Daily Financial Crisis Recap 01.11.08

Stocks end higher in the last day of October after a tumultuous month of trading. October was a wild month.

Dow Jones industrial average up 144.32 points, or 1.57 percent, to 9,325.01. It was the first time the Dow had back-to-back gains since the end of September.

Barclay’s is seeking $11.8 billion from Abu Dhabi and Qatar. As much as 32% of the company would be owned by Middle Eastern interests.

Bernanke says that the mortgage system needs more safeguards. Consumer spending slowed to its slowest in four years in September.

Bank of Japan cuts its key interest rate for the first time in 7 years. Banks alter loan terms to forestall upcoming mortgage foreclosures.

The country is showing signs of entering a fierce global recession, with deflation running rampant.

Daily Financial Crisis Recap 30.10.2008

Consumers are already feeling the next crisis, the credit card crunch. It’s normal. In North America, people live beyond their means thanks to credit cards. That’s how people accumulate thousands of dollars of bad debt.

The money is disappearing out of AIG. Analysts wonder where the $123 billion went.

The biggest portion of the Fed loan is apparently being used as collateral for A.I.G.’s derivatives contracts, including credit-default swaps.

Doesn’t sound good. That and exec pay. However, they were asked by Cuomo to halt any bonuses or exec compensation

The economy is showing signs of a slowdown. No shit. It’s at the lowest it has been 17 years. The Dow was up thanks to a report on the economy. It finished at 9,180.69, a gain of 189.73 or 2.11%. This morning, stocks are up as well. The Fed lowered its key interest rate by half a percentage point. Taiwan and a few other Asian countries followed suit.

Japan plans to invest $51 billion into their economy.

Daily Financial Crisis Recap 28.10.08

Stocks soared while expecting a Fed rate cut. The Dow closed at 9,065.12, a gain of 889.35 or 10.88%. Crude oil is still falling. It closed at $62.73. Consumer confidence is at a low point. Some analysts believe it’s the start of a consumer-led recession, but ultimately the problem rests with the banks and their derivatives schemes for making a quick buck.

Iceland raises its key interest rate to 18%, a gain of 6%. The hike is part of a deal Iceland struck with the IMF. It’s also a tactic to prop up frozen credit and currency markets. Two weeks ago, it cut the rate by 3.5% to 12%. British PM calls for more contributions by China and the Gulf States to the IMF to help out.

Huntsman/Hexion merger not going ahead as planned because banks won’t finance it. Washington considering helping GM and Chrysler merge.

Denmark is rethinking its spurn of the euro. Hedge fund traders take VW stock up to $1,256 a share, after Porsche announced that it had taken control of VW with 75% of the voting shares. This partly happened because short-sellers were betting that VW shares would fall. The shares closed at $1,215.38. On Friday, the shares were at $261.76 on the Frankfurt exchange.

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The Dow plunges during the last ten minutes of trading. It closed at 8,175.77, down 203.18, a loss of 2.42%. Oil closed at $63.22, over a dollar less. A barrel of crude is at its lowest in the last 18 months.

Policy makers worldwide try to shore up their economies.

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Many US businesses are cutting jobs. I don’t know about you guys, but my freelance work from the US has also been cut down. Not completely, but by 30%. It might be cut down even further. Still, this gives me the opportunity of exploring other forms of freelancing and other gigs that I couldn’t pursue while writing 5 posts a day for one site. Spending is also stalled. As with most hard times, people are cutting back everywhere. This is forcing Americans to reevaluate their priorities and come up with new solutions. I’m glad I don’t have a mortgage right now. I used to, but we sold in 2006 when we left for Asia.

GM cutting down on SUVs. GM shares are down 76% as of this Friday. Workers are stunned that SUV plants are shutting down. Americans finally realize that SUVs aren’t the best cars.

The markets had another brutal day Friday. The Asian markets got crushed. Germany and England were down more than 5 percent. In the hours before the United States markets opened, all the signals suggested it was going to be the worst day yet in the crisis. The Dow dropped more than 400 points at the opening, but thankfully it never got any worse.

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Currencies markets plunge. Money fled from emerging currencies into dollars and yens. The Dow was initially down almost 450pts (-5%) but managed to rally to a loss of 312.30 for the day. The Dow is at 8,378.95, a loss of 3.59%.

The bad news started early Friday in Tokyo and Seoul, where big companies like Toyota, Sony and Samsung disappointed investors with their earnings.

Oil prices fell 5 percent, to $64.15. OPEC announced that it was cutting output. Some countries in OPEC like Saudi Arabia can live with this decline, into the $55-60 range, but others like Venezuela need a lot more. Chavez needs at least $100 a barrel. Tough times ahead for those countries. Honestly, Canada’s production isn’t that great, but lower oil prices are a wake-up call for those countries relying on the $145 a barrel from July 2008.

