Federal Reserve Board Chairman Ben Bernanke testifies before the Senate Budget Committee on Mar. 3 in Washington, D.C. Alex Wong/Getty Images Continue Reading
WASHINGTON
A day after the Federal Reserve slashed a key interest rate to battle an economic downturn, the government reported Thursday the economy did shrink in the summer, sending the strongest signal yet that a recession may have already begun.
The Commerce Department reported that the gross domestic product, the broadest measure of economic health, fell at an annual rate of 0.3 percent in the July-September period, a significant slowdown after growth of 2.8 percent in the prior quarter. Read the rest of this entry »
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The IMF has agreed to lend Ukraine $16.5 billion, helping the country to avert a run on its banks and its currency, the hryvnia
The victims of the global financial crisis just seem to be getting bigger and bigger. First it was financial institutions, then came entire countries. After Iceland, the latest domino to wobble is Ukraine, which on Oct. 26 reached an agreement with the International Monetary Fund for a $16.5 billion bailout. Read the rest of this entry »
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For the bold, opportunities abound: Strategies for managers, employees, investors, consumers, and borrowers
When conditions are dire and people are losing their nerve, Traxis Partners hedge fund manager Barton Biggs pulls out a chart of the London stock market’s performance during World War II. The fever line plunges as the German army invades Poland, Denmark, the Netherlands, Belgium, and France. Then an odd thing happens. Just when the mood is darkest—in June 1940, as Adolf Hitler is inspecting conquered Paris—the market finds a bottom and begins a long, steep rebound. It’s almost as if investors sense that somehow, some way, Hitler is destined for defeat. Read the rest of this entry »
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Someday, banks may try to assess the credit risk of borrowers via “responsibility” scores based on unconventional metrics like school grades or eBay reputations
As bankers claw their way out of the credit crunch, they’re likely to get a lot more curious about our ability to repay loans. To do that, they’ll no doubt search for statistical correlations between financial risk and our behavior in different realms—as shoppers, students, even drivers. Read the rest of this entry »
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Shares have plunged in Asia on growing fears of a global recession.
Japan’s Nikkei tumbled more than 7% at one point, hitting levels last seen in May 2003.
It recovered some of the losses to end down 2.46% amid hopes of a bounce on Wall Street later in the day.
In London, the FTSE 100 index of leading shares fluctuated in and out of positive territory.
The South Korean market closed down 7.4%. Read the rest of this entry »
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The coming blitz of quarterly results may leave investors more confused than ever about the outlook for corporate profits and the economy
For stock investors, this earnings season is turning into the lost quarter.
This month, companies began unveiling their results from the 2008 third quarter, which included July, August, and September. And the next couple of weeks will be especially busy, with 136 members of the large-cap Standard & Poor’s 500-stock index reporting earnings during the week of Oct. 20, and another 114 firms the following week. Read the rest of this entry »
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After central bankers and policy-makers took unprecedented steps to shore up global financial markets, the economic support for the world’s banks — estimated at roughly $3.3 trillion — is starting to pay off. On Oct. 20, the London Interbank Offered Rate (LIBOR), the rate banks charge each other to borrow money, fell the most in almost nine months to 4.06%. The overnight rate for dollars also dropped to 1.51% - the lowest level since August, 2004. Read the rest of this entry »
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With the IPO market bleak and venture capital scarce, innovative new companies are running low on cash
Gajus Worthington has seen the effect of the financial meltdown on U.S. startups, and it’s not a pretty picture.
The chief executive of Silicon Valley’s Fluidigm set out to take his chipmaker public about a month ago. On Sept. 5, the first day of the company’s road show, Worthington gave a standing-room-only presentation to blue-chip investors interested in buying Fluidigm stock. Three weeks later, after Lehman Brothers filed for bankruptcy and panic seized investors, he pulled the plug on the initial public offering. Read the rest of this entry »
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During the nearly three-week ban on shorting financial shares, the market sank 21.5%. Are regulators after the wrong parties?
