Global investors search for safety

Investors showed renewed signs of fear about the extent of the economic problems, sending equities indices sharply lower and bond prices higher
Source: Financial Times - US homepage | 20 Nov 2008 | 11:56 am

Peugeot Citroen cuts 2,700 jobs

French car company Peugeot Citroen announces plans to shed 2,700 jobs because of falling demand in Europe.
Source: BBC News | Business | World Edition | 20 Nov 2008 | 11:51 am

Oil falls toward $50

Read full story for latest details.

Source: Business and financial news - CNNMoney.com | 20 Nov 2008 | 11:51 am

Prospect for auto bailout dims

WASHINGTON (Reuters) - Chances dimmed that a last-minute plan being crafted by Republican senators, with White House support, to provide $25 billion to bail out U.S. automakers would receive enough backing from Democrats to pass before the end of this week.
Source: Reuters: Business News | 20 Nov 2008 | 11:45 am

GM and Toyota to cut Thai output

BANGKOK (Reuters) - General Motors Corp and Toyota Motor Co said they will cut production at their plants in Thailand, the latest move by global automakers seeking to slash costs in the face of weak sales and deepening economic gloom.
Source: Reuters: Business News | 20 Nov 2008 | 11:45 am

UK companies' job cuts reach 24,000 in a week

British companies have cut nearly 24,000 jobs over the past week, after Rolls-Royce, AstraZeneca and BAE this morning added to the growing tally of unemployment.
Source: Latest Business News from Times Online | 20 Nov 2008 | 11:44 am

Recession blues play on

LONDON (Reuters) - Global economic misery spread on Thursday with the Federal Reserve predicting U.S. recession well into 2009, Japan's exports to Asia falling for the first time in six years and job losses mounting.
Source: Reuters: Business News | 20 Nov 2008 | 11:40 am

Major S&P Stocks On Decade Lows (AA, AMAT, AMD, DOW, EK, GCI, HOG, INTC, IP, JNY, M, MU, MSFT, NWL, NWS, SLE, STX, LUV, HOT, YRCW)

Source: 24/7 Wall St. | 20 Nov 2008 | 11:39 am

GM (GM) And Chrysler: Why Die Alone?

Rumors have surfaced again that Chrysler and GM (GM) may restart talks about a merger. For some time analysts and executives at the two companies have believed that a marriage would save $5 billion or so a year and allow the new entity to cut 40,000 or more people.

While putting that many people out of work may be horrible, it beats having most of the employees at the two firms fired due to bankruptcies.

According to the FT, "Chrysler hopes to revive merger talks with General Motors once a government bail-out package for Detroit’s carmakers is agreed allowing the two companies to address their immediate liquidity problems."

That would put the events in the wrong order, especially since the Congress does not seem inclined to invest money in the car industry. It is not a sure thing that the new administration can come up with the capital although analysts are betting in that direction.

Arguing that bailing out two companies so they might become one seems like a losing proposition. Arguing that a combined and more efficient firm would be much more likely to be profitable and would only need modest capital to bridge it through the merger should be much easier to sell.

Detroit does not seem to be terribly skilled at selling itself, so why should this be an exception?

Douglas A. McIntyre

Source: 24/7 Wall St. | 20 Nov 2008 | 11:39 am

Europe Markets: Europe stocks face fresh round of selling

European stocks see a fresh round of selling on Thursday on concerns of a lingering global recession that few firms will be able to escape.

Source: MarketWatch.com - Top Stories | 20 Nov 2008 | 11:33 am

Yugo gone

Serbia's iconic vehicle finally runs out of road
Source: BBC News | Business | World Edition | 20 Nov 2008 | 11:32 am

Earnings Watch: Updates, advisories and surprises

A roundup of the latest corporate earnings reports and what companies are saying about future quarters.

Source: MarketWatch.com - Top Stories | 20 Nov 2008 | 11:31 am

UK October budget deficit widens

The UK's public sector net borrowing widened by £1.4bn in October ahead of the pre-Budget report, official figures show.
Source: BBC News | Business | World Edition | 20 Nov 2008 | 11:30 am

Stock futures signal more pain

(Reuters) - Stock futures pointed to a drop on Thursday, adding to the previous session's plunge, as investors worried about the fate of stricken U.S. carmakers and the specter of a prolonged economic downturn. At 5:33 a.m. EST, S&P 500 futures were down 1.9 percent, Dow Jones futures were down 1.3 percent and Nasdaq 100 futures were down 2.2 percent.
Source: Reuters: Business News | 20 Nov 2008 | 11:30 am

Air France-KLM's second-quarter profit fell 96% on fuel, charge

Air France-KLM, Europe’s largest flag carrier, on Thursday reports a 96% drop in second-quarter profit as fuel costs surge and the value of hedges to protect against fuel and currency moves drops.

Source: MarketWatch.com - Top Stories | 20 Nov 2008 | 11:30 am

DMGT cuts 400 jobs amid 9% profit fall

Daily Mail and General Trust (DMGT) has axed 400 jobs across its publishing business amid a 9 per cent fall in profits as advertising revenues continue to tumble.
Source: Latest Business News from Times Online | 20 Nov 2008 | 11:28 am

Recession blues play on (Reuters)

Reuters - Global economic misery spread on Thursday with the Federal Reserve predicting U.S. recession well into 2009, Japan's exports to Asia falling for the first time in six years and job losses mounting.

Source: Yahoo! News: Business | 20 Nov 2008 | 11:28 am

Rolls-Royce plans 2,000 job cuts

Aircraft engine maker Rolls-Royce says it plans to cut between 1,500 and 2,000 jobs in 2009, including 140 in the UK.
Source: BBC News | Business | World Edition | 20 Nov 2008 | 11:21 am

Microsoft (MSFT) Zune Being Washed Out With The Tide

It is like fighting an army with a pea-shooter. Microsoft (MSFT) is changing the subscription model for its Apple (AAPL) iPod knock-off, the Zune.

According to Reuters, MSFT "announced a new music subscription plan for owners of its Zune players, which would allow them to keep 10 tracks per month and add them to their permanent collection.".

With 180 million iPods sold around the world since it was introduced by Apple six years ago, Microsoft would have to give away music for free to get any substantial part of that market, and that may not be such a bad idea.

Looking at the billions of dollars that Redmond spent to pick up market share for its Xbox which was launched into a market dominated by Sony's (SNE) Playstation, Microsoft will have to make a similar push to make any difference in its competition against the iPod.

The cost of a subscription to Microsoft's music download plan is $14.99 a month. It would be expensive to underwrite that for a million people, but it would be possible with the software company's balance sheet. The $14 million investment each month is actually modest.

It will take that kind of investment to save the Zune from oblivion.

