Markets Drop Amid Mortgage Worries
Dow Falls 128 Points As Investors Assess Dangers Faced By Freddie Mac, Fannie Mae
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Fannie Mae, Freddie Mac logos on generic background showing declining stock prices. (AP/CBS)
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Play CBS Video Video More Homeowners Selling Short With home prices plummeting nationwide, more homeowners are opting to sell their homes for less than what their mortgage is worth. Anthony Mason reports on an alternative to foreclosure.
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Video Relaxed Congress Under Fire Although faced with pressing concerns such as the nation's mortgage crisis, Congress still managed to take an extended recess for Independence Day. Sharyl Attkisson reports from Washington.
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Video Fannie And Freddie Panic Major housing market lenders Fannie Mae and Freddie Mac are facing severe stock setbacks. As Anthony Mason reports, the American economy might not survive the loss of these two companies.
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Timeline Credit Crunch Feeling the squeeze? Here's a look at actions and statements from key players in Washington.
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60 Minutes Fighting In A Hornet's Nest U.S. military tell Lara Logan more resources are needed to win in Afghanistan.
The Dow Jones industrial average, which traded down more than 250 points in the session, briefly moved into positive territory Friday before resuming its decline. The blue chips also fell below 10,000 for the first time in two years before recovering.
A new high for oil prices above $147 a barrel also weighed on stocks.
Investors' focus was on the fate of the government-chartered companies. Shares of Fannie Mae and Freddie Mac fell sharply during the week on concerns about their stability. Wall Street is worried that a collapse of the two financiers would cause further shock to the financial system, and trigger more losses to banks and brokerages with significant holdings of mortgage-backed securities.
The well-being of Fannie Mae and Freddie Mac is crucial because they hold or guarantee about $5 trillion worth of mortgages. Their troubles are just the latest depressing turn in a year-old credit crisis that shows no sign of ending, disappointing some stock traders who thought just months ago that the worst was perhaps over.
The Dow fell 128.48, or 1.14 percent, to 11,100.54 after having fallen to 10,977.68. It last traded below 11,000 on July 25, 2006.
Broader stock indicators also logged declines. The Standard & Poor's 500 index fell 13.90, or 1.11 percent, to 1,239.49, and the Nasdaq composite index fell 18.77, or 0.83 percent, to 2,239.08.
Friday's drop meant Wall Street moved squarely into a bear market, which is defined as a 20 percent drop from a recent peak. The Dow is down 21.6 percent from the record closing high of 14,164.53 it reached in October. The S&P 500 is down 20.8 percent and the Nasdaq is off 21.7 percent.
Oil, meanwhile, extended its move into record territory, rising as high as $147.27 amid tensions between the West and Iran. Light, sweet crude for August delivery settled up $3.43 at $145.08, slightly below a record close of $145.29 a barrel set more than a week earlier.
Bond prices fell sharply as investors worried a bailout of Fannie Mae and Freddie Mac could dent the government's credit rating. Ordinarily, bonds are seen as a safe haven during stock market pullbacks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.95 percent from 3.80 percent late Thursday.
© MMVIII The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
The secrets of tennis legend 
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See all 247 CommentsVote for the Constitution Party for a REAL CHANGE.
America take back your Constitution and Bill Of Rights! Both Obama and McCain will continue to lead America into a HOLE of DEBT, DEPENDENCE and DISPAIR.
www.constitutionparty.org
www.baldwin08.com
WRITE IN CHUCK BALDWIN on your BALLOT
A weak stock market is the perfect time for regular joes to get in and buy stocks cheaply. JMHO.
Ran across a DIFFERENT perspective and I''m left wondering if something similar might be part of what''s behind THIS collapse (again):
http://www.thirdworldtraveler.com/CIA/S&L_Scandal_CIA.html
The ''talking points'' BS is idiotic. In fact, people like John Reich (at the Office of Thrift Non-Supervision) should be indicted NOW for ''fiddling while Rome burns''. I''ve had enough of these administrative incompetents pointing fingers at everyone but themselves for their own lack of interest in doing the jobs for which they''re wildly overcompensated.
All of us in this country - except those whose incomes put them in the top tenth of the top one percent - are being crushed by the lazy, worthless scum at the top, and the hits just keep on coming. It''s just about time to build some guillotines and have a good housecleaning.
