Ten US banks fail recession test

May 8 2009

US banks would need a total of £50 billion in additional funds to survive if the recession deepens, the results of government "stress tests" showed.

An assessment of the robustness of the sector found that 10 of the 19 largest banks would need to find extra capital to see them through the bad times.

Bank of America faces the largest potential shortfall of £23 billion.

It joined a list of institutions that also includes Citigroup and Wells Fargo.

The stress tests were designed to gauge whether America's 19 largest banks have enough capital to see them through a deepening of the recession.

After Bank of America, Wells Fargo was found to have the second largest shortfall of £9.1 billion, followed by GMAC with a potential £7.6 billion black hole.

Citigroup is being asked to raise an additional £3.3 billion to make it secure. Goldman Sachs, JP Morgan Chase and American Express were among the nine banks deemed not to need to raise additional funds.

The stress tests were designed to help regulators assess the ongoing financial stability of US banks.

They look at two models of the economy going forward - one in which unemployment reaches 8.8% next year and house prices drop a further 14%. In the second scenario, joblessness rises to 10.3% and property slips another 22%.

Banks facing a shortfall under the model will have to come up with a plan to raise additional capital by mid June.

 If they cannot do so independently, they may have to turn to the government's £466 billion financial bailout fund.

sourced from Runcorn and Widnes Weekly News

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UK economy shrinking at fastest rate in more than 50 years

Downward revisions to official statistics show output fell 2.4% in the first three months of the year and the recession started three months earlier than thought

The recession facing Britain is even deeper than had been thought and started more than a year ago, it was revealed today.

National income fell in the first quarter of this year by 2.4%, the biggest drop since 1958, as the Office for National Statistics revised its initial estimate of 1.9%.

The figures are much worse than expected. Extended to the whole year, the drop in output in the January to March period is now equal to 4.9% – the worst since records began in 1948.

"We hope the recovery comes as soon as possible but sadly we now know this recession has been longer and deeper than we had thought," said shadow chancellor George Osborne.

"This also means that in the future unemployment will be higher and Labour's debt crisis will be even worse."

Although GDP fell 2.4% in the third quarter of 1979 and first quarter of 1974, statisticians said these were rounded from 2.36% or 2.37%. The figure for this year was exactly 2.4%.

The revision is one of the biggest ever made by the ONS and it said the reasons were changes to its estimate of the construction and services sectors.

The ONS also revised down its figure for the second quarter of last year to -0.1% from zero, meaning the recession started earlier than previously thought. And the fourth quarter of 2008 figure was revised down to a fall of 1.8%.

"The recession, which now begins in the second quarter of 2008 rather than the third, is now thought to be quite a bit deeper than previously thought, and is looking ominously like the early 1980s vintage," said Danny Gabay of Fathom Consulting.

Critics of the Bank of England who called for big interest rate cuts in the first half of last year, will feel justified by the data, since the Bank's monetary policy committee argued into last autumn that there was little likelihood of a recession occurring and delayed rate cuts until October. In fact, the economy had entered one last spring.

Separately, the Trades Union Congress said that while there were signs of "green shoots" in the economy, this was more to do with an easing of the pace of the fall in output rather than that a big recovery was under way.

"This recession is already worse than the 1990s one and is likely to be worse than that of the 1980s," said Richard Excel, TUC labour market expert. "It has been very severe and we are probably only half way through. It will be quite some time until employment and growth return to pre-recession levels."

Paul Gregg, labour market expert from Bristol University, noted that unemployment had started rising earlier in this recession than in previous ones and was "encouraged" that monthly rises in the claimant count appeared to be slowing down.

sourced from The Guardian

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We are in a recession, we have a labour goverment so that all strike

Cadbury workers 'vote on strike'

