Nature and Urban Life: Absolute Write Blog Chain June 2009

This is the time for an Absolute Write Blog Chain. It is a blog chain without any theme. So, you can expect some dramatic change in tone and topic as the blog chain progresses.

I am starting June blog chain with this entry. The last few days were full of stress for me. It is very hot in my country. Monsoon Rain was supposed to come last week and it has not come yet. 2 weeks ago, I had to take my wife to a hospital because she became sick from summer heat. Today, she again felt weak and I became afraid. Fortunately, I did not need to take her to the hospital again. Even I am not well these days. I live in a city with more than 10 million people and like any urban dweller; I have lost touch with nature. Air conditioner is out of my ability and electric fan is the best thing that I can afford. This problem has made me think about nature.

I am now 34 years old and when I was 10-11 years old, there were just half the amount of people in my city. There were many more trees and nature summer was more moderate. I know that many people in Europe and America like to believe that there is nothing called global warming. Well, I can tell you from my experience that it is real. Climate has really changed a lot in the last 2 decades. It is true that the people in my own society and country have a lot of contribution in global warming but at the same time, too much consumption of resources in the rich Western countries is the main villain behind the changing nature of global climate.

In USA, I think that there are more than 700 cars against 1,000 persons. In my own country, it is not even 5 cars against 1000 persons. I have no complain against US consumers. They work hard and they enjoy life with their hard earned money. Not only that, we the people living in the third world countries, have our own fair share of bad activities to harm nature.

All I know is that we do not live in an isolated world any more. I wish that our political leaders and decision makers could come to this realization.

Next in blog chain is Fokker Aeroplanbau in his blog: I'm Always Right, Far Right

I wonder what he will say about it.

The participating blogs in June 2009 blog chain are:

Hobby Economist
I'm Always Right, Far Right
Far Seeing Fairy Tales
Benjamin Solah, Marxist Horror Writer
Writer Chick Talks
Delirious
Beyond Tourism: Florida's Yesteryear

Four-Lettered Words
Random Writerly Thoughts
Expressive World
Tika Newman
BillWardWriter.com
Made of Carbon

President Barack Obama’s financial reform: Will it change people?

On June 20, 2009, the U.S. President Barack Obama in his weekly radio and Internet address, said that he is going to work on restructuring the country’s financial system. In his speech President Obama said that he would make sure that government gain more oversight on the business activities of the country’s top financial institutions. President Obama also proposed to form “Consumer Financial Protection Agency” that will make sure that banks and financial institutions clear the fine points to consumers before they take any kind of loan.

The Financial Regulatory Reform:

On June 17, 2009, President Barack Obama unveiled his regulatory reform plan. The proposals are now submitted to the congress. The reform if implemented would reverse all the policies set by President Ronald Reagan in the 1980s. Here are some of the major points:

• More authority to the Federal Reserve over major financial institutions.
• More power to the Federal Deposit Insurance Corporation.
• Tap into the “shadow system” of the financial institutions to stop their deceptive practices and protect consumers.
• Creation of a watchdog agency called “Consumer Financial Protection Agency” to oversee the interest of the consumers. The agency would make sure that
• banks and credit card companies become more clear when they sell their products to their consumers.

Opposing the reform plan:

Banking officials are saying that the reform plan will increase the rich of the government and put them in the middle of the business which is not a very good thing.

In support of the reform plan:

There are many people who are also supporting the reform plan. They supporters are saying that the new reform plan would give a boost to the banking and financial sector of the country. In the light of the recent economic crisis, people have lost their faith on banks and financial institutions. The bank officials place their interest first rather than consumers interest. In order to get more money, they even gave loans to people with poor credit record or people who does not have the capability to clear their loans and it caused a serious crisis.

At this very moment what is most necessary is confidence which the consumers do not have any confidence on rating agencies. A recent survey revealed that only 9 out every 100 people in the U.S and the U.K trust their financial institutions. What President Barack Obama is trying to restore the faith of the investors and consumers through his financial reformation.

American people should accept the reality:

My view is that it is time for the U.S. people also become conscious about their financial condition and understand their limitations. There are many people who earn small amount of money and have no job security. Yet, they took loans from bank to buy house and cars and other expensive items. This is not a very good practice. I understand that it is a dream to have your own house or car but for some people it is too much to handle and may not come true but life does not end if you do not own a house or your own car.

Related articles:

The New York Times

The Washington Post

Associated Press

Los Angeles Times

The Huffington Post

Six Flags Inc.: Chapter 11 bankruptcy and restructuring

On June 13, 2009, Six Flags Inc., with unianimous support from its lenders, filed for Chapter 11 bankruptcy protection. The New York- based company is the largest theme park company in the world. It operates theme parks in the U.S., Canada and Mexico. The company was already under $2.4 billion dollar when its current management team took over the company. Mark Shapiro, chief executive of Six Flags Inc. said that the company would not be able to sustain such huge debt load in the time of economic recession. Reuters reports:

The plan will result in a deleveraging of the company's balance sheet by about $1.8 billion, as well as the elimination of more than $300 million in preferred stock obligations.

