Pat Dollard

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Yeah, me and Mr. Drill have lost about 25% too … But we’re still alive. Yoy!

Not to worry … We have a ranch-style home.

Dow plunges 679 to fall to lowest level in 5 years

NEW YORK (AP) — Stocks plunged Thursday, sending the Dow Jones industrial average down 679 points — more than 7 percent — to its lowest level in five years. Stocks took a nosedive after a major credit-rating agency said it might cut its rating on General Motors and Ford, further rattling investors already fretting over the impact of tight credit on the economy.

The Standard & Poor’s 500 index also fell more than 7 percent.

The declines came on the one-year anniversary of the closing highs of the Dow and the S&P. The Dow has lost 5,585 points, or 39.4 percent, since closing at 14,164.53 on Oct. 9, 2007. It’s the worst run for the Dow since the nearly two-year bear market that ended in December 1974 when the Dow lost 45 percent. The S&P 500, meanwhile, is off 655 points, or 41.9 percent, since recording its high of 1,565.15.

U.S. stock market paper losses totaled $872 billion Thursday and the value of shares over all has tumbled a stunning $8.33 trillion since last year’s high. That’s based on figures measured by the Dow Jones Wilshire 5000 Composite Index, which tracks 5,000 U.S.-based companies’ stocks and represents almost all stocks traded in America.

Thursday’s sell-off came as Standard & Poor’s Ratings Services put General Motors Corp. and its finance affiliate GMAC LLC under review to see if its rating should be cut. The action means there is a 50 percent chance that S&P will lower GM’s and GMAC’s ratings in the next three months. GM has been struggling with weak car sales in North America.

S&P also put Ford Motor Co. on credit watch negative. The ratings agency said that GM and Ford have adequate liquidity now, but that could change in 2009.

GM, one of the 30 stocks that make up the Dow industrials, fell $2.15, or 31 percent, to $4.76, while Ford fell 58 cents, or 22 percent, to $2.08.

“The story is getting to be like that movie ‘Groundhog Day,’” said Arthur Hogan, chief market analyst at Jefferies & Co. He pointed to the still-frozen credit markets, and Libor, the bank-to-bank lending rate that remains stubbornly high despite interest rate cuts this week by the Federal Reserve and other major central banks.

“Until that starts coming down, you’ll be hard-pressed to find anyone getting excited about stocks,” Hogan said. “Everything we’re seeing is historic. The problem is historic, the solutions are historic, and unfortunately, the sell-off is historic. It’s not the kind of history you want to be making.”

The Dow ended the day at its lows, finishing down 678.91, or 7.3 percent, at 8,579.19. The blue chips hadn’t closed below the 9,000 level since the June 30, 2003.

The Dow’s tumble in the last seven sessions is its steepest ever in terms of points and the worst percentage decline since a downturn ending Oct. 26, 1987, when the Dow lost 23.8 percent. That sell-off included Black Monday, the Oct. 19, 1987 market crash that saw the Dow fall nearly 23 percent in a single day.

Broader stock indicators also tumbled Thursday. The S&P 500 fell 75.02, or 7.6 percent, to 909.92, while the Nasdaq composite index fell 95.21, or 5.5 percent, to 1,645.12.

The Russell 2000 index of smaller companies fell 47.37, or 8.7 percent, to 499.20.

A wave of fear about the economy sent stocks lower in the final two hours of trading after a volatile morning in which major indicators like the Dow and the S&P 500 index bobbed up and down. The Nasdaq, with a bevy of tech stocks, spent much of the session higher but eventually declined as the sell-off intensified. Still, its losses were less severe because of the relatively modest drops in names like Intel Corp. and Microsoft Corp.

On the New York Stock Exchange, declining issues came to nearly 3,000, while fewer than 250 advanced.

The sluggishness in the credit markets that triggered much of the heavy selling in markets around the world since mid-September appeared little changed Thursday following days of efforts by the Federal Reserve and other central banks to resuscitate lending.

Libor, the bank lending benchmark, for three-month dollar loans rose to 4.75 percent from 4.52 percent on Wednesday. That signals that banks remain hesitant to make loans for fear they won’t be paid back.

The Fed and other leading central banks this week lowered key interest rates to help unclog the credit markets and promote lending to help the global economy. While a rate cut can take up to a year to work its way through the economy, the move was aimed as a boost to investor sentiment.

“We’re stuck in a morass and I think it’s going to take quite some time to come out of it,” said Stephen Carl, principal and head of equity trading at The Williams Capital Group.

