Economic Outlook: Close calls all around

At a news conference Wednesday, President Barack Obama said what surprised him most in his first 100 days in office were the number of crises crying for attention all at once.

Wall Street, it seems, is the epicenter of many of these. Oh, yes, and then there's Detroit.

And Charlotte, N.C., where shareholders at Bank of America's annual meeting Wednesday narrowly voted to split Chairman Kenneth Lewis' job description, pushing him out of the top job. While keeping Lewis as president and chief executive officer, the board gave the chairmanship to bank director Walter Massey.

The bank's troubles are familiar by now. Shareholders were critical of Lewis' handling of the purchase of Merrill Lynch and Countrywide Financial Corp.

Reports also indicate that, in spite of $45 billion in federal aid, the Treasury Department's recently concluded bank stress tests indicate the first-quarter profits at Bank of America were not good enough to avoid a federal mandate the bank increase its capital reserves.

And then there's Chrysler. Given a month to cut costs, restructure its debt and forge an alliance with Fiat, the private company with 54,000 employees has kept financial pundits on the edge of their seats without pause for a month.

Obama said he was "very hopeful" a Chrysler bankruptcy would be averted.
Smaller creditors, however, voted to reject a fattened Treasury Department offer Wednesday night, saying no to exchanging $6.9 billion of secured debt with $2.25 billion in cash.

Almost simultaneously, the United Auto Workers said 82 percent of its membership voted to ratify an agreement with the automaker that would give the union 55 percent of the company.

With Fiat Chief Executive Officer Sergio Marchionne in Washington ready to sign a deal, it seems Chrysler's efforts to avoid bankruptcy will fall short within sight of the finish line.

"This has been a challenging time filled with anxiety and uncertainty for our membership," said UAW President Ron Gettelfinger in a statement.
Or was that an understatement?

In another crisis, the Commerce Department announced the gross domestic product had followed up the fourth quarter's 6.3 percent decline with a fall of 6.1 percent in the first quarter.

But investors shrugged off the devastating figure as U.S. markets rose with the Dow Jones industrial average gaining a solid 168.78 points or 2.11 percent, closing at 8,185.73.

Asian markets turned in an upbeat day Thursday with the Nikkei average up 3.94 percent, the Hang Seng index up 3.77 percent and the Singapore Straits Times gaining 3.82 percent. The S&P/ASX in Australia rose 2.31 percent.

European markets also rose. In midday trading, the FTSE 100 was up 2.24 percent, the DAX 30 up by 2.74 percent and the CAC 40 up 1.78 percent. The broader DJStoxx 600 was up 2.07 percent.

Copyright 2009 by United Press International.