Oct. 6, 2008
World Markets Plummet Despite Bailout
Investors Stay Scared As Europe Shows Lack Of Unified Response, U.S. Economy Keeps Souring
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Wall Street's Shadow Market
Steve Kroft looks at some of the arcane Wall Street financial instruments that have magnified the economic crisis.
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Financial Trouble Ahead
Experts predict that although the House has finally passed the bailout bill, the credit freeze is expected to last another 4-6 weeks. Priya David reports.
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Running On Empty
Between increasing gas prices, the credit freeze, and the financial crisis, America's automobile dealers are relying heavily on the bailout bill to save their businesses. Randall Pinkston reports.
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An investor reacts as he watches a display showing stock prices at a brokerage firm in Hong Kong, Oct. 6, 2008. (AP Photo/Vincent Yu)
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Bank Seizure Q&A
What if my bank fails? Some questions and answers in the wake of IndyMac Bank.
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Bear Stearns Bailout
A look at recent events at the 85-year-old investment firm.
Japan's stock market sank to its lowest finish in 4 1/2 years as worries about growing fallout from the credit crisis overwhelmed any relief over passage of the U.S. bailout.
The benchmark Nikkei 225 index lost 465.05 points, or 4.25 percent, to close at 10,473.09 - its lowest finish since February 2004.
Traders were spooked by Germany's announcement Sunday of a new bailout package totaling 50 billion euros ($69 billion) for Hypo Real Estate, the country's second-biggest commercial property lender, part of a scramble by European governments to save failing banks.
Adding to European uncertainty, leaders failed to unite at a weekend summit on a joint approach to shore up confidence in the markets - a show of unity pleaded for by French President Nicolas Sarkozy and, before him, U.S. Treasury Secretary Henry Paulson.
Despite her earlier and vocal support for such a pan-European approach, Chancellor Angela Merkel reportedly announced that Germany's government would guarantee at least part of all deposits in the nation's banks.
Ireland was the first to adopt a bold, unilateral approach by guaranteeing all deposits in Irish banks last week. The move frustrated other European leaders, bringing pressure on them to institute similar, costly guarantees - or risk a mass-flight of investors.
CBS News correspondent Richard Roth said the fear gripping European leaders is that a plan to prop up banks in one country could spark a run on banks in the rest of Europe, despite U.S. Treasury chief Henry Paulson's call for coordination to rescue the world economy.
It was unclear Monday morning exactly what Merkel had promised. CBS News partner network Sky News in Britain reported that sources said the German plan was not a full government underwriting of all German deposits.
Britain's treasury issued a statement Monday morning saying it was seeking "further clarification" on Merkel's plan to underwrite German deposits.
"Instead of answering Hank Paulson's request for an international, coordinated approach to match their $700 billion dollar package, actually what you've seen is Europe acting in a complete and utter lack of coordination - cats in a sack is probably a good way to try to describe it," London investment analyst Justin Urquhart Stewart told CBS News.
Alistair Darling, Britain's treasury chief, said during the weekend that he was ready to take "pretty big steps that we wouldn't take in ordinary times" to help the country weather the credit crunch.
Amid the uncertainty, London's FTSE exchange dropped nearly 6 percent during morning trading.
In Austria, shares on the Vienna Stock Exchange plunged 8.4 percent in early trading, and officials said it was the deepest drop since May 2005.
Vienna's benchmark ATK index fell 237.3 points to 2,579.25 at the opening bell. The nosedive at one of Europe's smaller stock exchanges showed how the global economic crisis was rattling markets big and small.
Austria's government has been pressing to increase the mandatory minimum euro20,000 (US$27,545) insurance on bank deposits.
Russia's stock markets also fell precipitously in early trading, with the benchmark index of the RTS exchange down more than 7 percent in the first 20 minutes. The index of the MICEX exchange took an even steeper dive, falling about 10 percent Monday morning before authorities halted trading on the exchange. Russia's markets are shut down when they are deemed to be gaining or losing value at too quick a pace.
A dismal report on the U.S. job market released Friday added to the gloom in Asian markets, fanning worries about U.S. consumer demand for the region's exports.
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Hong Kong's Hang Seng index slid 3.4 percent to 17,089. Markets in mainland China, Australia, South Korea, India, Singapore and Thailand also fell sharply. Indonesia's key index plunged more than 5 percent.Apart from a credit crunch in Europe, investors are quite concerned about the worsening outlook on the U.S. economy.
