consumers have cut their costs. Thus, everything has become very austere in the country. The bet, according to Enrich and Fitzpatrick is in this context, the appropriation is not recovered until the second half of 2010. For those who know the experience of the Argentina crisis of 2001, which would end the pattern of arrangement in the early days of 2002 and shares many elements of the crisis of subprime mortgages in their effects, although the country had a banking sector far smaller than the U.S., can be very useful in making predictions. In this regard, the Argentine case, credit to the private sector did not recover until early 2004, and did it naturally through the short-term financing. If the experience in Argentina where the banking system as a whole was hit much harder than that suffered by the U.S. system (like the shock to the economy, businesses and families) can be regarded as a parameter of comparison then one can expect that the recovery of the credit would have to take place towards the last quarter of 2009, three quarters earlier than expected.
For now, until this scenario, banks prefer to be cautious. U.S. executive Richard Davis Bancorp (NYSE: USB) said: “I think it’s good for banks to be prudent if we continue as an industry and not create a credit growth through the reduction of support in the capital.” A spokesman for Bank of America (NYSE: BAC) in Charlotte (North Carolina) said: “There are fewer opportunities to generate high credit quality due to the recession.”
On the demand side of credit, it is true that it has been reduced, but have also heard complaints from potential applicants about the increasing demands for access to new financing, as is the case of Ernie Cambo CPF Investment Group real estate developer who had to curb their investments for the construction of a shopping center at the lack of funding beyond the initial stages. The absence of credit growth as usually occurs after multiple stimulus measures as those generated by the U.S. Treasury and the Federal Reserve, has generated many questions from various sectors of the political front. It is intended to be a lot of resources from taxpayers and the expectations are still not being met (or perhaps had generated a disproportionate expectation). Republican Spencer Bachus, he called the U.S. Treasury Secretary Timothy Geithner, the poor results to date: “Tell me why we do not see really that multiplier effect”, referring to the effect that the TARP would be expected to generate a vigorous credit on the economy. Geithner for the TARP’s effect is not observed in fact that it was not able to increase the stock but to prevent a credit collapse it.
The reality shows that beyond that credit demand is showing a little shy, low demand there are major obstacles to access credit. And despite the understandable that these may become greater demands imposed by the U.S. banks, this is limiting the recovery of investment and consumption in the U.S. and slowing water down the economic recovery.
The global music sales fell for the seventh consecutive year, while the most important fair of the industry, MIDEM in Cannes (France), the industry breaks down the head to try to increase sales through the Internet, the distribution channel for excellence. Everything from competition that is a dreaded word ‘free’. Total music sales have dropped again in 2006, according to preliminary estimates. However, despite that the digital market has almost doubled, to 2,000 million dollars, and notes that the popularity of the music is today stronger than ever.
Critics of the main responsible for the music business argue that they have spent much energy in the fight against ‘piracy’ and in so doing, have put aside the business growth of the discharge of payment.
In response, the industry says it has had no choice. Many people around the world tells me that our problems we managed properly, but nobody tells me what he should have done. It is impossible to compete against free.
Protecting files
Much debate has centered on the concept of protection of rights in the digital world (the famous DRM) systems that can restrict the use of music purchased through the Web and that is often proposed as a solution against called ‘piracy’, or copying of protected content. Advocates of this system claim that the DRM will also offer other tools that enable the music can be offered through subscription services or advertising-based, as certain protections to prevent digital music can be offered in exchange networks.
However, a negative consequence of DRM for consumers is that the items purchased with this protection at sites such as Rhapsody, for example, cannot be used in an Apple iPod, digital music player market leader, as they are not compatible, which restricts the potential growth of music sales.
Reviews
However, not everyone (even less) is in agreement with the IFPI. David Pakman is chief executive of eMusic, the second biggest selling music service ‘online’ after iTunes in the U.S. market, and an ardent critic of DRM. Their service is the only large-scale items provided in MP3 format, meaning they can be played on any portable music device, including iPod. That position, however, showed that none of the four major record companies (responsible for two thirds of the music world) provide the service issues.
Ours is the same model used for CD and DVD, universal compatibility, and think that is the main reason for withholding the digital growth today,” said Pakman.
For its part, Chris Anderson, director of Wired magazine, argues that some forms of ‘piracy’ should simply be accepted. “You cannot have ‘piracy’ zero, and if you try to convert the experience of consuming music so painful into something that will end up having a zero industry,” he said.