Douglas A. McIntyre

Source: 24/7 Wall St. | 20 Nov 2008 | 11:21 am

Public finances fall into red by £1.8 billion

Alistair Darling's problems over the rapidly worsening state of the Government's finances mounted today ahead of Monday's critical Pre-Budget Report.
Source: Latest Business News from Times Online | 20 Nov 2008 | 11:20 am

UPDATE 2-Lukoil talked to Caixa on Repsol stake sale-source

* La Caixa talked to Lukoil on possible Repsol stake sale
Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Nov 2008 | 11:14 am

Recession fears hit stock markets

European and Asian markets fall sharply amid growing concerns that the world economy will enter a protracted slump.
Source: BBC News | Business | World Edition | 20 Nov 2008 | 11:13 am

October UK retail sales fall 0.1%

Sales on the UK's high streets fell by a lower-than-expected 0.1% in October, Office for National Statistics figures show.
Source: BBC News | Business | World Edition | 20 Nov 2008 | 11:12 am

Putting It Balance Sheet On The Line, GE (GE) Becomes The World's Bank

GE (GE) has guts. And, that may be what it takes to keep the company's revenue and earnings growing. It is preparing to lend money to more and more customers who want to buy its goods and services.

According to the FT, "General Electric is willing to extend more financing to customers of its industrial businesses next year to help assure key energy, transportation and water projects proceed even if credit markets remain frozen."

GE could originate as much as $150 billion in loans in 2009. It is a high-stakes game, but the conglomerate may have to play it to get Wall St. into its stock. The firm's shares have dropped from over $38 to $14.45 in just a year.

The irony in the GE plan is that the market's greatest concern about the company is the credit and liability exposure in its financial services arm. GE is prepared to increase that risk to accelerate earnings. Its large infrastructure units are doing well, but several other divisions including its industrial and medical devices arms are doing poorly. In a poor credit environment, GE needs to do something to help those operations grow.

Buying earnings with capital risk would seem to be a deal with the devil, but GE has put its reputation on its ability to keep growing. It has to back that up, even if it uses it own balance sheet to do it.

Douglas A. McIntyre

Source: 24/7 Wall St. | 20 Nov 2008 | 11:11 am

Prospect for auto bailout dims (Reuters)

Reuters - Chances dimmed that a last-minute plan being crafted by Republican senators, with White House support, to provide $25 billion to bail out U.S. automakers would receive enough backing from Democrats to pass before the end of this week.

Source: Yahoo! News: Business | 20 Nov 2008 | 11:07 am

How to love trillion-dollar deficits

We're looking at a mind-boggling, trillion-dollar budget deficit next year and I say keep the red ink rolling.

Source: Business and financial news - CNNMoney.com | 20 Nov 2008 | 11:05 am

Stock futures signal more pain (Reuters)

Reuters - Stock futures pointed to a drop on Thursday, adding to the previous session's plunge, as investors worried about the fate of stricken U.S. carmakers and the specter of a prolonged economic downturn. At 5:33 a.m. EST, S&P 500 futures were down 1.9 percent, Dow Jones futures were down 1.3 percent and Nasdaq 100 futures were down 2.2 percent.

Source: Yahoo! News: Business | 20 Nov 2008 | 11:04 am

How not to act your age at work

So you've discovered how to network on Facebook and LinkedIn and you've even been known to forward the occasional YouTube video to colleagues. Well, don't go congratulating yourself on how au courant you are just yet.

Source: Business and financial news - CNNMoney.com | 20 Nov 2008 | 11:02 am

AstraZeneca axes jobs and plants

Anglo-Swedish pharmaceutical giant AstraZeneca says it will cut 1,400 jobs by 2013 and close three European factories in a cost-cutting effort.
Source: BBC News | Business | World Edition | 20 Nov 2008 | 11:02 am

Pension Funds Get Ready To Risk Payouts

It used to be a pretty good deal to work at a large US company for several decades and then retire with a pension and health benefits. A lot of that part of the American dream is heading out the window. The Big Three may not be able to fund the VEBA which they set up with the UAW. That would mean tens of thousands of retired auto employees might have to pay their own doctor bills.

A large number of companies are trying to get Congress to give them relief from putting money into their retirement programs. According to The New York Times, "The total value of company pension funds is thought to have fallen by more than $250 billion since last winter." Under normal circumstance, the firms would have to put that money back. With earnings down and access to capital nonexistent, the checks to cover those deficits are not likely to be written.

The trouble with forsaking these contributions today is that there is no reason to think that the money can be found to make up these payments later, at least in the case of companies which may be badly damaged by the recession.

Corporate pensions are not the only ones at risk. Tens of thousands of municipal and state retirees are beginning to find out that their pensions are underfunded as well. With the tax base shrinking in most regions, solving the problem will be remarkably difficult.

The system which was developed to reward longtime workers as they moved into their golden years is now breaking apart. Some government entities will default on their obligations. Many companies will. And, one of two things will happen. Either the federal government will step into another financial mess with boatloads of capital or a huge number of people over 65 will be flooding emergency rooms and drive-in clinics.

Being old just got less attractive.

Douglas A. McIntyre

Source: 24/7 Wall St. | 20 Nov 2008 | 10:58 am

Indications: U.S. stock futures point to extended slide

U.S. stock futures dropped further Thursday as the fears over the financial and automotive sectors as well as the broader economy that have punished the market by nearly 8% just this week showed no signs of abating.

Source: MarketWatch.com - Top Stories | 20 Nov 2008 | 10:57 am

Citi to use scalpel not axe in trimming Asia units

HONG KONG/SINGAPORE (Reuters) - Citigroup is scrambling to slash costs in the face of collapsing investor confidence, but the embattled bank is unlikely to retreat from Asia, its strongest performing region.
Source: Reuters: Business News | 20 Nov 2008 | 10:54 am

Microsoft lets Zune music subscribers keep tunes

Source: Business and financial news - CNNMoney.com | 20 Nov 2008 | 10:49 am

UPDATE 1-Pfizer pulls EU bid to sell non-prescription Viagra

*Pfizer withdraws EU application for non-prescription Viagra
Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Nov 2008 | 10:48 am

Oil price hovers at $50 a barrel

Oil prices are hovering around $50 a barrel amid growing fears over a global recession and lower demand for oil.
Source: BBC News | Business | World Edition | 20 Nov 2008 | 10:45 am

China fears grow over job losses

Beijing says its employment outlook is "grim", amid concerns of increasing social unrest caused by economic problems.
Source: BBC News | Business | World Edition | 20 Nov 2008 | 10:45 am

Mortgage market still weak despite 7% rise

Mortgage lending rose nearly 7 per cent last month, but the Council of Mortgage Lenders (CML) warned of "continuing weakness" in the market.
Source: Latest Business News from Times Online | 20 Nov 2008 | 10:44 am

Taiwan's economy contracts in 3rd quarter

Taiwan's economy contracted 1.02 percent in the third quarter from a year ago, its first decline since 2003, the government said Thursday. Gross domestic product is also projected to...
Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Nov 2008 | 10:40 am

