Archive for the ‘Wall Street’ Category

The Times Are not Right For a Liberal Agenda

November 28, 2008

In the old days — from the Venetian Republic to, oh, the Bear Stearns rescue — if you wanted to get rich, you did it the Warren Buffett way: You learned to read balance sheets. Today you learn to read political tea leaves. If you want to make money on Wall Street (or keep from losing your shirt), you do it not by anticipating Intel’s third-quarter earnings but by guessing instead what side of the bed Henry Paulson will wake up on tomorrow.

By Charles Krauthammer
The Washington Post

Today’s extreme stock market volatility is not just a symptom of fear — fear cannot account for days of wild market swings upward — but a reaction to meta-economic events: political decisions that have vast economic effects.

As economist Irwin Stelzer argues, we have gone from a market-driven economy to a politically driven economy. Consider seven days in November. On Tuesday, Nov. 18, Paulson broadly implies that he’s using only half the $700 billion bailout money. Having already spent most of his $350 billion, he’s going to leave the rest to his successor. The message received on Wall Street — I’m done, I’m gone.

Facing the prospect of two months of political limbo, the market craters. Led by the banks (whose balance sheets did not change between Tuesday and Wednesday), the market sees the largest two-day drop in the S&P since 1933, not a very good year.

Read the rest:
http://www.washingtonpost.com/w
p-dyn/content/article/2008/11/2
7/AR2008112702052.html?hpid=
opinionsbox1

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Stocks Slump As Signs Point To Harder Times

November 20, 2008

Market closes below 8,000 on news of business price cuts, fewer home starts; Fed anticipates further economic slowdown next year.

By Neil Irwin and David Cho
The Washington Post

Businesses cut prices at a record rate and builders started fewer new homes last month than anytime on record, according to new government data, as the outlook for the economy continues to dim.

An investor watches a market board indicating the Chinese stock ... 
An investor watches a market board indicating the Chinese stock market index in a trading house in central Beijing.(David Gray/Reuters)

The data helped spur another terrible day for the stock market, as did a projection of more hard times ahead by leaders of the Federal Reserve. A serious recession now appears all but assured.

The stock market fell another 5 percent, as measured by the Dow Jones industrial average, which closed below 8,000 for the first time in this bear market. New-home starts in October were the lowest since at least 1959, when the government began keeping data. The consumer price index plummeted by the most since that series of monthly data was started in 1947, as the economy slowed so abruptly that companies had to slash prices to sell products.

And Federal Reserve leaders released projections indicating they expect the economy to worsen significantly in the coming year. The most pessimistic of 17 Fed officials expects joblessness to rise to 8 percent at the end of 2009, which would be the highest in a quarter-century.

“We’re in the deep portion of the economic trough,” said Richard Yamarone, chief economist of Argus Research, explaining yesterday’s market sell-off. “So you have to expect a certain degree of negative sentiment, you almost have to expect doom and gloom at this point.”

Read the rest:
http://www.washingtonpost.com/w
p-dyn/content/article/2008/11/19
/AR2008111900943.html?hpid=topnews

Fighting the Financial Crisis, One Challenge at a Time

November 18, 2008

WE are going through a financial crisis more severe and unpredictable than any in our lifetimes. We have seen the failures, or the equivalent of failures, of Bear Stearns, IndyMac, Lehman Brothers, Washington Mutual, Wachovia, Fannie Mae, Freddie Mac and the American International Group. Each of these failures would be tremendously consequential in its own right. But we faced them in succession, as our financial system seized up and severely damaged the economy.

By Henry M. Paulson, Jr.
Treasury Secretary
Op-Ed, The New York Times

Treasury Secretary Henry Paulson addresses a gathering of corporate ...
Treasury Secretary Henry Paulson addresses a gathering of corporate CEOs, Monday, Nov. 17, 2008. (AP Photo/J. Scott Applewhite)

By September, the government faced a systemwide crisis. After months of making the most of the authority we already had, we asked Congress for a comprehensive rescue package so we could stabilize our financial system and minimize further damage to our economy.