Cadbury's produces some of the UK's best known chocolate bars Cadbury workers begin voting on possible strike action on Saturday, according to the union Unite. Ballot papers consulting on action will begin to arrive at the homes of workers at the UK's best-known chocolate maker, it said. Unite claims that Cadbury is breaking a long-standing pay deal with workers at its Bourneville, Chirk, Marlbrook and Somerdale plants. About 1,300 people work across the sites, the union said. The ballot will run to 18 August, it added. sourced from THE BBC Postal staff set to strike again The union has warned a national strike could take place Industrial action at the Royal Mail is set to escalate with strike action scheduled for three days next week, the BBC has learned. The strike action on 25, 27 and 28 July comes on top of Friday's one-day walkout by 12,000 Royal Mail employees. The escalating action is in defence of workers who, the Communication Workers Union (CWU) say, are being unduly pressured by Royal Mail managers. The Royal Mail has accused the union of standing in the way of modernisation. 'Illogical cuts' Union members in London and other selected regions are to down tools in the dispute over job cuts and working conditions. This could result in no deliveries of mail on Saturday 25 July, and no work at Royal Mail's London distribution centres on 27 and 28 July, says BBC business correspondent Joe Lynam. The CWU has accused Royal Mail managers of trying to "break the union for good" and accused them of "illogical and arbitrary" job cuts. Deputy General Secretary of the CWU, Dave Ward, said his union recognised that the Royal Mail is "facing huge problems" but said that it had a very different view of what modernisation is needed. The vision that Royal Mail has put to workers involves "endless job cuts, hugely damaging cuts to the service and continuous cuts in our members' pay, pensions and conditions," he said. Paul Tolhurst at the Royal Mail countered that with "mail volumes falling and our profits under huge pressure, there is no real opportunity for us to stop [making] the changes." "Particularly," he added, "as these changes we are trying to put in were agreed with [the union] in 2007." Earlier on Friday, about 400 employees marched on Westminster to deliver letters of protest to the Business Secretary Lord Mandelson. Sell off The Royal Mail is suffering from a big drop in demand for letters as more and more people use the internet to communicate. The government announced last month that it was delaying controversial plans to sell a stake in the postal service to a private company. It maintains that the partial sell off of Royal Mail is required as part of measures to tackle the company's finances - in particular a pensions deficit said to be near £8bn. Lord Mandelson has said the company cannot survive without the sale. The Royal Mail employs more than 150,000 people in the UK, most of whom are represented by the CWU. sourced from THE BBC

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A poor advert for advertising standards?

Link to BBC article

A poster showing a nervous man alongside the slogan "Take Courage my friend" has been banned by the Advertising Standards Authority (ASA) for suggesting the beer could boost confidence.

Newsnight's culture correspondent Stephen Smith reports.

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Recession

rom recession in more than a decade and a half. One yardstick is at least two quarters of negative economic growth - and Britain has not had even one three-month period of falling output since 1992.

This unbroken record has allowed Gordon Brown to boast that the economy is enjoying its longest spell of sustained growth since the dawn of the Industrial Revolution in the 18th century, although reliable quarterly data has only been available for around half a century.

Some economists believe this definition of recession is flawed, since an economy would not be in recession if it contracted by 5% in the first quarter, expanded by 0.1% in each of the following two quarters and then contracted again by 5% in the fourth quarter.

It would, however, be deemed to be in recession if it grew by 5% in each of the first and fourth quarters but contracted by 0.1% in each of the second and third quarters. An alternative - and tougher definition - is a full calendar year of negative output.

Given the UK economy has grown on average by 2.5% over many decades, it is rare for gross domestic product (GDP) to fall on an annual basis. There have been only five such years since the end of the second world war: 1974, 1975, 1980, 1981 and 1991.

The United States has its own method of assessing recession, with the National Bureau of Economic Research's business cycle-dating committee making a judgment.

The NBER defines recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production and wholesale-retail sales". It has not given a definitive ruling on whether the United States is technically in recession now, but analysts believe that it will give its verdict soon.

sourced from The Guardian

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Link to blog about recession

Please follow the link below to view a blog relating to the current economic situation

(redirected to a blogger blog)

 

Downturn and Recession

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British jobs for British workers

Deal hope in foreign workers row

Workers say the action is not racist, but about discrimination against Britons

A possible deal to end the row over the use of foreign labour at Lincolnshire's Lindsey Oil Refinery will be put to local union leaders and workers later.

The proposal emerged after talks chaired by Acas.

A GMB union source told the BBC the deal could see half of the disputed 200 jobs offered to British workers, but the Unite leader has denied this.

Hope that new 'half-and-half' deal in foreign workers row could end wildcat strikes

A proposed deal that could end the bitter row over foreign workers at an oil refinery will be put to unions today.

Marathon talks aimed at ending a series of wildcat strikes at Lindsey plant in Lincolnshire ended last night with the outline of a possible deal.

