Negative option rebilling, the simple concept of which is a “free trial” which places you on a subscription list if you do not cancel, has been considered a quasi-legitimate business practice in some industries for decades. Companies in areas such as mail order book clubs or the new mail order DVDs are good examples.

A California company called “Family Products” marketed alleged “get rich quick scams,” such as the “John Beck Free and Clear Real Estate System” was targeted by the FTC for making “bogus claims through DVDs and infomercials” about the effectiveness of their product. Family Products allegedly duped over 600,000 Americans out of $300 million.

The traditional concept of negative option rebilling has effectively been outlawed in Canada, but remains a viable business plan in much of the rest of the world.

Operation Short Change, as the movement is called, was announced between the FTC and the Justice Department yesterday and includes dozens of cases brought forward in at least 13 states.

A quick Google search demonstrates to reporters that “weight loss” is another niche heavily effected by negative option rebilling. With products like “Nature’s Colon Cleanse” (do not order from this site — at least, not without reading the terms) which appears to sell little more than the concept of doing a “cleanse” offering “limited” free trials to customers in exchange for adding them to their rebill list. Some of these companies provide proper customer support to allow users to cancel, but the majority do not.

Attorney General of North Carolina, Roy Cooper, told the Associated Press that he has received a huge upswing of complaints regarding these scams. “In the down economy, the scam artists crawl out from under rocks. If they want money up-front, then they’re up to no good.”

The industry giant will add $30 billion of aid from the US and $9.5 billion from Canada to the $20 billion it received in January of 2009. In exchange the US government will now own 60% of the company, the Canadian government will hold 12.5%, and the United Auto Workers Union will receive 17.5% of the shares. This leaves only 10% for the previous stockholders, who will probably be forced out of the picture by the restructuring. The governments will sell off their portion of the shares over the next several years.

GM has promised that in this time all operations will continue to run, including warranty coverage, services, manufacturing and customer service. All employees and suppliers will continue to be paid, and the pension plans for the workers are in no danger.

However, they have stated that 9 plants will be closed and 3 more will be mothballed for the time being. Only 4 brands will survive with the new company - Chevrolet, Cadillac, Buick and GMC. The sale of Hummer has already been finalized and Saturn is expected to come soon as well. The downsizing will cut the workforce employed by the company by more than a third.

The impact on markets can been seen clearly, as shareholders try to sell before they are wiped out completely. One year ago the stocks were work almost $20 a piece. The shares fell as low as $1.07, but rebounded to $2.65 after the bankruptcy filings were made.

As GM moves through bankruptcy court, it is uncertain if the company will even survive the amount of restructuring that needs to be done. If it does, that does not necessarily mean that it will ever be the industry heavyweight it once was. If GM takes its time through court, it may push many of its suppliers over the edge and crumble the entire industry.

In the United States there are two kinds of bankruptcy that a company can file for - chapter 7 and chapter 11 under the Bankruptcy Code. Chapter 7 consists of selling off company assets to cover debts and closing the entire operation down whilst chapter 11 allows for a massive restructuring under the control of the courts.

GM is the second of the Detroit three to be pushed into considering Chapter 11 bankruptcy in the past month. They have already approved the closure of the Pontiac brand, which will cost upwards of $2 billion USD to complete. Chrysler filed on April 30th which resulted in the European automaker Fiat taking a 20% share in the company. Fiat has plans to reorganize Chrysler into a company that can compete in the smaller car market that exists in North America today.
After a major restructuring earlier in the year, Ford is still floating under its’ own steam, having not accepted any money from the massive bail-out earlier this year.

GM’s board of directors meets soon to decide whether it is worth keeping the company alive, although the return on selling the company off is likely to be minimal in the current economic crisis.

Since the employment rate peaked in October of last year, net job losses have totaled around 357,000, increasing each month — Statistics Canada has said the five-month decline is the most severe since the 1982 recession. Of all industries hit by the crisis, manufacturing is reportedly suffering the heaviest losses, with a 6.8 percent unemployment increase since October alone, the equivalent of 134,000 job cuts. In addition to manufacturing, losses have similarly been reported in finance, insurance, real estate and leasing, construction and natural resources.

Economists had previously, for the most part, predicted full-time job losses of around 50,000 for last month, whilst more fearful estimates pegged the number at around 90,000 — in actuality, 79,500 full-time jobs were lost, with 18,200 part-time positions created in their place. Similar trends have been seen over the past five months across all employment sectors, and only the public sector seems to remain relatively unscathed internationally.

