U.S. companies are now suffering from the worst business conditions in almost 30 years, according to a survey from the National Association of Business Economics. The group’s quarterly industry poll revealed the current economic downturn had worsened in the fourth quarter of 2008, while the majority of respondents expect the country’s gross domestic product to contract even faster during 2009.

Central to the fall in business conditions have been the collapsing housing market collapse and the resulting global credit crisis, which have both eroded household wealth. That has caused deep cutbacks in consumer spending and significant declines in demand for products.

Source: Reuters

Will Obama Nationalize U.S. Banks?

Less than a week since taking office, President Obama faces a difficult question — is he prepared to nationalize a large section of the country’s banking system? Most members of Obama’s economic team concede that the deterioration in some of country’s biggest banks will eventually require further investments of taxpayer money. But any more money — on top of the billions of dollars that already have been invested — begs the question: what do taxpayers get in return?

Source: New York Times

Bank of America Caught up in Merrill’s Bonuses

Bank of America had a role in Merrill Lynch’s controversial decision to pay $4 billion in bonuses just as mounting losses were threatening to derail Bank of America’s takeover of the struggling Wall Street firm. People familiar with the situation say Merrill’s now-ousted Chief Executive Officer John Thain had at least two conversations with Bank of America’s chief administrative officer before a Dec. 8 meeting during which Merrill’s bonus payments were approved.

Source: Financial Times

Barclays Unveils $11 billion Writedowns

British bank Barclays on Jan. 26 said it wrote down about $11 billion of credit assets in 2008, but wouldn’t seek more capital because its overall yearly revenues actually rose. The bank plans to release earnings on Feb. 9 — instead of the originally scheduled Feb. 17 — and has reiterated that 2008 pretax profit will be in excess of $7.2 billion.

Source: Bloomberg

Global Financial Crisis Sparks Unrest

The economic downturn hasn’t just been felt in the financial world. Outbursts of civil unrest have occurred in recent weeks across the periphery of Europe, where the global crisis has hit smaller countries with fewer resources to defend their economies. In Eastern Europe, the recent turmoil reflects political discontent, which could topple shaky governments that have been accused of corruption for years.

Source: Washington Post

Chrysler Calls on Dealers to Help with Restructuring

U.S. automaker Chrysler urged its U.S. dealers on Jan. 25 to cut costs and order more of its vehicles as the company tries to restructure itself to secure additional federal aid. Chrysler also has been asking for concessions from all of its stakeholders, including creditors and the United Auto Workers union. The company has a deadline of Feb. 17 to prove to U.S. lawmakers it has a financial future.

Source: Reuters

U.S. Autoparts Industry Seeks Bailout

Facing a severe drop in car production, the U.S. autoparts supply sector will request at least $10 billion of federal bailout funds from the troubled asset relief program. Industry representatives already have met with Treasury officials and members of President Obama’s economic team to discuss the growing financial pressure on the sector.

Source: Financial Times

Pfizer Closes in on Rival Wyeth

Pfizer is finalizing a $68 billion takeover bid for rival Wyeth in what would be the largest pharmaceutical deal in nearly a decade, according to people familiar with the matter. The company is expected to borrow $22.5 billion to finance the deal.

Source: Wall Street Journal

OPEC Slows Tumbling Oil Price

Members of the Organization of the Petroleum Exporting Countries cartel have finally managed to stop the slide in oil prices — at least for now. The OPEC countries have slashed output by more than three million barrels a day in recent months in an attempt to put a floor under oil prices. Saudi Arabia has led the cuts, trimming its production to eight million barrels a day this month. That compares to nearly 10 million barrels last summer.

Source: New York Times

New Powers Planned for U.S. Fed

The U.S. Federal Reserve could be given authority to examine the workings of a wide range of companies in an attempt to address one of the key failures that led to the financial crisis. Under proposed legislation, the Fed would be put in charge of protecting the stability of the entire financial system.

Source: Washington Post

Intel Readies New Chips for Mobile Devices

Intel — the world’s largest chipmaker — is readying new chips and a version of the open-source Linux operating system specially designed to run a new class of “mobile Internet devices.” Consumers could use the devices to play high-definition video, make Internet-powered phone calls, or download directions and local business listings on the go.

Source: BusinessWeek

Conversation of the Day: Microsoft Slams on the Brakes

Reader Tom Mariner Writes: “Microsoft had better find a new Gates—there are great businessmen running the firm, but no crazy, enthusiastic spark plug.”

Tell Us: Is Ballmer Unraveling Gates’ Legacy?

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