By the time the legislation had passed on Oct. 3, the global market crisis was so broad and so severe that we needed to move quickly and take powerful steps to stabilize our financial system and to get credit flowing again. Our initial intent was to strengthen the banking system by purchasing illiquid mortgages and mortgage-related securities. But the severity and magnitude of the situation had worsened to such an extent that an asset purchase program would not be effective enough, quickly enough. Therefore, exercising the authority granted by Congress in this legislation, we quickly deployed a $250 billion capital injection program, fully anticipating we would follow that with a program for buying troubled assets.

There is no playbook for responding to turmoil we have never faced. We adjusted our strategy to reflect the facts of a severe market crisis, always keeping focused on our goal: to stabilize a financial system that is integral to the everyday lives of all Americans. By mid-October, our actions, in combination with the Federal Deposit Insurance Corporation’s guarantee of certain debt issued by financial institutions, helped us to accomplish the first major priority, which was to immediately stabilize the financial system.

Read the rest:
http://www.nytimes.com/2008/11/18/opinion
/18paulson.html?_r=1

Vietnam in quandary over inflation, global economic downturn

November 16, 2008

Vietnam, like much of the world, is trying to stimulate its economy amid the global downturn, but it is in a quandary because it must also keep rampant inflation from flaring up again, say experts.

With a small and relatively insulated banking sector, Vietnam was not directly exposed to the subprime crisis that sparked the Wall Street meltdown and the subsequent worldwide credit crunch and financial turmoil.

But the wider economic repercussions of what has been called the worst global economic crisis since the Great Depression are already being felt in Vietnam, especially in the crucial export sector.

Containers are seen piling up at Saigon port in Ho Chi Minh ...
Containers are seen piling up at Saigon port in Ho Chi Minh city in June 2008. Vietnam, like much of the world, is trying to stimulate its economy amid the global downturn, but it is in a quandary because it must also keep rampant inflation from flaring up again, say experts.(AFP/File/Hoang Dinh Nam)

Amid slackening overseas demand, Vietnam’s monthly exports have steadily fallen from US$6.5 billion (US$1 = RM3.59) in July, to US$6 billion in August,US$5.1 billion in October.

 

And, although it’s too early to say foreigners are pulling out of financial markets, in the past month they have been net sellers of bonds and stocks.

Inflation has been in double digits all year and stood at 26.7 per cent in October, a slight fall after a drop in global energy and commodity prices. The government’s target is to bring annual inflation down to 23-24 per cent in 2008, and to less than 15 per cent in 2009.

Aiming to reduce liquidity to fight inflation, the government had raised interest rates and bank reserve requirements several times this year. But this has also starved businesses of credit for investment and working capital, forcing the central bank to reverse its monetary policy as both local and international factors have slowed economic growth in Vietnam.

A farmer throws a net to catch fish on a flooded paddy field ... 
A farmer throws a net to catch fish on a flooded paddy field in Phuong My village, 25 km (16 miles) outside Hanoi November 12, 2008. Hanoi reported 22 deaths from the worst inundations in more than three decades, officials said.REUTERS/Kham (VIETNAM)

Read the rest from AFP:
http://www.btimes.com.my/Current_News/
BTIMES/articles/vope/Article/

Obama’s First Press Conference — Long on Style, Short on Substance

November 8, 2008

Barack Obama was long on style and short on substance today as he hosted his first press conference as president-elect, as perhaps was appropriate. He reminded the audience that George Bush is still president, but signaled to Americans that his administration will not want for talent or diversity by appearing with a bevy of top drawer financial figures. The members of his Transition Economic Advisory Board who joined him on the stage included, among others, former Federal Reserve Chairman Paul Volcker, former Treasury Secretary Robert Rubin, Governor Jennifer Granholm of Michigan, and business leaders such as Eric Schmidt of Google, Dick Parsons of Time Warner and Anne Mulcahy of Xerox.

