Category Archives: Economy

OPEC cuts Oil Production and its impact on Global economy slow down

The Oil per barrel has been hit the lowest mark since may 2007 ,a 17 months low in the price.The price was $67 for one barrel this morning which was the lowest mark.The slowdown in the oil demand is the real reason for this low price of Oil.The Oil producing companies and countries have feared about the lowering of oil price to down iin future and they might go into loss as well. So inorder to stabilize the global economy and also to bring the oil prices in equilibrium position the OPEC has decided to cut down its oil production by 1.5 million barrels per day.But the experts of economy say that the cut in the production should be made to 2 million barrels perday since this announced cut in oil production wont be enough to bring back the global economy to the normal position.The decision by OPEC came after the US crude to be delivered to $63 in december as calculated in the electronic trading and so the production has been cut and it will be until the oil prices come up more than $90 per barrel.

The investors has expected to cut more in oil production to solve the financial crisis.The OPEC has also informed by the economists that if the Economy recession continues the oil would go down to $50 per barrel which will lead to the downfall of the Oil producing countries.Then they have to make a decision in the cut in more production.So it would be better to cut the production by 2 million barrels per day now itself . Even the Iran’s petroleum minister also agreed to this. Moreover the upcoming winter season in northern hemisphere will increase the fall in demand of oil and obviously lower the price of the oil.Thus OPEC countries should keenly look on everything and take a diplomatic decision inorder to stabilze the global economy slowdown.


Goldman Sachs laysoff 3620 employees.

The world is facing a crucial situation and dont know when this economic slow down may end up.All the trading and business performing companies have been hit and none of them left.Especially the banking sectors are been drastically hit and the global crisis impact them directly leading to file bankruptancy.

The Goldman Sachs Group, Inc. is a bank holding company and a leading global investment banking, securities and investment management firm. Goldman Sachs provides a wide range of services worldwide to a substantial and diversified client base that includes corporations, financial institutions, governments and high net worth individuals. 

Because of the increasing turbulence in US economy, last month the giants in banking sector Lehmann Brothers and the Meriyll Lynch have filed their bankruptancies.The Goldman Sach’s and the Morgan Stanley were the two bank holding companies got the approval of holding the banks.September was considered to be the worst ever hit in the US markets and the shares went down completely.

All because of this now the bank holding and investing company Goldman Sach’s also started to feel the heat.They have the record of having highest number of employees and because of the recent economic turmoil they have decided to slash 10 percent of their work force.Because of this nearly 3620 employees are going to lose their jobs in Goldman Sach.Because of this layoff this company is going to pared back to 2006-2007 record of employee strength.Goldman Sachs has widely been considered among the best performing banks amid the ongoing credit and mortgage crisis that began in the middle of 2007. During its fiscal third quarter, which ended Aug. 31, the company’s profit fell 71%, but that performance was still better than many of its competitors, which have reported quarterly losses throughout much of the year

This decision came because now the company is worrying about the company’s future and if the recession continues then they will be majorly hit.So they have started to reduce their expenses.Last month, Goldman Sachs struck a deal with Warren Buffett to sell preferred and common stock to Buffett’s Berkshire Hathaway (BRKB). As part of the deal, Buffett planned to invest at least $5 billion in fresh capital to help Goldman Sachs. The investment could double to $10 billion.

At the same time, Goldman Sachs issued common stock to raise an additional $5 billion through a public offering.

It has to be noted that the Internet giant Yahoo has also announced that 10% of its task force will be reduced. It is obvious from this that all the major companies are severely been hit by the global recession.

Yahoo layoffs more than 1500 employees!

The layoffs are increasing around the world and in America it is now worst forever.Many companies are firing their employees in order to save their company from loss and to reduce their expenses.Yahoo has announced that it is going to slash 10 % of its work force, i.e more than 1500 employees are going to be sacked in near future.The internet giant is struggling along with the wall street and the companty’s third quarter result clearly says that the Yahoo is in trouble.The yahoo CEO Jerry  Yang said that their company is taking some initiative measures to reduce the cost and to be is safer side.He also said that the steps they are taking in this quarter will deliver both near-term benefits to operate cash flow, and substantially enhance the nimbleness and flexibility with which they are competing over the long term.He also said that the company is working on slashing the jobs and relocating offices inorder to reduce the cost of transportation.Yahoo also has some plans to negotiate with the real estates.Yahoo’s stock has been down in recent months due to concerns that companies would cut their online advertising spending as a result of the economic slowdown. Executives admitted that Yahoo’s performance has been taking a hit from the sluggish economy.Yahoo is now planning to execute some other strategy in order to increase their fourth quarter.It is expected that there may be more layoffs if the recession continues.

On the other Google has announced that it has increased its profit from previous.Now google is the biggest rivalry for Yahoo and Microsoft.

Paulson’s bailout package will be a failure!

The global financial crisis and the majorly hit country was America. Many banks went down to bankrupt and now the Government has decided for a bailout package of $700 bn, as part of rescue strategy.But the recent polls conducted by CNN says that most of the Americans are not happy with the plan of country’s treasury secretary Paulson’s rescue bailout package.The Americans do not like the way he is handling his job and the bailout package announced by the congress.According to the poll 68 % disapproved Paulson’s idea.However this is better than the poll conducted on Mr.President George .W.Bush. In that poll 72 % of the Americans disapproved Bush’s administration.