As the panicked selling in equities markets around the world has accelerated over the past two weeks, there have been several attempts to slow the process, including the temporary suspension of trading on stock exchanges from Moscow to Milan. In the U.S., the Securities & Exchange Commission banned short-selling—bets that shares of certain companies would fall—on a list of more than 800 financial stocks whose balance sheets have exposure to risky mortgage-backed securities and other distressed products. Read the rest of this entry »
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Don’t wait for that bailout to take effect. Manage your credit, watch costs, think globally, and hang on until a recovery materializes
Record financial bailouts that are followed by historic stock market drops, frozen credit markets, and a growing global economic crisis. Each day seems to bring a new round of bad news, and there’s no end in sight. How will small companies be affected by the bailout that passed last week—and by this week’s events? And how should they respond? Read the rest of this entry »
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A bronze statue of a bull fighting with a bear is displayed at the Museum of American Finance on Oct. 7 on Wall Street in New York. Spencer Platt/Getty Images
The week started with hope for a U.S. plan to calm world stock markets. By Friday, investors wondered if anything could stop the slide
Stupefying. Dizzying. Deeply unsettling. The panic that swept the global financial markets in the past five business days, Oct. 6-10, will go down in history—either in its own right or possibly as a prelude to something worse.
The Standard & Poor’s 500-stock index suffered its biggest weekly decline since 1933, and markets from Japan to Brazil to Russia tumbled as well. What exactly happened, and what does it mean? It’s worth taking a look back at the tumultuous five days to see what lessons can be drawn and perhaps get a hint of what might come next. Read the rest of this entry »
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The automakers may try to salvage one healthy company out of two sick ones
General Motors (GM) and Chrysler LLC have had discussions about merging their operations amid widespread speculation that neither company can survive the current global economic meltdown and havoc in the financial markets, according to executives at both companies who spoke on the condition of anonymity. The talks were reported on the Web sites of The Wall Street Journal and The New York Times late Friday, Oct. 10, the same day that GM issued a statement denying that it is considering Chapter 11 protection. Read the rest of this entry »
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After the bold step by Bernanke & Co. to cut rates, what moves should you make? Here are five questions to ask your financial adviser—now
Financial advisers are usually an unflappable bunch. When the markets are wild, investors turn to their financial planners for calm, consistent advice: Stick to the plan, think long term, don’t do anything rash. Advisers have studied their history and know that markets go up, down, and sideways; proper investing requires patience. Read the rest of this entry »
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STOCKHOLM, Sweden
Governments across Europe scrambled to save failing banks on Sunday, working largely on their own a day after leaders of the continent’s four biggest economies called for tighter regulation and coordinated response to the global meltdown.
In Berlin, the German government held crisis talks after the collapse of a ballyhooed euro35 billion (US$48.4 billion) bailout of Hypo Real Estate AG, the country’s second biggest property lender.
German Chancellor Angela Merkel said that Europe’s biggest economy would “not allow the distress of one financial institution to distress the entire system.”
In Iceland — particularly hard-hit by the credit crunch — government officials and banking chiefs were discussing a possible rescue plan for the country’s overstretched commercial banks.
Belgian Prime Minister Yves Leterme said he aims to find a new owner for troubled bank Fortis NV to restore confidence in the company before the opening of markets on Monday. Read the rest of this entry »
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Think stocks are volatile? The dislocations in the credit markets are even more serious, and they pose a greater threat to the economy
With the financial system bailout plan derailed by the House of Representatives on Sept. 29, the resulting plunge in equities made headlines around the world. But while the stocks gyrate, it’s important to keep one thing in mind: The big problem for financial markets is still the credit crunch. Read the rest of this entry »
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Defaults on corporate loans have jumped, lenders to McDonald’s franchisees are strapped, and big names like GM are facing liquidity problems
A growing number of companies are already feeling the heat. As of Sept. 9, 57 companies had defaulted on $45.3 billion of debt for the year, according to S&P RatingsDirect, up from 22 companies defaulting in all of 2007. (While not a bankruptcy, a default sets off clear alarm bells about a company’s fiscal health.) Read the rest of this entry »
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Unless there’s some break in the credit-freezing financial crisis, industry-watchers say, potential buyers may hold off on taking their planes or be forced to turn to Boeing for financial help.
“We believe that the amount of funding from traditional aircraft financing sources is shrinking and that Boeing’s customers may face near-term challenges financing aircraft purchases,” Goldman Sachs (GS) analyst Richard Safran says in a note to clients. Read the rest of this entry »
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By John Tozzi
Amid the widespread crisis, even healthy small businesses are feeling the squeeze. But some banks see an opportunity to lend
How directly will small business lending be affected by the ongoing financial crisis and forthcoming bailout? The evidence is mixed. Treasury Secretary Henry Paulson told Congress that the $700 billion plan was needed “in order to avoid a continuing series of financial institution failures and frozen credit markets that threaten American families’ financial well-being, the viability of businesses both small and large, and the very health of our economy.” Read the rest of this entry »
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