By Liz Peek
Fox News

US President-elect Barack Obama (C) speaks to the press in Chicago. ... 
US President-elect Barack Obama (C) speaks to the press in Chicago. Obama on Friday said he would act “swiftly” as soon as he takes office to confront the economic crisis head on, during his first news conference since his historic election.(AFP/Stan Honda)

He appeared at first to disappoint investors who may have been hoping that Obama would announce a sterling choice for the key post of Treasury Secretary, or would somehow produce a rabbit out of his hat that would guarantee an economic recovery. The stock market averages were ahead strongly as Obama took the podium, but drew back as he delivered tempered remarks about his programs to help out the middle class and boost growth. As the day came to an end, however, the market came back to post a 2.8% gain.

Not only did he speak against an impressive backdrop of well known financial figures, he also spoke against a backdrop of sobering economic news, including word today that the U.S. lost another 240,000 jobs in October, leading to a year-to-date drop of nearly 1.2 million.

Responding to the worsening employment picture, Mr. Obama outlined his top priorities.

His first aim appears to be the passage of a stimulus program, which he described as “long overdue” and which he suggested would be his top goal as president in the event that the plan does not get passed by the lame duck Congress. He emphasized the need to extend unemployment benefits, aid homeowners, help small businesses navigate the financial crisis, and assist hard-pressed states and local governments. Doubtless mindful of the miserable earnings results and dire cash flow projections reported earlier in the day by General Motors and Ford, Obama also singled out the auto industry as needing assistance –- advocating specifically funding for retooling for the industry as well as considering other possible options.

Otherwise, Obama reached back into his campaign quiver to talk about long-term areas of focus such as clean energy, universal health care, improved education and tax relief for middle class families. He said his team would work to stabilize markets, help homeowners and oversee the implementation of the financial bailout package “without unduly rewarding” managements of those companies receiving assistance.

Read the rest:
http://foxforum.blogs.foxnews.com/2008/11/07/lpeek_1107/

N.Y. Fed Chief Touted for Top Treasury Post; Obama To Meet With Econ Advisors

November 7, 2008

On an Obama economic brain trust studded with high-profile heavyweights, mTimothy F. Geithner, the low-key president of the Federal Reserve Bank of New York, has emerged as a top candidate to head the Treasury Department or another top policy post in the new administration.

New York Federal Reserve President Timothy Geithner testifies ... 
New York Federal Reserve President Timothy Geithner testifies at the U.S. House Financial Services Committee about financial market regulatory restructuring in Washington July 24, 2008.(Larry Downing/Reuters)

Mr. Geithner, 47, is two weeks younger than the president-elect but has served in top Treasury and Federal Reserve positions since the late 1980s. He joined Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben S. Bernanke to oversee the Bush administration’s effort to contain the crises in the world’s credit and financial markets.

By David R. Sands
The Washington Times
.
Mr. Obama and Vice President-elect Joseph R. Biden Jr. will hold their first press conference since the election Friday in Chicago after a meeting with the transition economic advisory board. Mr. Geithner is not listed as a member of the transition team.

The New York Fed is considered the most influential of the regional Federal Reserve Banks. By virtue of his position, Mr. Geithner serves as vice chairman of the central bank’s Federal Open Market Committee, the key body guiding monetary policy.

Like Mr. Obama, Mr. Geithner is described by colleagues as even-tempered and wonkish at times, comfortable debating abstract financial concepts and not likely to break the bureaucratic crockery as an administrator.

With the economy declining, plunging financial confidence and a $700 billion Wall Street rescue program just getting under way, the Treasury secretary selection will be one of the most critical for the new president, and one of the most closely scrutinized.

Mr. Obama’s economic advisory team during the campaign contained an unusually large number of heavy hitters, including former Federal Reserve Chairman Paul A. Volcker, billionaire investor Warren Buffett, and two Clinton administration Treasury secretaries — Robert E. Rubin and Lawrence H. Summers.

