Money Minute: GDP, FDIC, AIG
Associated Press
Transcript
AP money minute new economic data is providing further Evidence the country is almost certainly in the throws of a painful recession an updated reading on gross domestic product shows the economy shrank by half% in the July through September quarter During the period consumers cut back spending by 3.7% the worst in 28 years and their disposable income fell by more than 9% the largest quarterly drop since 1947 the FDI says the list of banks it considers to be in trouble shot up nearly 50% during the third quarter the 171 banks on the problem list Encompass only 2% of the nearly 8500 FDIC insured institutions and the current tally is the highest since late 1995 insurer AIG says it's now limiting how much it pays its top Executives chief executive Edward ly is expected to receive just $1 this year and the same for 2009 the decision is one of of many cutbacks made by the insurer since accepting $150 billion in government assistance I'm Mark hamri with ap money man
Wall Street Extends Dow's Rally to Third Day
Associated Press
Transcript
the dow jones industrial average and standard and poor's 500 index rallied for a third straight session tuesday it's the first time the dallas accomplished that feat since late august the first time the s p has done it since mid-september investors were encouraged by the government's plan to provide 800 billion dollars to help unfreeze the market for consumer debt and to make mortgage loans more available in general i think the market liked it but then was figuring we've already had two days of advances so let's try to take some profits if we can investors were also treated to some better news about consumers consumer confidence index unexpectedly rose to 44.9 this month up from a revised 38.8 in the previous month that's leading some to feel the rally could continue we could end up seeing the market continue to advance in the wednesday before thanksgiving and the friday after thanksgiving according to the stock traders almanac those are usually good days for the market the dow rose 36 points to close at 8 479 the s p 500 gained six points to 857 and the nasdaq heard by signs the companies are cutting back on technology spending fell seven points to fourteen hundred sixty five mark hamrick the associated press
Citi Bailout Bounce
CBS
Transcript
this morning Global markets followed wall Street's lead and surged after the government said that it will bail out City Group in Japan Nik soared more than 5% in Hong Kong the hangsang rose 3 and a half% early show National correspondent Jeff glor is at the New York Stock Exchange hoping this uptick will continue good morning Jeff hey Maggie good morning to you yeah here on the floor between Friday and Monday it's been the largest 2-day percentage-wise increase for both the Dow and the S&P since October 1987 most Traders feel these swings will continue both up and down all of this caused by uncertainty today we might get a little more certainty when treasury secretary Hank pson talks more about what the government's going to do with that $700 billion rescue plan they're trying to get more help for consumers looking for loans the city group rescue that helped rally Wall Street Monday came courtesy of the government's everever evolving $700 billion tarp Fixit fund out of which 310 billion has been committed so far to more than 90 Financial firms but with limited success until now what happens to the rest and when questions treasury secretary Hank pson will try to answer today and if need be we're going to make these kind of decisions to safeguard our financial system in the future Monday pulsing by his side President Bush defended the actions they've taken but it's a very awkward time with a lame duck president in office and an incoming one chomping at the bid all while a financial crisis Royals the markets day after day you've got a guy that's been trying to change a flat tire on a car going 100 mph now he's going to get out of the driver's seat and let someone else slide in it's a very difficult process it's a very Dynamic process and the rules of the of the game change every day President elect Obama rolled out his bigname economic team Monday and he did not deny that hundreds of billions of extra dollars could be needed to mend our fractured system this will not be easy there are no shortcuts or fixes to this crisis which has been many years in the making and the economy is likely to get worse before it gets better Barack Obama will be speaking again today soon after Hank pulson does another way both the outgoing and incoming administrations are trying to sync up their message Harry all right thanks very much Jeff legendary investor Jim Rogers is here to give us his forecast on the future of the US economy and what he believes needs to be done to help make it a little better good morning sir delighted to be here good to see you we're watching these wild gyration on the market last week it went down below 8,000 Friday and Saturday you Friday and Monday you have this combined uh runup of more than 900 points biggest run up in 20 years or something are these gyration going