Stocks Fluctuate As Profit-taking Sets In
Associated Press
Transcript
investors reacted with enthusiasm to the government's $250 billion plan to buy stock in private Banks but the enthusiasm was tempered with bouts of profit taking President Bush says the announcement that the government will buy shares in the nation's leading Banks was not intended to take over the free market but to preserve it according to one analyst the move was uncharacteristic coming from a republican Administration very unusual obviously for the for the federal government to be owning a stake in a in a publicly held bank or publicly held institution of any kind it's it's it's essentially unprecedented it's just not the Republican way I mean it you know in it in its most critical argument you're talking about something approaching socialism investors are hoping the extraordinary steps by governments across the globe will help resuscitate the stagnant credit markets particularly the the liore rate because that's the rate that Banks borrow to one another like I'll give you an example the FED fund rate was well this is going back 2 weeks was 2% the library rate in London which is where they they do all the marketing was 11% so Banks don't want to borrow at 11% that's insane because then your mortgage are up ridiculously so I mean overall it's that's a very important rate because the banks will not pay up they just will move the credit's Frozen at that right stocks have been rebounding from a gruesome week that obliterated about $2.4 trillion in shareholder wealth the Dow remains 33.7% below its October 9th 2007 record close of 14,1 16453 and could fluctuate around these levels for some time Ed Donahue the Associated Press
Dow Surges 900 Points
CBS
Transcript
wall street was more like a freeway monday the dow staged its biggest single point gain ever it's been a difficult grind for a lot of folks down here they're bearing up very well and i think they're happy that they have a little bit of a break today the market soared more than 900 points breaking an eight-day losing streak the surge came after european governments put nearly two trillion dollars on the line to protect their own banks it certainly feels good you know it feels like the history is behind us they certainly needed that monster rebound here on wall street but still no one's quite sure whether the rally will stick over the next few days that's because investors are concerned about the frozen credit markets hoping to get the heart of the economy pumping again the bush administration followed europe's lead and huddled with top bank executives to finalize its bailout plan the newest package will allow the government to take equity stakes in banks most importantly you need it to to to restore confidence in the banking system amongst consumers amongst other banks willing to lend to other banks president bush will make a statement on the economy tuesday the same day the u.s treasury department is expected to unveil its plan to resolve the nation's economic crisis drew levinson cbs news wall street
Massive Move On Wall Street
CBS
Transcript
everybody is talking about what happened yesterday on the stock market European markets are up Asian markets are up this morning what's going to happen around the uh around the New York let's find out markets around the globe soared today following the Dow's biggest onepoint gain ever CBS News business correspondent Anthony Mason is at the New York Stock Exchange with more good Morning Anthony good morning Harry and we're expecting a new plan from the government this morning uh one that would be the boldest move yet by the treasury and would have been considered a heresy only a few weeks ago the DraStic step to take a $250 billion ownership stake in the banks this drastic step is designed to unlock the credit markets and restore confidence in the financial system and it's just the latest twist in the government's $700 billion rescue program the government will invest 250 billion of the 700 billion approved by Congress in private Banks initially half that money will go to nine major Banks including City Group Wells Fargo JP Morgan Chase Bank of America Bank of New York Goldman Sachs and Morgan Stanley Bankers summoned to the treasury Department yesterday were told they have no choice the government will also temporarily ensure the loans Banks make to each other and there will be unlimited government guarantees of non-interest bearing Bank deposits typically business accounts if you buy a steak in the banks what does that do Economist lakman aan if the US Treasury if the U US government is putting the full faith in credit of the United States behind an institution a company uh the company's not going to fail so you don't have to worry about being paid back uh money if you loan it to that institution this morning overseas markets surged Japan's Benchmark Nik made an astounding jump over 14% there were substantial gains elsewhere in Asia and Europe This follows yesterday's record rebound on Wall Street the Dow snapped back from its worst week in history with its biggest one-day r Valley in history the Dow surged more than 11% the biggest single daily percentage gain in 75 years although the Dow still down 133% this month it certainly feels