The Daily Business Digest

The Obama administration is continuing with its style of lavish spending, under the guise of stimulus package. It has gone ahead with the one billion dollar car sales promotion program , called cash-for-clunkers which was a run away success. Then the administration has added another two billion to the corpus and at the end of the scheme few days back, the US car industry has already seen a massive 700000 car sales.
And no guess for identifying the largest beneficiaries of the car program, which were Japanese car makers and not the US car makers. The top seven cars surrendered under the program were US company cars, while four out of the top five new fuel efficient cars bought were foreign made.
And experts fear that the US car companies might be heading for troubled times for the next two or three months because the cash-for-clunkers program would have forced many future buyers to advance their car purchases.

Roger Federer had tough time last year when Rafel Nadal spoiled his dream of winning his 15th Grand Slam title. But Federer was lucky this time, when Rafel Nadal got out of the tournament due to injury issues. That left Federer with literally no competition in the Wimbledon 2009.
And Roger Federer won the Wimbledon 2009 title in grand style and matched Pete Samparas with 15 Grand Slam title to his name. He needs to anyway struggle to add more titles to his name because apart from Rafel Nadal there could also be some new found opponents for Roger Federer.

The US economy is a consumption driven economy which in turn depends on optimal employment of all eligible citizens. But the global economic crisis has pulled down millions of job in the last one year, and the rate of unemployment has hit a 26 year high last month.
The rate of 9.7% unemployment has not been seen after 1983. Just two years back the unemployment rate was at 3% and it has climbed up sharply in the last two years due to increased job losses across automobile / finance / insurance / export oriented sectors.
The increase in unemployment would have been more pronounced, had the government not started pumping up billions of dollars on stimulus plans. The Obama administration has so far spent over 800 billion dollars for revival of banking / insurance and automobile industry. Obama administration has gone ahead with the first home buying incentive of up to 10% or 8000 dollars whichever is lower.
In spite of that scheme, the housing sector has not been able to see a reversal in the fortunes. Had the scheme not been in place, the housing sector might have faced a massive collapse which has since been averted.
The Obama administration still expects the unemployment rate to reach 10% plus in the coming months, due to further trimming of jobs in the private sector.

The Chinese stock markets have gone overboard in the last two months by surging over 50% from the lows hit in March 2009. The massive stimulus spends by the Chinese government in the last few months coupled with over 50% extra lending by banks to the corporate sector and also to individuals, has lead to major recovery in domestic demand in China.
The stock markets reflected the improvement by gaining over 50% in the last two months. But they have corrected by over 15% in the last two weeks, only because the government is worried about the abnormal rise in bank credit, and is planning to reduce it in the near future.
Also with no recovery signs in Chinese exports, the foreign investors are said to be pulling back part of their investments from China in the last two weeks.

US banks were near bankruptcy only a year back, and almost all the big banks took aid worth billions of dollars from the US FED at rock bottom rates. The US FED had no other choice , but to help out these banks through life line financial support.
And even six months after the financial rescue act, nobody was confident of getting back all the money from the troubled banks because the bad debts were still rising. But the recovery in the stock markets in the last few months, on the back of some positive economic news from US, has changed all that.
Major US banks including Bank of America and Goldman Sachs have started repaying their dues to the US FED with penal charges in the last few weeks.
And more banks are expecting to payback the US FED loans, termed as TARP funds, over the coming months. One more reason for these banks to repay the TARP loans, is to get back the right to fix the executive compensation without government intervention.
Anyway the US FED would end up earning few billion dollars of profits once all the TARP loans are received back from the troubled banks before the end of 2009.

China has been the fastest growing economy in the world in the past decade, and it grew by over 10% in the last four years. But the global economic crisis since the beginning of 2008 has pulled down the Chinese economic growth to less than 6% in the recent past.
The Chinese government acted swiftly and has pushed the banking system to lend more to companies and individuals in the last since the beginning of 2009. The banking system has responded to the government initiative and has shown a massive 52% growth in lending in the first six months.
The strong lending has helped spur the domestic demand in a big way, and has helped China to record a strong 6.3% GDP growth in the second quarter, in spite of a sharp drop in exports during the period.
There are of course, some negative side effects of the massive bank lending. There are already reports that some part of the bank lending has gone into stock markets and commodity markets, which is not healthy.
The Chinese bank monitoring authorities are already looking into the issue and are likely to come out with stern corrective measures in the next few weeks.