-
Global Rate Cut: A Good Start but Not Enough
Tweet Share on Facebook October 8, 2008 Comment (2)Today's unprecedented decision by the world's central banks to cut interest rates around the globe is exactly what the market needs. Unfortunately, it looks more like admission of what's going wrong in the global financial system than a true solution.
Panic selling on Monday and Tuesday that sent the Dow below 10,000 was caused by consensus on Wall Street that the government's $700 billion bailout plan simply didn't address fears that the credit crisis is spreading like wildfire outside of America's borders. That hasn't stopped. If anything, it's gotten worse this week. Banks simply aren't lending. Investors are willing to hide out in treasuries even though they're offering no return.
-
The Fed Can’t Save Markets
Tweet Share on Facebook October 7, 2008 Comment (1)The Fed is buying up commercial paper and is now hinting at an interest rate cut.
So what's the Dow doing?
Falling. Again.
As of midafternoon, stocks appear to be headed for a fifth straight day of losses.U.S. officials called for a "forceful and coordinated" reaction to the crisis after the Dow fell as much as 800 points Monday and ended the day below 10,000.
Maybe the losses continue because no matter what kind of bailout plan is put into place, investors are finally waking up to some harsh economic realities. As Bernanke put it:
"All told, economic activity is likely to be subdued during the remainder of this year and into next year. The heightened financial turmoil that we have experienced of late may well lengthen the period of weak economic performance and further increase the risks to growth."
Yesterday, we looked at 5 Bad Signs for a Dow Below 10,000. A day later, not much has changed.
-
5 Bad Signs for a Dow Below 10,000
Tweet Share on Facebook October 6, 2008 Comment (16)September spawned a monster. More of the credit-crunched, bailout-braced financial system gave way again today, following one of the worst months in Wall Street's memory.
The Dow fell more than 800 points Monday, dropping below the 10,000 mark for the first time since 2004 as global markets suffered their worst day in years while the credit crisis spreads. Shares recovered later in the day to end down about 350, but the damage still resulted in a 3.5 percent drop in the Dow and a whopping 4.3 percent fall in the Nasdaq. The systemic crisis in the U.S. banking sector is now a worldwide phenomenon.
-
Credit Crisis Goes Global
Tweet Share on Facebook October 6, 2008 CommentIf the single largest job of the government's $700 billion bailout plan was restoring confidence in the markets, it may already have failed.
Another Monday-morning massacre is slamming Wall Street today after traders around the world woke up to banking problems in their own backyards and saw little reason to hope for immediate help from America's newly inked bailout plan.
Stocks are plummeting across the globe today as the credit crisis spreads to the rest of the world.
-
Bailout Bill Passes!
Tweet Share on Facebook October 3, 2008 Comment (13)Late Friday, the House voted 263-171 to pass the $700 billion bailout for the financial sector by a comfortable margin, just days after rejecting an earlier bill, capping one of the most unsettling weeks in Wall Street history. Reports from Congress had markets guessing up to the final minutes before the vote.
What changed:
Congress got an earful. Swooning markets and angry constituents lined up to back an imperfect plan imperfectly, if earnestly, offered up by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. From the NYTimes:
-
Internet Tries to Kill Steve Jobs
Tweet Share on Facebook October 3, 2008 Comment (4)Speculating about Steve Jobs's health was a full-time occupation this summer, and today the Internet scrutiny moved Apple's share price.
A report from CNN's iReport, a citizen journalism site with the tag line "Unedited. Unfiltered. News," ran a headline saying Jobs was rushed to the hospital after a heart attack.
Apple spokespeople say it's not true. The story has been pulled from iReport. (Silicon Alley Insider was on this early today.)
-
IMF: Bank-Sector Stress Worsens Downturns
Tweet Share on Facebook October 2, 2008 Comment (1)The International Monetary Fund surveys the world economy and outlines some examples of when financial turmoil turns into economic damage. America could be its poster child for the worst-case scenario.
Not all episodes of financial stress lead to economic slowdowns (that only happens about half the time), but when banking-sector problems do stunt growth, the pain lasts longer. How much longer? "In particular, slowdowns or recessions preceded by banking-related stress tend to involve 2 to 3 times greater cumulative output losses and tend to endure 2 to 4 times as long," the IMF says.