Volunteers make 143 tons of spicy kimchi in Seoul

Thousands donned aprons and hair nets Thursday outside Seoul's City Hall in a bid to make the world's biggest batch of kimchi, the spicy pickled cabbage that is Korea's best-known dish. ...
Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Nov 2008 | 10:40 am

Turkmenistan Jan-Sept gas output 52 bcm - source

ASHGABAT, Nov 20 (Reuters) - Turkmenistan, Central Asia's largest natural gas producer, produced 52 billion cubic metres (bcm) of gas in January-September 2008 and exported 35 bcm, a government source...
Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Nov 2008 | 10:37 am

The Market Thinks The Bailout Is Bogus

A quick look at bank stocks would indicate that Wall St. is not terribly impressed with the Paulson $700 billion bailout plan. Citigroup (C), the whipping boy of the group, may be at a multi-year low. But, so is Goldman Sachs (GS), the most sublime of all US financial institutions. Even Jamie Dimon's JP Morgan (JPM), arguably the best run bank, has been pulled into the vortex of selling

The trouble is that investors think that the amount of money being put into the financial system is far too little. If it was adequate, this argument goes, bank stocks would be worth more than Confederate dollars.

Citi is supposed to lose as much as $2.72 a share in 2009, at least according to the more pessimistic numbers. Banks have underperformed analysts' guesses most of this year. Why should next year be any different? The Wall St. consensus is that Goldman will make $10.73 EPS, which is actually up from where 2008 is being pegged. So, why has its stock dropped from $234 to $55 in less than a year?

According to the Oracle of Delphi, the reason these stocks are taking such a beating is that the estimates are too high and are based on unrealistic expectations of an economic recovery.

A number of indicators point to bank earnings getting worse. One of them is problems with consumer credit and the potentially toxic securities attached to this market. Another is that corporate debt default rates are likely to rise sharply, at least if credit default swaps are any indication.

An analyst at Friedman Billings Ramsey was good enough to work out the math. According to Reuters, these figures show that "The U.S. financial system still needs at least $1 trillion to $1.2 trillion of tangible common equity to restore confidence and improve liquidity in the credit markets."

By that estimate, the Paulson program fund would have to be increased almost two-fold.

While this expert or that expert may differ over what the exact sum may be, the markets are wise, and all the trading in major financials indicates that there is still great concern that another large bank could fail due to lack of capital. Based on trading over the last two weeks, the money is on Citgroup to be that firm.

If the financial world thought Lehman wrecked the credit markets, it knows that Citi would be much worse. Looking at what it cost to save AIG (AIG), the pot is still light.

Douglas A. McIntyre

Source: 24/7 Wall St. | 20 Nov 2008 | 10:35 am

Peugeot Citroen to cut 2,700 jobs

French automaker PSA Peugeot Citroen said Thursday it plans to cut 2,700 jobs in response to a worsening economic crisis that has seen European car sales plummet. The plan, to be carried
Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Nov 2008 | 10:35 am

Global stocks fall sharply

Overseas stock markets fell sharply Thursday, taking a cue from Wall Street, as investors remained anxious about the grim outlook for the global economy and corporate profits.

Source: Business and financial news - CNNMoney.com | 20 Nov 2008 | 10:31 am

Stocks set to extend losses

U.S. stocks were poised to extend losses Thursday, a day after a rout on Wall Street sent the blue-chip Dow average below 8,000 for the first time since 2003.

Source: Business and financial news - CNNMoney.com | 20 Nov 2008 | 10:30 am

AstraZeneca to cut jobs, close plants in Europe

Pharmaceutical company AstraZeneca PLC said Thursday it plans to close three plants in Spain, Belgium and Sweden and cut 1,400 jobs in Europe by 2013 to improve efficiency and expand...
Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Nov 2008 | 10:30 am

US opens consulate in China industry center Wuhan

The U.S. opened its first new consulate in China in 20 years on Thursday as part of a shift of diplomatic resources away from Europe and toward the "new front lines of diplomacy." The...
Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Nov 2008 | 10:29 am

Daimler to further downsize temporary workforce: spokeswoman

The German luxury car maker Daimler will reduce the number of its temporary workers in Germany again, a spokeswoman told AFP on Thursday as the company sought to counter the effects of...
Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Nov 2008 | 10:26 am

Ahold 3Q earnings fall despite higher sales

Royal Ahold NV, the Dutch owner of U.S. grocery chains including Stop & Shop and Giant, on Thursday said third-quarter earnings fell 8.9 percent on higher taxes and a worse performance by a
Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Nov 2008 | 10:25 am

No job, bad mortgage - no luck

All the foreclosure prevention plans announced to date will do little to help the next wave of delinquent homeowners, who can't make their monthly payments because they've lost their jobs.

Source: Business and financial news - CNNMoney.com | 20 Nov 2008 | 10:21 am

Senate to probe bond-ratings firms: report

(Reuters) - A U.S. Senate subcommittee is opening a probe into causes of the global financial crisis, focusing in part on whether bond-ratings firms, driven by conflicts of interest, boosted mortgage investments which have since collapsed, the Wall Street Journal said.
Source: Reuters: Business News | 20 Nov 2008 | 10:18 am

Rolls-Royce to cut up to 2,000 jobs by 2009 as demand slumps

Aircraft-engine maker Rolls-Royce Group Plc on Thursday says it will cut up to 2,000 jobs by 2009 as production delays and cuts to aircraft programs combine with a sharp economic downturn to hit demand for its goods.

Source: MarketWatch.com - Top Stories | 20 Nov 2008 | 10:15 am

EU reaches deal on farm reforms

EU ministers agree to reform farm policy by moving more subsidies away from production and liberalising the dairy market.
Source: BBC News | Business | World Edition | 20 Nov 2008 | 10:13 am

London Markets: U.K. stocks slide on recession concerns, but retailers climb

U.K. stocks were on pace Thursday to close below a key technical level for the first time in three weeks as the global and local fears about recession were shown by the job cuts at Rolls-Royce and the discounts employed by Marks & Spencer.

Source: MarketWatch.com - Top Stories | 20 Nov 2008 | 10:12 am

Citi to use scalpel not axe in trimming Asia units (Reuters)

Reuters - Citigroup is scrambling to slash costs in the face of collapsing investor confidence, but the embattled bank is unlikely to retreat from Asia, its strongest performing region.

Source: Yahoo! News: Business | 20 Nov 2008 | 10:11 am

BNP Paribas dismisses talk of capital increase

BNP Paribas late Wednesday dismisses speculation it is considering a move to strengthen its capital base, saying it meets all the standards required by regulators.

Source: MarketWatch.com - Top Stories | 20 Nov 2008 | 10:07 am

British retail sales down 0.1 percent in October (AP)

AP - British retail sales fell only slightly in October, official figures showed Thursday, despite mounting evidence from retailers such as Woolworths PLC and Marks & Spencer PLC, that business conditions are extremely tough.
Source: Yahoo! News: Business | 20 Nov 2008 | 10:06 am

High street sales rise defies gloomy outlook

Retail sales fell by just 0.1 per cent in October, much less than the forecast 0.9 per cent decline, official figures revealed today.
Source: Latest Business News from Times Online | 20 Nov 2008 | 9:57 am

Shoppers: Wait 'til next year

While U.S. merchants are a few weeks away from wrapping up a potentially disastrous 2008, experts say there is some relief on the horizon in 2009 for both stores and consumers - and it's coming from thousands of miles away in China.

