2008 Economic Debacle Let’s start with the fact that the median US income last year was $50,233 dollars. Now lets add to the fact that the plan of Treasury Secretary Henry Paulson's $700 billion dollar to stabilize the banking system, that every man, woman and child in the U.S. would be owing more than $37,000 each.
This puts the situation in simple context.
Let’s put it another way, approximately 73% of the median income will be needed for this plan. It is beyond obvious that we are going to be paying this off for a long time, and quite obviously our grandchildren.
Henry Paulson’s plan may push the national debt to the highest level since 1954 and possibly causing a diminished demand from foreigners for U.S. bonds as well as potentially other assets. Why would foreigners still be attracted to U.S. assets? How about a worse question will US investors still be attracted to US assets?
Again it seems pretty clear that this $700 billion dollar plan can cause a jump in interest rates prompted by the glut of additional Treasuries needed to finance the plan. Needless to say the dollar has been weakening against the euro and many other currencies.
How can this be a good way to get out of our current economic debacle!
Let’s put it yet another way, Paulson’s plan could drive the debt above 70 percent of gross domestic product and the annual budget gap to an all-time high, possibly exceeding $1 trillion next year. The US is not the only one in this party, just look at several other developed nations have debt levels far higher than that of the U.S such as Japan at 196 percent of GDP and Italy at 104 percent of GDP. Can you imagine if we ran our personal businesses this way…or ran our households in this manner?
The irony is that Paulson said it is ``Difficult to determine'' what the ultimate cost of the plan would be, though he said the objective is to minimize the cost to taxpayers.
Supposedly the money for the Paulson plan will go to buy assets at prices that are depressed. It is unknown what prices the Treasury would pay for them.
Is it possible that these assets could increase in value when the credit crisis ends??
Can the Fed make money doing this? Will the taxpayer ultimately profit?
Your guess is as good as mine- but a point in history was the bailout of Chrysler Corp the taxpayer did profit
Andrew Abraham
My Investors Place
www.myinvestorsplace.com
Tuesday, February 17, 2009
Economic crisis will affect telecommunications sector
The economic crisis is inevitably affecting the global telecommunications sector. Continuous strain in the credit market has a big effect on investments and the reduction in consumption is changing the adoption and acceptance of new services.
During these difficult times, companies will need to implement an open and shared innovation model to stay afloat.
“The telecommunications sector will likely be hit by the recession in two main ways,” says Frost & Sullivan ICT analyst Saverio Romeo. “First, due to the lack of credit in the global economy, investments will fall in the beginning of 2009. Investments related to costly projects such as acquisitions, will feel this drop intensely. Second, consumption will fall as people move away from wants and focus on their needs. This will reduce the uptake of innovative services.”
Service providers are already trimming down their operations. Since November 2008, Vodafone and Telecom Italia announced mid-term cost reductions of £1billion and €2billion respectively. BT and Virgin Media have both announced job cuts, the former relieving 10,000 employees, while the latter reduced its workforce by 2,200.
“Optimisation of organisational resources and processes as well as promoting business innovation will be key success factors in this environment,” Romeo observes. “This means being able to design lower cost and disruptive business models as an effective way to attract consumers. Disruptive business models here refer to combining existing technologies with new business models to create low cost products and services (i.e. the combination of mobile content with forms of marketing and advertising).”
This will require partnering with players of different expertise. This type of collaboration can reduce costs, advance the quality of service, and offer more attractive packages to the customer.
An example of optimising resources in a positive way is mobile network management sharing. The innovation process, as it is opened to different players, could prove to be the lynchpin to surviving the crisis.
Encouragingly for the industry, many national governments and super-national organisations have come to view the telecommunications sector as a critical means to overcome the crisis. For example, the European Economic Recovery Plan places a huge amount of importance on broadband infrastructure, ICT services and sustainable telecommunications.
Even the European Union has committed to an immediate investment of €200bn to implement ‘public-friendly’ legislation. From 2009-2010, the EU plans to invest €1bn for the development of “high-speed Internet for all” with the aim of achieving 100% broadband coverage across the EU by the end of 2010.
These types of actions, from a governmental perspective prove not only the importance of telecommunications to the economy, but also help protect this sector from drastic decline.
Yet even with this support, major mobile network operators have declared processes of strategic and operational adjustments in order to face the tough economy in 2009. Of the plethora of rescue plans presented, two trends stood out.
One clear strategy is to pull the purse strings tight through cutting costs, reducing investments, monitoring consumption through pricing and reigning in cash flows. Supporters of this strategy hope to minimise the short term damages of the recession. The other major trend is to identify and act upon the need to use this time to build opportunities out of the recession.
“Frost & Sullivan believes that innovation should remain at the core of economic and industrial policies,” says Romeo “We also believe that the same networks that are spreading the crisis can also be the ones to promote innovation in a collaborative and open manner, stimulating economic growth.”
During these difficult times, companies will need to implement an open and shared innovation model to stay afloat.
“The telecommunications sector will likely be hit by the recession in two main ways,” says Frost & Sullivan ICT analyst Saverio Romeo. “First, due to the lack of credit in the global economy, investments will fall in the beginning of 2009. Investments related to costly projects such as acquisitions, will feel this drop intensely. Second, consumption will fall as people move away from wants and focus on their needs. This will reduce the uptake of innovative services.”