Union sources said it involved offering half the jobs of the disputed recruitment contract to UK workers.

Downturn will bring big fall in migrant workers, says CBI

Companies facing decline in demand for goods and services will reduce their use of agency staff, MPs are told

The use of migrant labour in Britain will decline abruptly as companies face a sharp fall in demand for their goods and services, the Confederation of British Industry told MPs yesterday. John Cridland, the CBI's deputy director general, told the Commons home affairs committee that the first response of many firms to the downturn was to reduce their dependency on agency staff, many of whom are migrant workers.

He said that there was evidence that many nationals of new EU states were going home as unemployment rose in Britain and suggested that the flow of skilled migrants from outside Europe would also decline. He added: "I expect that, when we have the next report from the [Home Office's] migration advisory committee on the needs for skilled labour, we will not see the same need for non-EU labour in the same numbers because of the need to provide as many employment opportunities as possible for the unemployed. All I'm suggesting is that the market will correct itself, but what we cannot avoid is a significant increase in unemployment, which is a sad but inevitable consequence of recession."

read full articles Click here

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Global recession claims 67,000 jobs in a day

The depth of the global recession was glimpsed today when almost 80,000 jobs were lost or put under threat in the UK, Europe and US, making it one of the bleakest days in recent memory.

Household names, including electronics retailer Philips, construction equipment maker Caterpillar and drug group Pfizer announced thousands of job losses, with many posts expected to be lost in the UK. Steel company Corus, for instance, is axing 2,500 British workers as it dumps 3,500 worldwide.

Even upper-crust London retailer Fortnum & Mason, which can trace its roots back to 1705, is suffering. It emerged yesterday that the Piccadilly-based department store is looking to cut about 100 of its 530 staff as shoppers seek out cheaper alternatives to products such as its £500 picnic hampers stuffed with champagne, vintage marmalade and smoked salmon.

The scale of the challenge faced by world leaders as they grapple with the worst economic downturn since the second world war was underlined yesterday as Gordon Brown issued a stark warning that the global economy will be undermined unless countries work together to tackle the crisis. The prime minister said the world needed to "ensure that we do not experience a new form of financial protectionism, of mercantilism, of retreat into domestic financial markets".

In the US, where General Motors cut 2,000 jobs, President Barack Obama warned it was imperative that Congress pass his $825bn (£590bn) package of spending and tax cuts as soon as possible. "We cannot afford distractions," he said. "We cannot afford delays in getting legislation to boost the economy through Congress."

New research from the Institute of Directors showed British business leaders are not only pessimistic about their companies' prospects but have recently seen a marked deterioration in performance.

"In previous IoD surveys, companies were saying it's going to be hell out there in the future but we're not doing too badly at present. Now they're saying the problem is much closer to home," said the IoD chief economist and director of policy, Graeme Leach."We're a long way into the financial crisis but the economic crisis is only just beginning."

Managers across the UK, meanwhile, have accepted their own redundancy as "inevitable", according to the Chartered Management Institute (CMI), which has examined recent calls to its helpline. "Quite clearly, any suggestion that there is already light at the end of the tunnel is misplaced," said Ruth Spellman, chief executive of the CMI.

The job losses announced yesterday fell mainly across industry. Europe's largest consumer electronics company Philips is shedding 6,000 jobs after announcing its first loss for half a decade. US mobile phone company Spring Nextel is axing 8,000 and Pfizer is shedding 19,000.

But the biggest losses announced yesterday were from Caterpillar. The Illinois-based manufacturer of heavy-duty earth-moving equipment is cutting almost 20% of its workforce – or 20,000 people. The news has raised fears for the company's 10,000 employees in the UK, which is Caterpillar's largest operation outside the US, and Ireland. It has factories dotted across the UK from Teesside, Leicester and Peterborough to Shrewsbury and Slough. In Ireland its electricity generator business FG Wilson is Europe's largest assembler of generators.

sourced from The Guardian

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Updated: Should we help the banks

Click here to see video of Gordon Brown

Gordon Brown says the government will do 'everything it takes' to support the economy

Gordon Brown video

The Guardian's economics editor, Larry Elliott, assesses the government's latest banking bail-out



We I'm in two minds regarding this, I know that we really don't have any choice but I think the banks the should not only loan to business but also loan to the their customers.