Source: Business and financial news - CNNMoney.com | 20 Nov 2008 | 9:55 am

Iceland gets $4.6 billion bailout

Nordic countries agreed to lend struggling Iceland $2.5 billion to help it recover from a series of crippling bank failures, bolstering a $2.1 billion aid package from the International Monetary Fund, their governments announced Thursday.

Source: Business and financial news - CNNMoney.com | 20 Nov 2008 | 9:49 am

Ballmer to Yahoo investors: What didn't you understand about 'No'?

Steve Ballmer has already said it more than once. For good measure, he said it again in front of Microsoft's own shareholders: 'We are done with all acquisition discussions with Yahoo'
Source: Financial Times - US homepage | 20 Nov 2008 | 9:41 am

Isuzu, Mazda to cut 2,700 seasonal workers in Japan

Isuzu Motors Ltd. and Mazda Motor Corp. announce layoffs Thursday, amounting to a combined 2,700 seasonal workers as the automakers curtails production amid weaker demand, according to a media report.

Source: MarketWatch.com - Top Stories | 20 Nov 2008 | 9:40 am

Financial crisis could have happy ending

I was thinking about the financial mess the other day and I came up with this theory. I'm wary of it because it's comforting, even uplifting, and by definition any economic supposition that has a happy ending is suspect. So with that caveat here goes:

Source: Business and financial news - CNNMoney.com | 20 Nov 2008 | 9:33 am

Mobile banking's prospects looking better in Asia

Polillo, a remote island in the northeastern Philippines with poor road infrastructure and no public transport, is set to get a taste of mobile banking long before the developed world does.

Source: MarketWatch.com - Top Stories | 20 Nov 2008 | 9:31 am

Oil down a dollar as crisis crimps growth

LONDON (Reuters) - Oil fell for a fifth straight session to approach $50 a barrel on Thursday as the fallout from the credit crisis hits the global economy, hitting demand for fuel.
Source: Reuters: Business News | 20 Nov 2008 | 9:11 am

Iceland secures $5.1bn bail-out

Iceland has finally secured a $5.1bn bail out comprising a $2.1bn loan from the International Monetary Fund and additional loans of up to a total of $3bn from Denmark, Finland, Norway, Sweden, Russia and Poland and the Faroe Islands
Source: Financial Times - US homepage | 20 Nov 2008 | 8:56 am

Asia Markets: Nikkei sinks below 8,000; Kospi and Hang Seng dive

Markets across Asian posted sharp losses Thursday, as stocks were swept away after Wall Street's sell-off and amid concern about rising deflation risks.

Source: MarketWatch.com - Top Stories | 20 Nov 2008 | 8:53 am

Media Digest 11/20/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, Japan exports hit their lowest level since 2002.

Reuters writes that hopes for an auto bailout in this session of Congress are poor.

Reuters reports that the US is looking into lending practices at Golden West.

Reuters reports that small businesses are being hurt by trouble on Wall St.

Reuters reports that a bank analyst said financial firms need another $1 trillion in capital, especially Goldman Sachs (GS), Wells Fargo (WFC), JP Morgan (JPM), Citigroup (C), AIG (AIG), and Bank of America (BAC).

Reuters writes that GM (GM) and Toyota (TM) are cutting production output in Thailand.

Reuters reports that Yahoo! (YHOO) and T-Mobile announced a mobile search deal.

Reuters reports that Kohl's will offer large price cuts for the holidays.

Reuters reports that over 100 "blue chip" stocks are trading under $10.

Reuters reports that Microsoft (MSFT) has modified it Zune subscription service to make it more competitive.

The Wall Street Journal reports that a number of housing and financial CEOs have received huge pay packages in the period just before the bust.

The Wall Street Journal reports that car manufacturing facilities in the South with their low labor costs could benefit from Detroit's fall.

The Wall Street Journal reports that Boeing (BA) will cut jobs in its Kansas location.

The Wall Street Journal reports that Microsoft has ruled out buying Yahoo! .

The Wall Street Journal reports that executives at large companies are now more worried about risk management than workforce issues.

The Wall Street Journal reports that more and more analysts are rating Dell (DELL) as a "sell".

The Wall Street Journal reports that an industry group says chip sales will fall.

The Wall Street Journal reports that "Some mortgage companies are slashing the amount that borrowers owe, deciding that a permanent cut in the loan balance may pay off if that helps teetering borrowers avoid foreclosure."

The Wall Street Journal reports that Harbinger Capital has cut its stake in The New York Times (NYT).

The Wall Street Journal writes that Ambac (ABK) "reached a deal with counterparties to commute four securitized transactions worth about $3.5 billion on Sept. 30 in exchange for a $1 billion cash payment from Ambac Assurance Corp."

The Wall Street Journal reports that Sanofi-Aventis settled litigation with two drug makers over U.S. sales of generic copies of its allergy treatment Allegra,

The Wall Street Journal reports that BASF is closing plants and cutting thousands of jobs.

The New York Times reports that web retailers are staging holiday price wars.

The New York Times reports that "Some of the nation’s biggest companies want Congress to roll back rules requiring them to put more money into pension funds."

The New York Times reports that some economists think efforts by China and other emerging countries to take the global economy out of a recession.

The FT reports that the Fed vowed to fight deflation.

The FT reports that Chrysler hopes to restart merger talks with GM (GM).

The FT reports that yields on junk bonds spiked sharply.

Bloomberg writes that record options trading is drying up as hedge funds fold.

Douglas A. McIntyre

Source: 24/7 Wall St. | 20 Nov 2008 | 8:52 am

Banks back mandatory CDS clearing: report

LONDON (Reuters) - Some of the world's top banks are backing a proposal to develop a mandatory central clearing system for the $55 trillion credit default swap (CDS) market, a report in the Financial Times said on Thursday. Dealer banks are stepping up efforts to back CDS clearing to head off a more radical overhaul, which includes a proposal to move trading of over-the-counter CDS on to an exchange, the report said, citing an internal Morgan Stanley email.
Source: Reuters: Business News | 20 Nov 2008 | 8:27 am

How financial stocks look vs. history's biggest market busts

When investors turn rabidly bearish on a stock market sector, history shows they can sell it down to levels that almost no one could have imagined in the good times.
Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 Nov 2008 | 8:26 am

How financial stocks look vs. history's biggest market busts

When investors turn rabidly bearish on a stock market sector, history shows they can sell it down to levels that almost no one could have imagined in the good times.

