March 10th, 2009
12:02 PM ET

Just how tough it might be

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/images/03/10/art.gfx.wallst.jpg]

Ali Velshi
CNN Chief Business Correspondent

Here's what may be big today....

The IMF says the global economy will shrink this year, possibly as much at 3% or more. With the rest of the world suffering, there's no obvious "savior" for this economy (even Dubai needed a financial rescue recently!)

Moody's will unveil a list of 283 companies (out of 2,073 that it rates) with "junk" credit ratings or lower. Basically, it will list the "sub-prime" borrowers of the business world. These are companies most likely to default – Moody's thinks up to 45% of them might. Expected to be on the list: AMR, Chrysler, Ford, GM, US Airways, Dole, Kodak, Rite Aid.

It's worth noting, though, that Moody's, Fitch and S&P have been wrong about a lot of things in the past couple of years.

Filed under: Ali Velshi • Economy • Finance • Wall St.
soundoff (13 Responses)
  1. Brenda Dias

    Someone needs to find out why Citi Bank is posting a more favorable picture. We have been a Citi Bank Credit Card customer for several years, never been late with payments. Our January billing showed the interest rate jumped to over 25%. When I called the company, they said they valued me as a customer, apologized and lowered my rate down to 8.24%. My rate prior to this was in the 7% range.The problem is that they had already charged at least one month at the outrageous percentage and did not adjust it off. I am wondering how many other customers they did this to. A single month at 25% interest times how many customers could certainly fool the government into thinking this was the best quarter they have had. It's funny this all happens when there is talk to let some of the banks go under isn't it?

    March 10, 2009 at 8:36 pm |
  2. Ed Iowa

    It is amazing how about a week ago Citigroup was in terrible financial trouble and was expecting another taxpayer handout, in fact asking for a handout.

    Then over the weekend the buzz was that maybe these large financial institutions COULD be shut down, in fact 2 senators were ready to shut down Citigroup.

    Now today they are profitable.

    Now is this another Wall Street / Political scam on the American people?

    That is why the majority of Americans are so scared to invest in this country today.

    March 10, 2009 at 5:30 pm |
  3. Isabel, Brazil

    Hi, Ali!

    I love your placements!
    I think that is one of the most intelligent in the blog.

    Unlike other crises, this, the IMF is not making one thousand conditionalities for lending. Before, he always asked for letters of intent and made a lot of demands. This time, not doing that.

    If someone is winning with the crisis, perhaps the IMF which was falling into disuse. Now with the crisis, the Fund has had a queue of customers: Iceland, Ukraine, Hungary, Turkey. Of course he lost the fatty fish, such as Brazil and Mexico, which now have a direct line with the Fed, but he returned to work and weight gain of interest to receive.

    March 10, 2009 at 3:59 pm |
  4. natalie, lebanon TN

    All of these companies are failing. The goverment can't possibly bail all of them out, so what happens? Does anybody know? I understand giving money to the states for new jobs. That makes since, but are we starting a dangerous cycle to when any company who has misused thier money they can come to the goverment and get a bail out? I support Mr. Obama and want him to succeed. I just wonder if any of the economist in the white house understand what is going on and how it could be fixed or if it could be fixed. What seems to look good on paper doesn't seem to work in real life, because people who get the money don't use it for what it was given for. It is greed and we are all paying the price.

    March 10, 2009 at 3:16 pm |
  5. Pete

    Since the stock market melt down i would believe that public trust might different out look on things if the government treated this as a criminal case rather than their present course if the public would see some form of justice in this matter it just might restore some faith in the system

    March 10, 2009 at 3:00 pm |
  6. earle,florida

    Question: Why is there; Moody's, Fitch Rating,and S&P Rating Agency company to begin with, and for the same matter the three credit reporting agencies; TransUnion,Equifax,an Experion! They work in collusion,unregulated and are all in bed with their co-horts! Sorry,if the truth hurts,...

    March 10, 2009 at 2:53 pm |
  7. Neo

    45% is high. There obviously needs to be a new way of doing business. Cash, cash, cash. Credit is only going but so far ....

    March 10, 2009 at 2:13 pm |
  8. Don

    Unfortunately I think they are right Ali. Our core industry is in the tank left in shambles by basically one simple calculation made in error and enforced by the SEC. The now famous mark to market calculation has caused untold trillions to evaporate before our eyes, left banks scrambling to shore up balance sheets sucking up all available cash and leaving regular people like me in fear of loosing their hard earned retirement. I saw today that SEC considered dropping the mark to market calculation but has decided to maintain it. But I think the real question is not if we should drop it but if we should modify how it is calculated.
    This mark to market asset value calculation is being made too rapidly in the global financial system. We must adopt a root mean square deviation (RMSD) calculation to smooth out values over a longer time period, prevent the chain reaction that further reduces asset values and add a shock absorber to cushion violent market swings of asset values. All I can say is, WHAT ARE WE DOING TO OURSELVES!
    This is pretty obvious stuff Ali. Is there something more going on here?

    March 10, 2009 at 2:11 pm |
  9. bookbabie

    It's been tough here in MI for a long time. I think the picture for business in our country, and globally, is undergoing a shift that will be permanent. Scary stuff but necessary and unavoidable at this point.

    March 10, 2009 at 1:26 pm |
  10. Jerome M

    Perhaps you can help me better understand something with regards to the economy. From my limited understanding of the stock market I believe its based on what people think stocks and shares are worth. If this is indeed the case than why is there so much to do about what, presumably, a bunch republican men guessing how much the worth of our economy is? It would only stand to reason that our economy is tanking since these very men most likely did not vote for Obama. These men who control the stock market undoubtedly are cut from the same cloth as the men whose actions, greed and short sighted strategies put us in this position. These very same men who received millions if not billions in bonuses during this recession are still being allowed to dictate the state of our economy.

    March 10, 2009 at 1:21 pm |
  11. Mari, Salt Lake City

    I am not surprised, there has been a lot of GREED in our Nation, not only by Wall Street, the banks, mortgage lenders, but....... by regular Americans!

    I read in a magazine poll that the #1 "wish" Americans had was to own a luxury car; second, was own a big house; third was have lots of money. Those were the top three "wishes"! Totally about greed.

    They did not mention health, happy marriage, world peace, cure for diseases....... the "wishes" were all about "me, myself, and I"....... we have lost sight of what we TRULY should value: love, trust, faith, unity, family, etc. For the "things" of the world.

    The Bush Disaster (as I call the economic mess) is a wake-up call for some, hopefully all, but I will settle for "some"! As part of the Baby-Boomers I shake my head is disbelief at how our children's generation has strayed from the values that our generation holds dear. I am grateful that my kids have those values planted in their hearts. Sadly, the majority of their generation would not know a "value" IF it hit them in the head! Sad.

    March 10, 2009 at 1:19 pm |
  12. Michael C. McHugh

    If whole countries and regions start to default, then we really are back in the 1930s. That will mean the collpase of world trade and investment–and if the world goes down, America will go down with it.

    We aren't an island, insulated from the rest of the world's problems. I hope the administration is taking this seriously and at least has some kind of plan for the G-20 meeting. They should remember that international cooperation was attempted and failed in the early-1930s, and the results for the world were not good, to put it mildly.

    March 10, 2009 at 1:12 pm |
  13. Michael "C" Lorton, Virginia

    When corporate greed rains----it really pours!!!

    March 10, 2009 at 12:09 pm |