Alex Tang, Core Pacific-Yamaichi"This credit crunch looks like it's not going away any time soon," said Alex Tang, head of research at brokerage Core Pacific-Yamaichi in Hong Kong. "Apart from a credit crunch in Europe, investors are quite concerned about the worsening outlook on the U.S. economy."
"We haven't seen any positive developments in Europe or the U.S., apart from the rescue plan," Tang said. "But even with the rescue plan, investors are focused on the slowing economy."
Investors were processing a series of developments out of Europe over the weekend. Belgian Prime Minister Yves Leterme said Sunday that France's BNP Paribas SA had committed to taking a 75-percent stake in troubled European bank Fortis NV.
The outlook for the U.S. economy worsened after figures released Friday showed that 159,000 jobs in the U.S. were lost last month, the fastest pace in more than five years.
Economists were also predicting many more months of bank failures in the United States, suggesting the $700 billion bailout would help control the losses, but the banking industry enfeebled by huge losses on risky home loans was still on very shaky ground. (Read more analysis of banking industry's blues.)
Such concerns overshadowed any investor optimism over the U.S. House of Representatives' approval Friday of a massive bailout plan that will allow the U.S. government to buy distressed mortgages and securities backed by mortgages from banks and other financial institutions.
Investors questioned how long it would take for the package to unfreeze credit markets, restore bank lending and generally shore up the U.S. economy.
"The market had already figured in the package's passage," said Yukio Takahashi at Shinko Securities Co. in Tokyo. "There are strong doubts about its implementation."
U.S. stock index futures were down more than 1 percent, suggesting Wall Street would open lower Monday morning. The Dow Jones industrial average fell 157.47, or 1.5 percent, to 10,325.38 on Friday.
Meanwhile, oil prices fell to an 8-month low Monday below $90 a barrel on speculation that the spreading financial crisis would exacerbate a global economic slowdown and cut demand for crude oil.
Light, sweet crude for November delivery was down $4.69 to $89.19 a barrel in electronic trading on the New York Mercantile Exchange by late afternoon in Singapore.
Oil prices have tumbled nearly 40 percent since peaking in July.
© MMVIII, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
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See all 217 CommentsNot true. He (McCain) unwisely went to the regulators. When he (McCain) found out Keating was under a criminal investigation, he (McCain) withdrew. That''s why Congress only said he used bad judgment. McCain''s family lost $359,000 to Keating also.
A lot of people are going to be hurt by this. Jobs and houses lost.
I hope it doesn''t happen to me shiver
Actually currency printed without any real material backing, (gold, silver, labor, tec.) is illusory, so when the illusion that supports it collapses, the money printed because of the illusion disappears.
Credit is illusory, it is the illusion that money you don''t have now will somehow appear in the future. when it doesn''t, the illusion is shattered.
Unless we start locking up both the financial and the oil barons very soon this mess will continue, nothing short of a term in prison is going to curb these crooks.
It might indeed, but we cannot just let those who stole it walk away scot free, they should also get back to the basics, if the rest of us have to.
And the Wall Street CEO''s already have their money in off shore accounts since they can''t trust US banks. LMAO.
Maybe November elections will ''clean house''---it''s America''s last chance!
Having mortgaged the next generations'' future away with little or no result to show for it, let me say, " I told you so!"
Posted by brianbwb at 04:52 AM : Oct 06, 2008
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Maybe so! But, they won''t stay here! They''ll head to Paraquay, Brazil, the French Riviera, and Dubai---places like that.
It''''s up to us fellow Americans. Do we value our freedom and humanity so little that we no longer deserve them? Or will we once again stand to defend and uphold American liberty?"
Nobody will take notice until the stormtroopers are marching down our streets. Heil Bushler.
BLACK FRIDAY
When Black Friday comes
I stand down by the road
And Watch the grey men
As they dive from the fourteenth floor..............
Regards
Posted by Nancy_Naive at 05:48 AM : Oct 06, 2008
The dust bowl cometh................
Posted by drinuk at 05:01 AM : Oct 06, 2008
I bet Chenny is laughing his *** off after he accomplished his mission for big corps. He may
never face justice in the US for what he has done. But I think God will send him to the Hell soon after his bad heart fails.
Just as the Jewish peple have organizations that rightfullt hunt down the Nazi war criminals, we should create a similar organization to hound our own war criminals to their hideouts in South America and the Middle East.
If we take the steps I have outlined in previous posts to restore the economy, it will not be in the interests of those countries to hide our criminals.