Source: L.A. Times - Business | 20 Nov 2008 | 8:26 am

Asia Markets And Europe Open 11/20/2008

Markets in Asia fell sharply.

The Nikkei was off 6.9% to 7,703. Canon and Mitsubishi UFJ Financial took huge losses.

The Hang Seng fell 4.2% to 12,279.

The Shanghai Composite was off 1.7% to 1,984.

At the open in Europe, the FTSE was down 2.1% to 3,921. The Dax fell 2.6% to 4,245. The CAC 40 dropped 2.4% to 3,014.

Data from Reuters.

Douglas A. McIntyre

Source: 24/7 Wall St. | 20 Nov 2008 | 8:20 am

Deductibles march higher for employer-provided health insurance

The average U.S. worker faced out-of-pocket expenses of more than $1,000 this year, an annual study finds.

Employers are dramatically shifting healthcare costs onto workers, so much so that the average annual deductible for an individual surpassed $1,000 for the first time this year, according to a new study.

Source: L.A. Times - Business | 20 Nov 2008 | 8:00 am

Stock prices hit new lows on more troubling economic data

Dow closes below 8,000 for first time since 2003. The broad market sell-off is led by a huge drop in financial stocks on signs that the trouble affecting that sector is spreading. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 Nov 2008 | 8:00 am

Big 3 fail to close deal on bailout

Lawmakers scrap a vote for $25 billion in aid. Auto execs take heat over private jets. Embattled U.S. automakers...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 Nov 2008 | 8:00 am

Housing slowdown spurs auction of construction equipment

Sellers dump equipment to pull in capital. Buyers are lured by cheap prices, although some are reluctant to spend on equipment that could remain idle for months. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 Nov 2008 | 8:00 am

Carmakers charge ahead with electrics

At the L.A. Auto Show, Nissan-Renault announces plans to start selling a competitively priced electric car in 2010. Other makers, including BMW and Chrysler, show off what's developing. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 Nov 2008 | 8:00 am

In China, the U.S. opens food inspection office

The FDA field office is the first of three to be opened in the nation and is meant to boost consumer confidence in products coming from China. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 Nov 2008 | 8:00 am

Chinese carmakers also seek government aid

Caught in a slowdown, they urge policy changes rather than bailouts. Some are deferring export plans and cutting their costs. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 Nov 2008 | 8:00 am

Federal Reserve sees recession to at least mid-2009

The central bank indicates interest rates will be cut again soon. The news, along with other economic concerns, sends Wall Street into another panic. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 Nov 2008 | 8:00 am

Carmakers charge ahead with electrics

At the L.A. Auto Show, Nissan-Renault announces plans to start selling a competitively priced electric car in 2010. Other makers, including BMW and Chrysler, show off what's developing.

The future -- or at least a future -- may finally be in sight for the electric car.

Source: L.A. Times - Business | 20 Nov 2008 | 8:00 am

Government to loosen requirements for mortgage help program

Rule changes are designed to attract more participants. The government will let more borrowers qualify for a new,...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 Nov 2008 | 8:00 am

Housing slowdown spurs auction of construction equipment

Sellers dump equipment to pull in capital. Buyers are lured by cheap prices, although some are reluctant to spend on equipment that could remain idle for months.

Robert Anderson, 70, wandered the huge auction yard in Perris, inspecting his fleet of excavators, backhoes and other heavy construction machines, including the first crane he ever owned.

Source: L.A. Times - Business | 20 Nov 2008 | 8:00 am

Philanthropist and investor Vilar is convicted of fraud

Opera-loving philanthropist Alberto Vilar was convicted on fraud charges Wednesday for swindling investors, including the mother of actress Phoebe Cates, out of millions of dollars.
Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 Nov 2008 | 8:00 am

Chinese carmakers also seek government aid

Caught in a slowdown, they urge policy changes rather than bailouts. Some are deferring export plans and cutting their costs.

America's Big Three aren't the only carmakers turning to government with hat in hand.

Source: L.A. Times - Business | 20 Nov 2008 | 8:00 am

In China, the U.S. opens food inspection office

The FDA field office is the first of three to be opened in the nation and is meant to boost consumer confidence in products coming from China.

Amid recurring Chinese product safety scares, the U.S. Food and Drug Administration on Wednesday opened an inspection office in Beijing that officials said would help China export safer products to America and the world.

Source: L.A. Times - Business | 20 Nov 2008 | 8:00 am

Federal Reserve sees recession to at least mid-2009

The central bank indicates interest rates will be cut again soon. The news, along with other economic concerns, sends Wall Street into another panic.

Reporting from Los Angeles and Washington Ronald D. White -- Although consumers got some welcome news Wednesday about the prices they pay, the clouds over the economy loomed larger than ever.

Source: L.A. Times - Business | 20 Nov 2008 | 8:00 am

Stock prices hit new lows on more troubling economic data

Dow closes below 8,000 for first time since 2003. The broad market sell-off is led by a huge drop in financial stocks on signs that the trouble affecting that sector is spreading.

For investors who thought the stock market had put the worst of this ruthless year behind it, it's time to recalibrate.

Source: L.A. Times - Business | 20 Nov 2008 | 8:00 am

Big 3 fail to close deal on bailout

Lawmakers scrap a vote for $25 billion in aid. Auto execs take heat over private jets.

Embattled U.S. automakers added a new entry to their list of troubles Wednesday: executive jet travel.

Source: L.A. Times - Business | 20 Nov 2008 | 8:00 am

Australian stocks: Grim day on ASX

The Australian sharemarket closed more than four per cent weaker, with losses in all sectors particularly among the major miners and energy stocks after Wall Street's lowest close since 2003. The benchmark S&P/ASX200 index was...
Source: New Zealand Herald - Business | 20 Nov 2008 | 7:00 am

Financials need at least $1 trillion: analyst

(Reuters) - The U.S. financial system still needs at least $1 trillion to $1.2 trillion of tangible common equity to restore confidence and improve liquidity in the credit markets, Friedman Billings Ramsey analyst Paul Miller said.
Source: Reuters: Business News | 20 Nov 2008 | 6:47 am

Financials need at least $1 trillion: analyst (Reuters)

Reuters - The U.S. financial system still needs at least $1 trillion to $1.2 trillion of tangible common equity to restore confidence and improve liquidity in the credit markets, Friedman Billings Ramsey analyst Paul Miller said.