Demand remained high for short-term Treasurys, a refuge for investors willing to trade modest returns to protect their money. The yield on the three-month Treasury bill, which moves opposite its price, fell to 0.51 percent from 0.63 percent late Wednesday. Longer-term debt prices fell, with the yield on the 10-year note rising to 3.79 percent from 3.65 percent late Wednesday.

Investors across markets were mulling a plan being considered by the Bush administration to invest in hobbled U.S. banks as a way to stabilize the financial sector. The $700 billion rescue package signed into law last week allows the Treasury Department to inject fresh capital into financial institutions and obtain ownership shares in return.

Britain rolled out a similar plan, though no U.K. bank has received any investments. In Iceland, the government now has control of the country’s three major banks as it struggles to contain the troubles there.

Wall Street is also looking for any effects of short selling now that a three-week ban imposed by regulators has expired. Short selling is a technique in which investors borrow shares in a company from a broker and sell them, hoping to buy them back later at a lower price. Essentially, it’s a bet that a stock’s price will fall. Short sellers can lose money if they have to repurchase the stock after it has risen.

Some analysts believe the unprecedented ban on short selling — an effort to bolster investor confidence — did more harm than good at a time of historic market volatility. They contend that short sellers help the market rally by covering their bets and creating demand for stocks.

“I think the market’s way oversold. But I can’t stand in the way of this falling knife — I’d get sliced open,” said Phil Orlando, chief equity market strategist at Federated Investors. “Investors are just saying, get me out at any price.”

He also said that with the short-selling rule back in play, hedge funds might be shorting again to make up for their forced liquidations.

Energy names were among the biggest decliners as the price of oil fell and investors worried about a slowing economy. Exxon Mobil Corp. fell $9, or 12 percent, to $68, while Chevron Corp. fell $9.10, or 12 percent, to $64.

Light, sweet crude fell $1.81 to settle at $86.62 a barrel on the New York Mercantile Exchange, the lowest closing price since October last year.

Health insurer WellPoint Inc. fell $3.94, or 9.7 percent, to $36.50, while insurer and investment manager Lincoln National Corp. fell $9.66, or 35 percent, to $18.31.

The tech sector saw less selling than other parts of the market after IBM Corp. affirmed its forecast.

IBM fell $1.55, or 1.7 percent, to $89. Meanwhile, Intel fell 65 cents, or 4 percent, to $15.60 and Microsoft fell 71 cents, or 3.1 percent, to $22.30.

Consolidated trading volume on the NYSE came to 8.14 billion consolidated shares compared with 8.54 billion traded Wednesday.

In Asia, Japan’s Nikkei 225 closed down 0.50 percent while the Hang Seng added 3.31 percent. In Europe, Britain’s FTSE-100 fell 1.21 percent, Germany’s DAX fell 2.53 percent, and France’s CAC-40 declined 1.55 percent.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

Me: But WAIT! I thought lower oil prices were supposed to be good … When did below $100/bl become BAD, after Congress dragged oil company execs in for “willie-wacking” just a few months back … Gas is roughly $3.15/gal in my area. Kurt T.I.???

Demand destruction: Oil prices sink to 1-year low — OPEC calls emergency meeting

NEW YORK — Oil prices closed at their lowest level in a year Thursday, falling below $85 a barrel even after OPEC signaled it may try to slow crude’s downward spiral by cutting production.

At the pump, retail gas prices kept falling, with a gallon of regular shedding 4.4 cents overnight to a new national average of $3.403, according to auto club AAA, the Oil Price Information Service and Wright Express.

In Oklahoma, regular gas dropped to an average of $2.987 a gallon, the first time average prices have fallen below $3 in any state since Feb. 21, said Fred Rozell, director of retail pricing at the Oil Price Information Service in Wall, N.J.

“Barring some sort of major event, it looks like we’ll see $3 gas as the national average in the next few weeks,” Rozell said.

Fearful that oil prices could fall too far and harm their petroleum-dependent economies, the Organization of Petroleum Exporting Countries said it would hold an extraordinary meeting Nov. 18 in Vienna, Austria to discuss the widening economic crisis and how it’s affecting the oil market.

The 13-member cartel said it would work “to ensure that oil market fundamentals are kept in balance and market stability is maintained.”

Light, sweet crude for November Delivery fell $1.81 to settle at $86.62 a barrel on the New York Mercantile Exchange, the lowest closing price since Oct. 15, 2007. In aftermarket trading, prices edged below $85, a key technical level that traders say could signal another plunge.