Why should we keep or money in banks, their have wasted / loss billions of pounds in bad deals and investments - so why are we having to help out these private companies.

I don't fully understand but if we loss the banks to who economy would crash, but why use tax payers money. The issue I feel the most strongly about is what is the bank doing with this money, and who is it helping.  Is this securing peoples own investments, shares and pensions.

Now I privately rent my flat and I use public transport, so these actions taken by the Government - reducing vat and lowering interest rates has not benefited me at all. Transport cost have in increased by up to 10%, rent has not reduced like peoples mortgages. In the present economic situation you are not really able to ask for a pay rise, because if you have a job you are luck.

When the banks were offering 5 times and 100% mortgages, I was unsure because of the finical commitment. But what I feel is the people that over mortgages them self's either knowingly or accidental have been bald out by the government. But people like me who was not sure I could commit to the monthly re payments is know stuck, because the deposits are so high I can't afford to pay my rent, bills and save for a deposit.

I know that this money to the banks is intended to go towards business, but maybe reduce tax on people earning below £25,000 per years, because this will give people money in their pockets to spend in the high street.





Bank shares in free fall despite bail-out

Bank shares plummeted today amid concerns that the latest government package to stabilise banks and encourage lending would not solve the deepening economic crisis.

Royal Bank of Scotland was the biggest faller in the FTSE 100 share index, its price collapsing by more than 66%, to 11.6p, after it warned ofthe largest loss in British corporate history of up to £28bn and its chief executive, Stephen Hester, admitted that full-scale nationalisation of the bank had been considered.

The taxpayer already owns 58% of RBS but this will soon rise to 68% when £5bn of preference shares owned by the government are converted into ordinary shares.

The first day of dealing in shares of the newly created Lloyds Banking Group resulted in a 34% drop to 65p. The bank, which now has more branches than any of its rivals, issued a trading statement insisting that Lloyds TSB had been trading "satisfactorily", while HBOS, which it rescued in a deal brokered by Gordon Brown, had not suffered any "significant change" in its trading position.

Unlike RBS, Lloyds TSB is not asking the government to convert the preference shares it owns in the combined bank into ordinary shares, which means the taxpayers' stake is staying at 44%.

Eric Daniels, the chief executive of Lloyds, said the bank was "continuing its ongoing constructive dialogue" with the government about the wide range of measures announced today. Among them is a plan to sell insurance to banks to help them cap the losses on loans that have turned sour in the credit crunch.

HSBC, the only bank listed on the stockmarket not to have raised any fresh funds, insisted it would not need to use the government insurance scheme.

"HSBC has not sought capital support from the UK government and cannot envisage circumstances where such action would be necessary," the bank said. "HSBC has long been one of the world's most strongly capitalised banks and is committed to maintaining this position."

Shares in HSBC closed down 6.5% at 501p amid persistent talk that it would need to raise funds, which has been widely predicted since analysts at Morgan Stanley said last week that the bank may need as a much as £20bn of extra funds.

Barclays shares – which lost a quarter of their value in a frenzied hour of trading on Friday – recovered many of their losses early on but closed down another 10%, at 88p.

To participate in the government's insurance scheme, Barclays would need to sell preference shares to the government or find cash to cover the cost of the guarantee. John Varley, the bank's chief executive, is thought to be determined not to sell such shares to the government, even though they would not appear on the bank's shareholder register.

The bank has yet to decide whether to participate in the insurance scheme. Varley said he welcomed the range of announcements today. "The government has worked hard to construct practical and extensive measures to help the UK economy," he said. "The programme is made up of a number of important initiatives in the areas of capital ratios, funding and asset protection."

He added that Barclays would work with the tripartite authorities – the Treasury, the Bank of England and the Financial Services Authority – over the coming days "to understand the detail of the programme and to determine how it can be used to best effect on behalf of customers, shareholders and the wider economy".

RBS expects to use the scheme and Hester admitted today that he expected the bank to be "guinea pig". He admitted total nationalisation of RBS had been discussed with the government. "It was discussed as something we all wish to avoid," he said.

Bruce Packard, banks analyst at the stockbroker Evolution, said: "These share price movements tell you that the government has gone around and said the bank bail-out in October hasn't worked and if they hadn't done that I don't think we'd be in this position.