Source: Yahoo! News: Business | 20 Nov 2008 | 6:45 am

NZ stocks: Sharemarket can't shake the blues

The New Zealand sharemarket went for a ride lower today along with slumping world markets. A 51 per cent hike in interim profit from Fisher & Paykel Healthcare and a prediction of a 70 per cent rise in annual profit could not...
Source: New Zealand Herald - Business | 20 Nov 2008 | 6:30 am

Yahoo, T-Mobile announce mobile search deal

SAN FRANCISCO (Reuters) - Yahoo Inc announced an expansion of its mobile Web portals to T-mobile, so its smart phone users who get data will have Yahoo search by default.
Source: Reuters: Business News | 20 Nov 2008 | 5:38 am

Currency: Dollar ends day treading water

The New Zealand dollar lost ground again today as Asian equity markets fell, increasing risk aversion once again. Having traded between US54.70c and US55.05c overnight, the NZ dollar was around US55c by 8am but was back down at...
Source: New Zealand Herald - Business | 20 Nov 2008 | 5:30 am

China Internet giant Baidu's stock price dives amid allegations (AFP)

AFP - Shares in China's Nasdaq-listed Internet giant Baidu have dived more than a third amid allegations it gave unlicensed medical firms prominent exposure for money, without telling its customers.

Source: Yahoo! News: Business | 20 Nov 2008 | 5:14 am

Dow 8000: Is That Opportunity Knocking? (Deal of the Day)

How to take your buying cues from market professionals.
Source: SmartMoney.com | 20 Nov 2008 | 5:00 am

Fiscally-Responsible Gift Giving for Kids (Deal of the Day)

Use the tough economy to teach your kids about saving and giving.
Source: SmartMoney.com | 20 Nov 2008 | 5:00 am

Buying Opportunity in Bonds (Deal of the Day)

Dan Fuss sees some great buys in high quality corporate bonds.
Source: SmartMoney.com | 20 Nov 2008 | 5:00 am

Aus competition body rejects Air NZ-Air Canada deal

Australia's competition regulator has rejected a plan by Air NZ to join forces with Air Canada, saying the deal could hurt Australian consumers. The Australian Competition and Consumer Commission (ACCC) has blocked the proposed...
Source: New Zealand Herald - Business | 20 Nov 2008 | 4:03 am

Mortgage rates on their way down - Kiwibank joins in

Mortgage rates are on the way down today, with two banks - Westpac and Kiwibank, cutting rates in anticipation of another Official Cash Rate cut. Kiwibank says it has today cut its variable home loan rate to 7.95 per cent - what...
Source: New Zealand Herald - Business | 20 Nov 2008 | 3:02 am

Australian stocks: Four per cent down on opening

The Australian sharemarket has opened over four per cent weaker today, after Wall Street dropped below 8,000 points for the first time since 2003. The benchmark S&P/ASX200 index was in freefall, down 143.7 points, or 4.11 per cent,...
Source: New Zealand Herald - Business | 20 Nov 2008 | 1:35 am

Medical Products Maker's Blood-Testing Tools Dominate The Field

Talk about a captive market. Say you're an accident victim or a transplant patient or an anemic diabetic, and you need a blood transfusion.
Source: Investor's Business Daily: BUSINESS | 20 Nov 2008 | 1:30 am

Hanover unveils 100 per cent payback plan - reaction 'mixed'

One of the biggest casualties of the finance company collapse, Hanover Finance, has unveiled a five-year plan to pay back 100 per cent of depositors' principal. It says it will keep trading, with the same management and even start...
Source: New Zealand Herald - Business | 20 Nov 2008 | 1:30 am

Wall St plunges on continued recession fears

NEW YORK - Wall Street hit levels not seen since 2003 overnight, with the Dow Jones industrial average plunging below the 8,000 mark as the fate of Detroit's Big Three automakers amid a slumping economy disheartened investors. A...
Source: New Zealand Herald - Business | 20 Nov 2008 | 1:00 am

After The Close - Wednesday

AKAMAI TECHNOLOGIES (AKAM), a Web content delivery company, said it will eliminate 110 jobs, or 7% of its work force. It sees a $4 mil charge in...
Source: Investor's Business Daily: BUSINESS | 20 Nov 2008 | 12:38 am

In Brief - Wednesday

Pall (PLL), a maker of filtration systems, said Q1 sales grew 4% to $578 mil, below views. Pall, which will release Q1 results Dec. 9, said it was...
Source: Investor's Business Daily: BUSINESS | 20 Nov 2008 | 12:38 am

Business Briefs - Wednesday

BJ's beats as profit surges 40%. The No. 3 U.S. warehouse club operator said Q3 EPS rose 49 cents ex items, up from 35 cents a year ago and...
Source: Investor's Business Daily: BUSINESS | 20 Nov 2008 | 12:38 am

Trends & Innovations - Wednesday

Stem cells aid organ transplant
Source: Investor's Business Daily: BUSINESS | 20 Nov 2008 | 12:38 am

NZ manufacturing keeps on shrinking

The manufacturing industry has the honour of being the only industry shrinking in terms of jobs, data released by Statistics New Zealand (SNZ) today showed. The number of filled jobs in manufacturing decreased by 8060, or 3.4 per...
Source: New Zealand Herald - Business | 20 Nov 2008 | 12:30 am

Junk bond yields spike

Average yields on US junk bonds have topped more than 20 per cent for the first time amid rising concerns about a protracted recession and a wave of corporate defaults
Source: Financial Times - US homepage | 20 Nov 2008 | 12:20 am

TPG deal in China at risk over dispute

TPG risks losing a substantial investment in a Chinese leasing venture after a business dispute in which the company's local staff called in police to remove the private equity firm's representatives, people familiar with the matter say
Source: Financial Times - US homepage | 20 Nov 2008 | 12:01 am

Steve Ballmer says only search link with Yahoo! appeals

Steve Ballmer, Microsoft's chief executive, reopened the door to a deal with Yahoo! on its search business yesterday, but ruled out buying the struggling internet company.
Source: Latest Business News from Times Online | 20 Nov 2008 | 12:00 am

BBC One and BBC Two to stream live online from next week

The BBC is to begin showing all its programmes live over the internet from next week, raising questions about the long-term viability of the licence fee.
Source: Latest Business News from Times Online | 20 Nov 2008 | 12:00 am

Chemicals group BASF heads list of companies cutting staff

BASF, the world’s largest chemicals group, said yesterday that it was cutting 20,000 jobs and halting or scaling back production at nearly 200 plants after a huge decline in demand.
Source: Latest Business News from Times Online | 20 Nov 2008 | 12:00 am

German minister Michael Glos lets cat out of the bag on EU rescue package targets

A financial stimulus package worth €130 billion (£109 billion) is being prepared by the European Commission to help to boost industry and the economy, a German minister said yesterday. The recovery plan, which the EU’s executive arm plans to unveil next Thursday, will amount to 1 per cent of each country’s GDP, according to Michael Glos, the German Economy Minister.
Source: Latest Business News from Times Online | 20 Nov 2008 | 12:00 am

Scrap empty property tax in North East, demands MP, but not in London

Nick Brown, the Chief Whip, called yesterday for the North East to be exempted from the Government’s controversial tax on empty commercial buildings. However, Mr Brown, who is also Minister for the North East, said that the tax was appropriate for London and the South East.
Source: Latest Business News from Times Online | 20 Nov 2008 | 12:00 am