No province is free from the increased unemployment, with British Columbia seeing the largest decline of 23,000 jobs; Alberta suffered 15,000 cuts and Ontario an additional 11,000 — the three provinces have accounted for the steepest drop in employment over the past five months. The natural resource sector was hit badly in recent months, in particular in Alberta where gas, oil and coal extraction play an important part in the economy.

TD Bank economist Grant Bishop predicted that the three-month contraction of jobs totaling 272,000 thus far in 2009 is only a portion of the total losses expected before the end of the year, which Bishop predicts could eventually exceed 520,000. Another school of thought on the issue suggests that though things may progress over the year, the rate at which they are doing so has decelerated.

The British bank, which is part-nationalized, has been the subject of controversy of late, with Sir Fred Goodwin’s infamous £16 million pension - one of many high-level bankers claiming bonuses, including the ever-developing AIG scandal. In announcing the possibility of the job losses, RBS Chief Executive Stephen Hester also stressed that compulsory redundancies were an absolute last resort, should other initiatives to return RBS to sound financial health fail.

The move has been dubbed a cost-cutting measure to try and boost the British lender out of the current recession, an initiative which chiefs have said aims to eliminate $3.73 billion in costs over the next three years. The potential 9,000 job losses discussed today are in addition to 2,700 previously announced job cuts thus far this year, though natural turnover and redeployment will reportedly reduce the effect to a minimum, with 650 new job opportunities already identified.

With unemployment welfare claims already at a record high in the U.K., trade unions are outraged by this, the latest revelation in the financial crisis. The tenure of Fred Goodwin was largely responsible for the beginning of nationalization of the bank, which needed government financial assistance. Where the lender was 58 percent state-owned before today, the government’s stake in the company rose to 70 percent today, rapidly approaching total nationalization.

Shares in the bank were 10.4 percent lower at 26.7 pence by 1500 GMT, while the FTSE 100 share index was down 1.3 percent. RBS currently commands a workforce of 170,000 worldwide, with around two-thirds situated in the U.K.

Firstly, in conjunction with increased funding for the IMF, the finance officials pledged Global “quantitative easing”, involving a vast increase of Special Drawing Rights (SDR), by $250bn. SDRs, a form of IMF shadow currency, are reserve funds which can be converted into any usable currency for the purpose of assisting countries in need; recently, the Bank of England launched a similar initiative which involved the injection of £75 billion into the British economy. Though SDRs are available for all countries, it is expected that more developed countries will loan their share to nations hardest by the recession without the means to recover alone. The decision to raise the amount to $250 billion is a more than 1000% increase.

A particular bone of contention for several European powers in recent weeks, particularly Germany and France, was the projected commitment to major fiscal stimulus in each country. The aforementioned nations refused to make specific promises with regards to government spending, but a consensus was reached to disclose the to-date amount of stimulus issued — $5 trillion. U.K. Prime Minister Gordon Brown explicitly confirmed the possibility of further government bailouts should the ever-changing situation warrant them.

It was speculated during the summit that one major hurdle before the global economy is the significant decline in international trading, the first of its kind in decades. Due to the credit crunch, exporters in the developing world have struggled to obtain credit, which, it has been proposed, the World Bank and other financial institutions will combat with new trade credit guarantees totaling an estimated $250 billion. British Prime Minister Gordon Brown was the major driving force behind this initiative, which he outlined in detail during a recent trip to South America.

Another significant proponent in the struggle to increase international trading is the sudden uprising of Protectionism in economically developed countries, a response brought on, most likely, by fears of deeper recession. The G20 pledged to implement a 12-month halt on the introduction of new trade barriers, effectively freezing tariffs and quotas on international goods at their current levels, a promise which if honoured will play a large part in preventing further economic decline. Economists have said that it was primarily protectionist policies which excacerbated the 1930’s depression. Skepticism is high amongst the World Bank and other international institutions, in large part due to similar promises made in November of last year not being kept by 17 nations.

In order to ensure that these changes are made, and perhaps more importantly honoured for a substantial length of time, vast improvements to the standard of international finance monitoring were also called for. The calls for change pledged to transform the present Financial Stability Forum into more of a global banking watchdog with a pro-active mandate. Under the new title of Financial Stability Board (FSB), the watchdog will turn its attention to the scrutiny of the risks taken by financial institutions, and impose stricter reprimand through national channels on those which do not honour suitable risk assessment.

