Benefits of Recession ...!!!

The ongoing recession, being cursed by everyone, can actually, in a small and smart way be seen beneficial in certain ways. Analyzing the situation worldwide with a little logic and from both ends (sellers as well as buyers). Thus we shall see the following ways in which recession is beneficial in a little way:

Lowering real estate cost: The sellers who invested previously for short term gains, shall not be impressed with the current trend of deteriorating housing prices. However, from a buyers’ point of view it is indeed the right time to go for the purchase. Anyone who has been deciding on buying a new house , now is the time to utilize and draw out the benefits.

Stock price deterioration: Investors who want to gain in long term investments through holding stocks , can now call the deal. As there is no better time than the present scenario to go for quoting stocks. All the houses which have a proven track record are having cheap stock prices beyond normal. So this is the correct time to bet big with little cash.

Lower rates of Mortgage: The Reserve Banks or the Federal Banks have lowered mortgage rates reasonably to counter recession. Also low mortgage rates would encourage real estate investments. Thus, it is an excellent time to actually invest in property.

Better Deals at cheaper rates : The recession have made manufacturing houses and even travel agencies and companies to provide awesome bargains to keep a continuous flow of business. As consumers are on a back0foot and are cutting down their expenses in all possible ways , the stores and manufacturers have pointed out the need to provide more for less. Thus, this time is ideal for purchasing consumer durables and going for holidays over long travel routes.

Recession Dressing up the Fashion Industry

The ongoing recession global financial depression has put shopping on a conservative and budgetary tone. Rather, fashion tips and brand addiction is getting thrifty , as the fashion industry is forced to make itself adaptable to the on-going credit crunch. Fashion conscious personalities have to get even smarter and find ways to look great for less. Thus, it is undeniable that shopping will be on an onslaught. Analysts though believe that attitude dressing should be compatible to real personality and the sense of one’s own self rather than enormously over priced brand hunting fascination.

A handful belonging to the top-level of the fashion world forecasts that recession will have its take on the fashion industry too. However, mixed reactions in the market continue to exist, so convergence to a constant verdict seems to be impossible. As, fashion photographer Gilles Bensimon would waive away any effects of recession and sees a stronger evolving market. According to him, fashion is all about dreaming and figuring out to look great rather than going for materialistic shopping. As dreams come free, so, can we expect fashion to flourish amid the recession? Should it be considered that although people are cutting their budgets on travel, shopping and other things, a pair of new shoes or a new dress might be affordable to take them away from the frustrating economy? Well it sounds quite an opposite to the reality. Yet, fashion being all about pleasure, it might be “considered” by optimists.

The Gucci President Danielle Vitale provided a little more clarity in explaining the situation. She expects a short-term affect of the global economic recession, however , feels that Gucci being the brand it is and its international presence would in fact compensate the fall of one country’s economy through sales revenue earned from another.

Thus, for the end customer it is advisable to integrate sense with fashion and avoid over-priced shopping of big branded stuff. It is important to maintain one’s identity through fashion which actually is can be fetched without spending much.

Hollywood feels the HEAT of GLOBAL CREDIT CRUNCH

A myth about Hollywood has been that it is a capable industry that can keep itself unaffected from any financial crunch. However the reality is harsher. In 2008, Hollywood motion picture studios have been pinched by the global financial recession which mostly occurred in U.S due to the extreme stagnation of economy in the realty sector. As economy kept on deteriorating movie studios have felt the pain the even more.

Over the past few houses the major Hollywood studios have started revising their production project plans and restructuring their advertising ways to meet the crisis. Employee lay-offs have also been a part of the measures taken up. As economy is on decline parent companies have felt the heat and thus have gone in to develop risk minimizing plans. As consumers have restricted their expenses and advertising revenues have worsened, parent companies have no other option than this. There has even been heavy job bashing in the industry as Time Warner owned Warner Bros. Pictures smashed 1000 jobs as the 100-day strike observed by Hollywood writers was on. It was estimated that the strike, called by the Writers Guild of America , which suspended work for about 2 weeks , amounted to a loss of about USD 2 billion.

Following Warner Bros. Pictures, NBC-Universal owned Universal Pictures declared a lay-off of about 500 employees or 3 % of its total employee strength while Paramount Pictures, owned by Viacom laid off 850 personnel or 7% of its total staff count.
One major decision that came from Disney was its decision to withdraw its production plans for the third installment of the fantasy series “Chronicles Of Narnia”. Due to the stringent economy high-investment plans are being looked at as high risk-issues. Studios are now operating on a more conservative tone.

The only big good news for Hollywood being the revenue generation has not yet seen any fall compared to 2007. A few blockbusters have fortunately been able to attract huge audiences to the theatres and provided some relief from the depressing economy. “Batman – the Dark Knight “produced by Warner Bros added a cool USD 530 million last summer and topped the box-office charts. Such a figure was last seen back in 1997 when “Titanic” was released. The holiday season towards the end of 2008 even added to the occasion when "Marley & Me," "Bedtime Stories" and "The Curious Case of Benjamin Button," recorded the highest gross revenue ever generated on Christmas Day in the history of Hollywood.