"I'm a banks analyst and I don't want to criticise the government. They did the right thing in the second half of October but I'm not sure they're doing the right thing now." He has a price target for RBS shares of 18p

sourced from The Guardian

UK banking plan faces criticism

The government's latest plan to counter the economic downturn by encouraging lending has been criticised, and sent banks' shares tumbling.

Opposition MPs argued that the government's measures were inadequate and too many details remained unknown.

Meanwhile Prime Minister Gordon Brown said the move, which centres on state insurance for banks, was essential to help protect jobs.

Business leaders have raised concerns over how much the plan will cost.

The latest government package is the second major set of measures to encourage banks to lend to individuals and businesses, as credit remains scarce or expensive to obtain.

The news sent banking shares down sharply, with Royal Bank of Scotland closing down 67%.

The bank's warning that it could see record losses for 2008 compounded worries about the state of the finance sector.

'Turbulent times'

But the prime minister said that without the new schemes, jobs may have been "needlessly" lost at healthy firms struggling to gain access to necessary funding.

"Good businesses must have access to credit," said the prime minister.

"It is because of this that we are taking the action to expand lending."

Shadow chancellor George Osborne said the details of Monday's package remained a "mystery".

Mr Osborne added that the prime minister "hasn't saved this economy and he hasn't even saved the British banks yet".

Liberal Democrat treasury spokesman Vince Cable said the government's latest plans were inadequate, urging instead for the whole banking sector to be nationalised.

"The government must bite the bullet on the public ownership and control of the banks to ensure that lending is maintained to sound companies who can keep the economy ticking over in these turbulent times," he said.

What we've said is 'you've got to lend about £6bn more to businesses and to people' and the RBS Group have agreed to that Chancellor Alistair Darling

The long list of policies includes a scheme to offer insurance against banks losing more money from the bad debts that started the credit crunch.

Meanwhile, the Bank of England is to be able to buy assets direct from firms.

The government would not reveal how much the latest plan would cost the taxpayer.

Four key points

Here are the key points of the government's latest announcement:

• Banks will be able to take up government insurance against their expected bad debts

• The Bank of England will be able to buy up to £50bn worth of assets in companies in all sectors of the economy

• Northern Rock has been given extra time to repay its loans from the government

• The government is increasing its stake in RBS to nearly 70% from 58%. RBS also said it was set to report a huge loss for 2008, with asset write-downs of up to £20bn.

Insurance plans

Under the insurance scheme, banks will agree with the government the amount they expect to lose from particular debt.

The Treasury will then sell insurance against about 90% of the institutions' additional losses from the debt.

Chancellor Alistair Darling told the BBC that banks taking out the insurance would have to make "very specific legally binding agreements to lend more money".

Under the Bank of England's new role, it will be able to buy up to £50bn of high quality assets, such as bonds and loans, directly from companies

Northern Rock extension

There have also been changes to the terms of previous bank rescues.

The government has given Northern Rock longer to repay its loans from the government.

There was concern that the timetable for repaying the loans was forcing Northern Rock to reduce its mortgage lending too quickly.

Separately, RBS said it had agreed with the Treasury to swap the £5bn of preference shares the government holds for new ordinary shares, increasing the government's stake from 58% to nearly 70%.

The swap will reduce RBS's annual payments to the government as preference shares have a higher guaranteed rate of return than ordinary shares.

sourced from The BBC

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UK jobless 'to reach 3.4 million'

Unemployment will soar to 3.4 million as the financial crisis deepens, forecasters predict ahead of official jobless figures this week.

The Ernst & Young Item Club says the number of those out of work in the UK will pass 3.25 million by the end of 2010, and hit 3.4 million in 2011.

"All of the economic statistics are now in free-fall," it said in its forecast.

It warned the next 12 months would see the UK economy suffer its largest contraction since 1946.

The UK's gross domestic product would shrink by 2.7% in 2009 and another 0.5% the following year, the Item Club said in its latest report on the UK economy.

The official unemployment total reached a 10-year high of 1.86 million last October and some analysts expect the figure to increase to two million when new figures are published on Wednesday.

'Depression' warning

The group says that inflation and interest rates will stay close to zero, helping pensioners and those with tracker mortgages.

