Dec. 16: Stocks Surge on Record Fed Rate Cut
Associated Press
Transcript
[Music] A surprised Wall Street bolted higher Tuesday after the Federal Reserve slashed interest rates to their lowest point ever. The major indexes all surged minutes after the cut was announced, giving traders a well-needed boost of confidence. The Fed sort of, you know, gave a little head fake to everybody here because everyone was expecting a 50 basis point cut and we got a little bit more than that actually. and they're saying that they're going to try to keep things within a range of 0 to a/4% which is u actually a little bit more aggressive than people were anticipating. The reassurance of further government action and the promise of a Swiss Army knife approach dampened concerns that policymakers were running low on tools to fan the economy. Let's say they have a a quiver of arrows. Uh they've shot their last red arrow, but they still have blue, yellow, green, a whole bunch of other varieties that they can use. uh in particular quantitative easing uh which is the purchasing of treasury bills, treasury bonds, equities, commercial paper basically to do whatever they can to directly uh add liquidity to the overall marketplace. The Dow Jones Industrial Average ended the session up 368 points at 8,924. Broader stock indicators also advanced. The standard and pores 500 index gained 45 at 913 while the Nasdaq rose 82 at 1590. Reassurances that the Fed will snap up government and mortgage debt made it easier for investors to bet that the central bank will do whatever is necessary to bring an end to the longest recession in a quarter century. Bonnie Go, the Associated Press, New York.
Economy Sinks Further Into Recession
Associated Press
Transcript
[Music] new government data indicates the economy is falling deeper into recession consumer prices plunged in November by 1.7% the largest amount on records going back 61 years the turnaround in inflation reflects a huge drop in energy costs nearly doubled the decline seen in October meanwhile new home construction was down almost 19% that's the largest drop since March of 1984 looking forward the news isn't much better applications for building permits fell by more than 155% this Grim news comes as the Federal Reserve is expected to cut interest rates to the lowest amount ever the federal funds rate already at just 1% is expected to drop another half% Rita Foley the Associated Press
Federal Reserve Slashes Key Interest Rate
Associated Press
Transcript
the Federal Reserve has cut its key interest rate to the lowest level on record the federal funds rate the interest that Banks charge each other dropped by at least 3/4 of a percent meaning it can float between a range of zero to 0.25% Fed chairman Ben Bernan and his colleagues also pledged to use all available tools to contain the widening crisis and the longest recession in a quarter Century the news scores just how dire the economic situation has become earlier in the day new data showed consumer prices plunged by 1.7% in November the largest amount on record going back 61 years new home construction meanwhile declined close to 19% the largest decline since March of 1984 Ed Donahue the Associated Press
Illinois Window Factory Files for Bankruptcy
Associated Press
Transcript
it was the scene of a worker sit in for nearly a week after workers say they were abruptly laid off now that Chicago Factory Republic windows and doors is filed for bankruptcy the company says the bankruptcy filing for liquidation was a requirement of its creditor Bank of America workers staged a sit in at the factory after they say they were told their jobs were gone the sit in lasted 6 days and included intervention from elected leaders finally a deal was struck that allowed workers to get 60 days severance pay back vacation pay and health benefits Republic's chief executive says Monday's filing for liquidation is a microcosm of what's happening to many large and small businesses across the country John Belmont the Associated Press
Money Minute: GE; Ford, OPEC
Associated Press
Transcript
AP money minut General Electric is affirming its 2008 Outlook but is not providing any annual or quarterly guidance for next year the company did say it expects to make between $1.78 and 84 per share this year and will pay a dividend of 31 cents per share each quarter next year oil prices fell Tuesday despite an announcement from Saudi Arabia that production will be cut by 2 million barrels a day OPEC has hinted that it may have to shock markets to stabilize prices when it meets Wednesday but Traders and Brokers appear to have expected talk of an even bigger cut a barrel of crude settled at $43.6 in New York Ford says December sales are looking better than November's dismal numbers at least through the first two weeks of the month the company says the final determination will depend on the last week of the month traditionally the biggest sales week in December Ford Sales were down 31% in November compared to the same month last year and they're off almost 20% for the year I'm David mendi with ap money minute
Interest Rate At All-Time Low
CBS
Transcript