Harcourts' property sales down last month

The number of properties sold by Harcourts was down sharply on year ago figures but the real estate agent is hopeful of a pick up in the property market. "October is traditionally a strong month, but according to our latest statistics...
Source: New Zealand Herald - Business | 20 Nov 2008 | 12:00 am

GE offers assurance on credit

General Electric is willing to extend more financing to customers of its industrial businesses next year to help assure key energy, transportation and water projects proceed even if credit markets remain frozen, the conglomerate's chief executive said
Source: Financial Times - US homepage | 19 Nov 2008 | 11:35 pm

Chrysler hopes to revive GM merger talks

Chrysler hopes to revive merger talks with General Motors once a government bail-out package for Detroit's carmakers is agreed allowing the two companies to address their immediate liquidity problems
Source: Financial Times - US homepage | 19 Nov 2008 | 11:33 pm

Cheech & Chong Say Entertaining Each Other Is Key to Comedy

Source: Bloomberg - All Podcasts | 19 Nov 2008 | 11:15 pm

Hanke of Johns Hopkins Says U.S. Treasury in `Panic Mode'

Source: Bloomberg - All Podcasts | 19 Nov 2008 | 11:10 pm

Iran increases stockpile of uranium

Country is forging ahead with its nuclear programme, the United Nations' nuclear watchdog reported
Source: Financial Times - US homepage | 19 Nov 2008 | 11:00 pm

Bell Rock Capital's Toroian Favors Diversification Using ETFs

Source: Bloomberg - All Podcasts | 19 Nov 2008 | 10:28 pm

Author Berg Discusses L'Enfant, Creation of Nation's Capital

Source: Bloomberg - All Podcasts | 19 Nov 2008 | 10:14 pm

Fed vows to avert deflation

The US Federal Reserve will take every step required to ensure the country does not fall into deflation, its vice-chairman said as data showed consumer prices fell a record amount last month
Source: Financial Times - US homepage | 19 Nov 2008 | 9:33 pm

Market Assuming Citigroup (C) Will Go The Way Of AIG (AIG) Or Wachovia (WB)

Source: 24/7 Wall St. | 19 Nov 2008 | 8:43 pm

Senator Demint Says U.S. Automakers 'Have to Restructure'

Source: Bloomberg - All Podcasts | 19 Nov 2008 | 8:18 pm

Big Three's Uphill Drive

WASHINGTON —  The chief executives of Detroit's Big Three are doggedly trying to turn back what seems to be a rising tide in Congress against spending billions of dollars to rescue the domestic auto industry. 

Fresh from a skeptical Senate audience the day before, the auto chieftains spared no effort to persuade the House Financial Services Committee, fielding a phalanx of Michigan lawmakers to argue for approval of what they called a loan, not a bailout.

The executives looked positively elated to hear Carl Levin, senator of Michigan, warn that "time is shorter than short." The Democrat acknowledged the need for stringent conditions on any government rescue, but asked his colleagues not to "throw millions of jobs…overboard in your frustration."

Encouragement among the House panel's lawmakers, however, was scant. The first shot across the bow came from the committee's ranking Republican, Spencer Bachus of Alabama, who said that G.M.'s $75 average hourly wage was "three or four times what my constituents are making."

Auto industry management should "not kick the can down the road," he said, but first sit down "and hash out a solution to make these companies competitive."

Democrats weren't any easier on the Big Three executives.

"There's a delicious irony that there are private luxury jets landing in Washington with people who have tin cups in their hand," shot Gary Ackerman, the New York Democrat. "It's like seeing people show up at soup kitchens in top hats and tuxedos. Couldn't you have downgraded to first class or pooled jets?"

Underscoring public opinion that not just hefty pay packages but upscale perks also need to be banished, Brad Sherman, a California Democrat, asked the panel—Rick Wagoner of G.M., Alan Mulally of Ford Motor, and Robert Nardelli of Chrysler as well as the president of the United Automobile Workers, Ron Gettelfinger—"raise your hand if you flew here commercial."

Not one hand was raised, and Sherman honed in: "Are you willing to sell the jet here and fly back commercial?"

Nobody ventured a peep, let alone a hand. Wagoner, looking pained, gave a slight shrug as Sherman said: "I don't know how I go back to my constituents and say the auto industry has changed."

It didn't take lawmakers long to focus on one of the hottest issues—executive compensation. And it was a Republican—Peter Roskam, of Illinois, who challenged the auto executives to work for $1 a year.

"Those things really matter, and they set a tone," he said. But his query produced an unenthusiastic response. Wagoner of G.M., who grew increasingly flushed under the questioning, said he had given up cash bonuses in three of the last four years, and had voluntarily reduced his salary. But when Roskam persisted, asking him whether he would work for $1, he demurred.

Mulally tried to dance around the question, but when Roskam repeated it, he replied: "I think I'm okay where I am."

When it came to his turn for questioning, Paul Kanjorski, a Democrat of Pennsylvania, tried to pin down the elusive specifics of the industry's financial condition.

"When will General Motors run out of money?" he asked Wagoner.
 
"We don't have the luxury of a lot of time," Wagoner parried.

Undeterred, Kanjorski pressed: "How much money do you need until March 30?"

Wagoner equivocated, and the lawmaker pointedly repeated: "Maybe I'm dense. How much money do you need to survive from today until March 30?"

The G.M. chief conceded that under "the worst-case scenario, it would be $5 billion a month if the market doesn't turn around."

So, Kanjorski retorted, "You will be out of money then?"

Wagoner, who said G.M.'s forecast is based on selling cars at the current level—and not lower—said, "We think we have a good shot to make it through next year."

During repeated questioning, Wagoner and his counterparts insisted that the problem was the flailing economy and credit crunch that has stymied car loans, not their management.

"It's not G.M., but the economy that has landed us in such a precarious position," he maintained. "Our industry needs a bridge over a financial chasm."  

"Many people have a picture of G.M. that does not reflect what it has been doing" to shave costs, pare product lines, and reduce benefits and health-care costs, Wagoner argued. He insisted that American automakers are "matching, or besting, our foreign competitors."

He argued that closure of automakers would be a devastating blow to the American economy in terms of lost jobs, benefits, and tax revenues—arguments that are not new but seemed to touch some lawmakers, especially those whose districts are involved in U.S. automaking.

Gettelfinger—who spoke much less than the auto chieftains—argued that the union was continually negotiating, and had made a number of concessions on wages and benefits—including slashing the wages of newly hired workers.

Not everyone was convinced. Donald Manzullo, Republican from Illinois, questioned why car loans were so difficult to get if community and other banks have plenty of money for loans as they testified at a separate committee hearing Tuesday. Other lawmakers questioned why a tax break to consumers for buying cars wasn't a better idea than infusing that money into a dying industry.

Another Republican, Patrick McHenry of North Carolina, tried to unearth what bankruptcy plans the automakers have—but the manufacturers swatted that off, insisting they would survive. Later, Jeffrey Sachs, of Columbia University, excoriated the idea of bankruptcy, arguing that it simply could not work given the absence of markets.

