Deal's crucial to entire economy, warns US Inc
Officials from Microsoft to Office Depot and Schering-Plough said the government's failure to bail out the US banking industry put the entire economy at risk.
By Bloomberg |
| Possible steps ahead for US bailout |
SEATTLE/ NEW YORK: Officials from Microsoft to Office Depot and Schering-Plough said the government���s failure to bail out the US banking industry put the ���entire economy��� at risk unless a deal comes soon. ���The various sectors of the economy are so intricately linked, we need to recognise that the entire economy turns on what happens here,��� Microsoft general counsel Brad Smith said after the House of Representatives voted 228 to 205 Monday against giving treasury secretary Henry Paulson the authority to buy troubled assets from financial companies.
Executives from across Corporate America echoed the remarks, the first time Microsoft says it has weighed in on financial legislation. They called on lawmakers to put aside partisan differences and work to restore credit supplies and confidence to the financial markets. The Standard & Poor���s 500 Index tumbled the most since 1987 on Monday and the Dow Jones Industrial Average slid 778 points, the most points ever. The liquidity crisis has spread beyond Wall Street, threatening earnings at businesses from retailers to technology companies. The treasury���s toolkit to protect the financial system is ���substantial but insufficient��� after the $700 billion bailout failed to pass, Paulson said on Monday.
���It is a pity that this has developed into such a mess,��� said Fred Hassan, chief executive officer of drugmaker Schering-Plough in New Jersey. ���The probability of recession has gone up.��� General Electric, with businesses that span real estate, consumer finance, aerospace, energy equipment, media and health care, has talked with leaders in the House to express support for the bill, a source said. The company, which last week reduced its 2008 profit forecast for the second time this year, believes relief needs to be injected into the system even though it doesn���t view the bill itself as perfect, the person said.
Business officials expected the bill to pass, even with government leaders predicting a tight vote. That���s why companies didn���t speak up sooner about how important the legislation was, Smith said.
���I absolutely cannot believe it,��� said David Cosper, chief financial officer of Sonic Automotive, the third-largest US publicly-traded auto retailer. ���I don���t think the House knows what they���re doing. We need this, the markets are frozen, banks are being taken over ��� it���s a crisis. I think they���re leaving it in the lurch and going on a break.��� While the company doesn���t have any immediate liquidity challenges, Cosper said companies with debt coming due are facing major liquidity problems. ���There���s no credit for businesses to work,��� Cosper said. ���I���m very frustrated by it, our whole team is.���
Executives from across Corporate America echoed the remarks, the first time Microsoft says it has weighed in on financial legislation. They called on lawmakers to put aside partisan differences and work to restore credit supplies and confidence to the financial markets. The Standard & Poor���s 500 Index tumbled the most since 1987 on Monday and the Dow Jones Industrial Average slid 778 points, the most points ever. The liquidity crisis has spread beyond Wall Street, threatening earnings at businesses from retailers to technology companies. The treasury���s toolkit to protect the financial system is ���substantial but insufficient��� after the $700 billion bailout failed to pass, Paulson said on Monday.
���It is a pity that this has developed into such a mess,��� said Fred Hassan, chief executive officer of drugmaker Schering-Plough in New Jersey. ���The probability of recession has gone up.��� General Electric, with businesses that span real estate, consumer finance, aerospace, energy equipment, media and health care, has talked with leaders in the House to express support for the bill, a source said. The company, which last week reduced its 2008 profit forecast for the second time this year, believes relief needs to be injected into the system even though it doesn���t view the bill itself as perfect, the person said.
Business officials expected the bill to pass, even with government leaders predicting a tight vote. That���s why companies didn���t speak up sooner about how important the legislation was, Smith said.
���I absolutely cannot believe it,��� said David Cosper, chief financial officer of Sonic Automotive, the third-largest US publicly-traded auto retailer. ���I don���t think the House knows what they���re doing. We need this, the markets are frozen, banks are being taken over ��� it���s a crisis. I think they���re leaving it in the lurch and going on a break.��� While the company doesn���t have any immediate liquidity challenges, Cosper said companies with debt coming due are facing major liquidity problems. ���There���s no credit for businesses to work,��� Cosper said. ���I���m very frustrated by it, our whole team is.���
Computer-related stocks were among the hardest hit, with the Nasdaq composite index sinking 9.1% to 1,983.73 on Monday, the most since the technology bubble burst in 2000. Microsoft fell 8.7% and Apple dropped 18%, the most in eight years. ���It���s a flight out of riskier assets into more safe-haven types of investments,��� such as consumer goods, tobacco and basic materials, said Ross Sandler, an analyst at RBC Capital Markets. Googledropped below $400 the first time in more than two years.
���The dramatic volatility we���re seeing in the financial markets is clearly creating uncertainty for both marketers and consumers,��� said Michael Roth, CEO of advertising firm Interpublic Group of Cos. The company is on track to meet its financial goals for 2008, he said.
Lawmakers need to stop pointing fingers and assigning blame, said Robert S Miller, chairman of Delphi, the bankrupt auto-parts maker in Troy, Michigan. ���We are witnessing a most unfortunate and untimely collision of politics and economics,��� Miller said. ���This is not just about Wall Street. It is affecting Main Street. Bold action is required before there is further erosion of confidence.���
The Senate may take up the measure this week, and possibly send it back to the House, House Majority Leader Steny Hoyer said on Monday. A resolution to the crisis needs to make it easier for businesses to get access to capital, said Steve Odland, CEO of office-supplies seller Office Depot.
Microsoft will reach out to other companies to step up pressure on lawmakers, Smith said. ���We���re hoping it will get turned around. It needs to get turned around,��� he said.
Michael Burns, vice-chairman of Lions Gate Entertainment, said, ���I���ll tell you one thing we���re not going to do, we���re not going to panic.��� ���We���re going to wake up tomorrow and people will still go to the movies and watch Mad Men and buy DVDs of Weeds. None of that will change.���
���The dramatic volatility we���re seeing in the financial markets is clearly creating uncertainty for both marketers and consumers,��� said Michael Roth, CEO of advertising firm Interpublic Group of Cos. The company is on track to meet its financial goals for 2008, he said.
Lawmakers need to stop pointing fingers and assigning blame, said Robert S Miller, chairman of Delphi, the bankrupt auto-parts maker in Troy, Michigan. ���We are witnessing a most unfortunate and untimely collision of politics and economics,��� Miller said. ���This is not just about Wall Street. It is affecting Main Street. Bold action is required before there is further erosion of confidence.���
The Senate may take up the measure this week, and possibly send it back to the House, House Majority Leader Steny Hoyer said on Monday. A resolution to the crisis needs to make it easier for businesses to get access to capital, said Steve Odland, CEO of office-supplies seller Office Depot.
Microsoft will reach out to other companies to step up pressure on lawmakers, Smith said. ���We���re hoping it will get turned around. It needs to get turned around,��� he said.
Michael Burns, vice-chairman of Lions Gate Entertainment, said, ���I���ll tell you one thing we���re not going to do, we���re not going to panic.��� ���We���re going to wake up tomorrow and people will still go to the movies and watch Mad Men and buy DVDs of Weeds. None of that will change.���
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