Early Edition January 29 2009 at 05:51 AM Harry Maurer
The U.S. House of Representatives approved an $819 billion stimulus package on Jan. 28 -- the first step in President Barack Obama's plan to jumpstart the flagging domestic economy. Larger than the combined cost of the wars in Iraq and Afghanistan, the two-year stimulus package outlines up to $1,000-a-year tax relief for most families, dramatically increases funding for alternative energy, and earmarks $300 billion to help states' rebuild schools, provide healthcare, and reconstruct highways and bridges.
Despite the legislation's approval -- the Senate will debate the plan starting Feb. 2 -- Obama was unable to win support from Republicans. Instead, not a single Republican lawmaker supported the spending plan, which passed on a 244 to 188 vote.
Source: Washington Post
With the U.S. Congress approving the stimulus package, the negotiations now can really begin. Among the business provisions that could be tacked on in the Senate: a temporary reduction in the tax rate levied on companies bringing foreign-subsidiary profits back to the U.S.
Source: BusinessWeek
A controversial provision in the proposed U.S. stimulus package would mostly bar foreign steel and iron manufacturers from participating in the outlined infrastructure projects. Opponents to the provision say it's a declaration of war against free trade and could spark retaliation from abroad against U.S. companies and exacerbate the global financial crisis.
Source: Washington Post
The leaders of Russia and China have blamed Western developed countries for dragging the world into the current economic crisis. Speaking at the World Economic Forum in Davos, Russia's Vladimir Putin said: "The entire economic growth system... has suffered a major setback." Chinese premier Wen Jiabao was more forthright, blaming "inappropriate macroeconomic policies," an "unsustainable model of development characterized by prolonged low savings and high consumption," and the "blind pursuit of profit."
Source: New York Times
Japan's tech giants are feeling the economic pinch. On Jan. 29, Sony reported an operating loss of 18 billion yen ($200 million) for the three months to December, 2008 down from a 236.2 billion yen ($2.6 billion) profit a year earlier. In contrast, Game-maker Nintendo posted a 21% rise in operating profit for the October-December quarter due to strong holiday sales of its Wii game console and DS handheld game player. Yet the company cut its profit forecast for the year to March by a much larger-than-expected 16%.
Source: Reuters
Ford's credit division will cut 1,200 jobs from its total 6,100 workforce in the U.S., a company spokeswoman confirmed on Jan. 28. The layoffs come ahead of expected losses during the company's Jan. 29 earnings report.
Source: Wall Street Journal
Oil energy giant Royal Dutch Shell announced on Jan. 29 a full-year 2008 current cost of supply (CSS) net profit of $31.4 billion -- a European corporate record -- compared to $27.6 billion the year before. The news was overshadowed, though, after the company said fourth-quarter CCS net profit had fallen 28% annually to $4.79 billon due to collapsing crude prices.
Source: Reuters
Coffee company Starbucks will close more stores, sell a newly-acquired $45 million corporate jet, and cut headquarters staff and worker benefits to offset a slump in sales. The steps will lead to about 6,700 job losses and the closure of 300 "underperforming" stores -- 100 of them outside the U.S.
Source: Financial Times
Cash bonuses to employees of Wall Street firms fell 44% in 2008 amid record losses in the financial industry, New York State Comptroller Thomas DiNapoli said on Jan. 28. According to estimates, financial companies shelled out $18.4 billion last year, compared to $32.9 billion in 2007.
Source: Bloomberg
U.S. Treasury Secretary Tim Geithner on Jan. 28 played down fears of bank nationalization, fuelling hopes for a clean-up of financial toxic assets that wouldn't leave investors out of pocket. Geithner told reporters: "We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system."
Source: Financial Times
Energy giant ConocoPhillips on Jan. 28 reported a $17 billion loss for 2008, compared to an $11.9 billion profit in 2007. Central to the company's change in fortune was the last quarter of 2008. ConocoPhillips posted a fourth-quarter loss of $31.76 billion, hurt by $34 billion in asset writedowns and falling crude oil prices.
Source: Associated Press
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