to continue well they are but you know if if you give me several hundred billion dollars I'll show you a good time too I'll make the markets go up come on you know that let me ask you something we see this bail out of City Group yesterday this is the second time they've gone to the federal trough this for billions and billions and billions of dollars the market breathes a sigh of relief one of the analysts I heard yesterday said oh stop this is only the beginning of the federal help that City group is going to need in order to survive of course it is but you've got lots of other banks that are going to need just as much money too this there's a gigantic problem going on out there Harry and unfortunately those turkeys in Washington are bankrupting you and me and our children and everybody watching this show to save their friends on W Street I find it outrageous I find it morally outrageous and it's bad economics here's the question because if you if if any of us were in some any part of a company and we were responsible for its ruin would we would he at work the next day you would be fired and you might go to jail but these guys are getting huge bonuses they get to keep their Maseratis you know there lots of 29 year olds on Wall Street driving around in Maseratis they're going to get to keep them and you and I going to get to pay higher taxes and our children are going to have inflation higher taxes it's outrageous we talked to Arthur L last night he says you know what we can't allow these institutions to fail is is is absolutely wrong Banks Banks have been going bankrupt for hundreds of years investment banks have been going bankrupt for hundreds of years it's not the end of the world you need to clean out incompetence the what would happen for instance if the what happened to Layman happened to everybody else if all of a sudden we woke up tomorrow and all these institutions down in Wall Street didn't exist Harry we would have a very bad a couple of years but you know what's going to happen now we're going to have a very bad decade all of us let a million people on Wall Street suffer that there're 300 million Americans we're going to all suffer for maybe a decade maybe two decades the Japanese did this in the 90s they wouldn't let anybody fail 18 years later they're still trying to recover from the problems because they wouldn't let anybody fail all right you've got some great tips in a book about things that can be done to help save the United States which we don't have time to go into right now but if you need to know more just Google Jimmy Rogers and it'll all be right there [Music]
Obama's Economic Plans
CBS
Transcript
president-elect barack obama is focusing on federal belt tightening today mr obama is pushing for a massive economic stimulus plan and while it may sound like a contradiction he says the government is going to have to spend less to pay for it we can't sustain a system that bleeds billions of taxpayer dollars on programs that have outlived their usefulness with his economic team in place the president-elect is working with congressional democrats to quickly adopt a massive two-year economic rescue package when he takes office mr obama wants to create two and a half million jobs mostly in public works programs similar to what fdr did during the great depression the bush administration's already promised 700 billion dollars to bail out the financial sector but mr obama is eyeing another huge package that includes tax cuts to help struggling americans helping him put his plan in place will be congressional budget office chief peter orsag mr obama named him white house budget chief today peter will bring to his work at the omb a set of priorities that i and the american people share the president-elect says together with orzong his team will scour the federal budget to find money to pay for his stimulus plan some democrats say it'll cost as much as 500 billion dollars more to jump start the economy joel brown cbs news chicago
Paulson: Geithner "Well Positioned"
CBS
Transcript
let me step back and say I wish and I know everyone wishes that one piece of legislation a bill would suddenly be passed and then magically the credit markets would unfreeze uh or that there could be a single action that was taken and magically they would unfreeze but when we we went to Congress we said the credit markets are frozen uh the we need we need the capacity to strengthen the financial system and to stabilize the financial system it's it's it's on the verge and we need to we we need to stabilize the financial system the authorities we got from Congress were what we needed we I I tell you I'm I am going to run right to the end okay and if you've got any doubt about that I tell you you you you're missing the point because we are um we are working uh to deal with the uh to deal with this situation in the most effective way uh possible and we're going to continue to develop programs deploy them when they're when they're ready to go and work on having a very seamless uh very seamless transition here Tim gner is the president of the New York fed and so uh we worked on this together okay as we have every