the Federal Reserve is once again reaching into its Arsenal to battle the recession fed chairman Ben Bernan and the board have slashed a key interest rate down to an all-time low one quarter of 1% the move is designed to get Banks lending and consumer spending but investors aren't convinced it will work at this point it's probably not going to do much I mean it it hasn't done much for the last three rate Cuts Wall Street is showing little excitement because prior rate Cuts have and stopped the stock market's long slide you'll get a a bounce initially but it really flattens up with the credit markets Frozen people can't borrow money and almost everyone isn't spending that's driving the country further into a recession and hurting the bottom line even at the PowerHouse of Wall Street Goldman Sachs is reporting its first quarterly loss since 1999 the company lost nearly 2.3 billion dollars in the fourth quarter compare that to last year when Goldman made over 3 billion you can expect similar reports from JP Morgan this week from Bank America I mean they're all going to be in line they're all going to show losses 60 while prices have fallen by the largest amount in 61 years buyers aren't coming back and that's hitting the housing market hardest construction of new homes is down almost 19% the biggest drop in a quarter Century Allison Harlin CBS News Wall Street
International shipping slowdown
CNN
Transcript
The Fidelio is about to set sail from Germany to Asia. One of the largest container vessels in the world, the Fidelio is a perfect example of the problems facing international shipping. This ship can fit more than 9,000 of these standard shipping containers in its hull. Shipping containers are something like the currency of international trade. But now, with the international financial crisis going on, the question is, will the companies still be able to fill their vessels in the future? CMA-CGM, the company that operates the Fidelio, says while the logistics industry is still reporting growth, that has slowed considerably. The key to staying alive in these hard times is adjusting to the crisis, says Nicolas Zartini, CMA's head of Europe and Asia operations. The line is chartering fewer ships and telling captains to go slower. We have been adopting some measures to slow down the vessel, which obviously limits the consumption of fuel, reduces the cost, and also reduces the emission of CO2 in the atmosphere. While it may look like business as usual in the container terminal, the signs of trouble are lurking below the surface. Dock workers say they're unloading far fewer trucks since the beginning of the financial crisis. And the pilots who guide ship... ...in and out of Hamburg's port tell us fewer vessels are arriving, most of them lighter than usual, indicating they have less cargo on board. Germany's shipping association says with less cargo volume, rates are dropping fast. For parts of the shipping industry, the rates have declined very seriously. In the bulk sector by 90% or so. In the container sector, it's by 30% or more, depending on the... ...region where the shipping industry is transporting. Back on board the Fidelio, Captain Luc Massa has another problem to worry about. Getting his ship safely through the pirate-infested waters off eastern Africa near Somalia. One of the first measures is to have a good lookout, sharp lookout, to see any suspicious craft. Also, sometimes we... ...put some... ...some... ...some fire hose spraying outside to avoid approaching of craft. Fewer containers, declining rates and piracy. A long list of problems for an industry trying to navigate through some very rough waters. Fred Pleitgen, CNN, Hamburg, Germany.
Bad Economy Impacts College Graduates
VOA News
Transcript
There was a time when a college degree meant unlimited career opportunities. But in today's economic climate, students face greater pressures when entering the workforce. It's an anxious time for many students. At Catholic University in Washington, some students say they're starting their job search early. It's very intimidating to know you're going out there and you don't know what's going to be looking at what you'll be facing. Really facing perhaps the biggest economic crisis of their generation. Dr. Alan Goodman at Catholic University's career center says students must be willing to consider a wider variety of options. You may not get your ideal job first and so maybe you'll be more flexible and look for a job that perhaps you wouldn't have taken before but as a stepping stone to something that you really want. Allen says students specializing in industries hit hardest by the economic decline may need to look for jobs outside of their fields for the time being. The current job climate may also be a good time for students to pursue graduate degrees and post-graduate internships. According to the 2008 2009 recruiting trend reports, employment opportunities have dropped 8% since last year, but there still seem to be job openings in the science and technology fields. Michael Wolf, an economist at the Bureau of Labor Statistics, is optimistic about career opportunities for college graduates. Uh we do project solid growth for that occupation. Um for scientists, life scientists in particular, but physical scientists as well will be uh in demand as well as engineers for the next 10 years. He predicts job growth will improve greatly once the financial crisis is over. And he says the opportunities will be greatest for students who have achieved higher levels of education. For producer Tara Palmer, Jim Bertell, VA News.