good the feeling of of sheer panic and fear doesn't seem to be pervading the place quite the same anticipation of today's Bank announcement was one reason the markets rallied so strongly yesterday but Traders say that that massive move yesterday was just more evidence of how volatile the stock market still is in other words Harry we're not out of the woods on Wall Street yet Anthony Mason down on Wall Street this morning thank you joining us now is Paul Krugman who has just awarded the Nobel prize in economics he's a professor at Princeton University and a columnist and blogger for the New York Times good morning and congratulations good morning and thank you first off this infusion of $250 billion some of it straight into America's biggest banks is this a good idea yes it is I mean um we're following the lead of the British who did this actually on it relative to the size of their economy on an even bigger scale uh yesterday uh so this is this is what a lot of economists have been calling for the problem is the banks don't have enough Capital to do their business people don't trust them this is what the doctor ordered as far as we can tell right we've been listening for all these years to all these free marketeers who were saying get the regulation out keep the government away yet now all of a sudden these Banks and the government are literally going to be business partners well it's it's an amazing thing you know the the uh the Bush Administration has seized the commanding Heights of the economy Whoever thought that would happen but it's necessary you know there are times there free markets are great but sometimes you got to step in and right now you know we're on the edge of the precipice you need to do this yeah do you have a sense that in the days and weeks to come the markets will be as volatile as we've seen in the last month sure because the the truth is no one although most economists that I know think this is the right thing to do no one is sure it'll work and there's going to be manic depressive markets as people wonder and we don't have the evidence in yet about whether it will really work so this was a leap of faith literally by the by the dowo yesterday and there may be you know moments of depression coming along too so there's a Band-Aid now maybe it maybe it proves to be the the maybe the Cure on the end though we're starting to see mounting job loss this is going to be passed on down the economy in the months to come how bad do you foresee this recession going it looks like a nasty recession even if this works right well we're talking out here is preventing the collapse of the banking system which is collapse of the banking system is what turned uh a recession in the 1930s into the Great Depression so we're trying but the recession is still you know barreling along there's a lot of momentum behind it this is not these are not going to be good times we're just trying to prevent them from being terrible times you get a prize of more than a million dollars when you win the Nobel I'm just very curious if once you get that check how will you invest it uh people are that partly depends on where the markets are I mean as you know as of uh before the markets opened yesterday I was thinking maybe stocks are looking cheap not sure anymore well Krugman thank you very very much for taking the time to speak with us and again congratulations thanks so much do appreciate [Music] it
Bush buys $250B in bank shares; PepsiCo cuts 3,300 jobs
CBS
Transcript
the government is going to buy shares of the nation's biggest banks president bush announced a plan to use 250 billion dollars from the bailout program to prop up banks and loosen up lending for both consumers and businesses at the same time the Federal Reserve is vying vast amounts of commercial paper that's a short-term loan many companies rely on to pay workers and buy supplies all the moves are designed to crack the credit market and today a key interest rate dropped a sign that banks may be more willing to lend money the markets didn't have a major reaction the Dow finished down about 77 points while the nasdaq fell back 65 this week economy is hurting some major brands PepsiCo which owns Pepsi frito-lay and Quaker saw profits plunged nearly ten percent last quarter the company plans to close six plants and cut 3,300 jobs and pump prices dropped again Triple A says the national average for a gallon of regular unleaded is 316 that's down for pennies from yesterday on Wall Street I'm alexis crystal phorus
U.S. Buys Stake In Banks
CBS
Transcript