But Jackie Speier, Democrat of California, noting that Congress "has become the people's bank of the United States" quoted from Deutsche Bank and other analyses of the auto industry, which said bailout costs would likely rise to $30 billion. She tried—in vain—to get the Big Three to commit to fuel-efficient vehicles ahead of their current schedule.

Barney Frank, the Massachusetts Democrat who chairs the committee, raised the sticky issue of whether there is "a double standard for blue-collar employees being judged by a standard that is different than white-collar employees."

"The average A.I.G. (American International Group) worker makes a good deal more than a blue-collar worker," he said. Noting that "bankruptcy has become the new spectator sport, with people perfectly willing to let others go through it," Frank said the idea that it's acceptable to rescue financial-industry workers but not their blue-collar counterparts" is something that needs to "be confronted honestly."

Related Links
Ugh, What a Feeling, Toyota
Motor Skills
Detroit Needs a Miracle


Source: Portfolio.com: Top 5 | 19 Nov 2008 | 8:00 pm

Fed Fright

From bad to worse...and beyond.

Anyone looking for solace in the minutes of the Federal Reserve's most recent policymaking committee was sorely disappointed today.

Before the Federal Open Market Committee announced a half-percentage point rate cut on October 29, its staff economists had lowered their forecasts for economic activity not only this year, but in 2009 and 2010 as well.

"With growth below its potential rate for an extended period," the minutes said, summarizing the economists' views, "the unemployment rate was expected to rise significantly through early 2010."

In addition to growing joblessness, the Fed said, "the declines in stock-market wealth, low levels of consumer sentiment, weakened household balance sheets, and restrictive credit conditions were likely to hinder household spending over the near term."

Industry and commerce are unlikely to take up the slack. "Business expenditures also probably would be held back by a weaker sales outlook and tighter credit conditions," the minutes said.

Across the board, Fed policy makers "significantly" reduced their forecasts for the economy, citing "the worsening financial situation, the slowdown in growth abroad, and incoming information on economic activity."

"While economic activity had evidently already been slowing over the summer," the minutes noted, "the turmoil in recent weeks had apparently resulted in tighter financial conditions and greater uncertainty among businesses and households about economic prospects, further limiting their ability and willingness to make significant spending commitments."

Fed officials warned that "financial strains" could "intensify" if hedge funds and other big investors were forced to sell assets to meet margin calls from nervous lenders.

They spoke of a "negative spiral" in which "financial strains lead to weaker spending, which in turn leads to higher loan losses and a further deterioration in financial conditions."

Even after coordinated global government efforts to recapitalize banks, flood markets with liquidity, and guarantee bank deposits, this self-perpetuating spiral "could persist for a while longer."

The Fed released its gloomy outlook hours after the Commerce Department said consumer prices actually fell last month—testimony to weak demand—and the Labor Department reported that housing starts fell 4.5 percent in October, to an annual rate of 791,000 units. That's 38 percent below the number reported a year ago.

The confluence of bad news rattled investors and sank markets. The Dow Jones industrial average shed more than 400 points, or in excess of 5 percent; other widely watched stock indexes fell even further.Related Links
The Fed Sandwich
The Song Remains the Same
Will 2 Percent Be the Floor?


Source: Portfolio.com: Top 5 | 19 Nov 2008 | 8:00 pm

Brown Brothers' Chandler Sees Weak U.S. Economy in Early 2009

Source: Bloomberg - All Podcasts | 19 Nov 2008 | 7:56 pm

Obama gives Daschle healthcare role

Barack Obama has chosen Tom Daschle, one of his most high-profile allies, to be secretary for health and human services, according to Democratic officials close the US president-elect
Source: Financial Times - US homepage | 19 Nov 2008 | 7:34 pm

FOMC Minutes: Recession & Depression Simultaneously

Source: 24/7 Wall St. | 19 Nov 2008 | 7:30 pm

U.S. crisis devastates Mexican towns

The U.S. economic crisis means it's harder for Mexican migrants to find work, and that means there's less money sent home to families. Dan Grech visits a small town in central Mexico to see how it's faring.
Source: Marketplace | 19 Nov 2008 | 6:43 pm

Congress needs to take bailout back

Treasury Secretary Henry Paulson has switched the bailout plan from buying troubled mortgage securities to buying preferred shares in healthy banks. Commentator Robert Reich says it's time to stop the handout.
Source: Marketplace | 19 Nov 2008 | 6:41 pm

Thrift stores booming in bad times

Sales of used goods are rising as consumers ditch expensive retail stores for more creative and cheaper ways to shop. Why not? Sarah Palin does it. Ashley Milne-Tyte reports on a booming shopping sector.
Source: Marketplace | 19 Nov 2008 | 6:39 pm

Pepsi conserves water with Gatorade

Pepsi, maker of the sports drink Gatorade, is using new techniques to cut down on its water use and save some money in the process. Sarah Gardner has the story on the eco-friendly ideas at Gatorade plants.
Source: Marketplace | 19 Nov 2008 | 6:38 pm

P&G ad managers team with Google

Procter & Gamble Co. and Google have been swapping employees since the beginning of the year. Host Kai Ryssdal talks to Ellen Byron from the Wall Street Journal about the unusual arrangement between the two.
Source: Marketplace | 19 Nov 2008 | 6:37 pm

FDA China branch to monitor food

The Food and Drug Administration's first office in China will make it easier for inspectors to check food for export. Scott Tong reports.
Source: Marketplace | 19 Nov 2008 | 6:34 pm

Deflation can lead to a scary scenario

Falling consumer prices might sound good for now, but deflation can turn dangerous fast. Jeremy Hobson reports.
Source: Marketplace | 19 Nov 2008 | 6:32 pm

Price drops raise deflation worries

Consumer prices fell 1% last month, the most on record. It's good news for consumers looking to save a little on purchases, but as Steve Henn reports, deflation means we could be heading into even worse economic times.
Source: Marketplace | 19 Nov 2008 | 6:30 pm

Homebuilder, REIT shares tumble as recession spreads (Reuters)

Reuters - The shares of big U.S. homebuilders and real estate companies alike slumped on Wednesday as housing starts fell to a record low and concerns spread the commercial real estate market is going the way of residential.

Source: Yahoo! News: Business | 19 Nov 2008 | 6:02 pm

Stanford's Kennedy Does Not See Crisis as a `Great Depression'

Source: Bloomberg - All Podcasts | 19 Nov 2008 | 5:17 pm

Reinhart Says Bernanke `Very Creative,' Paulson `Inconsistent'

Source: Bloomberg - All Podcasts | 19 Nov 2008 | 5:11 pm

Stabenow Says U.S. Automakers May Liquidate Without Rescue

Source: Bloomberg - All Podcasts | 19 Nov 2008 | 4:56 pm

Keller Sees Need for Congressional Oversight of U.S. Automakers

Source: Bloomberg - All Podcasts | 19 Nov 2008 | 4:54 pm