In London, November Brent crude fell $1.70 to settle at $82.66 on the ICE Futures exchange, after earlier falling to a one-year low of $80.40.

Crude has shed about $60 — or 40 percent of its value — since soaring to a record $147.27 on July 11. The massive losses come as a global financial downturn forces people and businesses everywhere to cut back.

Libyan national oil company chief Shukri Ghanem on Thursday called on oil producing nations to cut output to “protect their interest (and) stop the loss of income.”

“However, OPEC’s aim is to create a balanced market, which neither harms the producers nor the importers,” Ghanem told The Associated Press.

OPEC controls 40 percent of the world’s oil supply, but many analysts doubt it will be able to slow oil’s descent just by tightening output. OPEC’s announcement that it would cut production by 520,000 barrels a day failed to halt oil’s drop.

Peter Beutel, oil analyst at Cameron Hanover, New Canaan, Conn., said history shows that OPEC cuts can rally prices for “a week, two weeks or a month.”

“But over a longer period of time, they’re incapable of stopping major moves,” Beutel said. “We’ve been down this road before, but OPEC refuses to learn this lesson.”

Given the dire U.S. economic conditions and waning energy demand, he said oil prices could be poised for another big drop.

“We have no idea at what price this economy can take. Nobody knows whether it’s $100 or $60 or $40,” Beutel said. “My guess is that we’re going to go a lot lower.”

Meanwhile, oil market traders continue to watch a fast-unfolding financial crisis. The U.S. Federal Reserve, along with central banks in Europe and China cut interest rates Wednesday in a bid to jump-start lending. But U.S. stocks sank in response Wednesday and continued to fall Thursday.

“Traders are expecting the world to move toward recession, with the U.S. and Europe especially a concern,” said Gerard Rigby, an energy analyst with Fuel First Consulting in Sydney. “Based on the short-term trend, you could see prices approaching $80 next week.”

Weighing on prices was evidence of falling demand in the U.S, where crude inventories jumped by 8.1 million barrels last week while gasoline stocks surged 7.2 million barrels, the Energy Information Administration said Wednesday in its weekly inventory report.

Both increases far exceeded expectations, reflecting both persistently weak demand and a recovery of the Gulf Coast energy complex that had been shut down by hurricanes Gustav and Ike.

“Overall demand for oil fell for a fifth straight week and year-on-year demand fell for a 24th straight week” this year, noted trader and analyst Stephen Schork in his Schork Report. “In fact last week demand … fell to the lowest level since the week following the 9/11/2001 attacks.”

Demand for gasoline was also weaker, falling 5.3 percentage points over the four weeks ended Oct. 3 compared to the same period a year earlier, according to the EIA report.

In other Nymex trading, heating oil futures fell 7.59 cents to settle at $2.4186 a gallon, while gasoline futures fell less than half a penny to $2.0273 a gallon.

Natural gas for November delivery rose 8.3 cents to settle at $6.825 per 1,000 cubic feet.

Associated Press writers Khaled El-Deeb in Tripoli, Lybia, George Jahn in Vienna, Austria, and Alex Kennedy contributed to this report from Singapore.
(AP)

Me: So what’s the solution for us mere humanoids? Bring in the Antichrist …

New World Order: Global co-operation, nationalisation and state intervention – all in one day

By Lindsay McIntosh – (The Scotsman)

IT WAS a day of desperate global action, unprecedented in both scale and cost, intended to stymie the international devastation being wrought by the financial crisis.

As the London stock market steeled itself to open again following days of vicious battering, Alistair Darling, the Chancellor, rose to stake the future of the country and the Cabinet on an audacious £500 billion banking bail-out.

And barely had the City begun to digest the hugely complex and unorthodox scheme when it was sent reeling again by an unscheduled interest rate cut – mirrored across the world – by the Monetary Policy Committee. It was the first such co-ordinated approach since the 9/11 terrorist attacks in 2001 – yet another indicator, had one been needed, of the gravity of the situation.

The half percentage point drop was immediately passed on to millions of borrowers, with leading high-street banks cutting their mortgages.

The government’s scheme, a three-part plan which takes in short, medium and long-term measures, was welcomed by business leaders and analysts.

David Kern, adviser to the British Chamber of Commerce, said: “The government has taken a radical step, but it is one we welcome.”

But there was concern a phenomenal amount of taxpayers’ cash was being staked on a last-ditch measure that could fail. The Taxpayers’ Alliance accused ministers of failing to address other options first.

Meanwhile, the International Monetary Fund (IMF) issued a fresh warning that Britain was on the brink of recession.