with an air of resignation the government threw out the free market Playbook today's actions are not what we ever wanted to do but today's actions are what we must do to restore confidence in our financial system in a drastic move the government will take a $250 billion ownership stake in the nation's Banks half of that money will be invested in nine of the country's biggest banks including City Group JP Morgan Chase Wells Fargo and of America this new capital will help healthy Banks continue making loans to businesses and consumers but the money will come with conditions the shares will pay a 5% dividend to taxpayers for the first 5 years and Banks must agree to limits on executive compensation no golden parachutes the government also agreed to guarantee loans between Banks but there were no guarantees about the plan's success although most economists that I know think this is the right thing to do no one is sure it will work and there's going to be manic depressive markets as people wonder and even if it thaws the credit markets it may be too late to help the economy will this keep us out of a recession I don't think so Carl Weinberg of high frequency economics says expect more news like the announcement from PepsiCo today the parent company of Pepsi and Fredo Le is cutting 3300 jobs so we haven't seen the worst of the downside yet we think not we think we have at least another year or year and a half to go and we surely will see a rise in unemployment the treasury is expected to begin buying up Bank shares within days and we'll be watching to make sure the banks actually lend the money and not hoard it Anthony Mason CBS News New York
A talk with ECB President
CNN
Transcript
Now that the analysts say the threat of global meltdown is now over, given the actions, but the impact on the real economy from the crisis we've seen has yet to be felt, what are you expecting for Europe over the next year or two? Well, I have to say that we have, of course, to be aware of the fact that uncertainty is, and a very high level of uncertainty, is the mark of the time. Before we had the recent intensification of the crisis, I would have said that we would have a trough in the second and third quarter, and then a progressive recovery during the course of 2009 up to our growth potential. Now we clearly have additional growth potential. We have additional materialization of the downside risks. And again, we will see exactly what goes on. How do you feel about inflation looking ahead? There's a ton of liquidity flooding the market now. Are you concerned about inflation or less so? We have undoubtedly been forthcoming as regards the supply of liquidity. But it's more a question of time, a question of duration of those liquidity. A question of handling the supply of liquidity. As regards the total amount of liquidity, it has not changed much. So I can be reassured, and all our fellow citizens, and I'm sure that it is the case in Europe, in the Euro area, can be assured that we will continue to solidly handle the delivery of price stability in the medium term. Some people thought that the financial crisis was a big deal. But it's not. It's not.
China invested in U.S. election
CNN
Transcript
At a Beijing brokerage, one market watcher is quick to lay blame. The U.S. markets are bringing the whole world down, this man says. The first thing the next American president should do is deal with the financial crisis. You can't simply say it's the U.S.'s fault, says another investor. But whether the Democrats or Republicans win, it will have a big impact on China. The Chinese don't have a vote for their nation's leader. China is a one-party state. Most of what they know about the U.S. election comes from state-run media. Many aren't following it closely, but those who are know the outcome could affect them. In China, everybody knows the names of the candidates. It's really a miracle. This is one of China's top universities. The students, some of the country's finest. If the next administration is going to do something to improve the policies with China, I think Taiwan is the issue. And they have informed views about how the next president should shape U.S. policy on China. Stop selling weapons to Taiwan. And stop complaining that China is taking U.S. jobs. If it is not China, India or Philippines or some Latin American countries will take... the livers. What about China's human rights record? What should Obama or McCain do about that? They should remember that they are not the policers of the whole world. And remember that China is not an enemy or a threat, but an inevitable competitor. China's peaceful rising is irreversible. Strong words from some of China's young elite for the future U.S. president. How many of you would vote for John McCain? One, two, three. Okay? How many of you would vote for Barack Obama? A clear winner in this classroom. Though they think McCain may let China develop more freely, they like Obama's social policy and see him as young and different. Eighteen to three, so I guess Barack Obama wins in this classroom, right?
Krugman on global economy
CNN
Transcript
On Monday, Princeton Professor Paul Krugman was awarded the Nobel Prize in Economics. Professor Krugman is well known for his column in the New York Times, where he's been an outspoken critic of the White House. Well, the award comes at a time when economics is indeed in the spotlight, perhaps more than ever. Well, Professor Krugman joins us now from Princeton, New Jersey. And Professor, first of all, congratulations on your award. Well, thank you. Thanks. It's awesome. You said in your own newspaper that you had an inkling that perhaps one day you could win this award, but it wouldn't be this year. Why not? I thought years would have to pass. And also, I made a point of not thinking about it. One thing you don't want to do with your life is spend every Nobel Prize announcement day wondering, is it going to be me? So I just put it out of my mind, and it