Insurers are lining up to get a piece of the bailout money.

Citadel hedge fund in trouble. With a loss $180 billion in the last three months in the hedge fund market, Citadel is having a hard time explaining their financial health.

A possible merger between Chrysler and GM hinges on federal aid.

Brokers are leaving big investment companies, even as Morgan Stanley and UBS are trying to recruit them.

Iceland wants more tourists. They say that prices are 50% lower than last year, but I just checked for a return flight from Toronto to Iceland and it was $5,300 during the holidays. At $530, I would have considered it. My guess is that they are trying to milk money, but they need to cut it further than that to attract customers. Actually, departing from Quebec, the lowest fare for that flight I could find was $905CAD for a 30-hour flight. (A 12-hour flight via Air Canada was $1162) Varying your departure dates will net you a steep saving. You can get a $813 flight a few days before. Thinking about this, you might be able to find even cheaper.

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Greenspan faces tough questions, photo by Doug Mills for NYT

Stocks are up today, but continue to remain volatile. The Dow finished at 8,691.25, a gain of 172.04 or 2.02% today.

Greenspan concedes error on derivatives regulation. A staunch promoter of deregulation during his 18-year reign at the Fed, Greenspan faced tough questions in a hearing today.

US Senators press for action to stem mortage foreclosures.

The real estate bubble in China has burst. In a Shenzhen complex, 50 out of 780 apartments are occupied.

Credit Suisse lost $1.1 billion this quarter. Like most banks, they lost this quarter.

Investors continue to flee hedgefunds. In the last three months, hedgefunds have lost $180 billion. Hedgefunds are supposed to make money in bear and bull markets. The average fund lost 17.6%. Many wealthy individuals are flabbergasted by their losses. Many managers are quitting their funds.

AIG to suspend millions in executive pay.

The next article in The Reckoning is up over at the NYTimes. Treasury Secreatry Henry M. Paulson Jr. tells the story. One of the biggest problems was the bankruptcy of Lehman Brothers, one of the largest institutions issuing commercial papers. The credit market was crushed.

Commercial paper is sometimes described as the lubricant that keeps modern economies moving, and the amount of commercial paper issued has increased rapidly in recent years.

But as the credit crisis took hold in 2007 and deepened in 2008, the commercial paper market began to dry up. In October 2008, the market for that kind of debt all but shut down, with many major corporations unable to borrow for longer than a day at a time, as banks become more fearful of giving out cash. The volume of such debt totaled about $1.6 trillion as of Oct. 1, down 11 percent from three weeks earlier.

In response, the Federal Reserve on Oct. 7 announced a radical plan to buy large amounts of the notes directly in the hope of restoring liquidity to the commercial paper market and thereby to the credit markets at large. The purchases, to be conducted through a newly created Commercial Paper Funding Facility, would put large amounts of taxpayer money at risk, but reflect the Fed’s dire assessment of the threat to the economy.

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Daily Financial Crisis Recap 19.10.08

A new article in the NYT’s series The Reckoning is up. It’s Henry Cisneros’ story about how things started to go wrong in the housing market during the Clinton years.

The FBI has trouble finding enough agents to investigate financial fraud.

Does Goldman Sachs wield too much influence at the govt? Paulson has hired a lot of former GS bankers since he himself is one.

Friedman gives some clues on what exactly happened in Iceland.

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The Dow ends the day 127.04 pts lower than yesterday at 8,852.22. A loss of 1.41%. The Dow is pretty volatile right now. It’s just the start. As soon as the recession sets in, things won’t be good.

The French bank La Caisse d’Épargne lost $807 million because of the derivatives market. They are currently in talks for a merger with La Banque Populaire. European banks are reticent to take money from their govts due to limits on their decision making and executive pay.

Fortunes built on debt are crumbling apart in Russia.

No one is listening to Bush. There are risks for the govt as it gets stakes in the banks. Nothing would be worse than if the markets continued to plunge.

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Today, stocks surged in the last hour. The Dow gained 401.35 to 8,979.26, a gain of 4.68%. European markets were down about 5% in response to the Dow’s 7% drop of yesterday.

A barrel of crude oil hit 69.85 at the end of the trading day on the commodities market. It’s a loss of $4.69.

AIG decides to please AG Cuomo and help recover improper expenditures, including severance packages and bonuses to execs.

Citigroup posts a loss of $2.8 billion. Switzerland gets ready to bailout banking giant UBS. Asia wants to boost their sales at home instead of abroad.

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