The Worst Is Yet To Be

Bad news after bad news and it appears, there are still skeletons in the closet. This week saw among the most bad news reported since the Sub-Prime and Financial Crisis started 1.5 years ago (just after mid 2007).

The International Monetary Fund (IMF) reported in its economic growth forecasts Wednesday, predicting the severe financial crisis would brake global growth to the slowest pace in six decades, and "World growth is projected to fall to 0.5 percent in 2009, its lowest rate since World War II".

It further reported, "A sustained economic recovery will not be possible until the financial sector's functionality is restored and credit markets are unclogged" and that some light at the end of the suffering, saying said it saw a gradual recovery in the global economy in 2010 to growth of 3.0 percent, spurred by "continued efforts to ease credit strains as well as expansionary fiscal and monetary policies."
(source : http://sg.news.yahoo.com/afp/20090129/tts-imf-economy-growth-forecast-c1b2fc3.html)

The Singapore's Finance Minister said the Global economic crisis will take more than a year to unravel. Mr Tharman said "The foreign banks are still in the mode of contraction. I think every large global bank is still looking at building up its capital, much more than it’s looking at extending new loans. So we are still at that phase of the crisis where recapitalisation is still the priority and estimates of the extent of bad assets on their books are still on the upswing. So, we haven’t seen the worst yet."

He further add that is why it is a good move for governments in the West to help these banks recapitalise and incentivise lending.
(Source : http://sg.news.yahoo.com/cna/20090129/tap-698-global-economic-crisis-take-year-231650b.html)

While many countries' government struggled to contain the recessoin, there are disturbing news appearing. Large companies in the US that took government funding are happily pampering and rewarding themselves with more than a total of US$18 billion in bonus.

The top executives of the Wall Street financial companies that the US president targeted, includes shameless heads of such well-known manufacturing and technology giants as IBM, Motorola, Xerox and Corning are still paid handsomely.

Citigroup even planned to take delivery of a new corporate jet with billions of dollars of support from the government. That bank, Citigroup, just canceled the deal earlier this week. Big companies and their top Executives are totally irresponsible, insensitive and only cares for themselves and their lavish spending while the majority of people are suffering.

However, the Obama administration is considering an idea for the creation of a "bad bank" that could take over soured debt, like defaulting mortgages, that have corroded the balance sheets of banks and helped choke off lending. If this plan goes through, it will help ease up banks' bad mortgage and allow them to recapitalise, which in turn, helps them to start lending again in the foreseable future.
(Source : http://sg.news.yahoo.com/ap/20090130/twl-obama-bonuses-1be00ca.html)

The signs of global economic distress multiplied, with more companies worldwide cutting profits and jobs, and protesters swarming the streets of France in anger at the worsening crisis.

Economic fears gripping the middle classes amid waves of cut-backs and stagnant wages spilled over in France, while elsewhere the daily treadmill of layoff announcements and plunging profits rolled on.
(Source : http://sg.news.yahoo.com/afp/20090129/tts-finance-economy-world-c1b2fc3.html)

In the mean time, we can only hope the situation will start improving. So far President Obama appears much more capable than his predecessor, the warmonger Bush.