It is being reported that the Tribune Company is in the process of preparing for filing Chapter 11 bankruptcy court protection. Sources suggest that the chapter 11 filing may come as early as this week. The Tribune Company, which is headquartered in Chicago, publishes both the Chicago Tribune and the Los Angeles Times, both major big-city newspapers.
The Tribune Company is saddled with massive debt, incurred in a takeover bid that occurred last year. The rumored bankruptcy filing is indicative of the toll the Global Economic Crisis is taking on all segments of the American economy, including traditional newspapers. It may be that other major newspapers will also go bankrupt, as readership and advertising revenue plummets amid the worst economic crisis since the Great Depression.
If the unfolding global economic crisis, which has already devastated the U.S. financial industry, is now threatening traditional print media, who among the American economic and financial titans will be the next to fall? The economic outlook continues to deteriorate for the United States and the world.
The November unemployment numbers released by the U.S. Labor Department show a record 535,000 jobs were lost during the month. This is the worst monthly total of lost jobs ever tabulated, and shows that the full wrath of the global economic crisis is wreaking havoc on the United States economy. With only weeks left in the lifespan of the Bush administration, America appears rudderless at a time when its economy is in dangerous free-fall.
Many economists believe the worst is yet to come. The official unemployment rate, which excludes long-term jobless, now stands at 6.7%. Some experts are forecasting that the number will rise to 8 or 9 percent, or even higher. With fear rife among families about losing their livelihoods, consumer spending in the U.S. will continue to erode, leading to further demand destruction. This is likely to continue the trend of house price deflation, the facilitator of the current credit crisis. A vicious circle of economic implosion is now fully underway, with policy makers in the United States and throughout the world desperately throwing money in vast sums at the problem, hoping something will work. So far, however, nothing seems to be impacting the acceleration of the global economic crisis. It is likely that vast numbers of workers across the globe will be joining the ranks of the unemployed, leading to further recessionary pressures on the global economy and dangerous levels of deflation.
Talks on mutual economic issues involving the United States and the Peoples Republic of China are now taking place in China amid the worsening global economic and financial crisis. The series of talks will occur over a two-day period. According to Chinese officials, the global economic crisis will dominate the discussions.
On the U.S. agenda is an attempt to resolve a dispute about the value of the yuan, the Chinese currency. These meetings are occurring under the auspices of the China-US Strategic Economic Dialogue, established in 2006 by the two major trading partners. The purpose of the dialogue is to iron out economic issues and disputes involving China and the United States. in his
Chinese Vice-Premier Wang Qishan, who is attending the meetings, the talks for China, told the Chinese and American participants that, “Making joint efforts to tackle the current global economic crisis is the most urgent task before us.”
The U.S. economy has been in a recession since December 2007, according to the National Bureau of Economic Research. This means the economy has been in a recession for more than a year, with over one million jobs already lost.
The National Bureau of Economic Research is a private body that determines, based on its analysis of economic trends, when the onset of a recession has occurred. Their grim announcement suggests that the economy has been in a yearlong downturn. Many economists are already predicting that the American economy will experience the deepest recession since the Great Depression of the 1930s. With trillions of dollars already spent by the government to reverse the economic decline, it seems more trillions may have to be spent.
In a sign that the mortgage crisis in the United States is getting worse, it is being reported that defaults on privately insured mortgages rose by a staggering 35 percent in October, topping 80,000 for the first time. This is a clear sign that more homeowners are falling behind on their house payments as the American economy continues to deteriorate.
The distressing statistics were released by the Mortgage Insurance Companies of America. The figures indicated that 80,071 insured borrowers were at least 60 days late on payments, up from 59,308 a year earlier, and surpassed the previous record of 76,776 set in September. The numbers present a stark picture as the initial troubles with U.S. mortgage payment precipitated what is now a severe global economic crisis.
The impact of the global economic and financial crisis on the United States has already cost potentially $8.5 trillion. Perhaps even more frightening, many more trillions of dollars could be added to the economic rescue bill, without certainty of success. Indeed, some economists are saying the U.S. is doomed to a horrific economic depression, no matter how much money the government borrows or prints.
In the past week the government allocated up to $300 billion to save Citigroup from certain implosion claiming that it was “too big to fail.”. This allocation, added to $150 billion and counting for AIG, more for Fannie Mae and Freddie Mac and other expenditures and loan guarantees currently add up to a staggering $8.5 trillion. This is more than half the entire U.S. gross domestic product in the past year.
President-elect Barack Obama and Democrats in Congress are planning an additional stimulus package of $500 billion to $700 billion. It is expected that the stimulus package will be one of the first bills passed by Congress after Barack Obama is inaugurated as the nation’s 44th president.
The United States federal budget deficit soared to $455 billion in the past fiscal year. With the bailout packages already enacted and additional spending being planned, economists are forecasting that the next fiscal year’s budget deficit could exceed one trillion dollars, a figure which would have defied belief only a year ago.