every one of these situations we we we've worked as a team and uh he was working right with us all weekend and that's that's his job as Ben banki and Sheila bear so we we we've all worked together and this is an important part of of of what we do now in looking at Tim's new job as as treasury secretary and incoming treasury secretary we will obviously uh work seamlessly with uh the next Administration on uh on a on a First Rate transition and on uh you know and and we will discuss with them uh very very carefully uh any programs that we are are developing and uh and any programs that we uh that we Implement because it's very important that the next team understand everything we have in place and uh be able to uh to be able to carry them out effectively and I would say that uh Tim is is very well positioned for that because he understands everything we have in place today and participated very actively and helping put it in place
Citigroup's global reach
CNN
Transcript
Be it Bulgaria or China or Chile or South Africa, the city name and red umbrella is easily recognizable and ranks right up there with other global brands like McDonald's and Coke. Citigroup boasts nearly 200 million customers in more than 100 countries, including here in the UK, where it not only has branches on the streets of London, but it employs thousands of people here in financial services at its Europe, Middle East and Africa headquarters. And those services are shrinking. Even before the bailout, Citigroup announced some 70,000 job cuts worldwide. Many are expected to go in its tall tower to the east of London. Their biggest presence. Their biggest presence in London is in investment banking. Now that, by absolutely anybody's estimation, is going to diminish radically. Canary Wharf is going to be a lot emptier in 2009. Analysts don't expect as much of a cutback in Asia, where Citi has tough competitors in HSBC and Standard Chartered. Citi's third quarter revenue fell 7% in Asia compared to a 42% fall in North America. Though its exposure to emerging markets. Once a tenant of its massive growth strategy could make things even worse at Citi if a global recession does take hold. No matter, another late Sunday night bailout helped European shares, at least on Monday. It helped because if Citigroup had gone bust, one of the world's largest banks, if not the biggest bank in the world, could really have caused devastation. Citigroup likes to say it focuses on upscale customers outside the EU. Though its rescue is being paid for by American taxpayers. Its success or failure will affect taxpayers around the world, since Citibank's plan is to still have 300,000 employees worldwide. Jim Bolden, CNN, London.
Citigroup Bailout Bolsters US Stocks
VOA News
Transcript
City group used to be one of the biggest players on Wall Street but in the past few weeks the banking giant has taken a beating losing more than 50,000 employees to budget cuts along with nearly 60% of its value given the size of the company Business Week Magazine editor roben Farzad says the government could not allow City Group to fail the way other investment banks have if you think Leman Brothers was big city is is several times in terms of exposure the news was greeted by a rally on Wall Street the Dow Jones Industrial index closed nearly 400 points higher on Monday recovering much of the losses from the week before under the bailout plan the government would shoulder potential Bank losses of up to $300 billion while injecting $20 billion in exchange for City Group shares Neil Weinberg is senior editor at Forbes Magazine one would think that the math adds up that this would probably be enough uh to tie them through but of course of course you don't know precisely how great their losses are going to be in the future the government is guaranteeing that it will pick up some bad debt for them uh but City Group will still have some responsibility for that President Bush just back from an economic Summit in Peru was briefed by treasury secretary Henry pson late Sunday Mr Bush told reporters on Monday the decision to save City group was tough but had to be made we have made these kind of decisions in the past he made one last night right and if need be we're going to make these kind of decisions to safeguard our financial system in the future but reaction from average Americans has been mixed I mean you know people know what's going on right now nothing's looking good on on the whole economic side so I think we need to go ahead and bail them out I don't know where it stops I don't know where it ends but City group's a big group I would let them go I mean bad management again is the reason why they're in this position and um there's not enough uh protection for the General Public part of the cash injection will come from the government's $700 billion Financial rescue package City group has agreed to pay the government an 8% dividend on shares and submit an executive compensation plan for government approval mil arga vaa news
Economic Troubles Squeeze Relief Organizations
VOA News
Transcript