Mr. Rubin, who had been rumored to receive a top post in the new administration, told Bloomberg News on Thursday that he was not interested in returning to government.

It was Mr. Summers who boosted Mr. Geithner’s career at several points after he joined the Treasury Department’s international affairs division as a civil servant in 1988. He became a top aide to Mr. Summers and was named Treasury undersecretary for international affairs in 1999, a post previously reserved for political appointees.

Mr. Geithner left the department in 2001 and spent time as a fellow at the Council on Foreign Relations and at the International Monetary Fund before joining the New York Fed….

Read the rest:
http://www.washingtontimes.com/news/2008/nov/07/
geithner-touted-for-top-post-at-treasury/

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Obama To Meet With Economic Advisors Today

By NEDRA PICKLER, Associated Press Writer

President-elect Obama is seeking some economic advice from leaders of business, government and academia, making the struggling economy — the nation’s No. 1 concern — his first order of public business.

Obama and Vice President-elect Joe Biden were to meet Friday with 17 members of their transition economic advisory board. Members include former presidential Cabinet officials and executives from Xerox Corp., Time Warner Inc., Google Inc. and the Hyatt hotel company. Investor Warren Buffett was participating by telephone.

Obama also was holding his first news conference as president-elect after the meeting.

It was to be Obama’s first public appearance since Tuesday’s election, where exit polls showed that the economy was far and away the top issue for voters. He’s been using the time for private meetings with his transition team, receiving congratulatory phone calls from U.S. allies and intelligence briefings, and making decisions about who will help run his government.

Read the rest:
http://news.yahoo.com/s/ap/20081107/ap_on_el_pr/obama;_ylt=
AqXrGZ7k1XKeHU99bcehSzys0NUE

Economy begs priority from Obama

November 7, 2008

Greeted with the stock market’s worst two-day drop in 21 years, President-elect Barack Obama will take on voters’ No. 1 concern Friday by fielding questions about the nations economic turmoil in his first news conference since Election Day.

President-elect Barack Obama leaves a gym in Chicago on Thursday. He also was briefed on a range of national security issues and returned congratulatory calls to world leaders.

Above: LOW PROFILE: President-elect Barack Obama leaves a gym in Chicago on Thursday. He also was briefed on a range of national security issues and returned congratulatory calls to world leaders.

Mr. Obama, who spent part of Thursday being briefed by President Bush’s top intelligence officer and talking with nine world leaders, will hold a meeting with his transition team of 17 economic advisers, including billionaire investor Warren Buffett, and then publicly tackle bad financial news that has returned with a vengeance since his election Tuesday.

By Jon Ward and Christina Bellantoni
The Washington Times

On Thursday, reports of the worst month for retailers in 35 years triggered a 443-point plunge in the Dow Jones Industrial Average that added to a nearly 500-point loss Wednesday to complete the worst two days for the Dow since 1987.

Retailers reported a “simply awful” month for sales in October and forecast a dismal 1 percent growth rate for the critical holiday season, during which most stores normally make about a quarter of their yearly sales.

Mr. Obama’s schedule was announced as he locked down his first major White House staff position when Rep. Rahm Emanuel, an Illinois Democrat and former senior adviser to President Clinton, agreed to become his chief of staff, and Mr. Bush vowed to help his successor navigate the transition of power.

In an emotional South Lawn address to executive branch employees, Mr. Bush warned that terrorists “would like nothing more than to exploit this period of change…

Read the rest:
http://www.washingtontimes.com/news/2008/nov/07/obama-faces-economy-early-days/

Obama Should Make Haste Slowly

November 7, 2008

Festina lente. Make haste slowly. That was the motto of the revolutionary-minded young Augustus who soon grasped that he needed to build upon Rome’s past, rather than dismantle it.

Amid the celebration of the historic victory of Barack Obama, the country should now quit the bickering, appreciate a fair and peaceful transference of power, and unite behind its new commander in chief.