came as a total wonderful surprise. And this was for research, really, you did about 30 years ago. Obviously, it still stands up very much to this day. Is it something that you would revisit and work on a little bit more? Is it done and you've moved on to other areas now? Well, some of it is research that's more recent than that. But, yeah, it's mostly research done between the late 1970s and the early 1990s, which is, you know, Nobels in economics tend to be for a long-term body of work. I think it's a good thing. I would probably revisit some of that later work. But, you know, there's a lot going on in the world right now, and I'm sort of focused on financial crises like everybody else at the moment. No kidding. Okay, well, let's talk about that. So we're expecting the president in the next 20 minutes or so to outline at least some details of part of the U.S. rescue plan. But from what we've seen so far in Europe, notably led by the British government on how it's handling the crisis, do you think this crisis is now on its way? Is this a good way to being contained? I hope so. I would give better than even odds. But, you know, we're not sure. I mean, if our economic analysis was as great as we'd like it to be, we would have seen this thing coming and headed it off. So there's a lot of uncertainty. But this does look like finally everyone is adopting a plan that makes sense, that in terms of our best understanding of the crisis does go to the root causes. So this has been very good news. The last – basically since last Wednesday when Britain announced its plan, and then Sunday when the Europeans announced it, and now the new announcement from the Bush administration, we're actually seeing – this has been the best few days in terms of policy since the beginning of the crisis. Now, the British Prime Minister, Gordon Brown, led his team on quite a different path than Henry Paulson at the Treasury. You've certainly very publicly backed the approach by Gordon Brown. Why is it so much better? Because the root of – the root of the financial problem, leaving aside there's also a recession problem, which is somewhat different, the root is the destruction of capital in the financial sector. And the way to address that, the obvious way to address it, is to infuse capital, to put in money, whereas the Paulson plan in the United States was somehow trying to do something else. We never quite understood how it was supposed to work. As best we understand, the Federal Reserve actually wanted something like the British plan quiet, and then the US government was able to do something about it. And the US government was able to do something about it, and the US government was able to do something about it,
Virgin navigate turbulent times
CNN
Transcript
Atlantic. Blue, America, Nigeria. The club of airlines that share the Virgin name and which are all part-owned by Sir Richard Ransom. Each is responding to the downturn in different ways. Virgin Atlantic is 24 years old. It's weathered the storm of two Gulf Wars, the dot-com burst and several recessions. This year's financial crisis is testing the mettle of its chief executive, Steve Ridgway. We have made a lot of decisions, I think, early, which have put us in the best shape we can. We've got a lot of cash in the bank, which you need in these situations. We've got a big hedge book. We've invested a lot in our product in the last four or five years. So our franchise is in good shape. But we're telling everybody, telling our staff, we have to be very, very fleet of foot because we still don't know what's coming yet. In Australia, it's Virgin Blue that's flying the name, a domestic low-fares carrier that's expanding its reach. We've gone into markets where, traditional holiday markets, where we think we can actually stimulate some demand and take it out of the Australian economy, which is, I'm not saying it's struggling, but it's certainly had excess capacity brought into it by all the carriers. Virgin America may be the newest member of the family, but it has great experience of flying in a crisis. It began business last August, right at the start of the credit crunch. We're doing a lot of things to reduce our costs. For example, on our planes, you don't see in-flight magazines, which add extra weight. We also have trained our pilots to learn how to reduce the fuel that they're using on their approach, so we have a more fuel-efficient approach. All airlines have to find ways to raise extra revenue, beyond the ticket price. For Virgin Atlantic, that's not so easy. Passengers on long-haul flights expect free food and drinks. For Loaf Fares America, there are plenty of opportunities to squeeze extra dollars out of the passenger. What we've discovered is that people will actually spend up to $21 on a long-haul flight for extra things like food, beverages, in-flight Wi-Fi, and so it's a big opportunity for us to drive incremental revenue when the economy is suffering. Virgin Brand is one of the most recognized in the world, and each airline reinforces the existence of the others. The fact they are not a single airline probably helps at the moment. They can make quick decisions tailored to their individual needs and not worry about the rest. Richard Quest, CNN, San Francisco. .