Investment Banking ------ An overview

Investment Banking refers to financial consultancy and their main revenue generation operates through cash market dealing with securities as well as primary market dealing with bonds. In fact, they provide legal advisory services for mergers and acquisitions. According to SEC (FINRA) regulations such an advisor (individual or a financial institution ) should be a licensed broker or an authorized dealer.

First world countries primarily the G7 nations having strong economic platform, banking sector had never delineated investment banking as a separate domain. Strategic financial advisor and services often include trading of derivatives (futures and options), equities and commodity market trading. Their financial planning services included mergers and acquisitions of institutional houses and thus acted as a perfect third-party consultant.

Their revenue generation has always been bilateral. Research, promotion, marketing dominated largely in securities and cash market trading. On the other hand, dealing with various funds, which categorically include pension funds, hedge funds, mutual funds, insurances of various categories by utilizing their retail database, which actually generated their revenue from their respective clients through the “buy side”.

The last two of the” bulge bracket” firms that existed on Wall Street were Morgan Stanley and Goldman Sachs. However, on the 22^nd of September,2008 they responded to the U.S financial crisis by electing to convert into traditional banking institutions. There are banks that are “universal” rather than specifically being bulge market investment banks as they accept deposits. These are Citigroup, Deutsche Bank, UBS AG , JP Morgan Chase , Credit Suisse , HSBC and Barclays.

U.S Automotive Industry crisis

Amidst the global financial crisis, during the latter half of 2008 , an automotive industry crisis developed. Although it primarily affected the United States and Canada, because of the Automotive Products trade Agreement, it stretched itself and went on affecting the automobile manufacturers in Europe and Japan as well. There are multiple causes responsible for such a depression being developed. Let us go into analysis and find out more :-
1. Political Demands:
A letter was sent to the CEO s of the Big-Three (General Motors, Ford and Chrysler) by Nancy Pelosi and Harry Reid(both belonging to the Democratic Party) calling them to devise a plan that would restructure their business concepts and sacrifice major resources. The time allotted was also too short to manage and resolve such critical issues which messed up everything.
2.Volume of laborers:
A survey by the Alliance for American Automobile Manufacturing reported a total 1.6 million people involved in the Big-Three of the U.S automobile industry , as employees , vendors and dealers. The total magnitude sums up to a lump-sum of 3.1 million in the whole U.S automobile industry. Thus, a huge cost has been going in for supporting such a huge labor base.
3. Costs to Jobs:
In 2005 it was surveyed and published by Detroit News that the Big-Three paid wages to almost 12000 workers who were idled due to technological advancements. Such was a compulsion on the manufacturer's part as the UAW formed a program in 1984 which protects the labor interests and benefits.
4. Brand Numbers:
In comparison to Toyota's three brands , GM rums eight brands which involve huge costs as separate brands require specific branding, advertising and expenses of product development. This is again a major cause for the developed depression.
5. Dealer Numbers:
An estimated amount of 500,000 people work for about 10,000 dealerships shared between GM and Chrysler. However, if a cut-down is intended on the number, it would involve huge expenses as dealers are protected through State laws. Such a reformation is extremely challenging without a bankruptcy declaration.
6.Merging the "Big-Three" :
Such an effective proposal to save the industry was totally rejected due to the influential opposition coming from the UAW and CAW. The reason to oppose was the fact that it would have involved huge employee layoffs.
7. Crisis of Capital:
GM is indebted with $43 billion, thus, if share holders swap their stakes for equity, the burden shall be substantially reduced. Thus, the Big-Three are in a critical situation and shall be even more penalized if such factors are not countered through bankruptcy declaration or plant-shut down. A bankruptcy declaration would hopefully provide a financial bail-out by the Federal Government and thereafter organizational and management re-structuring shall better the situation and the U.S economy as a whole.

Should I invest in Dollar or Gold ..... ???

A competition of investment in gold versus dollars would obviously result in gold winning over without a shadow of a doubt.
A number of reasons actually shall take us through the analysis for gold winning over dollar. A change in the price of gold is actually the change in the valuation of dollar, not gold. The simpler way in which we can put it in is that an ounce of gold can still buy the same quality and quantity of services and goods as it were decades ago. However, the same amount of dollar cannot fetch the same as it did years back.
Thus, the question that arises upfront is whether to invest in "Dollars or Gold?"
An investment in dollar exposes the investor to the manipulated fluctuations in the market which causes abrupt changes. This is again a result of continuous printing of dollars (such occurs in most currencies , however, we considering only U.S here). This is done so as to fund debt like Federal Government debts and also those which are both private and public.
In contrast to dollar , gold carries a permanent consistency which does not alter in terms of purchasing power. The value of dollar relatively decreases with time, in the longer time frame. There was a time when $20 would have bought an ounce of gold which now would go up to $600 to $700.
This interestingly points to the direction where one should put his money. Gold is not dependent on currency. Thus, it can be simply handed over or received.