Archive for the ‘credit crisis’ Category

World powers pledge to combat credit crisis

October 11, 2008

By MARTIN CRUTSINGER, AP Economics Writer

WASHINGTON – Financial officials from the world’s wealthiest industrial countries are pledging decisive action to deal with the biggest upheavals to hit the global financial system since the Great Depression.

The big question is whether their one-page action plan will be enough to stop the bleeding as investors watch trillions of dollars of wealth melt away.

In an effort to expand the firepower the United States is bringing to the problem, Treasury Secretary Henry Paulson announced late Friday that it had decided to go forward with a plan to buy a part ownership in a broad array of American banks. It would be the first time the U.S. government has employed such a program since the 1930s.

President Bush invited Paulson and Federal Reserve Chairman Ben Bernanke and their counterparts from the other G-7 countries to come to the White House Saturday morning for a meeting that the administration hoped would demonstrate global resolve in attacking the current crisis.

Bush, speaking on the economic chaos for the 21st time out of the past 26 days, said Friday that the government’s rescue program was aggressive enough and big enough to work. “We can solve this crisis and we will,” he pledged.

The G-7 officials wrapped up three hours of closed-door talks Friday with one of the shortest joint communiques in the history of the group. It was also the most direct in its promise to take “all necessary steps to unfreeze credit and money markets” to end a severe credit crisis that began in the U.S. a year ago but since has spread worldwide and has grown in furiosity.

Fears that banking systems had essentially frozen up have sent worried investors rushing for the exits. The Dow Jones industrial average just completed its worst week in history and has plunged by nearly 2,400 points over the past eight trading sessions. Over the last year, investors have suffered $8.4 trillion in paper losses.

In the midst of all that carnage, the G-7 countries — the United States, Japan, Germany, France, Britain, Italy and Canada — sought to strike a determined tone to do what they could to combat the problem in their countries.

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Asian markets surge on Wall Street rally

April 2, 2008
By THOMAS HOGUE, AP Business Writer 

BANGKOK, Thailand – Asian stocks surged Wednesday as investors took heart from an overnight rally on Wall Street amid a growing belief that the worst of the credit crisis is over.

Traders work on the floor of the New York Stock Exchange April ...
Traders work on the floor of the New York Stock Exchange April 1, 2008. U.S. stocks extended gains on Tuesday, lifting the benchmark S and P 500 and the Nasdaq up more than 3 percent, as Lehman Brothers Holdings Inc’s move to bolster its balance sheet calmed worries about the financial sector’s stability.(Brendan McDermid/Reuters)

In Tokyo, the region’s biggest bourse, the Nikkei 225 index jumped 3.3 percent in morning trade to 13,077.5. Hong Kong’s Hang Seng Index soared as much as 4.6 percent to 24,195.3.

In mainland China, the Shanghai Composite Index rose more than 3 percent, and benchmark indices in Australia, the Philippines, Singapore, South Korea and Taiwan all gained more than 2 percent.

“Investors believe the credit crisis in the U.S. is over,” said Francis Lun, a general manager at Fulbright Securities in Hong Kong. “They think the worst has gone.”

Wall Street began the second quarter with a big rally Tuesday as investors rushed back into stocks amid easing worries about the credit crisis that has battered many major banks and optimism that the U.S. economy — a major export market for Asia — is faring better than expected.

Financial stocks were among the big winners in U.S. and Asian trading after Lehman Brothers Holdings Inc. and Switzerland‘s UBS AG issued new shares to help bolster their balance sheets. The news was viewed as upbeat and offset even an announcement that UBS will take a fresh $19 billion write-down due to additional declines in the value of its mortgage assets and other credit instruments.

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Fire Sale of Bear Stearns Bear Sparks Rout, Bush Tries to Calm

March 17, 2008
By Jack Reerink 

NEW YORK (Reuters) – A fire sale of Bear Stearns Cos Inc (BSC.N) stunned Wall Street and pummeled global financial stocks on Monday on fears that few banks are safe from deepening market turmoil.

A U.S. two dollar bill is taped to the revolving door leading ...
A U.S. two dollar bill is taped to the revolving door leading to the Bear Stearns global headquarters in New York March 17, 2008.(Kristina Cooke/Reuters)

Trying to assuage worries that the credit crisis is spinning out of control, President George W. Bush said the United States was “on top of the situation,” but the sell-off intensified in the early afternoon.

The U.S. Federal Reserve geared up for a deep cut in interest rates on Tuesday to blow money into the fragile financial system — the latest in a series of rate cuts that has brought down borrowing costs by 2-1/4 percentage points and hammered the U.S. dollar to record lows.

Staff at Bear Stearns‘ Manhattan headquarters were welcomed to work on Monday by a two-dollar bill stuck to the revolving doors — a spoof on the bargain-basement price of $2 per share that JPMorgan Chase (JPM.N) is paying for the firm. A hopeful Coldwell Banker real estate agent was hawking cheap apartments to employees who saw the value of their stock options go up in smoke.

The combination of Bear Stearns’ bailout and the Fed’s offer on Sunday to extend direct lending to securities firms for the first time since the Great Depression highlighted just how hard the credit crisis has hit Wall Street.

And it scared market players worldwide….

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