Wake up and smell the coffee or whatever the rich drink in the morning or should I say mid-day.
It had to break... Housing, the market, all of it. It will be OK if we don''t screw up and McCain will screw up. Let''s not forget the Keating 5... he isn''t on your side.
B: This is the market up down up
C: There is money to be made on the down side, you have to know where to look
D: Doom and Gloom only feeds the bad news
F: For finally, you still want to vote for McCain and airhead?
Pick up the book Obamanomics, read it. Read it quick.
You people need to get a clue. Obama is dangerous for America in so many ways.
Would you want NANCY PELOSI or HARRY REID to be President.
Then why him ??
Drill for oil now or the above will happen again.
###############################We need to know before we vote OBAMA = Carter
Carter''s policies didn''t work then and they will not work now. We need to drill for our own resources NOW. This mantra of nothing getting to the pumps for over ten years is a sham. We know that is a lie and those that keep saying it just continue to loose credibility.
We need to stop seeding our money to people like Chavez and we need to do it now. Drill for our own energy sources NOW. Develop alternatives but drill now for the energy we know we have.
Obama = Carter
AGAIN. here is a little reminder of the CARTER years:
Our Embassy overrun in Iran and our fellow American citizens being held hostage for 444 days (for the young-uns, that is how the nightly news magazine "NIGHTLINE" got started)
21% Mortgage Interest Rates...
18% Inflation Rate...
OVER 50% top income tax rate...
29% Capital gains rate... and no mortgage deduction!!!
55 Miles Per Hour NATIONAL SPEED LIMIT...
AND the start of NOT BEING ABLE TO DRILL FOR OUR OWN OIL!!!
OBAMA the "SOCIALIST" in 08 for the 2nd CARTER TERM!!!
1) Keep the people afraid
2) Keep the people de-moralized.
3) Keep the people Broke and in debt.
When these things have been accomplished, the chosen few "will have control over the common man".
BUSH''S NEW WORLD ORDER ! The warning signs were everywhere...I hope everyone finally sees the truth....This is a very sad time.
How about some one HELP US, is that the reason we put you eletist-eco-liberals in Congress, get the COn out of the Congress, HELP us stop the Eco-weenies from abusing the laws for stopping economic growth in this counrty. WE NEED oil jobs, that bring about other jobs, great paying jobs. PLEASE HELP US !!!!!!!!!!!!!!!!!!!!!!!!!!!for the CHILDREN
Today again i watched TV news, Mr U.S. Rep on TV, more 10 years away thoughs, raillines Train service from cleveland to pittsburgh, that one of are u.s. Rep''s D though about 40 years ago.
The same-o-same-o, one thing abaout the Democratic Party rule, no new anything, just bring back the same old things, reaching back 40 years. This is for our new generation to hear.
People are lying who they are voting for so the media wouldn''t call them racist.
You must be referring to the liberals in the Republican party, who were extremely liberal for corporations with deregulation and welfare, those who are only "conservative" when it comes to controlling other peoples private activities, and trying in vain to revive Jim Crow...
Seems nobody else in the world is buying, anyway.
Posted by KathySuuny
Probably because the census bureau reports that 70% of registered voters who choose a party affiliation are Democrats.
As for those cowards who don''t want to admit to being racists, we know they exist, they are the ones who advocate not voting for Mr. Obama for reasons that have nothing to do with the most important issues, like the economy, corruption, and the fake war. They choose instead to talk about other people, Islam, Carter, all those subjects that have nothing to do with present reality.
McSame is losing not because of media reports, but because America has chosen not to accept more of the McSame.
Haven''t learned yet, have you? You believed Bush when he lied about WMDs, you believed his line about how the war would be less than one hundred days, you believed "mission accomplished", you believed the $700 billion would solve the problems, you believe that drilling for oil will create more than a few hundred new jobs, you believed that the few drops in the wilderness areas will make us indepen
Haven''t learned yet, have you? You believed Bush when he lied about WMDs, you believed his line about how the war would be less than one hundred days, you believed "mission accomplished", you believed the $700 billion would solve the problems, you believe that drilling for oil will create more than a few hundred new jobs, you believed that the few drops in the wilderness areas will make us independent of foreign oil.
Total sucker, maybe at the 10,000th lie you will begin to understand you are being played like John Bonham''s drums.
Ironic isn''t it, you used to wear the badge proudly, now you are afraid to pin it on.
