October 6, 2008

NEW YORK -- Stocks tumbled Monday, with the Dow Jones industrial average falling below 10,000 for the first time in nearly four years, as European governments' rush to prop up failing financial firms underscored the global reach of the credit crunch.

Credit markets remained tight, with two key measures of bank jitters hitting an all-time high. Treasurys rallied, lowering the corresponding yields as investors sought safety in government debt. Gold rallied for the same reason. Oil dipped. The dollar was mixed versus other major currencies.

October 3, 2008

After two weeks of contentious and often emotional debate, the federal government's far-reaching and historic plan to bail out the nation's financial system was signed into law by President Bush on Friday afternoon.

"By coming together on this legislation, we have acted boldly to prevent the crisis on Wall Street from becoming a crisis in communities across our country," Bush said less than an hour after the House voted 263 to 171 to pass the bill.

September 29, 2008

Stocks skidded Monday, with the Dow slumping nearly 778 points, in the biggest single-day point loss ever, after the House rejected the government's $700 billion bank bailout plan.

The day's loss knocked out approximately $1.2 trillion in market value, the first post-$1 trillion day ever, according to a drop in the Dow Jones Wilshire 5000, the broadest measure of the stock market.

September 25, 2008

Washington Mutual Inc was closed by the U.S. government in by far the largest failure of a U.S. bank, and its banking assets were sold to JPMorgan Chase & Co for $1.9 billion.

Thursday's seizure and sale is the latest historic step in U.S. government attempts to clean up a banking industry littered with toxic mortgage debt. Negotiations over a $700 billion bailout of the entire financial system stalled in Washington on Thursday.

President George W. Bush warned on Wednesday that the United States was in the middle of a serious financial crisis that could push the economy into a long-term recession if the government did not act.

In a televised address aimed at persuading the public to support a $700 billion financial bailout being negotiated with Congress, Bush said his "natural instinct" was to oppose government intervention in the financial sector, but the financial turmoil called for a different approach.

September 23, 2008

Warren Buffett's Berkshire Hathaway Inc (BRKa.N) (BRKb.N) will invest $5 billion in Goldman Sachs Group Inc (GS.N), in a major boost for the Wall Street bank from perhaps the world's best-known investor.

"It's a vote of confidence which is gold plated," said Michael Holland, a money manager at Holland & Co in New York. "You don't get better than this."

Shares of Goldman rose 6.5 percent following the announcement, while Standard & Poor's 500 futures gained 16 points.

September 23, 2008

In the dark of night over the weekend when most people were snoozing, the Treasury dramatically expanded its bailout plan to include buying student loans, car loans, credit card debt and any other "troubled" assets held by banks.

The changes, which were included in draft language that also opened the bailout program to foreign banks with extensive loan operations in the United States, potentially added tens of billions of dollars to the cost of the program.

September 23, 2008

Resentment is growing on both sides of the U.S. political divide over a plan to use $700 billion of taxpayer money to bail out Wall Street firms with bad mortgage debt.

The disquiet comes from many voters on the left who see hypocrisy in the rush to help some of the world's richest firms when the government says there is insufficient money to spend on other priorities.

September 25, 2008

The pace of new home sales fell to its lowest level in 17 years in August, according to a key government report released Thursday that signaled more dismal news for the housing sector in coming months.

August sales came in at a seasonally adjusted annual rate of 460,000, the Census Bureau report showed, down 11.5% from a revised 520,000 in July. The reading was well below the consensus forecast of 513,000, according to economists surveyed by Briefing.com.

In the U.S. government's largest single intervention in the private sector and in a measure of the depths of the global financial crisis, the Federal Reserve agreed late Tuesday to lend American International Group Inc. $85 billion to finance the insurance giant's likely liquidation over the next two years.

The loan is expected to prevent AIG's immediate collapse, which analysts said could have intensified the broad credit woes stemming from the sharp downturn in the housing and mortgage markets.

Sept 15, 2008

NEW YORK (Reuters) - Bank of America Corp's $50 billion acquisition of Merrill Lynch & Co Inc marks the end of a storied name in American finance, but also creates the nation's biggest bank by far.

The purchase would end the 94-year independence of Merrill, Wall Street's third-largest bank, and pair it with a banking behemoth that has announced more than $150 billion of acquisitions in the last five years. Bank of America would pass Citigroup Inc, the largest bank by assets, in size.

Sept 15, 2008

NEW YORK (Reuters) - Lehman Brothers Holdings Inc filed for bankruptcy after trying to finance too many risky assets with too little capital, becoming the largest and highest-profile casualty of the global credit crisis.

Based on assets, Lehman far surpassed WorldCom as the largest U.S. bankruptcy ever. Lehman had assets of $639 billion at the end of May, while WorldCom had $107 billion when it filed for bankruptcy protection in 2002.

September 7th, 2008

(Bloomberg) - The U.S. government seized control of Fannie Mae and Freddie Mac after the biggest surge in mortgage defaults in at least three decades threatened to topple the companies making up almost half the U.S. home-loan market.