In its latest World Economic Outlook, it predicted the UK economy would contract by 0.1 per cent next year as growth across the developed countries slowed to almost zero.

The downturn will mean lost jobs, with unemployment forecast to rise from 5.4 per cent to 6 per cent, while public finances were said to be “considerably weaker” than in previous slowdowns. However, the IMF said it was expecting Britain to bounce back strongly in 2010.

The £500 billion plan includes the government taking shares of up to £50 billion in leading banks, increasing funds available to banks to £200 billion, and guaranteeing their debts when they lend to one another. The guarantees are likely to cost up to £250 billion.

The Prime Minister called the plans “bold and far-reaching”, but admitted they would offer no quick fix.

Eight UK banks and building societies – including Royal Bank of Scotland, Halifax Bank of Scotland, Barclays, Lloyds TSB and Nationwide – have pledged to increase their capital by £25 billion but the government will pump in the funds if called upon. The Treasury also stands ready to make at least another £25 billion available, if necessary.

The Bank of England – alongside its interest rate cut – is taking emergency action to help ensure banks have enough cash to run their day-to-day activities. It has increased to £200 billion the size of its special liquidity scheme that lets banks swap risky assets for Treasury bonds.

The government is also making the further £250 billion available for banks to guarantee debt, but a fee will be charged.

Mr Brown moved to reassure taxpayers they would have the potential to “earn a proper return” from their investment. There would be “strings attached and conditions to be met” to protect taxpayer interests.

One key concern is whether there will be controls over the bonuses of the “fat cat” bank bosses. Gordon Brown, the Prime Minister, said such issues would be dealt with case by case. Remuneration should be “based on responsibility, hard work, effort and enterprise”, he said.

It had been claimed that RBS bosses, chief executive Sir Fred Goodwin and chairman Sir Tom McKillop, had offered to leave under a boardroom clear-out agreed with the government, but this was denied by the bank.

The announcement provided an initial boost to the FTSE 100 index of leading shares, and in particular to banking stocks, but this fell away later in the day. The FTSE closed at a loss of 5 per cent – its lowest close since 2004 – while banks failed to hold on to the huge gains of up to 60 per cent made earlier in the day.

When Mr Brown stood to address the House of Commons on the package, which could well determine how his premiership is judged, he was able to announce the interest rate cut.

Central banks across Europe, the US, Canada and China also reduced interest rates in an emergency move.

The banks hope to encourage nervous consumers and businesses to spend more freely again after widespread housing, credit and financial problems.

The cut – which was immediately passed on to more than five million homeowners – was cautiously welcomed by analysts and business leaders.

Miles Templeman, director-general of the Institute of Directors, said: “Before today’s announcement, the financial system was in the deep freeze. After today, it might be in the fridge, but there is no guarantee. Nobody should be under any illusion that the financial system is now fixed. Our concern now is for the real economy and how much it will slow.

“There remains a real risk that the economic downturn under way will further undermine bank capital due to rising repossessions and bad debt.”

Howard Archer, an economist, of Global Insight, said: “It’s not the magic pill. We have a lot of difficult times ahead. But the first stage is stopping things getting worse, and the hope is this will help to stabilise the economy.”

Martin Weale, director of the National Institute of Economic and Social Research, said that, for the UK, it was important that the move came alongside the £500 billion package.

He said: “The international banks concluded there is a major international banking crisis. Banks were collapsing in Europe, as well as the United States. I think they rather optimistically concluded a rate cut of this type can restore confidence.”

Rate cuts were “a valuable piece on the side”, but he added: “The key issue is for affected countries to do what Britain has done and show governments are prepared to inject equity capital into banks that look as though they need it.

“We will only be confident the worst is over when the US adopts a scheme like Britain.”

And Louise Cuming, the head of mortgages at moneysupermarket.com, warned: “This is not a magic cure-all, and we won’t see either the mortgage or the housing market bouncing back to where it was 18 months ago.”

Following the announcements, Mr Brown spoke by phone to the French president, Nicolas Sarkozy, the German chancellor, Angela Merkel, and the Italian prime minister, Silvio Berlusconi, as well as the EC president, José Manuel Barroso.

The government is expected to hold up its plan as a potential model for the rest of Europe. The EU – which is concerned about competition implications of a scheme by Ireland to safeguard its deposits – later said it saw no problem with Britain’s move.

Mr Darling is due to fly to Washington today to discuss global action on the crisis.

Me: B-HO be HIS name … Yo-man …