Consumer Confidence Index

The Consumer Index was released today at a level which came as a surprise to everybody. The index was rated at a record low of 38, which is down considerably from September which was at 61.4 and a level which hasn't been achieved since the index's inception in 1967. The general estimate was that the index would be at about 52 which is why there is also the big surprise. The general idea seems to be that the sky is falling and there appears to be no end in site as to the financial crisis as many families are struggling, the markets worldwide are having their own troubles and people are losing their jobs and homes.

* The Consumer Confidence Index is based on a survey of 5,000 households.

http://money.cnn.com/2008/10/28/news/economy/consumer_confidence/index.htm

Layoffs on the way

The tumbling economy has lead to layoffs in many industries. 3 / 4 million jobs have been lost since the January 2008 and it’s not the end, more job cuts are on the way. In auto industry alone 100,000 jobs were lost. It is speculated that merger of General Motors and Chrysler may lead to 30000-40000 job losses.
The areas worst affected are financial and construction domain, where most job cuts were seen. Although most of the sectors are firing people, health care and educational services remain the sectors still hiring people.

Job Cuts announced over past few days:
· Chrysler is planning to cut 5000 jobs
· Goldman Sachs is planning to cut 3300 jobs
· Xerox is planning to cut 3000 jobs
· Merck is planning to cut 12% of its work force
· Fidelity National Financial is planning to cut 1000 jobs

According to CNBC.com few of the sectors more prone to layoffs are:
· Housing
· Finance
· Leisure
· Auto

http://search.cnbc.com/main.do?target=all&keywords=layoff

Another Stimulus Package?

Federal Reserve chairman Bernanke suggested that another stimulus plan is needed to boost the economy. Perhaps another stimulus like the one passed by Congress this spring, where people received a tax rebate. The new plan would include improving access to credit, for home buyers and businesses. He believes that measures like this "will restore confidence and that the economy will improve".

It is likely that the new stimulus package will be passed after the election, although republicans are not very interested in a stimulus package they do believe that improving world relations and increasing trade could help boost the economy. While democrats are interested in providing tax brakes, investing in infrastructure projects, and providing funds for unemployment and food stamps.

http://www.marketwatch.com/news/story/bernanke-endorses-new-fiscal-stimulus/story.aspx?guid=%7BD1A4B0D2%2D1D6B%2D4DFD%2DBC19%2DCEDD6156CD89%7D

Weekend Review

The market was left in more uncertainty after the Down fell below 9,000 points. Nobody seemed to be able to survive the fallout that the housing market seemed to start. Several events of the week included the meeting of the G-7 summit to work on long term solutions to the financial markets worldwide, ING receiving 10 million euro money from the Dutch goverment, and GM and Chrysler talking on a possible merger. All of this overshadowed the intriguing drop in gas prices as they fall to the mid $3 range. The sudden drop in oil prices still gets trumped by the financial markets as many people will soon or have started to receive their 401(k) and other personal finance reports in the mail. Hopefully, the G-7 summit and the Dow can begin working on a true recovery as the bailout package backed by the United States government seemed to have little effect on the market.

Sources: Yahoo! Finance, Google Finance, MSNBC, CNBC, CNN Money

Dow Jones

This week brought an unprecedented occurrence in the United States stock market as the Dow fell below 9,000 points in several years. Tuesday was a day of uncertainty while the rest of the week mirrored a rising inability to see where the market was heading as well. The general word about the market was relating the fall of the housing market to the current crisis (KFI640). A meeting was scheduled this week for the G-7 summit (a group of the top 7 advanced economies) will hopefully provide some results for the world as a whole to take us out of this crisis.

Related link: http://www.imf.org/external/pubs/ft/survey/so/2008/NEW101308A.htm

This week was a crazy week, too much happened but not enough.

A Summary of the week:

• The Stock Market closed at 8451.19 down.


• The IMF made a statement to try to help in the crisis.


• President Bush also made a statement to boost confidence in the stock market.


• Other countries also created rescue bills and nationalized banks.


• Interest Rates are cut down.

There are a few good news, the price of gas is going down, airline companies have great deals (540am radio) and we are not alone other countries are with us on this.

Financial Crisis

Monday brought about a major downturn in not only the United States financial market but also several worldwide markets including but not limited to England, Germany, Ireland, and Greece. A common factor among all struggling markets is banks and/or major financial institutions failing and requesting or receiving government assistance. In the United States, the Dow fell below 10,000 points for the first time since 2004 on monday as speculators could only wonder why. To compound the problem, the market fell approximately another 500 points tuesday as worries increased as to the general financial nature of failed and failing financial institutions.
(http://money.cnn.com/2008/10/07/markets/markets_newyork/index.htm)

A second slightly overshadowed story is that of the buyout of Wachovia. The government intervened Monday to split up the company between CitiGroup and Wells Fargo as both companies claimed they had a valid claim to buy the company. The government negotiated that Wachovia would be split by region to both companies. Currently, the three companies will hold off the final decision until Wednesday to decide then who will actually get what and how each companies proposed buyout plan will affect Wachovia and the related financial market in general.
(http://money.cnn.com/2008/10/06/news/companies/citi_wachovia/index.htm)


An AP review of the current financial situation:

$700 billion bailout

And the bailout is approved. On Friday October 3rd the House of Representatives gave the green light to rescue Wall Street. Passing such a bill just before the election is seen as a bold move. Where many are hopeful that it will save the tumbling stock market, others seem doubtful. A similar bill was rejected on Monday but a heavy drop in the DOW led the house to change their decision.

The Emergency Economic Stabilization Act authorizes the Treasury Secretary to buy up to 700 billion dollars of bad assets from financial institutions to save them from bankruptcy. While this bailout is seen as a necessity to save Wall Street, a few questions remain unanswered.
How fair is it to pay the insanly high salaries to executives of the firm when it is threatening to file for bankruptcy?
Is it fair to spend the tax payer's money to save such firms?
Why should we, the people, pay for other's mistakes?
And lastly, would it really save the market?

Reference: http://www.latimes.com/business/la-fi-bailout4-2008oct04,0,5676279.story

Timeline of the crisis

So, Its nothing new that this crisis has been dragging for years and that it had to crash at some point. An article from BBC news explains just when the real crisis began, or at least when it became noticeable.

It has a list of companies that have filed for Bankruptcy. It also provides a timeline of U.S. banks and from other countries that have been affected by our housing market.

http://news.bbc.co.uk/2/hi/business/7521250.stm