Federal Deposit Insurance Corp (FDIC) might have to borrow money from the Treasury Department to see it through an expected wave of bank failures, the Wall Street Journal reported.

The borrowing could be needed to cover short-term cash-flow pressures caused by reimbursing depositors immediately after the failure of a bank, the paper said.

The borrowed money would be repaid once the assets of that failed bank are sold.

Automakers plan to urge Congress to support funding up to $50 billion in low-interest loans over three years to help them modernize their assembly plants and develop next-generation fuel-efficient vehicles.

Industry officials said the loans, which are twice the amount authorized in last year's energy bill, are a top priority when Congress returns next month because of the declining fortunes of Detroit's automakers and tightening credit markets.

Aug. 25 (Bloomberg) -- JPMorgan Chase & Co., the second- biggest U.S. bank, said the value of a $1.2 billion investment in Freddie Mac and Fannie Mae shares has declined by half so far this quarter.

Housing building fell sharply in July to a 17-year low, a government report issued Tuesday showed.

Starts plunged 11% to an annual rate of 965,000 from a revised 1.084 million pace in June, according to the Census Bureau report. Economists surveyed by Briefing.com had forecast starts would fall to a rate of 960,000.

Permits - often seen as a sign of builders' confidence in the housing market - tumbled 17% to an annual rate of 937,000 from a revised 1.138 million in June. Economists had forecast that permits would come in at 959,000.

August 15th, 2008

WASHINGTON - The Postal Service had a net loss of more than a billion dollars in the third quarter of the fiscal year, the agency said Wednesday.

For the quarter ended June 30, the loss was $1.1 billion, which officials blamed on reduced mail volume in the slowed economy, coupled with rapidly rising transport costs because of high fuel prices.

The Labor Department reported Thursday that consumer prices rose by 0.8 percent last month, twice the 0.4 percent gain that economists had been expecting.

U.S. consumers continued to cut back on gasoline purchases in the first 6 months of 2008, reducing overall demand for oil products to its lowest level in 5 years, a trade group said Wednesday.

Americans drove 12.2 billion miles fewer, or 4.7% less, in June than they did during June 2007, according to a report released Wednesday from the U.S. Department of Transportation.

More homeowners than ever are selling at a loss, propelling the real estate market deeper into crisis.

In the 12 months that ended June 30, nearly 25% of all homes sold nationwide fetched less than sellers originally paid, according to real estate Web site Zillow.com.

While the nation's double-digit decline in home prices has been well documented, the new report underscores the economic force of those price declines. Homeowners are walking away with much less in their pocket when they sell. And that affects more than the real estate market.

Price declines are hurting a growing number of borrowers who bought since 2003, but none more than borrowers who bought at the peak of the nation’s housing frenzy in 2006, according to data released Tuesday morning by real estate website Zillow.com.

2008-08-12

WASHINGTON - The federal budget deficit soared in July, pushed higher by economic stimulus payments and $15 billion in outlays to protect depositors at failed banks.

NEW YORK (Reuters) - Most institutional investors expect another failure of a major financial services firm in the coming year and view credit default swaps as a serious threat to market stability, according to a survey by Greenwich Associates.

WASHINGTON (AP) -- The efficiency of America's workers grew at a slightly slower pace in the spring as companies sought to produce more with leaner work forces. Workers' compensation growth slowed, too.

The Labor Department reported Friday that productivity - the amount an employee produces for every hour on the job - grew at a rate of 2.2% during the April-to-June quarter. That was down from a 2.6% growth rate logged in the first three months of this year.

BEIJING (AP) -- China's wholesale inflation in July accelerated to its highest rate in 12 years, adding to the government's headaches as it tries to rein in surging consumer prices, according to data reported Monday.

The producer price index was up 10% in July over the same month last year, the highest rate since 1996, the Xinhua News Agency said, citing the government's statistics bureau. The index measures the price of goods as they leave the factory.

WASHINGTON: Federal policy makers have reached a consensus that the turmoil plaguing the housing and financial markets is likely to spill deep into 2009, becoming one of the most significant domestic problems to confront the next president when he steps into the Oval Office in Jan.

Wachovia economists confirmed Thursday what many Floridians already felt in their bones: The state is in a recession. In its first down quarter in 16 years, the Florida economy shrank 1.6 percent during the second quarter. It was the state economy's worst performance since 1991. The numbers produced the most miserable showing of all the large states and a sharp contrast to the U.S. economy, which grew 1.9 percent.

WASHINGTON - The Federal Reserve, caught between mounting job losses and rising inflation, decided to sit tight and hope that the interest rate cuts it has already provided will be enough to heal a sick economy.

U.S. consumers borrowed more than twice as much as economists forecast in June as a decline in home equity forced Americans to fund purchases with credit cards and other loans. Consumer credit rose by $14.3 billion, the most since November, to $2.59 trillion, the Federal Reserve said today in Washington.