However, it said these conditions will do little to aid the housing market, set to fall 22% more over the next 18 months as it remains starved of finance for new mortgages. Meanwhile banks will be unable to lend to companies and consumers until the US sorts out its own banking problems.

"The government has failed to stop bankers hoarding cash and it seems this panicky behaviour is spreading out to the rest of the economy," the group warned.

The Item Club predicts that business investment will fall by nearly 17% this year, dropping almost another 6% in 2010 as worried company treasurers sit on cash.

In addition, consumer spending is expected to shrink 2.6% in 2009 as employees fearing for their jobs become "much more cautious" consumers.

sourced from The BBC read full article

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Finance crisis: In graphics

This is one of the most tumultuous times on record in the global financial markets.

The financial landscape is going through a period of upheaval with some major firms folding, other operations merging and a limited number of companies in both the Europe and the US, being rescued by governments.

BILLION-DOLLAR BAIL-OUTS

Governments have spent billions of dollars on rescue packages, led by the US with its $700bn rescue package.

soured from The BBC read full article

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Crimes increase as a recession looms

As the recession takes hold, we can expect crime especially theft to increase. Mostly this theft will be shop lifting. As supermarkets are seeing significant increases in shop lifting, this will only increase as we get further and further into the recession.  But if someone is stealing to feed their family, should we be more lenient on them.

But will the supermarkets cover this loss or will it be passed onto the consumer.

Shoplifiting for food soars as recession looms

Shoplifting in supermarkets has increased by more than a third since the economic downturn began to bite, according to some of the biggest stores.

Essential items like baby food are among the items being stolen most often as thieves increasingly steal out of necessity rather than greed.

At stores belonging to Iceland, the frozen food specialist, the most popular product for thieves is a leg of lamb followed by cheese, bacon and coffee.

At Tesco, the country's largest retailer, thefts are up by more than a third (36 per cent) this year and at Marks & Spencer the problem is also increasing.

Retailers say shoplifting has increased in previous recessions and they are taking extra security measures this time including electronically tagging food.

Stephen Robertson, director-general of the British Retail Consortium, said: "Retailers are preparing for an upsurge in offences and are extending crime prevention methods, for example, placing electronic security tags on expensive cuts of meat."

sourced from The Telegraph read full article

The recession crimewave

The recession puts police on the back foot as official figures show offences in 31 police forces are on the rise.

By Mark Hughes, Crime Correspondent and Ben Russell, Home Affairs Correspondent.

Robbery and burglary are on the rise across the country, almost doubling in some areas, according to figures that provide the first evidence that the economic downturn is fuelling crime.

Figures obtained by The Independent from police forces across England and Wales show that cases of burglary or robbery rose in 31 of the 43 forces in the final four months of the year in comparison with the same period in 2007. In those 31 areas an extra 5,572 crimes of burglary and robbery were committed in the final months of 2008, compared with the previous year.

Forces such as Greater Manchester, Suffolk, Gloucestershire and Cumbria all saw increases of between 20 and 50 per cent. Lincolnshire police saw the biggest rise, a 97 per cent increase in robbery between September and November – the most recent three-month period collated by the force – compared with the same three-month period the previous year.

sourced from The Independent read full article

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High street hit by Downturn

The economic downturn has seen high profile failures such as Woolworths, and High Streets across the country are worried about falling sales.

News video from the BBC

Founder on Lush talks about the downturn from the BBC

Founder of Lush Cosmetics Mark Constantine explains why British retail has taken a turn for the worse.

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Sales soar at Primark

Primark sales sour over the Christmas period. As the rest of the high street suffer Primark sales increase.

Article

Primark has enjoyed another successful Christmas, with sales soaring by more than a fifth as its cut-price chic continued to appeal to shoppers.

Parent company Associated British Foods said today that total sales at the fashion store rose by 21% in the final 16 weeks of last year.

The sharp rise was partly attributed to Primark opening six new stores during the year, but the group said like-for-like sales growth, which excludes new space, was "very strong" at around 4%.

Primark's performance provides further evidence that shoppers are becoming increasingly thrifty as the recession hammers consumer confidence – a trend that sent clothing sales falling sharply at Marks & Spencer.