this Warehouse contains thousands of kilogram of food it's operated by the Second Harvest Food Bank of Central Florida a southern US state the agency collects the Surplus from restaurants and supermarkets and distributes it to people who need Emergency Food Supplies you know that that's a little treat Dave kpco runs this organization which has handed out more than 8 and 1 half million kilos of food over the last 12 months reaching about 4,000 people per week I've been involved in food banking for 16 years and I have never seen anything close to this outside of outright disaster relief times what we have now is a disaster and that's not an exaggeration kpco says the economic downturn has triggered a surge in the number of people unable to feed themselves he says the hardest here to the elderly who have seen their retirement Investments dwindle in the volatile stock market and children who make up one in four of all recipients of this food kpco says even middleclass workers are asking for help after losing their jobs I never dreamt that I would ever see people blue collar and white collar um searching for for emergency food to tie them over total charitable giving in the US topped $300 billion in 2007 for the first first time in history while the center on philanthropy at Indiana University says that was a 4% yearly increase it finds donations grow more slowly during economic Hard Times still one Industry Group finds many fewer Charities reported Revenue increases last year even as demand increases thanks for calling 211 United Way how may I help you this telephone hotline helps people find assistance with food rent and utilities calls are up 40% this year there uh many people in our community who are really one or two paychecks away from having a serious problem Robert brown heads the Heart of Florida United Way which operates this hotline and provides funding for other nonprofit organizations he says even agencies that have not seen a drop in financial contributions are struggling they're all being hit with the same thing and that is record demand for services and uh even if they have stable resources that just means they're behind at the Second Harvest Food Bank cash and food donations continue to stack up but the agency has suffered losses of its own on the stock markets and as the food bank continues to ship out to help hungry people in Florida agencies such as this one predict demand for their services will only increase as the economic slowdown in the US grinds on Steve Mort for vaa news Orlando Florida
Obama Names his Economic Team
VOA News
Transcript
president-elect Barack Obama limited his second post-election news conference to the struggling economy we are facing an economic crisis of historic proportions our financial markets are under stress new home purchases in October were the lowest in half a century recently more than half a million jobless claims were filed the highest in 18 years and if we do not act swiftly and boldly most experts now believe that we could lose millions of jobs next year he said New York Federal Reserve Bank president Timothy gner will be his treasury secretary he said gner is ready to go Tim will waste no time getting up to speed he will start his first day on the job with a unique insight into the failures of today's markets and a Clear Vision of the steps we must take to revive them the president-elect also said former treasury secretary Larry Summers a veteran of the Clinton administration will head the National Economic Council he paid tribute to Summer's intellect as a thought leader Larry has urged us to confront the problems of income inequality and the middle class squeeze president- elect Obama announced two more appointments Economist Christina RoR as head of the Council of economic advisors and policy expert Melody Barnes as director of the domestic policy Council Mr Obama said he is planning a big stimulus package to jolt the economy back into shape and create 2. 5 million jobs our families can't afford to keep on waiting and hoping for a solution they can't afford to watch another month of unpaid bills pile up he also said the struggling automobile industry will have to be saved once the companies provide a proposal for restructuring their industry and he said he will honor commitments made by the Bush Administration in Washington Monday President Bush assured Americans that treasury secretary Henry Paulson is working with the Obama transition secretary Paulson is working closely uh with uh uh the president-elect's transition team it's important for the American people to know that there is close cooperation it's important for the American people to know that we will safeguard the financial system as the first step necessary for financial uh for economic recovery over the weekend the government agreed to rescue City Group another bank on the verge of collapse Mr Obama said in the coming weeks he will provide the public with an over viw of what his team recommends Senate confirmation hearings for his appointees are expected to begin shortly after Mr Obama assumes the presidency on January 20th Kane farb vaa news Chicago Illinois as a people so I am extraordinar
The Credit Crunch Continues
CBS
Transcript