By Victor David Hanson
The Washington Times

But in turn our new President Obama would do well to heed that ancient Roman wisdom, appreciating that the real world after Nov. 4 is not exactly the same as its frequent caricature during the hard-fought campaign.

John McCain promised to cut taxes on all. Mr. Obama promised to raise them on some. But neither plan fully appreciated that we are now buried deep under trillions of dollars of debt – and need both more revenue and less expenditure.

An Obama administration, like it or not, must cede to the laws of physics: America will have to pay down debt while not raising taxes too high at a time of recession. That balancing act will make it hard to borrow additional billions for more promised federal spending.

“Hope and change” may have implied an easy transition to our clean, cool solar and wind future. But for a while longer, America’s envisioned new electric cars will still require old-fashioned natural gas, coal and nuclear power to generate electricity to charge them.

Economic slowdown, conservation and public promises to drill more oil and natural gas have already helped to collapse world oil prices and saved us billions. And before we talk of ending the coal industry, we should thank our lucky stars that America has the world’s most plentiful supply of coal to transition us to alternate sources of energy.

We need more regulation of both Wall Street and Fannie Mae and Freddie Mac, which all went feral and turned on us during both the Clinton and Bush administrations. Yet European leaders are faced with far worse financial meltdowns than we are – and their problems have nothing to do with American excess or George Bush.

The dollar is climbing against the Euro because market analysts realize that for all our sins, American financial institutions are still far less exposed than those elsewhere in the world, and our free-market system far more flexible to recover from excess and grow the economy.

Some have called for the Wall Street bailout to be just the first, rather than the last, large federal takeover of American finance. But again, we should remember that despite a looming recession, Americans are still collectively the most affluent and free citizens in the world – precisely because our unique free-market system creates enormous wealth and draws in more capital and talent than elsewhere on promises of commensurate individual rewards. President Obama need not give radical chemotherapy to an ill economy that does not have a fatal cancer.

The shooting war in Iraq is ending. President Obama can continue to withdraw American troops slowly on the basis of a growing victory, rather than rashly and harnessed to an artificial timetable. In time, a Democratic administration could assert that a constitutional government in Iraq and an unprecedented defeat of al Qaeda in the heart of the ancient caliphate enhanced U.S. security at home and abroad – and are achievements to be claimed rather than simply reckless acts to be abruptly abandoned.

For all the campaign charges of unfairness, America currently has the most progressive tax system in the world, in which the top 5 percent of wage earners pay over 60 percent of all federal income taxes. President Obama will raise rates, as promised. Yet he might consider that Americans in the past came to accept the Clinton income tax hike to 40 percent on the top bracket – but may well balk at adding unprecedented increases in payroll taxes on top of all that. That combination could mean a sizable tax raise on many of those self-employed who already pay nearly half their income in various taxes – and gut rather than just shear the sheep.

Read the rest:
http://www.washingtontimes.com/news/2008/nov/
07/make-haste-slowly/

Euphoria of Obama’s Election Victory Fades Fast: Markets Down 10%; Toyota Says Auto Crisis “Unprecedented”

November 6, 2008

Toyota Motor slashed its profit forecast Thursday, warning the global auto industry faces an “unprecedented” crisis as Asian stocks tumbled on fears the US is sinking deeper towards recession.

The Japanese giant became the latest automaker to reveal plunging profits due to the financial crisis, following on the heels of BMW, Nissan and Honda.

From Breitbart

The headquarters of German luxury carmaker BMW are pictured ... 

Toyota , vying with General Motors for the title of the world’s top automaker, cut its annual profit forecast by more than half after a terrible year so far.

It now expects a 68 percent plunge in net profit to 550 billion yen (5.6 billion dollars) — the first drop in nine years.

“The financial crisis is negatively impacting the real economy worldwide, and the automotive markets, especially in developed countries, are contracting rapidly,” Toyota executive vice president Mitsuo Kinoshita said.

“This is an unprecedented situation.”