The bailout package will favour the homeowners and it will definitely bring them out of their mortgages.But other than them the government is going to buy the bad assets which will not stabilize the current recession , instead it may lead to more worse condition.However the main reason behind this bailout package is to save the AIG banks from its downfall and to make the depositor to be in safe postion.The financial rescue package requires the government to encourage lenders to modify mortgages in cases where the government holds atleast a partial stake in a mortgage-backed security. And in cases where the government buys loans directly, it may modify the loans on its own.

The markets are going down day by day in United States and economists say the election would be the best way to solve this crisis.The senator Biden has said that if Obama is elected as President of America, then he would be tested in solving this crisis.Thus the politics is getting into the markets as well.With 12 days for election ,hope there should not be any more down in US markets.The main reason behind this crisis is the anxiety prevailing with the investors in America.Wish a speedy recovery to the global economic crisis.

Top 10 of the Richest loses $139 bn

India’s top 10 promoters and business families are poorer by a whopping $139 billion, thanks to the recent meltdown in the market. The amount is equivalent to around 16% of India’s gross domestic product and more than the combined GDP of Uttar Pradesh and Maharashtra.  In percentage terms, India’s top billionaires have lost more than       60% of their wealth since January 2008. The country’s top 10 business houses are now worth $84 billion (Rs 4.1 lakh crore) compared with $223 billion (over Rs 10 lakh crore) at the peak of the stock market early this year. 

The biggest loser has been Anil Ambani with a loss of $32.2 billion. A sharp decline in stock prices in his leading group companies has resulted in more than 70% fall in the market value of Ambani Jr’s stake in his group’s listed entity. Based on Friday’s closing price, Anil Ambani is now worth $12.9 billion against $45.1 billion in January this year. 

Mukesh Ambani continues to be India’s richest promoter despite 54% fall in his networth to $22 billion. Bharti Airtel’s Sunil Mittal has turned out to be most lucky among the pack. His networth has fallen by just 31% in the past nine months and is now closely behind Tata Group as India’s fourth-richest promoter. His stake in Airtel is now worth $12 billion compared with $17 billion in January this year. 

In relative terms, the biggest fall has been recorded by the real estate barons — KP Singh (DLF) and Chandra’s (Unitech). A sharp decline in DLF’s stock price has now reduced KP Singh’s networth to over one-fourth of its level in January this year. Mr Singh is now worth $9 billion against nearly $35 billion early this year. Ramesh Chandra of Unitech has lost nearly 85% of his networth and is now worth only $2 billion compared with nearly $13 billion at the beginning of the year.

IT Companies cuts off its expenses.

It is obvious that IT companies in India are been hit drastically because of down in markets here as well in United States.The IT Majors already gave pink slips to many of its employees and they also reduced the recruitment process as compared to the previous year.Even the hiring of the people who already got selected has not been called  for training process.These are all the strategical way to reduce the expenses of the company and to prevent the company from further loss.

Apart from all those things now the IT companies have focussed on the cutting the expenses on stationary items and sanitary napkins.It has been said that there in many IT firms there are no pens and pencils.The employees are requested to bring pens and moreover the employees have been asked to use the stationary items in useful way.It is a usual thing the the employers will take some stationary items to their home from office.But this is also been watched and people doing this will have to face the penalty.When asked about this to my friend working in an IT firm in Bangalore,he confirmed me that this is what happening in IT companies.In many companies the napkins to wipe the hand after wash is not available ,and when asked about this, the reply was no stock.But actually these are all the acts of cutting the expenses and these things will really make a big impact on the reduction of cost.

Even the rates of the food items in the canteen have been increased since the companies withdrew their subsidies being provided to the canteen.The price for one meal is now is Rs.35 which was Rs.15 before.The transportation charges also hiked and now the companies are finding the loop holes to increase their money in the banks.Anyways these are all will be only for few days and everything will comeback normal as the markets recession period gets over.

US Markets feels the heat!

The Commerce Department says housing starts fell more than 6 per cent to an annual rate of 817,000 units in September, below the 880,000 units forecast by Wall Street economists.Over months the US Market feels the pressure and even many banks went bankrupt.The US Government’s bailout package was announced and there wasnt any improvement in stock markets even since then.Because of this the markets around the globe are also suffereing from the crisis and the sensex points are down everyday.Most investors are facing the loss and the global economy is in Danger.To be precise US economy is in danger.The report is a reminder that the original source of much of the economy’s turmoil, the housing market, remains troubled. A growing belief that the nation is either in a recession or heading for one has set off selling in the stock market this week. The Dow Jones industrial average is down 215 at the 8,763 level. Stocks are falling in early trading after a government report that home construction fell more than expected last month to the lowest place since early 1991. .However this recession may be sorted out,but it will definitely take some long time to come back again.All the problems are due to the anxiety among the investors and the happenings in the US domestic politics.Hope for a speedy recovery.