Like Stoker''s Dracula, the racists fear the dawn of the new day.
Posted by KathySuuny at 06:57 AM : Oct 06, 2008
Kind of a pointless argument.
So what if taxes go up?
Under Republican "guidance", the average American worker sees his or her CEO who is making 400 and more times average worker pay - and not exactly sharing the tax cut munificence with them.
The average American worker sees his or wages not even keeping up with inflation; that is, when they are not completely out of a job because the aforementioned CEO sent their jobs overseas to better profit themselves.
The fact is the average American worker gets next to nothing from the Repubican policies of "trickle-down" economics and inequitable "free trade", if they are lucky enough not to be losing in a big way because of loss of jobs.
So why should the average American worker care about the prosperity and after-tax income of America''s CEOs and wealthy elite, when they won''t take the average American worker along for their ride to increased prosperity in a Republican world?
At least if the money goes in taxes, the average American worker gets good roads and schools in return.
What does he or she get when it goes to the CEO?
Not a d@mned thing.
Not only those, but also those of us who know that we must take care of our own before we give our wealth to the already wealthy, those of us who know that just as the so-called evangelical Christians are not able to impose their will upon us, neither can any other religion.
We, as well as history, see you not as irrelevant, but totally deluded, paranoid, bigoted, and obsolete.
Not only those, but also those of us who know that we must take care of our own before we give our wealth to the already wealthy, those of us who know that just as the so-called evangelical Christians are not able to impose their will upon us, neither can any other religion.
We, as well as history, see you not as irrelevant, but totally deluded, paranoid, bigoted, and obsolete.
Posted by KathySuuny at 06:57 AM : Oct 06, 2008
Uh Huh! Those TERRIBLE Clinton Years... Now who in their right mind would like to have a Balanced Budget and a Surplus when you can have MASSIVE Debt and RECORD deficits!! Silly people!! LOL
A hundred million Americans are irate at this government abuse foisted upon them.
What''s worse, is that this bailout cannot solve the economic crisis facing the US & the world. After 25 years of the corrupt policies of Trickle-down Economics, a stop-gap measure like this cannot resolve this crisis when the problems which caused the crisis in the first place, (record trade deficits, transference of US employment overseas, falling US wages, perpetual war/military largess, & massive budget deficits,) are still intact & unimpeded.
As history has taught, such stop-gap measures like this banking/insurance industry bailout, cannot prevent an economic collapse when the core problems creating the crisis are unaddressed. (Japan tried the same tactics over a decade ago & is still trying to recover from the resulting economic depression which ravaged them.)
This kind of Corporate Welfare cannot prevent a Depression resultant of 25 years of corrupt government policies. It will only partially protect the assets of the rich.
$700 billion pissed away
wonder how many of Bush''s friends will or have pocketed a few million or how many of the "Wall Street" gang will be hurting
my guess not many
Housing Lenders Fear Bigger Wave of Loan Defaults
http://www.nytimes.com/2008/08/04/business/04lend.html?em=&adxnnl=1&adxnnlx=1217957113-pFlrUGvr7OAaQuMcyPKCbg
Posted by rickwar at 06:48 AM : Oct 06, 2008
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A. should be "are you lucky enough to still have a good paying job?" Then maybe we can move on to C...
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Posted by azure11 at 07:01 AM : Oct 06, 2008
Don''t need a job, I own 3 businesses with a number of employees and contrary to the doom and gloom, business is good and unlike many foolish folks the business has adequate cash reserves to go fo a couple of years and keep everyone working even if we sold nothing.
It''s called planning instead of running on credit.
1) Keep the people afraid
2) Keep the people de-moralized.
3) Keep the people Broke and in debt.
When these things have been accomplished, the chosen few "will have control over the common man".
BUSH''''S NEW WORLD ORDER ! The warning signs were everywhere...I hope everyone finally sees the truth....This is a very sad time.
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Posted by zietzke at 06:59 AM : Oct 06, 2008
Amen to that statement!
Barack Obama''s rise has left many Americans asking themselves that question. Here''s a big part of the answer: Community organizers intimidate banks into making high-risk loans to customers with poor credit. In the name of fairness to minorities, community organizers occupy private offices, chant inside bank lobbies, and confront executives at their homes - and thereby force financial institutions to direct hundreds of millions of dollars in mortgages to low-credit customers. In other words, community organizers help to undermine the US economy by pushing the banking system into a sinkhole of bad loans. And Obama has spent years training and funding the organizers who do it.
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