This will stop the take over of our now dead economy by vulture hedge funds like Boones Pickens.
Then a new gobal reserve currency based on some precious commodity and must be decided upon by the world''s powerfull nation.
Then hedge funds must be taxed out of existence and Congress must assume it''s sole authority to credit and currency for investment in alternative energies and infrastructure.
It''s the only way.
Then Congress
Schumer is not to blame. Check this out.
http://www.groupnewsblog.net/2008/07/schumer-not-to-blame-for-indymac.html
Take oil prices for example:
If you re-read my previous post about how how the bond market created Britney Spears then you will understand that it is our own desire as a future retiree for the oil stocks and bonds in our pensions to perform well.
So therefore the incentives or "market dynamic" built into the system are in the wrong place since the currency used is debt based.
During the Bush Administration our stagnant and declining wages were supplemented by credit and home eqity lines of credit.
Therefore our pension funds were more diverse with stocks that ranged from home builders to retailers like Home Depot.
Now that our pensions have collapsed with worthless Home Depot stocks then we go to a more sure thing...oil.
The more our pensions insist on oil then higher the price.
At that point the price is no longer based supply and demand but our desire to retire with enough money.
I was being sarcastic. The current crisis is the result of the de-regulation of the banking industry.
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Posted by sparks224 at 08:02 PM : Jul 12, 2008-
haha...Either way if we have no choice but to tolerate the present system then you are still right in that we have to at least regulate the monopolies and cartels for the benefit for the people.
I was being sarcastic. The current crisis is the result of the de-regulation of the banking industry.
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Posted by sparks224 at 07:39 PM : Jul 12, 2008-
that''s right; only the Constitutional Law to protect a "free market system" from cartels and monopolies.
In that way "demand" or consumption is natural instead of chaotic and disruptive.
And no monopoly stands in your way to supply demand.
Republicans come into a situation or problem with a simple ideology and certain steadfast principles; that''s fine.
The problem is is that unless you understand that the situation that you expected to come into has been corrupted or changed drasticly; your ideology and certain principles are worth dog doo.
Democrats on the other hand are not neccessarily smarter but rely less on principle and rely more on pragmatic academic analysis of a situation.
So it seems like it''s always the Democrats who get the blame because they''re fixing the economy with what must be done instead of using inadequate dogmatic principles.
And then Republicans come in afterwards thinking that "Ok... everything is fine again so I''ll prove my ideology" when both Democrats and Republicans lack a real appreciation of how the economy was built and designed.
And that design is not built upon a "free market system" but on a "Federal Reserve System" or private cartel bank monopoly.
WhiteMale: Richard Nixon/Gerald Ford left the economy is a dung heap; Carter inherits the shovel. Reagan starts supply side, trickle down followe by Voodoo encomonics GBush1. He left another disaster for Clinton to cleanup. The comes the smartest Republian President in the history of mankind according to the intelligent NEOCONs and the economy has been hemmoraghing since. Everytime a Republican administration is in office, the greed of their policies and their followers come close to destroying the American Middle class. They may very well have succeeded this time.
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Posted by BajaJohn1 at 05:20 PM : Jul 12, 2008
I couldn''t said it better myself.
This is why no one buys her records but yet she''s a superstar.
That''s supply-side.
Wall Street will automatacly quote the number of units shipped instead of number of units sold because it''s the expectation of how many units WILL be sold that counts.
It''s insane! Because once the number of units sold falls below the number of units shipped or expected to sell then Wall Street says the stock is underperforming and the bond holder (you and I) pays for the losses in our pension funds and Britney Spears is maligned and loses here record contract.
But that was more than 3 decades ago. And I''''m pretty sure Reagan measured up favorably to Truman.
Posted by txgrouch2006 at 12:28 PM : Jul 12, 2008
LOL Well Clinton didn''t do to bad there Sparky. He forced the Fascist to shut down the government before he''d let them bust the budget. He handed that pathetic piece of human Trash a few still call a President a Balanced Budget and a Surplus. Not to shabby if you ask me. Reagan?? He''ll be remember as the guy who Started us down the path to destruction with his Vodoo Economics. Sieg Heil Bush
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