In order for the policies to be effectively put into practice, there will need to be substantial powers granted to the FSB, a provision which has not been made. Skepticism surrounds the real enforcement power of the Board, but world leaders in attendance are hailing the summit as a great success.

Citing many economists who agree that the so-named “credit crunch” will continue until the top nations remove toxic assets from bank’s balance sheet, the communiqué had each of the nations — accounting for 80 per cent of the world’s GDP — pledge to dispose of their bad assets.

The two methods for eliminating the assets is to either establish a “bad bank” system, where a government insured or operated bank would purchase toxic assets from the other banks for a safe fraction of their value; or to have a government organization, which would insure assets against default — effectively returning the assets to face value.

“The G20 countries have decided on a profound reform of the international financial architecture. It is now on record that a breakdown in regulation was at the origin of the financial crisis,” said President of France, Nicholas Sarkozy.

For a “bad bank” to be established which would take on these effective “hot potato” assets, the cost to government’s internationally could be incredibly high; whether funding will be held by individual nations or by a cooperative of G20 nations is unclear at this point. Officials believe, however, that this cost is offset by the recovery of financial markets, particularly consumer and corporate lending which would stimulate private investment.

Following in the second option, G20 leaders agreed to add an additional $250 billion in new trade credit guarantees via the World Bank and IMF, allowing exporters to obtain credit despite the any form of credit crisis.

A new set of international rules will limit the cash bonuses provided to traders and executives who are making “risky decisions.” The regulatory body will assess how much risk these individuals are taking, and those deemed to be in the “risky” majority will be limited to payment in sale-restricted shares; a move which will limit the return a banker can get from making short-term profitable, but long-term faulty decisions.

The plan calls for an international body to be established which would be chartered with flagging and identifying potential economic and financial problems before they occurred.

As expected, British Prime Minister Gordon Brown said Thursday that the G20 would publish a list of non-compliant tax havens imposing what he calls “tough sanctions” on those who do not comply with the legislation agreed upon by the G20 or the Organization for Economic Co-operation and Development.

“The banking secrecy of the past must come to an end,” said Brown, referring specifically to those countries like Switzerland, who have historically ensured secrecy to the extent of harbouring tax criminals

Nicolas Sarkozy, President of France, praised the conclusions from the G20 summit, saying that they were “more than we could have hoped for.”

Canadian Prime Minister Stephen Harper also praised the regulation and tax haven crackdown saying that the new system is “very complete and very strong.”

“This really is unprecedented, coordinated and fast action by the international community to an economic crisis, frankly at a speed and a level of engagement we have never seen in the past,” concluded Harper. “This is quite a significant achievement, and I do believe markets should take considerable comfort from this action. Obviously we’re not out of the woods, but there is a very strong will on the part of all major nations to act on this and to coordinate those actions.”

The groups who are reported to be planning mass protests include several environmentalist collectives, anti-war campaigns, and unemployment advocates. Several such groups are: Camp For Climate Action, Campaign Against Clime Change, People and Planet, Stop The War Coalition, and Youth Fight For Jobs. The motives and method of each of the protests vary greatly, and each group will advocate for their cause independently; though the opportunity for media attention afforded protesters by the summit will create a city-wide display of outrage.

The G20 Meltdown, a newly formed group in response to the summit, plans to stage a faux-carnival through the streets of London, beginning at the Bank of England. Though the collective of street performers, elaborately dressed demonstrators, and live musicians is planning a peaceful protest, police in the area are concerned that violent elements may emerge over time.

Groups of climate change demonstrators have planned a 24-hour “flashcamp” involving the convergence of thousands of supporters outside the European Climate Exchange on Bishopsgate in Liverpool Street. Alternative locations have been earmarked in case of police opposition to the act. People and Planet, a student-led group campaigning to end world poverty, defend human rights and protect the environment are rumoured to have a specific target in mind — the Royal Bank of Scotland, whose offices are primarily located in the same area, Bishopsgate.

Several other parades, rallies, and demonstrations will take place over the course of today and tomorrow, including a city-wide march of anti-war protesters beginning at 2pm and continuing until well into the evening. Police fear that the several thousand demonstrators could effectively halt the city for two days, at a time when world leaders are set to convene to find a solution to the present financial crisis. The financial sector of London, commonly referred to as ‘The City’, is the likely target of demonstrations which police fear could become violent. Probably targets include merchant and high street banks, auditors, law firms, energy firms, financial associations, arms traders and commerce groups.