Elsewhere in the transport sector, European aircraft manufacturer Airbus warned it expects a sharp reduction in new orders in 2009 as the global economy slows.

Airbus A380.jpg

Amid the gloomy news, Asian stock markets fell heavily. Japan’s Nikkei stock index plunged 6.53 percent even before the Toyota warning, which came after the close of trade.

The drop wiped out gains seen a day earlier on hopes that US president-elect Barack Obama will get to work on fixing the world’s largest economy in the face of the worst financial crisis in decades.

“Now that the event is over, investors are sobering up and looking at the economic gloom,” said Mizuho Investors Securities broker Masatoshi Sato.

Seoul ended with a loss of 7.6 percent while Sydney shed 4.3 percent. Hong Kong shares were down 6.4 percent at midday.

The sharp falls came after the Dow Jones index slid 5.05 percent on Wall Street on Wednesday as investors braced for a gloomy economic ride after the euphoria of Obama’s election victory faded.

Read the rest:
http://www.breitbart.com/article.php?id=081106082217.v53hc2v7&show_article=1

Since Obama Election, Stock Market Down 929 Points

November 6, 2008

Wall Street plunged for a second day, triggered by computer gear maker Cisco Systems warning of slumping demand and retailers reporting weak sales for October. Concerns about widespread economic weakness sent the major stock indexes down more than 4 percent Thursday, including the Dow Jones industrial average, which tumbled more than 440 points.

Comments from Cisco that it saw a steep drop in orders in October and reports from retailers that consumers are skipping trips to the mall provided fresh evidence of the economy’s struggles. While sales at Wal-Mart Stores Inc. benefited from bargain-seekers, some specialty retailers posted huge drops in monthly sales.

Adding to investors’ list of worries, the Labor Department said the number of people continuing to draw unemployment benefits jumped to a 25-year high, increasing by 122,000 to 3.84 million in late October. It marked the highest level since late February 1983, when the economy was being buffeted by a protracted recession.

While new claims for unemployment benefits dipped by 4,000 to a seasonally adjusted level of 481,000 last week, the levels remain elevated. The findings added to the market’s unease ahead of Friday’s October employment report, a widely watched barometer of the economy’s health.

“I think everybody kind of simultaneously — the consumers and businesses — is tightening belts so that’s triggering a reasonably precipitous slowdown that’s widespread,” said Ed Hyland, global investment specialist at J.P. Morgan’s Private Bank. “This is something that we haven’t really seen, this level of this rapid and significant pullback both in the market and the economy.”

Thursday’s rout follows a drop of more than 5 percent in the market Wednesday that saw the Dow plunge nearly 500 points as investors fretted that weak readings on employment and downcast profit forecasts and job cuts from financial companies to steelmakers signaled broad economic troubles.

Still, the market’s two-day slide follows an enormous run-up since last week so some pullback was expected, analysts said. Through the six sessions that ended Tuesday, the benchmark Standard & Poor’s 500 index, surged 18.3 percent.

Read the rest:
http://biz.yahoo.com/ap/081106/wall_street.html
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By Alexandra Twin
CNN Money
NEW YORK (CNNMoney.com) — Stocks slumped for a second straight session Thursday, bringing the Dow’s losses to 929 points since Election Day, as fears of a prolonged recession sent investors running for the exits.

The Dow Jones industrial average (INDU) lost around 443 points, or 4.9%. The two-session decline of 929 points, or 9.7%, marked the biggest two-session point loss ever and the biggest two-session percentage decline in 21 years, according to Dow Jones.

The Standard & Poor’s 500 (SPX) index lost 5% and the Nasdaq composite (COMP) declined by 4.3%.

The Dow slumped 486 points Wednesday as President-elect Barack Obama’s historic victory gave way to worries about the economy he inherits. Those same worries continued to drag on stocks Thursday.

Read the rest:
http://money.cnn.com/2008/11/06/markets/markets_newyork/index.htm?postversion=2008110615