Financial Crisis Prompts A Meeting of Industrialized Nations
VOA News
Transcript
after a week of heavy losses another erratic day on Wall Street in the last 10 days of trading the Dow Jones Industrial Average has lost more than twenty percent of its value global markets have not been immune key Asian and European stock markets have seen steep declines and trading in russia and indonesia remains suspended indefinitely in the u.s. President Bush tried once again to reassure Americans that the government's financial rescue plan will work here's what the American people need to know that the United States government is acting we will continue to act to resolve this crisis and restore stability to our markets but the president's assurances did little to stop the roller-coaster ride on Wall Street after a brief rebound Friday morning Standard & Poor's equity manager Sam Stovall says stock prices dipped immediately after the President's speech I think basically you came to a point in which the market anticipated that he was not going to tell us anything new and at that point the the Dow started increasing its downward movement overseas Hong Kong analyst Francis Luna says investor confidence is at an all-time low it's a complete loss of confidence i think the market is still searching for bottom for support and the bottom won't come until the investors convinced that stability has returned to the financial markets many hope support will come as finance ministers and world leaders from the group of seven industrialized nations gather in Washington President Bush says international leaders share his concerns these efforts the world is sending an unmistakable signal we're in this together and will come through this together and economists say world leaders have good reason to work with the United States analyst David Hale says an economic downturn in the u.s. means a slow down for the rest of the world this crisis is central to the global economy because America still accounts for twenty-five percent of global gdp the latest report by the International Monetary Fund predicts the United States will enter a recession in mate resulting in a major slowdown in the global economy Miller Sega VOA news
Global Stocks Post Huge Rally
VOA News
Transcript
After a devastating week of losses, some muchneeded optimism on Wall Street. After dipping nearly 2400 points in the last eight sessions, the Dow Jones Industrial Average shot up more than 900 points Monday, the largest single day gain in recent history. At the White House on Monday, President Bush voiced confidence that the close cooperation between the United States and other nations is helping to ease the financial crisis. These are tough times for our economies. Yet, we can be confident that we can work our way through these challenges and America will continue to work closely with the other nations to coordinate our response to this global financial crisis. The US government is moving to implement a $700 billion financial rescue program. The Bush administration's interim bailout chief, Neil Kashkari, said the government is consulting with private law firms so the government can start buying up bad debt from financially distressed US firms. The government is also considering buying stakes in some banks. Our work is only beginning. A program as large and complex as this would normally take months or even years to establish, but we all know we don't have months or years. Some analysts say it's too soon to say if the efforts can solve the underlying problems. New York Times business editor Andrew Ross Sorcin says a number of key questions remain unanswered. Where do we see the $700 billion program really being used and how is it going to be used? Is it going to be used to fortify the banks? Is it going to be used to fortify mortgage prices? Combination of the two and how that plays out. In Europe, several governments have agreed to buy stakes in some banks to ease the financial crisis. In Great Britain, Prime Minister Gordon Brown released similar plans. The events of the last few weeks have made clear once and for all that these are global problems that require global solutions. Analysts say a clearer picture of whether confidence is returning to financial markets should emerge later this week. US bond markets and banks were closed Monday for the Columbus Day holiday. Millar Sega, VA News.
US Financial Concerns Plague More than One Wall Street
VOA News
Transcript
this is how most people picture Wall Street New Yorkers rushing to work Traders exchanging shouts at the stock exchange but there's another Wall Street less than 400 km south of the Big Apple in the city of Rockville Maryland and residents here are wondering whether the rescue plan for that other Wall Street will help them it does sometimes seem like the banks and the people on Wall Street are getting the bailout whereas the Working Poor are just working really hard and with the prices being up and gas being up it's just harder for us and I would hope some of that money would have come more for us Emily McGary says Rising costs have forced her to dig into her savings for everyday expenses on her own and with a daughter who's a single mother she says she's taken drastic measures to make ends meet I felt I had to cut back I got got rid of my car and I just ride a bicycle 84-year-old Ted Conway also rides a bike to save money he calls himself a child of the 1930s depression and says he's always been cautious but he's worried about the future especially for his children and grandchild I wish I could leave this earth because at this point I have some savings and uh also I have this house and uh be nice if the kids could go to the college they want to without worrying about the cash Conway a World War II veteran says he remembers a time when the rest of the world Americans as saviors he says greet on Wall Street is just one reason people have lost faith I worry about the world looking at us as scants and thinking all right America brought this on come here come on up Conway's Wall Street neighbor Nikki Goldsboro is also concerned it's pretty terrifying you know unsettling um stressful goldsboro's husband is a small business owner a home builder the mortgage crisis and crumbling housing market have brought bad news news for business I don't like to open the mail because I don't know what I'm going to see when we get statements from our from our uh Banks Wall Street residents aren't the only ones worried a recent survey by the American Psychological Association found about 80% of Americans are stressed about money and the economy the $700 billion rescue plan is designed to restore confidence in the financial markets but it is likely to take some time Alex feral vaa news