According to The Metropolitan Police, a preliminary 3,000 officers will be stationed throughout the district, with an equal number held in reserve should the protests become violent and warrant it. Several riot vans, equipped with specially trained teams and an arsenal of 50,000 volt stun guns, will be available should the officers need them; this will be the first time that such measures have been used in riots in the U.K.

The umbrella operation, called the G20 Meltdown, encompasses almost 80 protest groups for the purpose of disrupting the summit — several known anarchists are expected to infiltrate the groups in an attempt to storm key financial institutions, and it is feared that the Royal Bank of Scotland will place highly on the list of priority targets. Due to these suspicions, major firms are being urged to practice business inconspicuously for the duration of the demonstrations, with some being asked to keep their staff indoors.

The cost of the security initiative, Operation Glencoe, exceeds £7 million and will be remotely commanded from a base in south London through a complex network of surveillance cameras and video links. In addition to managing the protests, security forces in London will also be under pressure to protect the world leaders and finance ministers from each of the G20 countries, in addition to over 40 separate delegations in attendance on Thursday.

The G20 summit hopes to address initiatives which may see a resolution to the financial crisis formulated, including increased representation of emerging economies and a proposed doubling of IMF lending capacity to $500 billion.

“There are very few bright spots that one can see in the data. Most of the nation appears to remain on a downward path,” said head of Standard and Poor’s index committee, David Blitzer, “with all of the 20 metro areas reporting annual declines, and nine of the MSAs (metropolitan statistical areas) falling more than 20% in the last year.”

Somewhat unfortunately for homeowners in these areas, Phoenix, Arizona (35 per cent); Las Vegas, Nevada (32.5 per cent) and San Fransisco (32.4 per cent) took the largest hits, while cities such as Dallas, Denver and Cleveland showed declines of less than 5 per cent — marking the smallest declines on the large-cities index.

The twenty-largest index has seen losses of 30 per cent since the peak (in roughly June 2006). The cities mentioned before have seen very serious peak losses, with Phoenix still at the top with a 48.5 per cent loss.

The U.S. National Association of Realtors, a professional group for real estate agents, said earlier last week that sales of previously occupied (non-new) homes rose in February sparking thoughts of recovery — economists, however, suggest that the recovery may not be ready quite yet, many saying that we have not hit the bottom of home prices yet.

Many first-time buyers and risk-taking investors took advantage of the deep decline in values and huge discounts seen on foreclosures in the last month, while homeowners became more realistic about current-market prices; sparking an unexpected increase in sales.

In the U.S., 1.4 million homes have been foreclosed upon since 2007, though 2005 and 2006 saw rising foreclosures, suggesting that the subprime crisis may have only been a catalyst in U.S. foreclosures.

The decision to write off almost 25% of the Ivory Coast national debt is part of the Heavily Indebted Poor Countries Initiative, and has earned the praise of President Laurent Gbagbo. On March 27th, the IMF approved a loan of $565 million to the Ivory Coast; attached were strict regulations on financial transparency and national poverty measures. A 2002 armed rebellion in the country has had long-lasting effects which have yet to be fully rectified, though it is hoped that a resolution is fast approaching.

Should the Group of 20 (G20) developed and developing economies agree to double the IMF’s lending capacity, it is expected that a large number of similar initiatives will occur in order to boost emerging economies out of the current financial crisis.

Such a bill has long since been introduced, but due to bureaucratic roadblocks has been hindered; the Senate passed the bill last week and today the House of Representatives voted 285-140. The majority of the opposition to the bill came from Republican members of the House, who contested the prohibition of oil and gas drilling in the area, complaining that Democrats were not willing to entertain amendments.

The move is being cited as the most important environmental protection legislation in decades by environmentalist groups, and for many is a sign that the new administration is aware of the importance of the conservation of wildlife, climate change, and other environmental issues. The Bush administration was criticized for its nonchalant approach to environmental issues and unwillingness to satisfy the Kyoto quota during its governance; many experts are hoping for a new approach over the next term.

Obama, upon signing, praised the goals of the bill: “This legislation guarantees that we will not take our forests, rivers, oceans, national parks, monuments, and wilderness areas for granted,” The nine states affected by the bill are: California, Idaho, Utah, Colorado, Oregon, Virginia, West Virginia, New Mexico and Michigan.