Primark fired several suppliers in 2008 following allegations that they were using child labour. But this week, allegations emerged that one of its UK suppliers was subjecting its workers to sweatshop conditions, with illegal immigrants receiving just half the minimum wage for 12-hour days, seven days a week.

read full article sourced from the Guardian

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Sales slide at Currys and Argos

When I read this article, it really does real like the downturn is having a major effect. You would expect a lot of small retail shops to close and the odd big one like Woolworth, but here we are facing the end of Argos, Currys and PC world - so all those out of town retail parks will soon be very empty.

The article

Sales at several of Britain's top retail chains have fallen markedly as a result of the economic slowdown.

DSG International, which owns Currys and PC World, said like-for-like sales - which ignore new stores - had dropped 10% in the three months to 10 January.

Home Retail Group said like-for-like sales at its Argos chain had fallen 7.5% in the 18 weeks to 3 January.

DIY chain Homebase, which is also owned by Home Retail Group, saw like-for-like sales in the same period drop 10.2%.

Many retailers are struggling as consumers cut back on spending amid rising jobless figures, falling house prices and recession worries.

read more sourced from the BBC

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Goodbye Woolworth

[youtube=http://uk.youtube.com/watch?v=AimzRDZvvgA]

Watch a news article from the BBC relating to the closing downing down of Woolworth.

The F. W. Woolworth Company (often referred to as Woolworth's) was a retail American company that was one of the original five-and-dime stores. The first Woolworth's store was founded, with a loan of $300, in 1878 by Frank Winfield Woolworth. Despite growing to be one of the largest retail chains in the world through most of the 20th century, increased competition led to its decline beginning in the 1980s. In 1997, F. W. Woolworth Company converted itself into a sporting goods retailer, closing its remaining retail stores operating under the "Woolworth's" brand name and renaming itself Venator Group. By 2001, the company focused exclusively on the sporting goods market, changing its name to the present Foot Locker Inc (NYSE: FL). Company that was one of the original

Retail chains using the Woolworth name survive in Germany, Austria, Mexico, and South Africa, and, until the end of 2008, in the United Kingdom. The similarly-named Woolworth's supermarkets in Australia and New Zealand are operated by Woolworths Limited, a separate company with no historical links to the F. W. Woolworth Company or Foot Locker, Inc. However, this company did take the name from F. W. Woolworth as it had global appeal. sourced from Wikipedia

Woolworths in store closure sales

Woolworths branch Woolworths went into administration last month Woolworths is to hold a store closure sale in all its 815 outlets from Thursday amid growing concern that a buyer will not be found for the firm.

Woolworths went into administration last month

Administrator Deloitte said that if no offers for Woolworths were forthcoming, "it is possible that some stores may close before the end of December".

It added that it would consult with the retailer's 30,000 staff over support available in the event of redundancies.  read full article

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Recession and the housing market

As the housing market starts falling is this going to most difficult year for many home owners. As the prices fall by up to £3,000 per month, this is not the time move.

But as I’m sure you will have noticed a lot of houses that were for sale late last year are now for rent, people who have let their property will not find it an easy marked. If your house is on the market you would be very lucky to sell it, the biggest problem is agreeing a sale price and then all the people in the chain being able to to get the mortgages and financial security.

Almost 3,000 home owners are falling into negative equity every, negative equity is bad if you are planing or need to move. Negative equity means you are paying more for your mortgage then the value of your property.

But over a period of time house prices will increase after the low. I am not surprised this has happened to the housing market, the prices were getting so high and out of control. I know a lot of people hold the banks responsible for the housing situation, but we had a lot to do with it, people over estimated their salary with self certification and people mortgages them self’s up to the hilt.

read full article

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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

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HMV to snap up some Zavvi stores

Entertainment retailer HMV has said it is to buy 14 stores from troubled chain Zavvi, funded by selling new shares.

Proceeds will also be used to fund a move into the live music market, taking a joint stake in a firm running 11 venues such as Hammersmith Apollo.

It will also get naming rights to some of the venues.

HMV also said that sales in the five weeks to 3 January - which includes the Christmas period - were up by 2.9%, or by 0.5% not including new stores.

Rebranding

The Zavvi stores it is buying are all profitable, HMV said, primarily in locations where it does not currently have a store.

It expects the cost of the purchase to be about £2m - including fitting out and rebranding the stores. Nine of them are in the UK and five in the Irish Republic.

read full article at The BBC

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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 scoured from the BBC

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