[Music] yeah one more for the books it's a sound they don't hear too often the sound of a sale so let me guess they're turning them down and we have to call the bank and say Scott pearlstein says business at his family's car dealership is the worst it's been since opening in 1956 we getting all those deals approved said we're doing the best that we can I mean his customers he says can't borrow money to buy cars in the past people could put virtually no money down on a $30,000 car these days you have to put down about 25% or $7,500 people have been pushed away due to the credit restrictions and until we feel it until until money hits Main Street it's not going to change same story for real estate agent Janet dama who says her office is eerily quiet because of the credit crunch we're about 60% down from last year the government's massive Consumer Debt bailout is aimed at getting more people into Scott's showroom and Janet's office by making car loans mortgages and credit cards more affordable and accessible right now even consumers with very good credit are finding it very difficult to borrow so the goal is to get some credit moving again so consumers can do what we do best which is consume and borrow the FED may have accomplished that immediately today rates on a 30-year fixed mortgage drop significantly from 6 and 1/8 to 5 and 38 that means on a $200,000 mortgage you'd pay $100 less a month saving $1,200 a year the FED hopes by bringing rates down demand will rise and housing prices would stop their steep decline they're down nearly 177% since last year there is a big Unknown about the government's rescue plan will consumers who pulled back spending this summer by the biggest amount in 28 years rush out and start buying again we borrowed ourselves into a corner and a lot of people are waking up and realizing that that isn't sustainable there is an irony here it was the era of easy money that got America into this financial mess and now the feds are trying to make it easier for us to get credit again Russ Kelly Wallace thank you very much
Unlocking The Credit Markets
CBS
Transcript
the administration is trying to tackle a two-fold problem not enough consumer spending in the retail economy looking for a good deal because there's not enough Consumer Credit in the overall economy I don't have a credit card and so the Federal Reserve and treasury are pumping a jaw-dropping 800 billion dollars directly into the credit markets buying up 600 billion worth of mortgage debts so agencies like Freddie Mac and Fannie Mae can keep mortgage credit flowing there's also a 200 billion Dollar Loan Fund to buy up consumer credit propping up the market for auto loans student loans and credit cards this lack of a affordable consumer credit undermines consumer spending and as a result weakens our economy consumer credit is broken Polson says because the market is Frozen the normal process takes credit card debts and auto loans bundles them together and sells them to investors but this year investors stopped buying and took 240 billion dollars out of the credit system today's 200 billion dollar announcement 20 from bailout money 180 from the FED is designed to bring those investors back and get the credit flowing again I think it's an excellent step the Securities industry the investors who buy and sell Consumer Debt said the fund should help restore Market confidence what this does is hopefully jump starts that market allows investors to invest in these Securities even some Congressional critics who want Paulson to do more for homeowners say this plan at least is focused on helping credit worthy people so to pump some money into the consumer end of things into Main Street directly instead of Wall Street makes a great deal of sense but this is also secretary Paulson's third different strategy for using those bailout funds plan a buying toxic mortgages was scrapped as ineffective Plan B investing in the banks is still in progress which makes unfreezing Consumer Credit plan C and plan C is so complicated the FED told us today it won't be in place until February Russ Wyatt Andrews in Washington thank you very much
Treasury unveils $800B plan; economy shrank most since 2001
CBS
Transcript
the bush administration is going to spend another 800 billion dollars to prop up the sagging economy treasury secretary henry paulsen says the government will buy up bad loans and mortgage-backed securities the latest government strategy is designed to loosen up the lending markets and get banks to start loaning money again to both businesses and consumers the new plan comes as wall street gets new evidence of a deepening recession a revised look at the third quarter shows the economy shrank more than first thought sinking at a pace not seen since 2001. today's news didn't cause much movement in the markets the dow finished up 36 points up three straight days in a row the nasdaq though dropped seven while consumers haven't been spending retailers do see a ray of hope as the holiday shopping season approaches consumer confidence actually rose this month it's up from october when confidence hit the lowest point on record at the new york stock exchange i'm alexis christophers