On Tuesday afternoon, President Barack Obama signed his first bill into law. And it was a hefty, too! The Stimulus Package became the law of the land with the stroke of his pen and over $787 billion is now ready to stimulate our lagging economy back to life.There is a little problem, though, how will we know that the stimulus is working?
Mr. Obama didn't go as far to guarantee a win with this thing, as I'm sure he knows that there'll probably be a request for more stimulus money in the coming months. He said, "Today does not mark the end of our economic troubles. But it does mark the beginning of the end - the beginning of what we need to do to create jobs for Americans scrambling in the wake of layoffs; to provide relief for families worried they won't be able to pay next month's bills; and to set our economy on a firmer foundation."
The signing ceremony was held at the Denver Museum of Nature and Science in Colorado.
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The request for more billions didn't take long. General Motors Corp (GM) and Chrysler LLC requested nearly $22 billion in additional U.S. government loans and said they had reached tentative deals with the United Auto Workers union to reduce labour costs. It is estimated that they will trim close to 50,000 jobs... in exchange for the money. They claim that they need the funds to stave off bankruptcy.The two automakers, which have so far received $17.4 billion in loans from the U.S. Treasury, also detailed plans to cut jobs and idle plants as part of sweeping restructuring plans submitted under the terms of their federal bailout.
GM is seeking an additional $16.6 billion from the U.S. Treasury -- for a total of up to $30 billion in loans -- and said it would run out of cash as soon as March without new federal funding. In addition, GM said it expected to be able to borrow up to $6 billion from foreign governments and nearly $8 billion from the U.S. Department of Energy. It warned that without $1.5 billion from asset sales in 2009 it would need even more cash.
GM also accelerated its job cut plans, saying that it would eliminate 47,000 jobs over the course of 2009. The company said it would cut about 20,000 jobs in the United States, or about 22% of its remaining U.S. staff. Previously, GM called for U.S. job cuts of between 20,000 to 30,000 workers, but it had stretched out those reductions through 2012. The company said it plans to close five additional U.S. plants by 2012 --in addition to the 12 planned closings announced in December.
GM added it plans to phase out the Saturn brand by the middle of 2011 if it is unable to sell or spin-off the brand. GM is also looking to sell its Saab brand, and will look for help from the Swedish government to support Saab until a buyer is found. There will be fewer Pontiac models, with a plan to reduce GM to four brands: Chevrolet, Cadillac, Buick, and GMC (trucks).
Chrysler said it plans to cut about 3,000 jobs, or 6% of its workforce, and reduce capacity by another 100,000 vehicles this year as it tries to adjust to reduced demand. It also said it has won the concessions from the United Auto Workers union and its creditors that were demanded under terms of the loan from the Treasury Department.
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Obama's pen could not keep world markets from continuing their downward spiral... this economic crisis is global and it ain't getting better: Japan is suffering its worst downturn in 35 years, England has had its worst decline in 30 years, Germany's decline is the worst in 20 years! And the US job market is the worst in over 20 years. The Dow Jones industrial average declined nearly 300 points on Tuesday to finish close to its lowest level of the financial crisis. Even China is feeling the pinch with unemployment growing over there.
Japan's economy, the world's second-biggest, after only the United States, shrank at an annual rate of 12.7 percent during the last three months of 2008 -- the biggest contraction since the oil crisis of the mid-1970s. The British economy, damaged by the credit crisis, will contract at 3.3 percent, almost twice as much as predicted three months ago, according to the country's biggest business lobbying organization. Those two pieces of data, released Monday, came on the heels of a report Friday showing that the German economy, Europe's largest, shrank by 2.1 percent, the steepest drop since the country's reunification in 1990. Some economists had argued that countries like Japan and Germany were better equipped to weather the downturn. Germany has little consumer debt, and Japan's banks are in better shape after the banking crisis of the 1990s. But their economies rely heavily on exports, and global demand for items such as Japanese and German cars has evaporated.
And emerging markets, the world's fastest-growing economies, whose demand for goods and services is considered key to a global recovery, showed signs of intensifying weakness. Russia's state-owned news agency said Tuesday that lower commodity prices and the financial crisis are expected to cause the economy to shrink by more than 2 percent this year. In Brazil, where commodity exports have fallen sharply, retail sales in December fell for the third straight month, marking the longest period of declines in six years. Taiwan said exports plunged by record levels. In Mexico, the government was forced to intervene in the foreign exchange market after the peso reached an all-time low against the dollar. In China, slumping demand for exports has trimmed the growth of its powerful economy to nearly half its 13 percent pace in 2007.
Good news on the economic front is nowhere to be found!
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plez sez: i held out such hope that this stimulus package would actually make a difference, but something tells me that the global economy is so eff'd up, that $787 billion will be like "spit in the wind!" i'm not sure the US mint will be able to print enough $100's to keep this ship afloat. consumer confidence is so low, orders for goods are at record lows, global markets continue to fall... i don't know if the US economy (which has been mortgaged to china and saudi arabia) has enough gas in the tank to save the rest of the world.
i said it before... i think we're going to have to witness one of the automaker's demise before anything substantial will change. i am not sure what propping them up with cash while they are slashing payroll will do... when NO ONE is buying the product!
plezWorld believes the answer lies in the mortgage crisis and the credit crunch. maybe things would loosen up a bit if ALL of those risky loans heading to foreclosure were renegotiated at bargain basement rates, and then if credit card companies would be compensated for working to drastically lower (or even eliminate) the interest rate or balances on outstanding accounts that are headed toward default. to my way of thinking, both of those acts would serve as a necessary catalyst to get consumers back into the malls, realtor offices, and auto showrooms.
and since our economy is such a leading market for the global economy, US companies should be incented to begin bringing the jobs that have been offshored to china and india BACK to the US. put americans back to work... and the rest of the world will soon follow. put money and credit back in the pockets of americans... and we will start buying the world's goods.
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Read the CNN Money article about measuring the success of Obama's stimulus package.
Read the AJC.com article about Obama signing the stimulus plan into law.
Read the Washington Post article about the downturn in global economies.
Read the CNN Money article about US automakers wanting more bailout money.
Read the Reuters article about US automakers needing additional bailout money.
Read the New York Times article about how GM plans to trim brands from their line-up.
Read the New York Times article about the big loss of white collar jobs in Detroit.
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