Credit Card Interest Rate Jump
CBS
Transcript
true to her small town rots Miriam majors has never lived large she buys her clothes at Goodwill and always pays bills on time bye y'all have a good day so when Bank of America suddenly jacked her credit card's interest rate from 7.9% to 28% this nurse was shocked have the rules changed did I miss something here turns out the bank changed her rate because her credit limit on another card had been slashed by more than $7,000 it just didn't make sense to me because I did know what our credit scores were it's called balance chasing Banks worried about their own Rising loan defaults are chopping credit limits on customers who don't pay off their balance every month it's a risky environment so everybody's being a little bit um a little bit more careful by one estimate $2 trillion worth 40% of available Consumer Credit will be gone by 2010 this one was 7.9 once Miriam Major's balance was cut but it was a downward spiral Banks noticed that she had less available credit and that lowered her credit score by 50 points from an excellent 783 to 733 and that's what made her interest rate balloon they got you coming and going right it's um all to them in a statement Bank of America couldn't comment on a specific customer's account but said it's taking a more aggressive look at accounts in the current environment but consumer Advocates say car holders are getting kicked when they're down this is incredibly unfair people need to know what the rules of the game are and they follow them accordingly disgusted Majors closed her Bank of America card and opened an account at her Local Credit Union where account holders have a voice in making the rules I don't even want another credit card I don't I really don't you've had it I've had it this Thursday the Federal Reserve is expected to restrict certain credit card practices squeeze consumers could use the relief Mark stman CBS News Taha Tennessee
Fed Slashes Interest Rates
CBS
Transcript
With no silver bullet for the economy, the Fed fired a shotgun blast. In flashing its benchmark interest rate to the lowest level ever, the Fed said rates were likely to remain at exceptionally low levels for some time. Bernank and company also promised to use all available tools to turn the economy around. translation, a Fed spending spree. And they will probably start buying anything and everything uh to try to get money into the financial system, including buying up bad mortgage and credit card loans from banks so they have more money to lend, which should also drive down interest rates. Is that the primary weapon they have at this point? That's the primary weapon they have. Economist Michael Dardov says businesses are not investing and consumers are pulling back. So it really leaves the federal government and the Federal Reserve as sort of the, you know, spenders of last resort, if you will. And the Federal Reserve is the only institution that can actually create money out of thin air. The Fed's balance sheet, which was less than a trillion dollars back in September, is now expected to more than triple to $3 trillion. But despite the Fed's drastic interest rate cuts, a 30-year fixed rate mortgage is still 5 a.5%, a car loan more than 6%, a home equity loan more than 8%, and credit card interest rates more than 14%. Most importantly, the key is the job market. I mean, it doesn't really matter what the interest rate is if people are nervous about their jobs. That's where a new stimulus package to help create jobs is expected to come in. The number being floated is $600 billion, but some predict it could hit a trillion as economists see a growing risk that unemployment could be headed for double digits, possibly 10%. Katie and Anthony, as we mentioned, the market was up more than 350 points, most of it after the Fed's announcement. So, Wall Street was really happy to hear this news. They were, Katie, because they saw two key things. First, not only did the Fed knock rates to zero, but they said, "We're going to keep them here as long as it takes." Second, the Fed said, "We're going to spend as much as it takes to get credit moving." The key thing here is getting mortgage rates down, maybe as low as 4% to try to put a bottom under the housing market. All right, Anthony Mason. Anthony, thank you.
Is Hollywood Recession Proof?
CBS
Transcript
hey everyone and welcome to eye to ey is Hollywood really Recession Proof big numbers of the box office say it might just be CBS News spoke to some industry insiders about why a night out at the movies remains a big draw even during tough Economic Times Hollywood has been really Recession Proof I mean during the Depression people spent what little money they had to go to the theater to escape to watch Comedy to watch uh drama and we've seen that happen sort of time and again whenever the economy goes down movie watching goes up why do you think Hollywood is so Recession Proof or is it Recession Proof I know we'll see um you know but uh you know again you know a film can be escapism or it it can and it but it's also again it can be a nourishing event you know you're you know you're getting to spend time with friends families and others you know there a kind of community to it um and uh you know I think that has something of value to people you know as you're going through your days I just want them to laugh want them to feel free and and and what's been happening so far in all the screenings and the people that have seen it so far which is which is is exactly what I wanted which was for them to walk out of the theater believing in life and and saying you know I needed that you know it was just kind of the perfect tone you know the perfect thing that I kind of needed right now you know I think people when they're when they're in the theater and you they they'll look around they'll see the word yes and go how can that be bad you know I mean it was good for me you know it was good for me entertainment I think plays a a big part in in times and especially especially something like this that is can remind us of of of the good things you know the good things in our lives meeing our family and our and uh and our family as long as there's an America there are going to be movies and people are going to go see them and uh you know I think that that there may be tightening within Hollywood of uh what movies get made and maybe the number of movies get made and that's not even necessarily a bad thing I think that uh you know people need movies in hard times and they the Depression era is a perfect example of it you know and some of some of the the most moving uh films that we have were made during that era and I I really you know like the idea of having made in this case a big movie of Hollywood film and you know that's considered Escapist entertainment that kind of speaks to the time it is tough sometimes but but tough has a reason you know there's there's a reason we got into the recession and and we have to learn from that we have to we have to understand why because we were creating false wealth we were we were creating illusion you know and and now we're paying for it and that's fine you know that's my Christmas present to the world I'm I'm helping you know bail out the economy