Service providers are already trimming down their operations. Since November 2008, Vodafone and Telecom Italia announced mid-term cost reductions of £1billion and €2billion respectively. BT and Virgin Media have both announced job cuts, the former relieving 10,000 employees, while the latter reduced its workforce by 2,200.
“Optimisation of organisational resources and processes as well as promoting business innovation will be key success factors in this environment,” Romeo observes. “This means being able to design lower cost and disruptive business models as an effective way to attract consumers. Disruptive business models here refer to combining existing technologies with new business models to create low cost products and services (i.e. the combination of mobile content with forms of marketing and advertising).”
This will require partnering with players of different expertise. This type of collaboration can reduce costs, advance the quality of service, and offer more attractive packages to the customer.
An example of optimising resources in a positive way is mobile network management sharing. The innovation process, as it is opened to different players, could prove to be the lynchpin to surviving the crisis.
Encouragingly for the industry, many national governments and super-national organisations have come to view the telecommunications sector as a critical means to overcome the crisis. For example, the European Economic Recovery Plan places a huge amount of importance on broadband infrastructure, ICT services and sustainable telecommunications.
Even the European Union has committed to an immediate investment of €200bn to implement ‘public-friendly’ legislation. From 2009-2010, the EU plans to invest €1bn for the development of “high-speed Internet for all” with the aim of achieving 100% broadband coverage across the EU by the end of 2010.
These types of actions, from a governmental perspective prove not only the importance of telecommunications to the economy, but also help protect this sector from drastic decline.
Yet even with this support, major mobile network operators have declared processes of strategic and operational adjustments in order to face the tough economy in 2009. Of the plethora of rescue plans presented, two trends stood out.
One clear strategy is to pull the purse strings tight through cutting costs, reducing investments, monitoring consumption through pricing and reigning in cash flows. Supporters of this strategy hope to minimise the short term damages of the recession. The other major trend is to identify and act upon the need to use this time to build opportunities out of the recession.
“Frost & Sullivan believes that innovation should remain at the core of economic and industrial policies,” says Romeo “We also believe that the same networks that are spreading the crisis can also be the ones to promote innovation in a collaborative and open manner, stimulating economic growth.”
Economic crisis could provide opportunities for ICT businesses
NEW YORK: The global financial crisis could provide entrepreneurial opportunities for
budding information and communication technology (ICT)
businesses which, in turn,
can power economic recovery, a new United Nations report says.
The report highlights some harsh realities for the industry and explains how it can position itself for recovery in the future.
"Despite difficult times, there are reasons to be optimistic," said Hamadoun Touré, Secretary-General of the UN International Telecommunication Union.
Speaking at the Mobile World Congress in Barcelona, Touré said that innovation is the key to recovery, stressing that "having contributed consistently as a high-growth sector in its own right, ICTs can now power economic recovery across all sectors.
"Along with stimulus packages put together by Governments, the ICT industry must continue to invest in infrastructure and the roll out of cost-effective services, such as next- generation networks (NGNs)."
The report "Confronting the Crisis: Its Impact on the ICT Industry" notes that although credit is now more difficult to come by and more expensive, with financing costs on average 3 to 4 per cent higher year-on-year, savvy businesses can take advantage of the economic turmoil to reposition their services for the upturn.
Funding is still available for firms with sound business models, established demand and early projected cash flows, the report says. But it stressed that alternative sources of financing are now needed, with a growing role for government and economic stimulus packages.
Responding to the financial pressure facing the private sector, some Governments have stepped in to diminish the impact on the transition to NGNs, which can carry voice, data and media services simultaneously.
Several administrations have also announced commitments to invest in their national infrastructure, while others, such as the European Union, have included the roll-out of broadband networks in their economic stimulus packages.
The report highlighted the soaring growth in the mobile telephone business in developing countries, especially in large emerging markets, including Brazil, India and Nigeria, which registered record additional subscribers in September and October 2008, as an example of opportunity for growth.
budding information and communication technology (ICT)
businesses which, in turn,
can power economic recovery, a new United Nations report says.
The report highlights some harsh realities for the industry and explains how it can position itself for recovery in the future.
"Despite difficult times, there are reasons to be optimistic," said Hamadoun Touré, Secretary-General of the UN International Telecommunication Union.
Speaking at the Mobile World Congress in Barcelona, Touré said that innovation is the key to recovery, stressing that "having contributed consistently as a high-growth sector in its own right, ICTs can now power economic recovery across all sectors.
"Along with stimulus packages put together by Governments, the ICT industry must continue to invest in infrastructure and the roll out of cost-effective services, such as next- generation networks (NGNs)."
The report "Confronting the Crisis: Its Impact on the ICT Industry" notes that although credit is now more difficult to come by and more expensive, with financing costs on average 3 to 4 per cent higher year-on-year, savvy businesses can take advantage of the economic turmoil to reposition their services for the upturn.
Funding is still available for firms with sound business models, established demand and early projected cash flows, the report says. But it stressed that alternative sources of financing are now needed, with a growing role for government and economic stimulus packages.
Responding to the financial pressure facing the private sector, some Governments have stepped in to diminish the impact on the transition to NGNs, which can carry voice, data and media services simultaneously.
Several administrations have also announced commitments to invest in their national infrastructure, while others, such as the European Union, have included the roll-out of broadband networks in their economic stimulus packages.
The report highlighted the soaring growth in the mobile telephone business in developing countries, especially in large emerging markets, including Brazil, India and Nigeria, which registered record additional subscribers in September and October 2008, as an example of opportunity for growth.
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