Following discussions with Mexican President Felipe Calderon, Brown told reporters that in order to increase efficacy, he would do “a lot of work in the next two days getting countries to agree to proposals that we have been working on for some time,”. Global cooperation is doubtlessly important in the endeavour, and preliminary guidelines for the agenda highlight the importance of overall global economic health, and no country’s plans should be to the detriment of another.

There were recently a series of protests in Europe, and more are suspected for duration of the conference this week; in preparation for this, security measures in London are heightened, and according to police, five suspected protesters are currently being held under counter-terrorism laws, following the discovery of weapons nearby.

British finance minister Alistair Darling has attempted to ground expectations for the summit, citing the magnitude of the crisis and the reality that such problems cannot be remedied overnight; in spite of official reservations, however, Brown is confident in the world’s ability to contribute the effort needed: “We are hopeful of getting a conclusion but a lot of great work has got to be done.” There is no illusion that the G20 summit will be anything other than the first step in a long process — subsequently, finance ministers worldwide are insisted on a further convening of G20 leaders before the end of the year.

Some of the plans to be discussed at the summit have been discussed since the meeting was first proposed, such as a call by Brown to increase the International Monetary Fund’s (IMF) lending capacity by at least 100%, to $500 billion. One of the key mandates for the committee is to “enable the global economy to expand”, which will include preventing policies of protectionism finding their way into the recovery; according to Brazilian President Luiz Inacio Lula da Silva, countering protectionism and the restoration of credit are two of the biggest issues facing G20 leaders.

Future fiscal stimulus has been criticized and warned against by da Silva, in addition to many European leaders, concerned that without proper infrastructural amendments and stricter regulations another crumbling of the financial markets is inevitable. A consensus is hoped to be reached before Thursday, and Brown has made many international visits in an effort to foster communication between all nations involved.

President Obama’s team of analysts rejected the initial submissions from both General Motors and Chrysler, saying that their business plans were not viable on their own. General Motors will receive an additional 60 days to come up with a new business proposal, while Chrysler will receive an additional thirty days to negotiate technology transfer agreements with Fiat. In the interim, the U.S. government intends to provide working capital.

If Chrysler achieves the deal, the U.S. government will inject an additional $6 billion in financing, as requested — making a deal from Fiat not only a quick turn-around in technological innovation, but also a capital guarantee for the company.

CEO of General Motors, Rick Wagoner said that he was asked to “step aside,” as the administration replaced him with Fritz Henderson GMs chief operating officer and president since 2008, previously vice chairman.

“Year after year, decade after decade, we have seen problems papered over and tough choices kicked down the road, even as foreign competitors outpaced us,” said Obama at the White House. “Well, we have reached the end of that road. And we, as a nation, cannot afford to shirk responsibility any longer. Now is the time to confront our problems head-on and do what’s necessary to solve them.”

“I’m confident if each are willing to do their part, then this restructuring, as painful as it will be in the short term … will mark the beginning, not the end, of a great American auto industry,” Obama said.

Similarly, Minister of Industry, Tony Clement along with Jim Flaherty and Michael Bryant agreed on the same terms — 60 days for General Motors’ Canadian division and 30 days for Chrysler’s deal with both Fiat and the Canadian Auto Workers. An additional $4 billion interim loan will be provided to the two companies.

The summit is to be attended by the Group of 20 (G20) developed and developing economies, and will address the urgent need for economic reform and the possibility of further financial stimulus to combat the recession. Emerging economies, and those which have taken off rapidly in recent years, will demand further representation in IMF matters, and finance officials in such countries remain hopeful of “substantial progress in improving [the IMF's] representation and governance,” as well as other international institutions.

China, India, Brazil and Russia made such demands at a finance ministers’ meeting earlier this month, so it is clear that such reforms will be on the agenda. Currently, China is 5 percent of the economy nominally and 11 percent in terms of purchasing parity, creating an obvious disparity between international contribution and the 3.7 percent voting power it currently possesses.

The IMF presently gives the EU 32 percent and the US 17 percent of the voting power, compared to India’s only 1.9 percent. The US also possesses a de-facto veto, should the 85% quorum not be met. Critics are urging to the IMF to reform its procedure, and calls for the agency to “get up with the reality of the 21st Century” came from Australian Prime Minister Kevin Rudd.

Emerging economies will be crucial in the rebuilding of the global economy following the crisis, according to critics, and the G20 summit are being urged to realize this.