More than three years ago, Daniel M. Snyder, owner of the Washington Redskins American football team, took over Six Flags Inc. Though a successful businessman himself, his management team could not make the company profitable. In the first quarter of the current fiscal year, the company reported a lost worth $146.3 million. After getting bankruptcy court approval, the company will go for restructuring.

Bleak future for American Airlines Industry

Economic recession has hit the airlines industry of the U.S. pretty badly. Due to poor passenger turnover, air lines are now shedding off jobs to survive the recession. In the latest jobloss case, American Airlines, one of the top Airlines of the U.S. will eliminate 1600 jobs. On the other hand, Delta Airlines Inc., another major American Airlines is going to reduce its employees’ salary and will reassess its “staffing needs.” The company ordered its 400 flight attendants to take leaves or they would be laid off. Bloomberg reports:

Delta, the world’s largest airline, will slash available seats as much as 4 percentage points more than planned, for a cutback of 10 percent from 2008 levels, Chief Executive Officer Richard Anderson told employees. American, the second-biggest carrier, said it would shrink flying by 1 percentage point more than projected, to 7.5 percent.

Due to recession, number of people traveling by plane dropped significantly. Moreover, many business executives also stopped traveling as companies are trying to reduce their expenses. In order to attract customers, airlines are reducing air fares unless there is a major change in the country’s economic outlook there would be no major change in the business.

BlackRock Inc. will take over Barclays Global Investment Unit for $13.5 billion

Famous American Investment management firm, BlackRock Inc., will buy the investment unit of Barclays PLC, another major European financial firm, for $13.5 billion. This merger would become one of the largest investment firms in the world with assets worth $2.7 trillion.

The newly formed company named BlackRock Global Investors (BRGI), will have a market value of more than $34 billion. In a statement issued by BlackRock Inc., the company said that it would pay $6.6 billion in cash and rest will be paid in stock for Barclays Global Investors. In the newly formed company, Barclays will have a 19.9% stake. The combined company will raise funds worth $2.8 billion through equity sales and borrow $2 billion from Barclays and other banks. Laurence Fink, Chairman and CEO, BlackRock Inc. said that this would widen the range of products offered by the companies.

John Varley, CEO, Barclays and Robert Diamond, President, Barclays’ will join the board of directors of BRGI. Blake Grossman, CEO, Barclays Investment Unit, will be vice chairman of BRGI.

Related articles:

Bloomberg

The U.S. share market overview June 11 2009.

On June 11, 2009, the U.S. sharemarket observed an upward trend following a decrease in the number of jobless claims and rise in retail sales in May. According to the report of The U.S. Department of Labor, jobless claims fell by 24,000 to 601,000 last week. Though the number is quite high, it is lower compared to the January figure. On the contrary, retail sales rose 0.5% in May 2009 reporting the third monthly gain this year. Here are some of the highlights of the stock market:

• Shares of Bank of America Corporation advanced 6.2% to $12.72.

• Shares of Fifth Third Bancorp, the biggest bank of the state of Ohio, rose 4.9% to $7.70. Today, Goldman Sachs Group Inc. upgraded the bank’s share to “buy” from “neutral.”

• Share prices of Regions Financial Corporation increased 6.3% to $4.25 marking the biggest gain in S&P 500. Share of the banks was also upgraded by Goldman Sachs Group.

• Shares of Chevron Corporation advanced 0.7% to $74.33.

• Share prices of Microsoft Corporation gained 1.1% to $22.80.

• The Standard & Poor’s 500 Index increased 0.9% to 947.66 at 11:39 at the New York Stock Exchange. In March, the index hit a “12-year low” and rose 40% since then.

• Dow Jones advanced by 67.19 points to 8,806.21.

• Price of crude oil rose to $72.64 per barrel in New York, the highest in the last seven months. This also boosted the share prices of the energy companies. International Energy Agency (IEA), forecasted a rise in the demand of crude oil around the world for the first time since August 2008. In May, China bought 3.9 million barrels a day.

• Yields on ten year treasury bonds went down 3.93%.

Related article:

Bloomberg

Arcandor AG and Metro AG of Germany are going for merger

On June 7, 2009, Metro AG, a renowned retail chain in Germany, reported to have started discussion with Arcandor AG, a reputed retail and tourism company. The two companies are going to merge their departmental stores business to survive the economic recession.

Arcandor AG and Metro AG are owners of the two largest department store chains in Germany. Metro AG owns the Kaufhof chain while Arcandor AG is the owner of Karstadt department stores, most of which are situated in buildings of a real estate company, owned by Goldman Sachs. Chairmen of the three companies- Karl Gerhard Eick of Arcandor AG, Eckhard Cordes of Metro AG and Alexander Dibelius of Goldman Sachs in Germany have agreed to start necessary negotiations in the coming week.

Arcandor, which is on the verge or bankruptcy, asked for $610 million “in government credit guarantees.” However, many politicians are against this guarantee as they believe that the company’s failure is actually “management failure.” Business Week reports:

Chancellor Angela Merkel has said that Arcandor must seek a private solution to chronic problems that include too broad a portfolio and falling consumer demand.

"We naturally want to make every possible effort to secure an economic solution," Merkel said Sunday in Berlin.

On the other hand, Gerd Koslowski, spokesman, Arcandor said that his company could fulfill the government’s credit requirements after the alliance between the companies department stores business is formed.